Hibbett Sports has had 11 straight quarters of comp store sales increases. In Q2, it had double digit increases in accessories and high single digit comp increases in licensed and branded apparel. Comparable footwear increased in the mid single digits. Equipment sales were flat to slightly down.
In Apparel, colored tees and shorts performed well. Under Armour and Nike, especially Nike Compression, had a good quarter. Adidas had growth in men's and boy's apparel. Head wear was also strong.
In Accessories, socks and sunglasses performed well. There was strong demand for the Nike Elite sock.
In Footwear, running shoes performed well, and the Nike Free was the best performer. Retro Jordans are in high demand. Adidas Originals also did well.
In Equipment, baseball was off slightly, while football, soccer and basketball increased comps in the low to mid single digits. The cleat business was weak since football started later in several states that are moving back their back to school date.
The price increases from Nike have not impacted sales. Instead, the Nike products have continued to gain momentum. Hibbett believes the customer will continue to spend as long as there is good innovation and a good product. In Hibbett's market, it is often the only store that sells the premium products and if the customers want it, they will pay for it. Hibbett believes most of the price increases from suppliers are done for the year.
Hibbett is not seeing any less demand in the lower income states; indeed, the lower income states are often its highest performing states. However, it is still seeing sales on the 1st and 15th of the month, a trend that has been going on for years.
In Q2, Hibbett Sports opened 7 new stores, expanded 3 stores and closed 5 stores. It now has 837 stores in 26 states. It can easily grow to 1300 stores and expects to open 55 to 60 new stores (20 in Q3 and 25 in Q4) and expand 15 stores for the year. It expects to open the new DC store in 18 to 24 months. It is working on an e-commerce strategy, but it would not be available for another 18 to 24 months.
In the second half of the year, Hibbett Sports will have some additional doors for North Face and some new NFL products from Nike.
Financials.
Sales in Q2 increased by 8 percent. Comp store sales increased by 4.8 percent. So far, comparable sales in August have been strong.
Product margin improved by 80 basis points as Hibbett Sports had fewer promotions and shrinkage rates improved.
Earnings per share in Q2 increased by 43 percent to $.30. Hibbett is increasing its EPS guidance for fiscal year 2012 to $2.57 to $2.67/share.
Inventories increased by 3 percent, but on a per store basis, inventories declined by 1.1 percent. Hibbett felt its inventories were better positioned this year as they were too heavy last year and Q2 is not its strongest quarter. Inventories are in good shape for any increased demand in Q3 and the holiday season.
In Q2, Hibbett Sport repurchased 176,000 shares for $10.2 million. It has $121 million remaining under its share repurchase program.
The transcript of the earnings conference call can be found on Seeking Alpha at the following link:
http://seekingalpha.com/article/814341-hibbett-sports-management-discusses-q2-2013-results-earnings-call-transcript?part=single
Copyright 2012 Jaygo's Earnings Conference Call Summaries
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
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