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Hibbett Reports Second Quarter Results

  • Reiterates Full Year Fiscal 2024 Comparable Sales and Diluted EPS Guidance
  • Q2 Comparable Sales Decrease 7.3% Versus Prior Year; Net Sales Down 4.6% Year-Over-Year
  • Q2 Diluted EPS of $0.85

Hibbett, Inc. (Nasdaq/GS: HIBB), an athletic-inspired fashion retailer, today provided financial results for its second quarter ended July 29, 2023, and business updates.

Mike Longo, President and Chief Executive Officer, stated, “We are pleased with our performance for the second quarter of Fiscal 2024. Our business model focuses on providing an exceptional consumer experience in underserved markets and produced solid financial results despite a challenging retail environment. Our sales for the second quarter were supported by a strong start to the busy back-to-school season and we also benefited from a positive customer response to new product launches during the quarter. Our strong relationships with valued brand partners continue to provide us the ability to offer a compelling product assortment and as a result, we believe we continue to gain market share.”

Mr. Longo continued, “In today’s inflationary environment, consumers have pulled back on discretionary spending. In response, we have continued to focus on offering the products that meet our customers’ more selective interests. Due to these efforts, our footwear sales, especially with our popular premium brands, have remained more consistent while our apparel business continues to reflect softer demand amid a heavy promotional environment. Although we still face considerable headwinds, we believe we are well positioned for continued growth when market conditions improve. As always, we are focused on the long term and we remain confident in our ability to offer the most compelling brands and products while continuing to attract and retain customers in Fiscal 2024 and beyond. We are reiterating our previously stated guidance for the current fiscal year.”

Second Quarter Results

Net sales for the 13-weeks ended July 29, 2023, decreased 4.6% to $374.9 million compared with $392.8 million for the 13-weeks ended July 30, 2022. Comparable sales decreased 7.3% versus the prior year period. Brick and mortar comparable sales declined 7.7% while e-commerce sales decreased 5.2% on a year-over-year basis. E-commerce represented 15.1% of total net sales for the 13-weeks ended July 29, 2023, compared to 15.2% in the 13-weeks ended July 30, 2022.

Gross margin was 32.8% of net sales for the 13-weeks ended July 29, 2023, compared with 34.4% of net sales for the 13-weeks ended July 30, 2022. The approximate 160 basis point decline was driven primarily by lower average product margin which was approximately 215 basis points lower than the prior year period. This decline was driven mainly by higher promotional activity across both footwear and apparel. In addition, the year-over-year sales decline resulted in deleverage of store occupancy costs of approximately 100 basis points. These unfavorable gross margin impacts were partially offset by lower freight, shipping and logistics expenses as a percent of sales in comparison the prior year quarter.

Store operating, selling and administrative (“SG&A”) expenses were 25.3% of net sales for the 13-weeks ended July 29, 2023, compared with 23.3% of net sales for the 13-weeks ended July 30, 2022. The increase of approximately 200 basis points is primarily the result of deleverage from lower sales volume with the largest headwinds noted in wage increases driven by inflation, incentive compensation, medical expenses and data processing costs.

Net income for the 13-weeks ended July 29, 2023, was $10.9 million, or $0.85 per diluted share, compared with net income of $24.7 million, or $1.86 per diluted share, for the 13-weeks ended July 30, 2022.

For the 13-weeks ended July 29, 2023, we opened 5 net new stores, bringing the store base to 1,148 in 36 states.

As of July 29, 2023, we had $33.1 million of available cash and cash equivalents on our unaudited condensed consolidated balance sheet and $106.9 million of debt outstanding on our $160.0 million unsecured line of credit. Inventory as of July 29, 2023, was $430.8 million, a 17.6% increase compared to the prior year second quarter and up 2.4% from the beginning of the year.

During the 13-weeks ended July 29, 2023, we repurchased 294,917 shares of common stock under our Stock Repurchase Program (the “Repurchase Program”) for a total expenditure of $11.0 million. We also paid a quarterly dividend equal to $0.25 per outstanding common share that resulted in a cash outlay of $3.2 million.

