Hibbett Misses Q4 Expectations; Shares Slip 5%

Hibbett Sports, Inc. (NASDAQ: HIBB), a fashion retailer inspired by athletics, reported weak results for its fourth-quarter ending January 29, 2022. HIBB failed to meet expectations on both the earnings and revenue front. Following the news, shares slipped 5% in intraday trading, but ended the day in the green, up 2.8% at $49.06 on March 4.

The company noted that in Q4, it witnessed a strong holiday season; however, factors such as supply chain issues, especially in the footwear category coupled with inflation, and the rise of the Omicron-related cases resulted in lowered sales in the latter half of the quarter. Having said that, the company expects these factors to subside in the coming months.  

Its shares have lost 32.2% year-to-date. During Q4, the company opened 12 new stores and closed 2 stores, ending the quarter with 1,096 stores.

Weak Q4 Results

Q4 diluted earnings of $1.25 per share came in 10 cents lower than analysts’ estimates of $1.35 per share. The number was even lower than diluted earnings of $1.39 per share for Q4FY21.

Similarly, Hibbett’s net sales of $383.35 million fell marginally short of analysts’ estimates of $383.72 million. However, the number grew 1.7% compared to the prior-year period’s net sales. Comparable sales declined 1% compared to the same period last year.

However, for FY22, Hibbett’s diluted earnings grew a whopping 156.6% to $11.19 per share year-over-year, and net sales advanced 19.1% to $1.69 billion. Similarly, comparable sales grew 17.4% annually.

Official Comments

Commenting on the results, President and CEO of Hibbett, Mike Longo, said, “The rapid growth of our business over the last two fiscal years has been accompanied by significant investments in customer acquisition and retention, new store growth, improving existing store productivity, enhancing omni-channel features and functionality, optimizing our delivery capabilities and modernizing the back-office infrastructure. We believe this upgraded business model differentiates us from our competition and is more capable of sustained profitable growth than prior to the pandemic.”

FY23 Outlook

Based on the negative factors, which affected the Q4 results and their continued impact in the first half of Fiscal 2023, Hibbett guided for FY23 sales to be flat in dollar terms compared to FY22. Comparable sales are expected to be in the negative low single-digit range.

Diluted earnings for FY23 are projected to fall in the range of $9.75 to $10.50 per share, while consensus is pegged at $9.85 per share.

Additionally, the company expects to incur capital expenditures on new store growth, remodels, and additional technology and infrastructure investments, in the range of $60 million and $70 million.

Analysts’ View

Responding to Hibbett’s quarterly performance, Williams Trading analyst Sam Poser reiterated a Buy rating on the stock with a price target of $73, implying 48.8% upside potential.

Commenting on Hibbett, Poser said, “HIBB has developed one of the best consumer-facing omni-channel operations in retail. Through efficient use of increasing data from its customer relationship management (CRM), HIBB is improving its relationships with key brands, such as Nike (NKE) by engaging and retaining customers better than other retailers. It appears as if HIBB’s allocation of key launch product has improved, near term supply chain headwinds notwithstanding.”

With 4 unanimous Buys, the HIBB stock commands a Strong Buy consensus rating. The average Hibbett price target of $74.50 implies 51.8% upside potential to current levels.

Insider Trading

TipRanks’ Insider Trading Activity shows that Insider Signal is currently Positive on Hibbett, with corporate insiders buying $146K shares in the last quarter.

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