Hibbett Plunges 9% Despite Exceeding Q2 Expectations

Athletic-inspired fashion retailer Hibbett Sports, Inc. (HIBB) delivered better-than-expected second-quarter results backed by an improved inventory position which helped boost sales despite ongoing supply chain disruptions. Shares plunged 9.2% on the news, closing at $89.84 on August 27.

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The company reported earnings of $2.86 per share, up 20.2% year-over-year and higher than the Street’s estimate of $1.42 per share. (See Hibbett Sports stock charts on TipRanks)

Net sales declined 5.1% to $419.26 million compared to the year-ago period but significantly outpaced analysts’ estimates of $320.89 million. Also, comparable sales fell 6.4% year-over-year due to a fall in both brick and mortar and e-commerce sales.

Mike Longo, President and CEO of Hibbett said, “We believe our significant revenue growth and profitability over the previous two years ago demonstrates that our strategy of delivering a compelling assortment of highly coveted merchandise coupled with superior customer service and a best-in-class omnichannel platform will continue to drive strong top and bottom-line performance.”

Longo added, “We believe that our investments in employees, stores, the online experience, distribution capabilities, and our vendor relationships have positioned the Hibbett and City Gear brands to take advantage of the ongoing market disruption and to generate sustainable, profitable growth into the future.”

The company raised its Fiscal 2022 guidance based on several factors, such as new customer attraction and retention, accelerating consumer adoption of e-commerce, and strong vendor relationships, which enabled Hibbett to meet the growing consumer demand for its products.

Hibbett expects Fiscal 2022 earnings to fall in the range of $11 – $11.50 per share, much higher than the consensus estimate of $9.19 per share. Also, comparable sales are forecast to grow by the mid-teens compared to the prior-year period.

Impressed by Hibbett’s strong beat-and-raise results, Robert W. Baird analyst Justin Kleber lifted the price target on the stock to $100 (11.3% upside potential) from $90 while maintaining a Hold rating.

Kleber noted that Hibbett continues to gain market share with its strong performance. However, he is concerned about EBIT margin sustainability once demand normalizes post the “stimulus package hangover”.

Overall, the stock commands a Strong Buy consensus rating based on 4 buys and 1 Hold. The average Hibbett Sports price target of $105.40 implies 17.3% upside potential to current levels. Shares have gained 169% over the past year.