Hibbett Sports Posts Q3 Beat; Shares Down 4.3%

Hibbett Sports, Inc. (HIBB) reported stronger-than-expected Q3 results, topping both earnings and revenue estimates. The robust performance was driven by strong momentum leading to higher traffic and average ticket sales, as well as increased items purchased per transaction. The company also raised its outlook for the full year 2021.

Despite the Q3 beat and raised guidance, shares of the athletic-inspired fashion retailer were down 4.3% on December 3 to close at $69.08. (See Hibbett Sports stock charts on TipRanks)

Q3 Performance

Adjusted earnings of $1.68 per share beat analysts’ expectations of $1.53 per share. The company reported earnings of $1.45 per share for the prior-year period.

Revenues jumped 15.2% year-over-year to $381.7 million and exceeded analysts’ estimates of $359.95 million. The increase in revenues reflects a 13% surge in comparable sales, driven by 11.6% growth in brick and mortar comparable sales and 22.3% growth in e-commerce sales.

However, gross margin declined 200bps to 36.3% due to higher freight and transportation costs.

Guidance

Based on robust Q3 results, management raised the financial guidance for FY2021. The company now forecasts adjusted earnings in the range of $11.70 per share to $11.90 per share, while the consensus estimate is pegged at $11.00 per share. Comparable sales are forecast to grow in the positive high teens.

For the fourth quarter, adjusted earnings are likely to range between $1.85 per share and $2.05 per share. Comparable sales are projected to grow positive high single-digits, higher than the prior guidance.

Furthermore, for fiscal 2022, the company reiterated its plan to invest $70 million of capital towards attractive organic growth opportunities, and allocate capital towards share repurchases opportunistically.

CEO Comments

Hibbett CEO, Mike Longo, commented, “Despite ongoing challenges in the supply chain, our inventory position improved significantly during the third quarter. We are very well-positioned for the holiday selling season and our vendor partners continue to recognize and appreciate our differentiated business model and our ability to provide an outstanding customer experience in underserved communities.”

He further added, “We remain focused on execution and continue to believe investments in our employees, stores, the online experience, distribution capabilities, and our vendor relationships position the Hibbett and City Gear brands to thrive in this ever-changing competitive landscape.”

Wall Street’s Take

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 2 Buys and 1 Hold.  The average Hibbett Sports price target of $121.67 implies 76.1% upside potential to current levels. Shares have gained 44.4% over the past year.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 93% Bullish on HIBB, compared to a sector average of 70%.

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