Hibbett Sports 1st Quarter Report

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Hibbett Sports 1st Quarter Report

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On 26th May 2020, Hibbett Sports (NASDAQ: HIBB) announced the result for the first quarter of Fiscal 2021(Feb 2020 – Jan 2021) ended on May 2, 2020. The pandemic environment has affected the business of the company as the same-store sales have decreased by 19.5% but the e-commerce sales grew by a sharp rise of 110.5%, the President and Chief Executive Officer, Mike Longo has expressed his gratitude towards the Hibbett team and has appreciated their hard work and dedication which have helped the company to report the result in such challenging environment in the retail industry.

Earnings Highlights

  1. Revenue: The Revenue for the quarter ended on May 2, 2020 is $269.8 million it has decreased by 21.4% compared to $343.3 million in the quarter ended on May 4, 2019. The revenue has also decreased by 13% compared to the Q4 Feb 2020 due to the coronavirus, as the retail stores were closed.
  2. Gross profit: The Gross Profit for the quarter ended on May 2, 2020 is $74.147 million it has decreased by 37.48% compared to $118.60 million in the quarter ended on May 4, 2019.
  3. Gross Margin: The Gross margin for the quarter ended on May 2, 2020 is 27.5% of net sales it has decreased by 700 basis points compared to 34.5%  Gross margin reported in the quarter ended on 4th May, 2019. This decrease is a result of a decline in retail sales as stores were closed and the e-commerce sales have less margin due to added shipping and packaging costs.
  4. Net Loss: The company suffered a net loss as reported in the quarter ended May 2, 2020 of $15.3 million compared to the Net income of $27.9 million in the quarter ended on May 4, 2020.
  5. Net Interest Income: The net interest income for the quarter ended on May 2, 2020 is $1,70,000, it has increased by 269.56% compared to the net interest income reported $46,000 in the quarter ended on May 4, 2019.
  6. Diluted EPS: The Diluted EPS of the company for the quarter ended May 2, 2020 is $ 0.92 per share and has reduced compared to the Diluted EPS of $1.50 per share reported in the quarter ended on May 4, 2019.
  7. Cash & Cash Equivalents: The cash & cash equivalents for the quarter ended on May 2, 2020 is $106.20 million which has decreased by 9.19 %  compared to Cash & cash equivalents reported of $116.96 million in the quarter ended on May 4, 2019.

The company had a debt of $50 million outstanding as of May 2, 2020 under the $75million credit facility and still has $25 million available if needed. The company at the end of the first quarter of fiscal 2021 has an inventory of  $241.98 million it has decreased by 2.6% compared to $248.54 million in the quarter ended on May 4, 2019. The company said that its ability to support the emerging E-commerce demand during the pandemic and efficient inventory management were the reasons for the decline in the inventory, as carrying higher amounts of inventory leads to an increase in the cost of inventory management.

The company reported that its store operating and administrative expenses which include goodwill impairment was 33% of net sales for the quarter ended on May 2, 2020 which has increased compared to the Administrative and store operating expenses of  21.6%  reported in the quarter ended on May 4, 2019. The increase is due to the effect of COVID – 19 as the company has supported the team members on payrolls at closed stores. The company has announced for the quarter it had opened 3 stores, closed eight stores which includes underperforming stores and stores that are closed for rebranding, the company has rebranded 2 Hibbett stores to  City Gear stores which it has recently acquired, this total brings its current store count to 1078 stores.

The company has said that in the first quarter it has repurchased around 458,913 common stock shares which amounts to an expenditure of $10.2 million for repurchasing. The company has acquired these shares under its share repurchase plan which was put in place before the pandemic crisis and has a remaining  $143.3 million authorized for future stock repurchases. Also, due to the uncertainty of the impact of the pandemic on the business, the company will not provide a full-year outlook.

In addition, the company said it is actively taking measures to protect the health and safety of the team members and its customers at all locations by cleaning the stores regularly on daily basis, the social distancing norms as being followed by limiting the no. of customers inside opened stores, pick-up orders were allowed and contactless payment is made available at all stores. For now around 1000 stores are open for its customers and nearly 700 stores were open during the quarter.

 

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