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Hibbett Says It Could Benefit From Nike’s DTC Push, Thanks to Its Position as a Key Retail Partner

Hibbett Sports could reap some benefits from Nike’s shift towards DTC channels.

As Nike dials back its business with certain wholesale partners, key retailers that have maintained a strong flow of inventory from the Swoosh now have an even bigger competitive advantage as remaining chains still carrying the high-demand brand.

As such, Hibbett Sports is forecasting tailwinds to its business in the wake of Nike’s recent actions to further limit the amount of product is distributes to third party stores. Last week, Foot Locker posted a bleak outlook for 2022, largely due to the impact of Nike making an “accelerated strategic shift to DTC” and limiting the amount of product it sells with the retailer.

According to Hibbett executives in a Friday call with investors recapping the company’s fourth quarter and 2021 results, these changes will take between 60 to 90 days to take effect in the market, after which Hibbett will be able to assess the full impact to its business. However, the expectations are already positive.

“A number of other undifferentiated retailers lost the ability to buy and distribute product from our major brand partners,” said Hibbett CEO and president Mike Longo. “We have a lot of confidence that it is a tailwind to the business. And it will help us offset the headwind that we’re going to see primarily in Q1 from last year’s stimulus.”

For 2021, the athletic speciality store posted a net sales increase of 19.1% to $1.69 billion, compared to $1.42 billion in 2020. In Q4, net income was $17.7 million, or $1.25 per diluted share and net sales increased 1.7% to $383.3 million. Given supply chain disruptions, a lack of stimulus payments, inflation, wage pressures and more, Hibbett shared a bleak outlook for fiscal year 2023, with total net sales expected to be flat over 2022, with comparable and brick and mortar sales in the negative low-single digits.

Despite the bleak outlook, executives highlighted the company’s strong position with key vendors that are likely to help offset headwinds.

Analysts have noted in recent quarters that vendors like Dick’s Sporting Goods and Hibbett Sports appear to be chains of choice for leading brands like Nike. Williams Trading analyst Sam Poser noted in a Friday note that Hibbett “is improving its relationships with key brands, such as Nike by engaging and retaining customers better than other retailers.” Poser added that Hibbett will benefit from Nike’s decision to limit product to other retailers.

“We have the ability to continue to land inventory, Longo said. “We’re going to be in an advantageous position going forward.”

Part of remaining a strategic retailer for vendors comes from Hibbett’s focus on “underserved markets,” where there is less competition. Hibbett strategically places its stores in regions where there is less competition from other chains. Now, with key brands pulling out of other retailers, Hibbett stands to benefit even more, with consumers having less options to purchase key brands elsewhere.

As a result of this strategy, Hibbett says it can maintain strong partnerships with vendors that stand to benefit from these sales.

“We’re very confident in our positioning with our strategic vendor partners,” said EVP of merchandising Jared Briskin. “Our strategy continues to be to focus on the underserved consumer in underserved markets all reinforced with the premium consumer experience. And that’s highly differentiated in the marketplace and remains largely complementary to our partners.”

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