Birmingham, Ala.-based sporting goods retailer Hibbett Sports Inc. reported a mixed second quarter during which both profits and comparative store sales sank while revenues gained close to 3 percent.
Although Hibbett’s management said it was “disappointed” with its Q2 results, there was one bright spot: footwear.
“Our footwear business remains our most consistent business and was positive mid-single digits,” Jared Briskin, Hibbett’s SVP and chief merchant, said during the Q2 conference call. “All genders were positive with the men’s and kids’ businesses up mid-single digits and our women’s business up low-single digits. We’re also pleased that our growth was across multiple categories as basketball, lifestyle, casual and running, all posted positive results.”
During the first half, shoes have consistently been a source of upside for sporting goods and athletic retailers amid declines in apparel and other categories.
Hibbett’s CEO and president Jeff Rosenthal said that while the firm tried to account for the shift in tax-free weekends in 10 states this year, the 1.1 percent decline in comparable store sales was unexpected.
The company also announced it is adjusting down its guidance for the remainder of the fiscal year.
Net Income: Net income for the second quarter, ended Aug. 1, 2015, was $7 million compared with net income of $8.4 million in the comparable quarter.
EPS: Earnings per diluted share totaled 28 cents, a decrease from the comparable quarter when diluted EPS were 32 cents.
Net Revenue: Net sales increased 2.8 percent to $199.3 million from the comparable quarter when net sales were $193.9 million.
Hit, Miss or Beat: Hibbett’s results were in-line with Wall Street’s EPS estimates but missed sales forecasts. Analysts polled by Yahoo Finance had predicted EPS of 28 cents and revenues of $208.8 million.
Executive Insights: “Second quarter comparable store sales were not as expected, although we anticipated the shift [in] tax free weekends in 10 states. We did experience softness in other states as well. The biggest impact being felt the last two weeks of July. Quarter-to-date for the third quarter, we are up high-single-digits to the first 20 days of August. This gives us confidence that the assortment changes we made are on track and has set us up for a smooth transition into a successful fall and holiday season. We have also seen positive trends in gross profit as our inventory position has improved.” – Rosenthal during Q2 conference call.
“Our results thus far, in August, give us reason for optimism, however, the volatility in our recent results does temper that until we feel we have crossed all the mentioned shifts and we truly quantify our improvement as a trend.” – Briskin during Q2 conference call.
Looking Ahead: The company revised its guidance for the year to earnings per diluted share in the range of $2.80 to $2.90, which compares to previous guidance of earnings per diluted share in the range of $2.95 to $3.04. Comparable store sales are expected to be flat or increase in the low single-digit range for the year, which compares to previous guidance of comparable store sales increasing in the low single-digit range for the year.