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Hibbett's (HIBB) Q2 Earnings Beat Estimates, Sales Up Y/Y

Hibbett Sports Inc. HIBB posted second-quarter fiscal 2021 results, wherein the bottom line surpassed the Zacks Consensus Estimate. Further, both top and bottom lines improved year over year. Results gained from improved traffic in stores and website stemming from pent-up customer demand. Notably, store and online traffic grew nearly 27% and 49%, respectively, on the back of a rise in new customers. Moreover, management envisions the top-line momentum to continue in the fiscal third quarter.

Q2 Highlights

Hibbett’s adjusted earnings came in at $2.95 per share against an adjusted loss of 13 cents reported in the last-year quarter. The figure also surpassed the Zacks Consensus Estimate of $1.75 per share.

Net sales surged 74.9% year over year to $441.6 million in the quarter under review. The uptick can be attributed to improved traffic in stores and website stemming from pent-up customer demand. E-commerce sales accounted for 15.7% of total sales in the fiscal second quarter. Moreover, digital sales surged 212.2%.

Comparable store sales (comps) skyrocketed 79.2% in the quarter, driven by solid performance in apparel and footwear. Also, its athletic brands and performance business contributed to comps growth.

Adjusted gross profit increased 112.3% to $162.2 million in the reported quarter. Moreover, adjusted gross margin expanded 640 basis points (bps) to 36.7%.

Adjusted operating income was $69.7 million against an operating loss of $3.2 million in the prior-year quarter. Adjusted store operating, selling and administrative (SG&A) expenses contracted 920 bps to 19.3%, as a percentage of sales, driven by higher sales.

Hibbett Sports, Inc. Price, Consensus and EPS Surprise

Other Financials

Hibbett ended the quarter with $217.8 million in cash and cash equivalents and $75 million available under its credit facilities. Total stockholders’ investments, as of Aug 1, were $345.7 million.

Further, Hibbett did not repurchase any shares and has $143.3 million remaining under its authorization for share repurchase through Jan 29, 2022. Capital expenditures came in at $3.4 million during the reported quarter.

Store Update

In second-quarter fiscal 2021, the company introduced three stores and rebranded four Hibbett stores to City Gear. However, it shut eight underperforming outlets. Hence, it ended the quarter with 1,077 stores across 35 states.

Looking Ahead

With some of its competitors closing down stores, Hibbett is anticipating higher sales to the tune of roughly $20-$40 million annually. Further, it remains focused on its delivery facilities and is on track to expand the same-day delivery option.

For second-half fiscal 2021, management has issued GAAP guidance and also noted that it doesn’t foresee any material difference between GAAP and non-GAPP figures. The company expects comps growth of mid-single digit. Moreover, gross margin is anticipated to expand nearly 50-70 basis points, while SG&A expenses are projected to decline roughly 70-90 bps. Its bottom line is expected between 85 cents and $1 per share.

Price Performance

In the past six months, this Zacks Rank #1 (Strong Buy) stock has soared 70.6% compared with the industry’s 16.1% growth.

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The Kroger Co. KR has an impressive long-term earnings growth rate of 5.5% and a Zacks Rank #2.

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