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Hibbett (HIBB) Q2 Earnings Surpass, Sales Miss Estimates
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Hibbett, Inc. posted drab second-quarter fiscal 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, while sales lagged the same. Both metrics declined year over year. Results were hurt by muted discretionary spending due to inflation. Its apparel business continues to witness soft demand amid higher promotions.
Despite a challenging retail environment, exceptional consumer experience in underserved markets and a strong start to the busy back-to-school season acted as tailwinds. Also, positive customer response to product launches stemming from compelling product assortment and market share gains bodes well.
Shares of this Zacks Rank #3 (Hold) company have gained 15.6% in the past three months compared with the industry's 8.6% growth.
Image Source: Zacks Investment Research
Quarterly Highlights
Hibbett's adjusted earnings of 85 cents per share declined 54% from the $1.86 reported in the prior-year quarter. However, the figure surpassed the Zacks Consensus Estimate of 68 cents.
Net sales fell 4.6% year over year to $375 million for the quarter under review. Also, the figure missed the Zacks Consensus Estimate of $377 million.
Comparable store sales (comps) fell 7.3% and came ahead of our estimate of 6.8% decline. The metric jumped 54% from the second quarter of fiscal 2020, driven by strength across footwear as well as men's, women's, and kids’ apparel.
Meanwhile, in-store comps decreased 7.7% for the quarter under review. E-commerce sales declined 5.2% year over year and accounted for 15.1% of the total sales. In-store comp sales increased 22% from the second quarter of fiscal 2020. E-commerce sales increased 174.4% on a three-year stack.
The gross profit decreased 9% year over year to $122.9 million for the reported quarter, which beat our estimate of $118.5 million. Meanwhile, the gross margin contracted 160 basis points (bps) to 32.8%, driven by lower average product margin stemming from higher promotional activity across footwear and apparel. This was partly offset by lower freight, shipping and logistics expenses.
Operating income was $16 million, down 51% year over year, which surpassed our estimate of $12.3 million. Meanwhile, the operating margin contracted 410 bps to 4.3% for the reported quarter.
Store operating, selling and administrative (SG&A) expenses, as a percentage of sales, expanded nearly 200 bps to 21.1% due to lower sales volume stemming from inflation, incentive compensation, medical expenses and data processing costs.
Other Financials
As of Jul 29, Hibbett had $33.1 million in cash and cash equivalents, and a total stockholders' investment of $397.3 million. In the fiscal second quarter, Hibbett repurchased 145,000 shares worth $7 million. Management paid out a quarterly dividend of 25 cents.
Store Update
In second-quarter fiscal 2024, the company opened five stores. As of Jul 29, 2023, it had 1,148 stores across 36 states.
Management retained its fiscal 2024 view. Hibbett expects net sales to remain flat to up 2%. The company anticipates 24% sales growth for the fiscal third quarter and 28% for the fourth quarter. Hibbett anticipates comparable sales, in-store comps and an e-commerce sales decline of low-single digits each.
The gross margin is envisioned to be 33.9-34%, while the operating margin is predicted to be 7.4-7.8%. SG&A, as a percent of net sales, is estimated to be 23.3-23.5%. Also, interest expenses, as a percentage of net sales, are projected to be 0.4-0.45%.
Earnings are anticipated to be $7-$7.75. Also, the effective tax rate is expected to be 23.5-23.7%. For fiscal 2024, capital expenditure is expected to be $60-$70 million for investment in new stores, remodels, technology advancement and infrastructure.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 405.9% growth, respectively, from the year-ago period’s reported levels. The company has a trailing four-quarter earnings surprise of 121.2%, on average.
Urban Outfitters, which engages in the retail and wholesale of general consumer products, currently sports a Zacks Rank #1. The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings suggests growth of 57.1% from the year-ago reported number. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period’s actual. WMT has a trailing four-quarter earnings surprise of 12%, on average.
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Hibbett (HIBB) Q2 Earnings Surpass, Sales Miss Estimates
Hibbett, Inc. posted drab second-quarter fiscal 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, while sales lagged the same. Both metrics declined year over year. Results were hurt by muted discretionary spending due to inflation. Its apparel business continues to witness soft demand amid higher promotions.
