Hibbett (HIBB) Falls Despite Strong Q4 Preliminary Results
Hibbett Sports, Inc. HIBB announced preliminary results for fourth-quarter fiscal 2018, wherein sales outpaced the Zacks Consensus Estimate. Despite the better-than-expected results, shares of the company fell 2.2% yesterday.
The company reported fourth-quarter net sales of $266.7 million that improved 8% year over year, including $13.5 million for the 53rd week. The metric has also outpaced the consensus estimate of $257 million. While comparable-store sales (comps) rose 1.6%, e-commerce sales represented 7.6% of the total sales in the fourth quarter. Moreover, earnings are envisioned in the band of 47-51 cents per share. This projection includes anticipated gain of 7 cents from the divestiture of the company’s Team Division. Further, the tax reform changes will not have a significant impact in the fiscal fourth quarter.
Results in the quarter gained from strength seen in branded apparel and footwear categories as well as persistent momentum in the e-commerce business. Although, the company witnessed a promotional holiday season that affected fourth-quarter gross margin, it ended fiscal 2018 with a better inventory position. Also, fourth-quarter preliminary results outpaced the company’s expectations.
However, we note that comps after adjusting the 53rd week declined 3.6% in fiscal 2018. The company had earlier anticipated comps decline in the mid-single-digit range. Further, net sales after adjusting the week shift came in at $967.6 million.
For fiscal 2019, management issued preliminary guidance in relation to tax reforms, the divestiture of the Team Division and the impact of the 53rd week on revenue comparisons. Consequently, the company’s tax rate has been reduced to 21%. Furthermore, Hibbett plans reallocation of roughly $3-$4 million of tax savings into SG&A expenses for the benefit of the team members and enhancement of the omni-channel capabilities. The balance of these savings is likely to impact net income positively.
Revenues are expected to be impacted by $7.6 million for fiscal 2019, due to the sale of its Team Division. Further, loss of revenues is likely to hurt fiscal 2019 earnings by nearly 2-3 cents per share. This will be mitigated by an anticipated benefit from final deal contingencies in first-quarter fiscal 2019.
Hibbett is slated to release fourth-quarter results on Mar 16.
Hibbett has outperformed the industry in the last three months mainly backed by robust earnings trend and solid third-quarter results. This Zacks Rank #1 (Strong Buy) has gained 28%, substantially outperforming the industry’s rally of 0.8%.
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