Updated Research Report on Hibbett - Analyst Blog

We issued an updated research report on Hibbett Sports, Inc. HIBB following the company's dismal fourth-quarter fiscal 2014 results.

Hibbett reported fourth-quarter earnings per share of 64 cents, down 12.3% from the year-ago quarter figure of 73 cents and short of the Zacks Consensus Estimate of 69 cents. Net sales increased year over year by merely 0.2% to $217.8 million while lagging the Zacks Consensus Estimate of $222 million.

The downside was due to soft sales performance in January, stemming from an extremely chilly weather that forced store closures and weak sales from the college football championship game this year. Results also suffered due to difficult comparisons from the prior-year quarter, given the additional week in fiscal 2013.

Moreover, the company's fiscal 2015 forecast pointed to higher costs for the year that is expected to impact margins. The company anticipates gross margin to remain flat or slightly up in the coming fiscal year. Selling, general and administrative (SG&A) expense as a percentage of sales is expected to rise based on increase in health care costs as well as marketing and IT costs. Earnings per share guidance are expected to range from $2.78–$2.96 and comparable store-sales (comps) growth is projected to be in the low-to-mid single digit range.

Hibbett has witnessed sharp downward estimate revisions after reporting disappointing fourth-quarter fiscal 2014 results, along with tepid outlook for fiscal 2015. The Zacks Consensus Estimate for fiscal 2015 decreased 4.3% to $2.92 per share over the last 30 days. For fiscal 2016 too, most of the estimates were revised downward over the same time frame with the Zacks Consensus Estimate falling 2.9% to $3.35 per share.

Furthermore, we remain skeptical about the stock's performance on anticipation of competitive risk from DICK'S Sporting Goods Inc. DKS, which has entered smaller and mid-sized markets. Moreover, we believe that the lack of new construction activities in smaller markets may hinder Hibbett's store expansion plans.

Currently, Hibbett carries a Zacks Rank #5 (Strong Sell).

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Some better-ranked stocks worth considering in the sector include Barnes & Noble, Inc. BKS and Iconix Brand Group Inc. ICON. While Barnes & Noble sports a Zacks Rank #1 (Strong Buy), Iconix Brand has a Zacks Rank #2 (Buy).