Hibbett Sports earnings take a tumble in Q3

By

Robin Driver

Published
Nov 27, 2018

Birmingham, Alabama-based fashion sportswear retailer Hibbett Sports, Inc. reported falling third-quarter profits on Tuesday, as the company’s performance was negatively impacted by costs associated to its recent acquisition of City Gear.

 
Hibbett’s net income of $1.5 million in the 13-week period ended November 3, 2018, came in under analysts’ estimates and was a significant decline when compared to the $7.6 million reported in Q3 2018.
 
Total net sales for the quarter also decreased 8.8% to $216.9 million, compared with $237.8 million in the prior-year period. Comparable store sales, did however, rise slightly, increasing 0.1%.

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E-commerce sales were a bright spot for the company, seeing growth of 62.2%, and accounting for 8.8% of total net sales for the quarter.
 
“Our e-commerce business continues to exceed expectations, and we expect continued traction as we benefit from enhancements to our mobile app and our new Buy Online, Pick up in Store and Reserve Online capabilities,” explained Hibbett CEO and President Jeff Rosenthal in a release, while also highlighting progress in the company’s branded apparel business.
 
In October, the company announced its acquisition of City Gear for $88 million in cash, a transaction which also implied $1.5 million in non-recurring costs for the retailer in Q3.
 
Hibbett expects to conclude the acquisition in early December and predicts that the transaction will be slightly accretive, excluding one-time transaction costs, as of the fourth quarter.
 
During the quarter, Hibbett also opened seven new stores and closed 24, meaning that it currently operates 1,042 locations in 35 states.
 
Year to date, the company reported net sales of $702.7 million, an increase of 0.2%,  compared with $701.5 million in the prior-year period, while comps were also up 1.4%.
 
Net income totaled $21.8 million, down from $25.3 million.
 
In light of its results, Hibbett has updated its full-year 2019 outlook, and now expects to see earnings per diluted share of between $1.35 and $1.48. Comparable sales are predicted to be in the range of flat to 1.0%, compared to the company’s previously stated guidance of -1.0% to 1.0%.