Footwear sales drove growth for Hibbett Sports Inc. in Q3.
The sporting goods retailer reported that Q3 net sales were up 13.5% to $433.2 million, short of analysts’ expectations of $445.73 million. Net income was $25.6 million, or $1.94 per diluted share, up 15.5% compared to 2021 and nearly 15x more than Q3 of 2020. Hibbett shares were down almost 10% as Tuesday morning.
CEO and president Mike Longo specifically called out the “strong demand” for the retailer’s popular shoe lines in a Tuesday call with investors, explaining how this category was the major growth driver in Q3.
The demand, Longo said, reflected “continued consumer loyalty to our key brands.” On the other hand, apparel and team sports sales dwindled in Q3 amid a more promotional and competitive environment. Weaker apparel sales, combined with higher fuel and freight costs and wage inflation also impacted the company’s margins in the quarter.
Moving forward, Hibbett executives said the company’s inventory position, improved customer experience and a traffic increase will help drive strong results in the fourth quarter and full year. As such, Hibbett reiterated its current full-year guidance and expects net sales to increase in the low-single digit range, driven by strong e-commerce sales. Diluted earnings per share are expected to fall between $9.75 and $10.50 for the year.
Longo also called out strong partnerships with vendors that keep the retailer well-stocked with inventory in Q3. Analysts have noted in previous quarters that Hibbett Sports appears to be one of just a few wholesale chains of choice for leading brands like Nike, which has dialed back its business with other wholesale partners.
“We have a strong inventory position and favorable vendor relationships to ensure we can meet the demands of our customers,” Longo said in a statement.
Alongside the reiterated guidance, executives noted the impact of higher prices due to inflation, which has forced consumers to be more cautious about discretionary purchases. This trend has had a notable impact across the retail industry this quarter, though Hibbett executives said demand had remained consistent.