Hibbett Reports First Quarter Fiscal 2025 Results
Hibbett reported its first quarter fiscal 2025 results, with net sales decreasing by 1.8% to $447.2 million and comparable sales down by 5.8%. The diluted EPS was $2.67, down from $2.74 in the prior year. Gross margin improved to 35.8% due to higher product margins.
However, SG&A expenses increased to 23.7% of net sales, largely due to inflation and transaction-related fees. The quarter ended with a net income of $32.5 million. Hibbett also announced a pending acquisition by JD Sports, with shareholders set to receive $87.50 per share. The transaction is expected to close in the second half of 2024.
- Gross margin improved to 35.8%, driven by higher product margins.
- Net income for Q1 was $32.5 million.
- Hibbett entered a definitive agreement to be acquired by JD Sports for $87.50 per share.
- Inventory decreased by 15.2% compared to the prior year.
- Six new stores opened, maintaining a stable store base of 1,169.
- Net sales decreased by 1.8% year-over-year to $447.2 million.
- Comparable sales declined by 5.8%.
- SG&A expenses increased to 23.7% of net sales due to inflation and transaction fees.
- Q1 diluted EPS dropped to $2.67 from $2.74 in the previous year.
- Store occupancy costs deleveraged by approximately 60 basis points.
Insights
Hibbett's Q1 fiscal 2025 results show a 1.8% decrease in net sales and a 5.8% decline in comparable sales compared to the prior year. This aligns with the broader retail sector's struggles amidst challenging market conditions. However, the gross margin improved from 33.7% to 35.8%, primarily due to lower promotional activities and reduced logistics costs. This improvement indicates effective cost management and a more favorable product mix. Despite higher SG&A expenses due to inflation and JD Sports' transaction-related costs, the underlying operational efficiency remains strong.
For retail investors, the pending acquisition by JD Sports at
In the short term, the suspension of the stock repurchase program and dividends until the transaction closes could slightly affect income-seeking investors. Overall, the acquisition by JD Sports is a net positive, providing an exit strategy with a solid premium.
The 5.8% decline in both brick-and-mortar and e-commerce sales highlights ongoing consumer trends and challenges in the athletic fashion retail market. The consistent decline across both platforms suggests a broader shift in consumer behavior, likely influenced by economic conditions and changing preferences.
Despite the sales dip, the acquisition by JD Sports underscores the strategic value of Hibbett's market position, particularly in underserved communities. JD Sports likely sees long-term growth potential through expanded market reach and synergies from integrating Hibbett's operations.
Investors should consider the longer-term implications of this acquisition. By becoming part of a global retail giant, Hibbett may benefit from enhanced operational efficiencies, broader product offerings and stronger brand partnerships.
The steady store count at 1,169 stores with both openings and closures balancing out indicates a stable physical retail footprint. This stability is crucial, especially as e-commerce sales also reflect a decline. The improved gross margin by
From an operational perspective, the integration with JD Sports is likely to bring operational synergies, enhanced supply chain efficiencies and improved market competitiveness. These factors could help mitigate current market headwinds and support future growth.
Investors should note the potential for increased store efficiency and expanded customer engagement post-acquisition, which could drive long-term value.
-
Q1 Diluted EPS of
$2.67 $2.74 -
Q1 Comparable Sales Decrease
5.8% ; Net Sales Down1.8% Versus Prior Year
Mike Longo, President and Chief Executive Officer, stated, “Our sales and diluted earnings per share for the first quarter of Fiscal 2025 were in line with our expectations in a very challenging athletic footwear and apparel retail market. Despite these challenges, we continue to execute our long-term strategy, establishing Hibbett and City Gear stores as preferred shopping destinations for the compelling product assortment we offer to underserved communities across the country.
“Our previously announced agreement to be acquired by JD Sports is a true testament to all that our Hibbett and City Gear teams have built over the years and reinforces the strength of our brands, our close relationships with our vendor partners, and our team of dedicated associates across the country. We are excited to begin our new chapter with JD Sports,” Mr. Longo concluded.
First Quarter Results
Net sales for the 13-weeks ended May 4, 2024, decreased
Gross margin was
Store operating, selling and administrative (“SG&A”) expenses were
Net income for the 13-weeks ended May 4, 2024, was
For the 13-weeks ended May 4, 2024, we opened six stores and closed six stores, leaving the store base unchanged from the prior quarter at 1,169 in 36 states.
