Hibbett Beats on Double-Digit Comps - Analyst Blog

Hibbett Sports Inc. (HIBB) reported fiscal third-quarter 2011 earnings of 44 cents, handily beating the Zacks Consensus Estimate of 16 cents. Earnings increased 45% from 30 cents reported in the prior-year quarter. Net income at $12.6 million increased from $8.8 million in fiscal third-quarter 2010.

Net sales in the quarter were $167.4 million, up 14.8% from $145.9 million in fiscal third-quarter 2010. Comparable store sales increased 12.5%. The company recorded its third straight double-digit comparable store sales growth.

Cost of goods sold, distribution center and store occupancy costs in the quarter under review increased 12.6% year over year to $108.4 million. Store operating, selling and administrative expenses were $35.6 million, up 10.7% year over year. The company reported an operating income of $20.1 million, reflecting a year-over-year increase of 44.1%.

Financial Update

Cash and cash equivalents at the end of the quarter were $52.5 million, up from $24.8 million at the end of the year-ago quarter.

Share Repurchase

The company spent $25.1 million to buy back approximately 1.0 million shares in the quarter. Since the inception of the program, in August 2004, the company has bought back approximately 1.2 million shares for $30.1 million. The company still has almost $219.9 million of the total authorization remaining for future stock repurchases.

Store Update

Hibbett opened 17 new stores and closed 2 stores during the quarter, bringing the store base to 789 in 26 states as of October 30, 2010. The company also opened its first store in South Dakota during the quarter.

Fiscal 2011 Guidance

Management expects mid- single-digit increase in comparable store sales in the fourth quarter of fiscal 2011. Accordingly, it expects earnings in the range of 47 cents to 50 cents a share. The company also raised its expectation for fiscal 2011 to $1.63 to $1.66 per share from $1.45 to $1.55 earlier.

Hibbett intends to open 40 to 42 new stores and expand 18 high performing locations in fiscal 2011. The company also intends to close 10 to 12 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 currently have a short-term Zacks #3 Rank ('Hold') rating and a long-term Outperform recommendation on the company.