Hibbett Sports, Inc. HIBB is performing exceedingly well, thanks to its solid omni-channel capabilities, loyalty program and store-rationalization efforts. Moreover, management remains optimistic about a robust second-half fiscal 2020 on the back of the strategic efforts coupled with expectations of a strong finish to the back-to-school season and continued strength in product offerings.
In addition, management’s upbeat view for fiscal 2020 adjusted earnings and comparable sales (comps) is encouraging. Currently, it envisions adjusted earnings of $2.15-$2.25 per share, up from the prior expectation of $2.00-$2.15 and $1.77 earned in fiscal 2019.
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Hibbett remains focused on expanding the customer base by connecting with more customers through e-commerce and selective store expansion. Strength in the company’s e-commerce business is likely to continue on account of enhancements in mobile app as well as the ‘Buy Online, Pick Up in Store’ and ‘Reserve online, pickup in store’ capabilities. In second-quarter fiscal 2020, digital sales grew 25% and accounted for nearly 8.6% of the total sales.
Additionally, the company will consistently drive its email program and new sign ups that increased 51% in the fiscal second quarter. Notably, sales from its loyalty program represented about 64% of the company's sales in the quarter, up from 61% in the prior-year period. Moreover, new loyalty enrollments increased 17% on a year-over-year basis.
Hibbett, which shares space with DICK'S Sporting Goods, Inc. DKS, Five Below, Inc. FIVE and Foot Locker, Inc. FL, is on track with inventory-management initiatives. Moreover, the company is gaining from small market strategy as it continues to strengthen presence across the country. It has a target of growing to more than 1,500 stores in underserved markets.
In second-quarter fiscal 2020, Hibbett introduced two stores, rebranded two of its flagship stores to City Gear outlets and expanded three high-performing stores. However, the company shut down 40 underperforming outlets in the same period.
Management accelerated its store closure plan by focusing on increasing store productivity besides reinforcing the omni-channel business. Hibbett expects to shut down roughly 95 flagship stores in the current fiscal year, with 80-85 net store closures.
All these factors and Hibbett’s strength in product offerings to enrich customers' experience are likely to prove conducive to the company in the coming days.
Solid Comps
Robust omni-channel endeavors aided Hibbett to deliver third consecutive quarter of positive comps in second-quarter fiscal 2020. The metric inched up 0.3% in the reported quarter and 3.1% on a year-to-date basis.
Category-wise, the company registered low single-digit growth in footwear sales, recording the eighth successive quarter of positive comps. Men’s footwear sales increased at the low-single digit range, women’s footwear witnessed double-digit growth while kids’ footwear recorded mid-single-digit growth. Growth was somewhat offset by softness in the apparel and licensed businesses.
Hibbett also remains confident about the City Gear’s performance driven by its strong assortment of latest and fashion-forward inventory, and expected migration of its website to the company’s digital platform. Moreover, the company will continue focusing on sneakers and connecting toe-to-head concept along with active apparel, accessories and footwear.
Driven by such positives, comps are now anticipated to grow in the band of 1-2% compared with 0.5-2% anticipated earlier.
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