As of May 4, 2024, we had
During the 13-weeks ended May 4, 2024, we did not repurchase shares of common stock under our Stock Repurchase Program (the “Repurchase Program”). We paid a quarterly dividend equal to
Transaction with JD Sports Fashion plc
On April 23, 2024, Hibbett entered into a definitive agreement to be acquired by a subsidiary of JD Sports Fashion plc (“JD Sports”). Under the terms of the agreement, Hibbett stockholders will receive
In light of the pending transaction with JD Sports, Hibbett will not be hosting an earnings conference call to discuss its results for the first quarter ended May 4, 2024, and will not be providing or updating previously issued financial guidance.
About Hibbett, Inc.
Hibbett, headquartered in
Disclosure Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws, which include all statements that do not related solely to historical or current facts, such as statements regarding our expectations, intentions or strategies regarding the future. In some cases, you can identify forward-looking statements by the following words: “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “ongoing,” “outlook,” “should,” “seek,” “target,” “will,” “would,” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, Hibbett. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including: the risk that the proposed transaction with JD Sports may not be completed in a timely manner or at all, which may adversely affect Hibbett’s business and the price of Hibbett’s common stock; the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the adoption of the merger agreement by Hibbett’s stockholders and receipt of required regulatory approvals; the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement, including in circumstances requiring Hibbett to pay a termination fee; the effect of the announcement or pendency of the proposed transaction on Hibbett’s business relationships, operating results and business generally; risks that the proposed transaction disrupts Hibbett’s current plans and operations; Hibbett’s ability to retain and hire key personnel in light of the proposed transaction; risks related to diverting management’s attention from Hibbett’s ongoing business operations; unexpected costs, charges or expenses resulting from the proposed transaction; potential litigation relating to the transaction that could be instituted against JD Sports, Hibbett or their or their affiliates’ respective directors, managers or officers, including the effects of any outcomes related thereto; continued availability of capital and financing and rating agency actions; certain restrictions during the pendency of the transaction that may impact Hibbett’s ability to pursue certain business opportunities or strategic transactions; unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, war, hostilities, epidemics or pandemics, as well as management’s response to any of the aforementioned factors; changes in general economic or market conditions that could affect overall consumer spending or Hibbett’s industry, including the possible effects of inflation and higher interest rates; changes to the financial health of Hibbett’s customers; Hibbett’s ability to successfully execute our long-term strategies; Hibbett’s ability to effectively drive operational efficiency in our business; the potential impact of new trade, tariff and tax regulations on our profitability; Hibbett’s ability to effectively develop and launch new, innovative and updated products; Hibbett’s ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; future reliability of, and cost associated with, disruptions in the global supply chain including increased freight and transportation costs, and the potential impacts on our domestic and international sources of product; increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts; the impact of public health crises or other significant or catastrophic events such as extreme weather, natural disasters or climate change; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt level or changes in fiscal, monetary or regulatory policy; fluctuations in the costs of our products; loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner, including due to port disruptions; labor availability and wage pressures; Hibbett’s ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; Hibbett’s ability to successfully manage or realize expected results from acquisitions, other significant investments or capital expenditures; the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology; risks related to data security or privacy breaches; Hibbett’s ability to raise additional capital required to grow our business on terms acceptable to us; Hibbett’s potential exposure to litigation and other proceedings; Hibbett’s ability to attract key talent and retain the services of our senior management and key employees; other risks and uncertainties described in Hibbett’s filings with the SEC, such risks and uncertainties described under the headings “Forward-Looking Statements,” “Risk Factors” and other sections of Hibbett’s Annual Report on Form 10-K filed with the SEC on March 25, 2024, as amended by Hibbett’s Annual Report on Form 10-K/A filed on May 29, 2024, and subsequent filings; and those risks and uncertainties that are described in the preliminary proxy statement on Schedule 14A filed with the SEC on May 30, 2024, or that will be described in the definitive proxy statement that will be filed with the SEC (if and when it becomes available from the sources indicated below). While the list of risks and uncertainties presented here is considered representative, no such list or discussion should be considered a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, and legal liability to third parties and similar risks, any of which could have a material adverse effect on the completion of the transaction and/or Hibbett’s consolidated financial condition, results of operations, credit rating or liquidity. Readers are cautioned not to place undue reliance on these forward-looking statements.
These forward-looking statements are based on our expectations and judgments as of the date of this press release and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. Any changes in such assumptions or factors could produce significantly different results. Hibbett undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise.
Important Additional Information and Where to Find It
In connection with the transaction, Hibbett filed a preliminary proxy statement on Schedule 14A with the SEC on May 30, 2024. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, COMPANY STOCKHOLDERS ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS, INCLUDING THE DEFINITIVE PROXY STATEMENT (IF AND WHEN IT BECOMES AVAILABLE), THAT ARE FILED OR WILL BE FILED WITH THE SEC (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. The definitive proxy statement (if and when it becomes available) will be mailed to stockholders of Hibbett. Stockholders will be able to obtain the documents (when they become available) free of charge at the SEC’s website, http://www.sec.gov. In addition, stockholders may obtain free copies of the documents (if and when they become available) on Hibbett’s website, https://investors.hibbett.com.
