Hibbett Sports blasts through sales and earnings expectations; announces departure of CEO
Birmingham, Alabama-based sportswear retailer Hibbett Sports, Inc. reported sales and earnings for the fourth quarter which topped analysts’ estimates on Friday, and announced that it has begun the search for a replacement for departing CEO Jeff Rosenthal.
The company’s net sales for the fourth quarter ended February 2, 2019, totaled $306.0 million, up 14.7% from $266.7 million in the prior-year period. According to FactSet data cited by MarketWatch, analysts were expecting Hibbett to achieve sales of $280 million.
$49.1 million of this total came from City Gear, acquired by the company in October of last year, while e-commerce revenues increased 60% to account for 10.6% of Hibbett’s overall sales in the quarter.
Comparable store sales for the period increased 3.8%
Net income for the quarter came to $6.6 million, down from $9.7 million in the equivalent period in the previous year, while earnings per diluted share were $0.36, compared with $0.51.
The decline in earnings despite the company’s soaring sales was largely due to a one-off charge of $2.8 million related to the acquisition of City Gear and a further non-recurring charge of $0.3 million in severance costs resulting from Hibbett’s ongoing streamlining operations.
Disregarding these and other non-recurring expenses, Hibbett’s adjusted non-GAAP earnings per share were $0.57, beating the FactSet consensus of $0.39 by a comfortable margin.
The company’s full-year net sales increased 4.2% to $1.0 billion, compared to the $968.2 million reported in fiscal 2018, while comparable store sales rose 2.2%.
Hibbett’s annual net income was $28.4 million, or $1.51 per diluted share, down from $35.0 million, or $1.71 per diluted share, in the previous year.
Over the course of fiscal 2019, Hibbett Sports acquired 136 City Gear locations, opened 32 other stores and closed 84 underperforming retail locations. The company currently operates 1,163 stores in 35 US states.
Looking forward to fiscal 2020, the retailer is planning to close approximately 95 Hibbett stores and open between 10 and 15 new Hibbett and City Gear locations as part of its continued efforts to optimize its fleet.
“While these decisions are never easy, we believe it is in the best interest of our shareholders as we continue to evolve the business and adapt to changing shopping patterns,” said CEO Jeff Rosenthal in a release. “Going forward, we will continue to invest in our business with the goal of providing a differentiated product assortment and customer experience that aligns with today’s consumer.”
In fiscal 2020, Hibbett expects to see earnings per diluted share in the range of $1.50 to $1.70, and predicts that comparable store sales will decline up to 1.0%, remain flat or increase up to 1.0%.
The company has also announced that, after more than 21 years with the company, nine of which have been spent as president and CEO, Rosenthal will be retiring.
The board of directors has already begun a search for the executive’s successor. Rosenthal will assist the board with this search and the subsequent transition process, and will remain in his position until a replacement can be found.
After his exit from the role of CEO, Rosenthal will continue to serve on the company’s board.
“I have been privileged to lead Hibbett Sports over the past nine years as President and CEO,” said Rosenthal. “I am proud of our accomplishments during that time having built a world class e-commerce website and most recently completing our first significant acquisition. I believe that the Company is well positioned, and it is an appropriate time to begin a transition.”
Following Hibbett’s announcement of its strong fourth-quarter results, shares in the company were up more than 25% on Friday morning.
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