Hibbett Sports, Inc. HIBB has been gaining momentum on the back of its solid growth efforts and impressive surprise trend in recent quarters. Moreover, the company is steadily benefiting from its omni-channel initiatives as evident from its robust digital sales in first-quarter fiscal 2020. Notably, consolidated e-commerce sales surged 49.7% in the fiscal first quarter, wherein earnings and sales surpassed the Zacks Consensus Estimate and grew year over year.
These positives have aided this Zacks Rank #1 (Strong Buy) stock to advance nearly 50.8%, significantly outperforming the industry’s 20.5% rally on a year-to-date basis. You can see the complete list of today’s Zacks #1 Rank stocks here.
In addition, Hibbett’s earnings estimates have witnessed significant upward revisions over the past 30 days. Also, the Zacks Consensus Estimate of $2.09 for fiscal 2020 and $2.17 for fiscal 2021 has moved north 21 cents and 22 cents, respectively. This clearly shows analysts’ optimism surrounding the stock.
Factors at Play
Hibbett is confident about its internal initiatives including improvement in e-commerce penetration and loyalty program. Additionally, the company remains focused on expanding customer base by connecting with more customers through e-commerce and selective store expansion. Management expects continued growth in the e-commerce business as enhancements in mobile app as well as the “Buy Online, Pick Up in Store” and “Reserve online, pickup in store” capabilities are delivering solid results.
These apart, the company expects its small market strategy and growth of omni-channel capabilities to enrich customers' experience, positioning Hibbett well for long-term growth.
Meanwhile, Hibbett is on track with store rationalization and inventory management initiatives. The company targets expansion in markets offering higher potential for growth and aims to grow more than 1,500 stores in underserved markets. In first-quarter fiscal 2020, Hibbett introduced three new stores, rebranded two of its flagship stores to City Gear outlets and expanded one high-performing store. However, it shuttered 24 underperforming outlets during the same period.
Management also accelerated store closure plan by focusing on increasing productivity and reinforcing omni-channel business. Currently, it remains on track to shut down roughly 95 Hibbett stores in fiscal 2020. In addition, the company expects 80-85 net store closings for the fiscal year.
Driven by all these endeavors, Hibbett delivered second straight positive earnings surprise with a third consecutive sales beat in first-quarter fiscal 2020. Also, the company has been witnessing robust comparable store sales (comps), which rose 5.1% in the reported quarter. Strength in footwear, and sneaker-connected apparel & accessories aided comps growth. In fact, the footwear business reported seventh straight quarter of comps increase.
As a result, management raised its earnings outlook for fiscal 2020. Adjusted earnings are now envisioned to be $2.00-$2.15 per share, up from the prior expectation of $1.80-$2.00 and $1.77 earned in fiscal 2019.
With that said, Hibbett remains a sound investment option. Furthermore, the company’s VGM Score of A and an expected long-term earnings growth rate of 6.5% highlight its growth potential.
3 Other Key Retail Picks
The Children's Place, Inc. PLCE delivered average positive earnings surprise of 37.4% in the trailing four quarters and sports a Zacks Rank #1.
Genesco Inc. GCO pulled off average positive earnings surprise of 232.6% in the last four quarters and carries a Zacks Rank #1.
Stitch Fix, Inc. SFIX, also a Zacks Rank #1 stock, has an impressive long-term earnings growth rate of 22.5%.
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