City Gear pushes Hibbett Sports to 20% sales rise; increased charges impact bottom line
today Aug 26, 2019
Hibbett Sports’ recently acquired City Gear banner helped the Birmingham, Alabama-based sportswear company to a 19.6% rise in second-quarter sales, which totaled $252.4 million, up from $211.1 million in the prior-year period.
In the second quarter ended August 3, 2019, City Gear, which was acquired by Hibbett at the end of 2018, accounted for $42.0 million of the company’s sales.
Along with the addition of City Gear, the footwear category was a strong driving force behind the sales increase, while e-commerce accounted for 8.6% of total net sales in the quarter.
Comparable store sales, which will not include City Gear’s contribution until Q4 2020, also increased 0.3% in Q2, making it Hibbett’s third consecutive quarter of comps growth.
Store operating, selling and administrative expenses for the quarter were 31.8% of net sales, up from 29.4%, reflecting the impact of charges related to Hibbett’s CEO transition process and the City Gear acquisition, as well as the company’s accelerated store closure plan, which is on track to shutter a total of 95 retail locations in fiscal 2020, as the retailer aims to boost the productivity of its store fleet.
Largely as a result of these charges, Hibbett announced an increased net loss of $8.8 million, or $0.49 per share, in the second quarter, compared with the loss of $1.2 million, or $0.06 per share, reported in the prior-year period.
Nonetheless, Hibbett President and CEO Jeff Rosenthal was optimistic about the company’s results.
“I am pleased with the second quarter results. We believe our strategic initiatives are taking hold as we recorded our third consecutive quarter of positive comparable sales,” he said in a press release. “Looking ahead, we expect a solid finish to the back-to-school season as well as momentum from strong product offerings in the back half of the year.”
Year to date, the sportswear company reported net sales of $595.7 million, a 22.6% increase from the previous year’s $485.8 million, while comparable store sales rose 3.06%.
Net income for the 26-week period totaled $19.1 million, or $1.05 per diluted share, decreasing from $20.3 million, or $1.06 per diluted share, in the same period in the previous year.
Moving forward, Hibbett has updated its full-year fiscal 2020 outlook, and now expects to see an increase of between 1% and 2% in comparable store sales, up from a previous guidance in the range of 0.5% to 2.0%.
The company did, however, lower its predicted earnings per share (EPS), which are now expected to total between $1.35 and $1.50, down from the previously stated guidance of $1.70 to $1.85.
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