Fiscal 2024 Year-to-Date Results

Net sales for the 26-weeks ended July 29, 2023, increased 1.7% to $830.4 million compared with $816.9 million for the 26-weeks ended July 30, 2022. Comparable sales decreased 1.4% versus the 26-weeks ended July 30, 2022. Brick and mortar comparable sales declined 1.2% and e-commerce sales decreased 2.2% compared to the 26-weeks ended July 30, 2022. E-commerce represented 14.3% of total net sales for the 26-weeks ended July 29, 2023, compared to 14.9% in the 26-weeks ended July 30, 2022.

Gross margin was 33.3% of net sales for the 26-weeks ended July 29, 2023, compared with 35.7% of net sales for the 26-weeks ended July 30, 2022. The approximate 240 basis point decline was due to lower average product margin of approximately 300 basis points and an approximate 45 basis point increase in store occupancy costs. Freight, shipping and logistics costs have improved as a percent of sales on a year-over-year basis, partially offsetting the unfavorable average product margin and store occupancy performance.

SG&A expenses were 23.0% of net sales for the 26-weeks ended July 29, 2023, compared with 22.9% of net sales for the 26-weeks ended July 30, 2022. The modest 10 basis point increase is primarily the result of higher medical expenses and an increase in data processing costs partially offset by lower advertising and professional fees.

Net income for the 26-weeks ended July 29, 2023, was $46.8 million, or $3.61 per diluted share, compared with $64.1 million, or $4.77 per diluted share for the 26-weeks ended July 30, 2022.

Capital expenditures during the 26-weeks ended July 29, 2023, were $25.7 million compared to $30.5 million in the 26-weeks ended July 30, 2022. Capital expenditures were predominantly related to store initiatives including new store openings, relocations, expansions, remodels and updated store signage.

Fiscal 2024 Outlook

Although the current retail business climate remains challenging as consumer demand has been negatively impacted by persistent inflation and higher interest rates, among other factors, we are reiterating our full-year Fiscal 2024 guidance as noted in the following table.

Metric

Reiterated Guidance

Total sales

Flat to up ~2.0%

Sales percent by quarter

~26%, ~22%, ~24%, ~28%

Comp sales

Down low-single digit

Brick and mortar

Down low-single digit

E-commerce

Down low-single digit

Net store growth in units

40 to 50

Gross margin %

33.9% to 34.0%

SG&A %

23.3% to 23.5%

Operating profit %

7.4% to 7.8%

Interest expense %

0.40% to 0.45%

Diluted EPS

$7.00 to $7.75

Diluted shares

~12.8 million

Tax rate

23.5% to 23.7%

Capital expenditures

$60 to $70 million

Investor Conference Call and Simulcast

Hibbett, Inc. will host a webcast at 10:00 a.m. ET on Friday, August 25, 2023, to discuss second quarter results. The webcast of Hibbett’s earnings review and a slide deck of supporting information that will be referenced during the webcast will be available at https://investors.hibbett.com/ under the News & Events section. A replay of the webcast will be available for 30 days.

About Hibbett, Inc.

