Hibbett Misses Zacks Estimate – Analyst Blog

Hibbett Sports Inc. (HIBB) reported fiscal second-quarter 2011 earnings of 14 cents, lagging the Zacks Consensus Estimate of 16 cents. Results, however, increased a whopping 257% from 4 cents reported in the prior-year quarter. Net income increased almost four fold to $4.0 million from $1.1 million in fiscal second-quarter 2010.

 

Net sales in the quarter were $139.8 million, up 13.6% from $123.1 million in fiscal second-quarter 2010. Comparable store sales increased 11.9% compared with a decrease of 10.5% in the prior-year quarter. The company recorded its second straight double-digit comparable store sales growth. Results were above the Zacks Consensus Estimate of $138 million.

 

Cost of goods sold, distribution center and store occupancy costs in the quarter under review increased 10% year over year to $95 million. Store operating, selling and administrative expenses were $34.9 million, up 11.5% year over year.

The company reported operating income of $6.5 million, reflecting a year-over-year 234.4% increase.

 

 

Cash and cash equivalents at the end of the quarter were $66 million, up from $49.7 million at the end of the year ago quarter.

 

Debt at the end of the reported quarter totaled $3.1 million compared with a zero debt balance at the end of the year ago quarter.

 

 

The company spent $4.9 million to buy back approximately 0.2 million shares. Since the inception of the program, in August 2004, the company bought back approximately 8 million for $171.9 million. The company still has almost $245.1 million of the total authorization for future stock repurchases.

 

 

Hibbett opened 10 new stores and closed 3 stores during the quarter, bringing the store base to 774 in 25 states as of July 31, 2010. The company also opened its first store in Colorado during the quarter.

 

 

Management expects mid-to-high single-digit increase in comparable store sales in the second half of fiscal 2011. Accordingly, it raised its earnings expectation to $1.45 to $1.55 per share from $1.35 to $1.50 per share earlier.

 

Hibbett intends to open 30 new stores and expand 20 high performing locations. The company also intends to close 10 to 15 underperforming stores to deliver increased operating margins.

 

Hibbett remains focused on mid-sized and smaller markets as well as a strategic mix of branded and localized merchandise. It is geared toward expanding operating results and creating shareholder value.

 

Despite the company’s efforts, business seasonality and a competitive environment keep us on the sidelines.

 

We maintain our “Neutral” recommendation on Hibbett Sports. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.