Hibbett Sports Inc. (HIBB) reported first-quarter ended April 30, 2011 earnings of 76 cents per share, beating the Zacks Consensus Estimate of 68 cents. Earnings also came well ahead of the prior-year quarter earnings of 59 cents. The company has reported seventh consecutive quarter of earnings increases.
Quarterly Discussion
Net sales in the quarter were $203.7 million, up 10.4% from $184.5 million in the prior-year quarter. The quarterly sales also beat the Zacks Consensus Estimate of $201.0 million. The double-digit growth in sales was primarily driven by an increase of 6.8% in comparable store sales. This is the company's sixth consecutive quarterly growth in comparable store sales primarily driven by better performance in activewear and footwear.
Cost of goods sold, distribution center and store occupancy costs in the quarter under review increased 8.0% to $127.9 million from the prior-year period. Store operating, selling and administrative expenses were $38.4 million, up 9.8% compared with the prior-year quarter. The company reported an operating income of $34.1 million, reflecting a year-over-year increase of 23.4%. Consequently, operating margin for the reported quarter improved 180 basis points to 16.8% from the prior-year quarter. Improvement in operating margin reflects the company's improved merchandise mix implementation, cleaner inventories and continuous benefits from investments in systems.
Other Financial Details
Cash and cash equivalents at the end of the first quarter was $85.3 million, up from $75.5 million at the end of prior-year quarter. The company has no bank debt at the end of the reported quarter and has full accessibility under its $80.0 million unsecured credit facilities.
The company spent $23.7 million to buy back 732,547 shares in the quarter. The company still has almost $189.6 million of total authorization remaining for future stock repurchases under its $250.0 million share repurchase program.
Store Update
Hibbett opened 8 new stores and closed 7 underperforming stores during the first quarter, bringing the store base to 799 in 26 states. The company also expanded 4 high performing stores during the quarter.
Full Year Guidance
Management expects low to mid single-digit increase in comparable store sales in the current fiscal. Accordingly, management has increased its earnings guidance for the fiscal in the range of $1.80 to $1.95 a share from $1.70 to $1.90 per share.
Hibbett intends to open 50 to 55 new stores and expand 15 high performing stores in the current fiscal. 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 increasing operating results and creating shareholders’ value.
Hibbett, which competes with Food Locker Inc. (FL) and Wal-Mart Stores Inc. (WMT), currently, holds a Zacks #2 Rank, implying a short-term 'Buy' rating on the stock. Besides, the company retains a long-term 'Outperform' recommendation on the stock.
FOOT LOCKER INC (FL): Free Stock Analysis Report
HIBBET SPORTS (HIBB): Free Stock Analysis Report
Be the first to comment