Hibbett is the latest retailer to say changing consumer habits are impacting sales.
The sporting goods retailer reported Q1 results Friday largely in line with its expectations. Q1 net income was $39.3 million, or $2.89 per diluted share. Net sales decreased 16.3% to $424.1 million. Comparable sales declined 18.9% compared to the prior year.
Shares of Hibbett were up less than 1% as of Friday morning.
In its outlook for fiscal year 2023, the company said it expects to see more impacts from supply chain disruptions, the spread of COVID-19, the lack of stimulus and unemployment benefits, increased inflation, wage pressures and geopolitical conflicts. Hibbett expects total net sales for fiscal year 2023 to be relatively flat in dollars compared to fiscal 2022 results.
With this outlook and results, Hibbett joins the roster of big-box and sporting goods retailers struggling to post strong gains against a backdrop of strong growth last year, bolstered by stimulus payments and sales normalization.
“Our customers spending habits were affected by lower discretionary income due to the absence of stimulus payments received in the first quarter of last year,” said Hibbett Sports CEO and president Mike Longo. The executive added that supply chain disruption has eased which has helped improve the company’s current inventory position, which increased by approximately $94 million in Q1.
Earlier this month, Target and Walmart both reported earnings for Q1 that fell short of analysts’ estimates. Both big-box retailers said sales had been impacted by a general consumer shift away from from discretionary to non-discretionary categories such as groceries, given the highly inflationary environment. And earlier this week, Dick’s Sporting Goods posted a weak outlook after reporting results for this first quarter that were impacted by wage and inflationary pressures as well as increased freight costs.
Consumer prices rose by 8.3% in April compared to a year ago, according to the Bureau of Labor Statistics’ monthly report. As such, consumers have shifted away from spending on big-ticket items to focus instead on staples like food and gas.
Despite the current environment, Hibbett said it is on track to open 30 to 40 net new stores in “underserved markets,” where there is less competition among similar retailers.
“We believe the investments we made to build our Hibbett and City Gear brands will continue to drive results as market conditions improve,” Longo said. “As always, we continue to manage our business for the long-term and strive to create sustainable revenue and profitability growth.”