Hibbett's Race Against Slowing Footwear Demand: Analyst Revises Price Target

  • Telsey Advisory Group analyst Cristina Fernández reiterated an Outperform rating on the shares of Hibbett, Inc. HIBBlowering the price target to $70 from $80. 
  • Hibbett is reporting 1Q earnings results before the markets open on Friday, May 26.
  • The analyst cautions that the company will likely be hurt by weakening demand for athletic footwear, given the consumer pullback and the need for greater promotions to clear inventory.
  • The company's recent promotional discount offers to drive traffic signal the sluggish demand cycle in the macroeconomy.
  • Based on the above, the analyst decreased forecasts of 1Q23 EPS to $2.85, down from $3.15. 
  • The analyst forecasts an operating margin contraction of ~90 bps to 11.0% and a gross margin contraction of 145 bps to 35.5%.
  • On the positive side, the analyst says that Hibbett faces less competition in many of its markets and its product allocations have improved.
  • As a result, sales in the quarter to be reported is expected to jump 6.5% Y/Y to $451.6 million.
  • Also Read: Foot Locker's Issues Are 'Self-Inflicted': 3 Analysts Review Q1 Print
  • Price Action: HIBB shares are trading higher by 2.21% to $46.67 on the last check Tuesday.
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