Why Hibbett (HIBB) Shares Are Plunging Today
What Happened:
Shares of athletic apparel and footwear retailer Hibbett (NASDAQ:HIBB) fell 14.7% in the morning session after the company reported fourth-quarter results with same-store sales, revenue, and EPS, all missing Wall Street's estimates. To add insult to injury, the full-year EPS guidance was well below expectations. In addition, the growth outlook was underwhelming, with net sales projections for FY'25 expected to be flat to up ~2.0%, while comp sales growth is expected to be flat to negative low-single digit. Management noted that investments in new stores, technologies, and infrastructure would have an impact on profitability growth in the short term. However, these decisions should be accretive to profitability in the long term. Overall, the results could have been better, with markets likely struggling to digest the weak guidance.
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What is the market telling us:
Hibbett's shares are somewhat volatile and over the last year have had 21 moves greater than 5%. But moves this big are very rare even for Hibbett and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 4 months ago, when the stock gained 12% on the news that the company reported third quarter results with revenue exceeding Wall Street's expectations, partly due to a small same-store sales beat. Much better margins and expense control led to EPS blowing past analysts' expectations. Management added that sales benefitted from a strong back-to-school season in the initial month of the quarter.
Moving ahead, while same-store sales and net sales guidance for the full year were maintained, the company raised EPS guidance well above expectations based on a combination of expectations for lower operating expenses, lower interest expense, and a smaller number of shares outstanding. Zooming out, this was a very good quarter that should have most shareholders cheering.
Hibbett is down 3.7% since the beginning of the year, and at $68.96 per share it is trading 15.9% below its 52-week high of $82 from February 2024. Investors who bought $1,000 worth of Hibbett's shares 5 years ago would now be looking at an investment worth $3,727.
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