Hibbett, headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer with 1,148 Hibbett, City Gear and Sports Additions specialty stores located in 36 states nationwide as of July 29, 2023. Hibbett has a rich history of convenient locations, personalized customer service and access to coveted footwear, apparel and equipment from top brands like Nike, Jordan and adidas. Consumers can browse styles, find new releases, shop looks and make purchases online or in their nearest store by visiting www.hibbett.com. Follow us @hibbettsports and @citygear on Facebook, Instagram and Twitter.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as our Fiscal 2024 outlook, future capital expenditures, expansion, strategic plans, financial objectives, dividend payments, stock repurchases, growth of the Company’s business and operations, including future cash flows, revenues, and earnings, our effective tax rate and other such matters, are forward-looking statements. The forward-looking statements contained in this press release reflect our current views about future events and are subject to risks, uncertainties, assumptions, and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, or performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to: changes in general economic or market conditions that could affect overall consumer spending or our industry, including the possible effects of inflation and higher interest rates; changes to the financial health of our customers; our ability to successfully execute our long-term strategies; our ability to effectively drive operational efficiency in our business; the potential impact of new trade, tariff and tax regulations on our profitability; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; future reliability of, and cost associated with, disruptions in the global supply chain including increased freight and transportation costs, and the potential impacts on our domestic and international sources of product; increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts; the impact of public health crises or other significant or catastrophic events such as extreme weather, natural disasters or climate change; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt level or changes in fiscal, monetary or regulatory policy; fluctuations in the costs of our products; loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner, including due to port disruptions; labor availability and wage pressures; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to successfully manage or realize expected results from acquisitions, other significant investments or capital expenditures; the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology; risks related to data security or privacy breaches; our ability to raise additional capital required to grow our business on terms acceptable to us; our potential exposure to litigation and other proceedings; and our ability to attract key talent and retain the services of our senior management and key employees.

These forward-looking statements are based on our expectations and judgments as of the date of this press release and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. For additional discussion on risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in our most recent Annual Report on Form 10-K as well as similar disclosures in our other filings with the Securities and Exchange Commission, press releases and other communications. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise.

HIBBETT, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

 

 

13-Weeks Ended

 

26-Weeks Ended

 

July 29,

2023

 

July 30,

2022

 

July 29,

2023

 

July 30,

2022

 

 

% to Sales

 

 

% to Sales

 

 

% to Sales

 

 

% to Sales

Net sales

$

374,877

 

 

$

392,805

 

 

$

830,374

 

 

$

816,857

 

Cost of goods sold

 

251,954

67.2

%

 

 

257,653

65.6

%

 

 

553,832

66.7

%

 

 

524,872

64.3

%

Gross margin

 

122,923

32.8

%

 

 

135,152

34.4

%

 

 

276,542

33.3

%

 

 

291,985

35.7

%

Store operating, selling and administrative expenses

 

94,867

25.3

%

 

 

91,414

23.3

%

 

 

190,880

23.0

%

 

 

187,011

22.9

%

Depreciation and amortization

 

12,039

3.2

%

 

 

10,926

2.8

%

 

 

23,732

2.9

%

 

 

21,444

2.6

%

Operating income

 

16,017

4.3

%

 

 

32,812

8.4

%

 

 

61,930

7.5

%

 

 

83,530

10.2

%

Interest expense, net

 

1,891

0.5

%

 

 

361

0.1

%

 

 

3,217

0.4

%

 

 

432

0.1

%

Income before provision for income taxes

 

14,126

3.8

%

 

 

32,451

8.3

%

 

 

58,713

7.1

%

 

 

83,098

10.2

%

Provision for income taxes

 

3,224

0.9

%

 

 

7,738

2.0

%

 

 

11,936

1.4

%

 

 

19,038

2.3

%

Net income

$

10,902

2.9

%

 

$

24,713

6.3

%

 

$

46,777

5.6

%

 

$

64,060

7.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.86

 

 

$

1.91

 

 

$

3.68

 

 

$

4.89

 

Diluted earnings per share

$

0.85

 

 

$

1.86

 

 

$

3.61

 

 

$

4.77

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

12,648

 

 

 

12,951

 

 

 

12,719

 

 

 

13,088

 

Diluted

 

12,822

 

 

 

13,261

 

 

 

12,967

 

 

 

13,436

 

 

Percentages may not foot due to rounding.

