Why Athletic-Inspired Fashion Retailer Hibbett's Shares Are Plunging Today

Hibbett Inc HIBB shares are trading lower after the company reported fourth-quarter FY24 sales growth of 1.8% year-on-year to $466.59 million, missing the analyst consensus estimate of $477.49 million.

Comparable sales decreased 6.4%. Brick and mortar comparable sales declined 9.2%, while e-commerce increased 6.9% on a year-over-year basis, excluding the impact of the 53rd week.

EPS of $2.55 missed the consensus estimate of $2.56.

Gross margin contracted 70 basis points Y/Y to 34.5%. The operating margin contracted from 11.1% to 8.7%, and operating income for the quarter slumped 19.9% to $40.6 million.

Hibbett held $21.2 million in cash and equivalents as of February 3, 2024. Store count at the end of the fourth quarter was 1,169 versus 1,133 last year.

Inventory as of February 3, 2024, was $344.3 million, an 18.2% decrease compared to the prior year fourth quarter.

Mike Longo, President and Chief Executive Officer, stated, “In Fiscal 2025, we plan to continue to make significant investments in our store footprint, customer-facing technologies, and back-office infrastructure. This will impact our profitability growth in the short term but will enhance our value proposition and profitability over the longer term.”

Outlook: Hibbett expects FY25 sales to be flat to up 2%, with EPS of $8.00 – $8.75 versus the consensus of $8.82.

Hibbett sees comparable sales to be flat to negative low-single digit. Net new store growth is expected to be in the range of 45 to 50 stores.

The challenges in FY25 include the potential for inflation and interest rates to remain elevated, the continued use of promotional activity to drive traffic, ongoing wage pressures, a more cautious and selective consumer, and ongoing geopolitical conflicts.

Price Action: HIBB shares are trading lower by 11% at $65.00 in premarket on the last check Friday.

Photo via Wikimedia Commons