Shares of multiple sporting goods companies were down in morning trading on Monday after Hibbett Sports HIBB announced that it expects a big second quarter drop off in a key sales category.
Hibbett, a Birmingham, Alabama-headquartered sporting goods chain, announced today that it projects same-store sales to fall by around 10% in the second-quarter. Shares plummeted more than 30% after the announcement Monday morning, touching a new 52-week low in the process.
In a statement, the company cited "very challenging sales trends" as a key reason for the predicted drop in same-store sales. Hibbett’s dismal second-quarter forecast has helped send shares of sports chain retailers Foot Locker FL and Dick's Sporting Goods DKS down as well.
Shares of Foot Locker were down -4.52% in morning trading and also touched a new 52-week low. The footwear-focused chain has seen its stock price tank since its reported less than stellar first-quarter earnings in May. The company is currently a Zacks Rank #4 (Sell).
Dick's stock fell 3.26% in Monday morning trading, reaching about $1 higher than its intraday and 52-week low by afternoon hours. The company is Zacks Rank #3 (Hold).
Interestingly, Hibbett’s horrible quarter is forcing the company to get with the times. “Launching an e-commerce site has been a key strategic goal for Hibbett, and we took time to invest in our omni-channel infrastructure to do it the right way,” the company’s president and CEO Jeff Rosenthal said.
“Our main objective is to provide a seamless shopping experience for our customers with a platform that will allow us to significantly expand our assortment over time.”
However, with Amazon AMZN snatching up business from retails chains every day, it might be too little too late for the struggling sporting goods chain to try to turn things around online.
Luckily for Dick's and Foot Locker, their e-commerce presence is far more established. Still, investors will have to wait a couple more weeks to see how things shake out, as all three companies are projected to report earnings in mid-August.
Athletic Footwear & Apparel Dips
Some of the world’s biggest athletic gear giants also fell in morning trading on the back of the Hibbett news. Shares of Nike NKE fell by 1.25%, while Under Armour UAA dropped by 1.84%. Adidas’ ADDYY stock dipped only 0.60%. The news has clearly made investors hesitant about the state of the sporting goods market.
However, Hibbett’s downturn is not as likely to affect these apparel powers as their retail counterparts, especially in the long run, as the companies have more flexibility to adapt to the shifting retail environment.
In fact, shares of Nike had climbed roughly 16% this year until today’s dip. Nike also reached a significant partnership with Amazon in late June. The global sports company’s products could already be purchased on Amazon through third-party sellers, but the new partnership will see Nike become more prominent on Amazon.
As more and more people become focused on health and exercise, it seems unlikely that the sporting goods business will fall apart completely anytime soon. What seems more likely is that sports apparel and retail companies will need to shift their focus online and completely revamp their brick and mortar models.
Hibbett’s story is a cautious tale for those that remain stuck in the past for too long.
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Foot Locker, Inc. (FL) : Free Stock Analysis Report
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