HIBBETT, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 

 

July 29,

2023

 

January 28,

2023

 

July 30,

2022

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

33,067

 

$

16,015

 

$

28,438

Receivables, net

 

15,449

 

 

12,850

 

 

16,495

Inventories, net

 

430,819

 

 

420,839

 

 

366,218

Other current assets

 

23,124

 

 

23,351

 

 

25,864

Total current assets

 

502,459

 

 

473,055

 

 

437,015

 

 

 

 

 

 

Property and equipment, net

 

174,358

 

 

169,476

 

 

159,608

Operating right-of-use assets

 

263,334

 

 

263,391

 

 

260,932

Finance right-of-use assets, net

 

2,366

 

 

2,279

 

 

2,086

Tradename intangible asset

 

23,500

 

 

23,500

 

 

23,500

Deferred income taxes, net

 

2,875

 

 

3,025

 

 

2,441

Other assets, net

 

7,974

 

 

4,434

 

 

3,113

Total assets

$

976,866

 

$

939,160

 

$

888,695

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ INVESTMENT

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

133,310

 

$

190,648

 

$

140,951

Operating lease obligations

 

73,700

 

 

72,544

 

 

73,454

Credit facility

 

106,897

 

 

36,264

 

 

88,548

Finance lease obligations

 

802

 

 

1,132

 

 

1,015

Accrued payroll expense

 

12,776

 

 

11,361

 

 

11,755

Other accrued expenses

 

15,977

 

 

15,803

 

 

16,631

Total current liabilities

 

343,462

 

 

327,752

 

 

332,354

Operating lease obligations

 

229,292

 

 

229,388

 

 

228,848

Finance lease obligations

 

1,690

 

 

1,305

 

 

1,258

Other liabilities

 

5,112

 

 

4,484

 

 

3,692

Stockholders’ investment

 

397,310

 

 

376,231

 

 

322,543

Total liabilities and stockholders’ investment

$

976,866

 

$

939,160

 

$

888,695

HIBBETT, INC. AND SUBSIDIARIES

Supplemental Information

(Unaudited)

 

 

13-Weeks Ended

 

26-Weeks Ended

 

July 29,

2023

 

July 30,

2022

 

July 29,

2023

 

July 30,

2022

Sales Information

 

 

 

 

 

 

 

Net sales (decrease) increase

 

(4.6

)%

 

 

(6.3

)%

 

 

1.7

%

 

 

(11.8

)%

Comparable store sales decrease

 

(7.3

)%

 

 

(9.2

)%

 

 

(1.4

)%

 

 

(14.5

)%

 

 

 

 

 

 

 

 

Store Count Information

 

 

 

 

 

 

 

Beginning of period

 

1,143

 

 

 

1,105

 

 

 

1,133

 

 

 

1,096

 

New stores opened

 

6

 

 

 

13

 

 

 

18

 

 

 

22

 

Rebranded stores

 

 

 

 

 

 

 

 

 

 

1

 

Stores closed

 

(1

)

 

 

(1

)

 

 

(3

)

 

 

(2

)

End of period

 

1,148

 

 

 

1,117

 

 

 

1,148

 

 

 

1,117

 

 

 

 

 

 

 

 

 

Estimated square footage at end of period (in thousands)

 

6,514

 

 

 

6,335

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Information

 

 

 

 

 

 

 

Average inventory per store

$

375,278

 

 

$

327,859

 

 

 

 

 

 

 

 

 

 

 

 

 

Share Repurchase Information

 

 

 

 

 

 

 

Shares purchased under our Repurchase Program

 

294,917

 

 

 

145,178

 

 

 

454,509

 

 

 

636,396

 

Cost (in thousands)

$

11,013

 

 

$

7,009

 

 

$

21,212

 

 

$

29,409

 

Settlement of net share equity awards

 

 

 

 

 

 

 

47,177

 

 

 

45,993

 

Cost (in thousands)

$

 

 

$

 

 

$

2,833

 

 

$

2,069

 

 

 

 

 

 

 

 

 

Dividend Information

 

 

 

 

 

 

 

Number of declarations

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Cash paid (in thousands)

$

3,165

 

 

$

3,223

 

 

$

6,339

 

 

$

6,500

 

Total paid per share

$

0.25

 

 

$

0.25

 

 

$

0.50

 

 

$

0.50

 

 

Contacts

Robert Volke - SVP, Chief Financial Officer

Gavin Bell - VP, Investor Relations

205-944-1312

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