Hibbett Stock Drops After Q1 Earnings Miss Amid Weakened Consumer Confidence

Athletic-inspired fashion retailer Hibbett, Inc. HIBB reported first-quarter FY23 sales growth of 7.4% year-on-year to $455.50 million, missing the consensus of $460.40 million.

• EPS of $2.74 missed the analyst consensus of $3.04.
• Consumer confidence has weakened, which has impacted purchasing behavior, especially for discretionary products and services. These factors weighed on the quarter under review. 
• Comparable sales increased by 4.1% versus the prior year.
• Brick and mortar comparable sales were up 4.7%, while e-commerce sales increased 0.6% on a year-over-year basis.
• The gross margin contracted 330 basis points Y/Y to 33.7%, dragged by lower average product margin due to higher promotional activity across footwear and apparel.
• Hibbett held $26.9 million in cash and equivalents as of April 29, 2023.
• Store count at the end of Q1 was 1,143 versus 1,105 last year.
• Inventory at Q1 end was $438.0 million, a 39.1% increase Y/Y.
• CEO Mike Longo said, "Notwithstanding our more cautious near-term consumer outlook, we believe Hibbett remains well positioned for the long-term to continue to grow and increase market share."
• Outlook: Hibbett lowered its FY24 outlook. 
• The company expects sales to be flat or rise by up to ~2.0% in dollars. Earlier, the company expected sales to be up mid-single digits.
• Diluted EPS is expected to be $7.00 to $7.75, lower than prior guidance of $9.50 to $10.00. The analyst consensus is at $9.26. 

Price Action: HIBB shares were down 9.4% at $40.01 at the last check on Friday.

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