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Hibbett Stock Surges 60% on Robust Omni-Channel Initiatives

Zacks Equity Research

Hibbett Sports, Inc. HIBB remains an investors’ favorite, thanks to its solid omni-channel efforts including store rationalization and e-commerce capabilities. In addition, the company’s stellar fourth-quarter fiscal 2019 results and an upbeat earnings view for fiscal 2020 have been driving investors’ confidence.

Backed by the afore-mentioned factors, shares of this athletic specialty retailer have surged 59.5% in the past three months, comfortably outperforming the industry’s 23.5% rally.



Let’s Delve Deeper

Hibbett is smoothly progressing with its internal initiatives, which covers improving e-commerce penetration and expanding loyalty program. Additionally, management remains focused on expanding customer base by connecting with more customers through e-commerce and selective store expansion. These apart, continuous enhancements in mobile app, and “Buy Online, Pick Up in Store” and “Reserve online, pickup in store” capabilities are encouraging. The company also expects its small market strategy to enrich customers' experience, positioning Hibbett well for long-term growth.

In fourth-quarter fiscal 2019, e-commerce sales increased 60% and accounted for nearly 10.6% of total sales.

Furthermore, Hibbett is on track with store rationalization as it continues to strengthen its foothold. The company has a target of growing to more than 1,500 stores in underserved markets. In the fiscal fourth quarter, Hibbett opened 12 new stores including two City Gear outlets, expanded one high-performing store and shut down 27 underperforming outlets. Management intends to accelerate its store closure plan by focusing on increasing store productivity and reinforcing the omni-channel business. In fiscal 2020, it has decided to close roughly 95 Hibbett stores and open 10-15 Hibbett and City Gear stores.

While these factors raise optimism about Hibbett, the company is witnessing strained operating margin for the last few quarters due to higher SG&A expenses. In the fiscal fourth quarter, adjusted operating income declined 12.6%, with adjusted operating margin contraction of 150 basis points. Nevertheless, adjusted SG&A expenses, as a percentage of sales, are likely to remain almost flat in fiscal 2020.

Upbeat 2020 Earnings View

Following a strong quarter, Hibbett envisions adjusted earnings per share of $1.80-$2.00 for fiscal 2020, up from $1.77 earned last fiscal.

As a result, analysts are optimistic about the stock’s potential. The Zacks Consensus Estimate of $1.88 for fiscal 2020 and $1.95 for fiscal 2021 has moved up 10.6% and 5.4%, respectively, over the past 30 days. Moreover, the consensus mark for first-quarter fiscal 2020 has been revised 5.7% upward to $1.29 in the same time period.

Conclusion

Markedly, robust growth strategies, upbeat 2020 guidance and a spectacular performance make this Zacks Rank #2 (Buy) stock an attractive investment option now. Furthermore, Hibbett has a VGM Score of A and an expected long-term earnings growth rate of 2.3%.

3 More Promising Retail Stocks You May Count on

Abercrombie & Fitch Co. ANF has delivered average positive earnings surprise of 88.3% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Canada Goose Holdings Inc. GOOS delivered average positive earnings surprise of 82.7% in the trailing four quarters. The company currently carries a Zacks Rank of 2.

Nordstrom, Inc. JWN, also a Zacks Rank #2 stock, delivered average trailing four-quarter earnings surprise of 11.2%.

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