Despite a challenging retail environment, exceptional consumer experience in underserved markets and a strong start to the busy back-to-school season acted as tailwinds. Also, positive customer response to product launches stemming from compelling product assortment and market share gains bodes well.
Shares of this Zacks Rank #3 (Hold) company have gained 15.6% in the past three months compared with the industry's 8.6% growth.
Image Source: Zacks Investment Research
Quarterly Highlights
Hibbett's adjusted earnings of 85 cents per share declined 54% from the $1.86 reported in the prior-year quarter. However, the figure surpassed the Zacks Consensus Estimate of 68 cents.
Net sales fell 4.6% year over year to $375 million for the quarter under review. Also, the figure missed the Zacks Consensus Estimate of $377 million.
Comparable store sales (comps) fell 7.3% and came ahead of our estimate of 6.8% decline. The metric jumped 54% from the second quarter of fiscal 2020, driven by strength across footwear as well as men's, women's, and kids’ apparel.
Meanwhile, in-store comps decreased 7.7% for the quarter under review. E-commerce sales declined 5.2% year over year and accounted for 15.1% of the total sales. In-store comp sales increased 22% from the second quarter of fiscal 2020. E-commerce sales increased 174.4% on a three-year stack.
The gross profit decreased 9% year over year to $122.9 million for the reported quarter, which beat our estimate of $118.5 million. Meanwhile, the gross margin contracted 160 basis points (bps) to 32.8%, driven by lower average product margin stemming from higher promotional activity across footwear and apparel. This was partly offset by lower freight, shipping and logistics expenses.
Operating income was $16 million, down 51% year over year, which surpassed our estimate of $12.3 million. Meanwhile, the operating margin contracted 410 bps to 4.3% for the reported quarter.
Store operating, selling and administrative (SG&A) expenses, as a percentage of sales, expanded nearly 200 bps to 21.1% due to lower sales volume stemming from inflation, incentive compensation, medical expenses and data processing costs.
Other Financials
As of Jul 29, Hibbett had $33.1 million in cash and cash equivalents, and a total stockholders' investment of $397.3 million. In the fiscal second quarter, Hibbett repurchased 145,000 shares worth $7 million. Management paid out a quarterly dividend of 25 cents.
Store Update
In second-quarter fiscal 2024, the company opened five stores. As of Jul 29, 2023, it had 1,148 stores across 36 states.
Hibbett, Inc. Price, Consensus and EPS Surprise
Hibbett, Inc. price-consensus-eps-surprise-chart | Hibbett, Inc. Quote
Looking Ahead
Management retained its fiscal 2024 view. Hibbett expects net sales to remain flat to up 2%. The company anticipates 24% sales growth for the fiscal third quarter and 28% for the fourth quarter. Hibbett anticipates comparable sales, in-store comps and an e-commerce sales decline of low-single digits each.
The gross margin is envisioned to be 33.9-34%, while the operating margin is predicted to be 7.4-7.8%. SG&A, as a percent of net sales, is estimated to be 23.3-23.5%. Also, interest expenses, as a percentage of net sales, are projected to be 0.4-0.45%.
Earnings are anticipated to be $7-$7.75. Also, the effective tax rate is expected to be 23.5-23.7%. For fiscal 2024, capital expenditure is expected to be $60-$70 million for investment in new stores, remodels, technology advancement and infrastructure.
Stocks to Consider
Some better-ranked companies are BJ's Restaurants (BJRI - Free Report) , Urban Outfitters (URBN - Free Report) and Walmart (WMT - Free Report) .
BJ's Restaurants, which operates a chain of high-end casual dining restaurants in the United States, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 405.9% growth, respectively, from the year-ago period’s reported levels. The company has a trailing four-quarter earnings surprise of 121.2%, on average.
Urban Outfitters, which engages in the retail and wholesale of general consumer products, currently sports a Zacks Rank #1. The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings suggests growth of 57.1% from the year-ago reported number. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period’s actual. WMT has a trailing four-quarter earnings surprise of 12%, on average.