Participants in the Solicitation
Hibbett and certain of its directors, executive officers and other employees, under the SEC’s rules, may be deemed to be participants in the solicitation of proxies of Hibbett’s stockholders in connection with the transaction. Information about Hibbett’s directors and executive officers is available in Hibbett’s Annual Report on Form 10-K filed with the SEC on March 25, 2024, as amended by Amendment No. 1 thereto on Form 10-K/A filed with the SEC on May 29, 2024. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction and their respective direct and indirect interests in the transaction, by security holdings or otherwise, are included in the preliminary proxy statement filed with the SEC on May 30, 2024 and will be included in the definitive proxy statement and other materials to be filed with the SEC in connection with the transaction (if and when they become available). Free copies of these documents may be obtained as described in the preceding paragraph.
HIBBETT, INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (Dollars in thousands, except per share amounts) |
|||||||||||
|
13-Weeks Ended |
||||||||||
|
May 4,
|
|
April 29,
|
||||||||
|
|
% to Sales |
|
|
% to Sales |
||||||
Net sales |
$ |
447,163 |
|
|
$ |
455,497 |
|
||||
Cost of goods sold |
|
286,957 |
64.2 |
% |
|
|
301,877 |
66.3 |
% |
||
Gross margin |
|
160,206 |
35.8 |
% |
|
|
153,620 |
33.7 |
% |
||
Store operating, selling and administrative expenses |
|
105,927 |
23.7 |
% |
|
|
96,014 |
21.1 |
% |
||
Depreciation and amortization |
|
12,973 |
2.9 |
% |
|
|
11,693 |
2.6 |
% |
||
Operating income |
|
41,306 |
9.2 |
% |
|
|
45,913 |
10.1 |
% |
||
Interest expense, net |
|
231 |
0.1 |
% |
|
|
1,327 |
0.3 |
% |
||
Income before provision for income taxes |
|
41,075 |
9.2 |
% |
|
|
44,586 |
9.8 |
% |
||
Provision for income taxes |
|
8,575 |
1.9 |
% |
|
|
8,711 |
1.9 |
% |
||
Net income |
$ |
32,500 |
7.3 |
% |
|
$ |
35,875 |
7.9 |
% |
||
|
|
|
|
|
|
||||||
Basic earnings per share |
$ |
2.73 |
|
|
$ |
2.80 |
|
||||
Diluted earnings per share |
$ |
2.67 |
|
|
$ |
2.74 |
|
||||
|
|
|
|
|
|
||||||
Weighted average shares: |
|
|
|
|
|
||||||
Basic |
|
11,909 |
|
|
|
12,791 |
|
||||
Diluted |
|
12,153 |
|
|
|
13,111 |
|
||||
Percentages may not foot due to rounding. |
|||||||||||
HIBBETT, INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (In thousands) |
||||||||
|
May 4,
|
|
February 3,
|
|
April 29,
|
|||
ASSETS |
|
|
|
|
|
|||
Current assets: |
|
|
|
|
|
|||
Cash and cash equivalents |
$ |
28,681 |
|
$ |
21,230 |
|
$ |
26,926 |
Receivables, net |
|
16,970 |
|
|
16,743 |
|
|
12,582 |
Inventories, net |
|
371,259 |
|
|
344,294 |
|
|
437,957 |
Other current assets |
|
19,213 |
|
|
24,448 |
|
|
13,662 |
Total current assets |
|
436,123 |
|
|
406,715 |
|
|
491,127 |
|
|
|
|
|
|
|||
Property and equipment, net |
|
182,391 |
|
|
183,949 |
|
|
175,285 |
Operating right-of-use assets |
|
277,122 |
|
|
280,755 |
|
|
262,999 |
Finance right-of-use assets, net |
|
1,696 |
|
|
1,837 |
|
|
1,913 |
Tradename intangible asset |
|
23,500 |
|
|
23,500 |
|
|
23,500 |
Deferred income taxes, net |
|
2,874 |
|
|
3,024 |
|
|
2,744 |
Other assets, net |
|
11,625 |
|
|
9,442 |
|
|
7,777 |
Total assets |
$ |
935,331 |
|
$ |
909,222 |
|
$ |
965,345 |
|
|
|
|
|
|
|||
LIABILITIES AND STOCKHOLDERS’ INVESTMENT |
|
|
|
|
|
|||
Current liabilities: |
|
|
|
|
|
|||
Accounts payable |
$ |
128,069 |
|
$ |
96,431 |
|
$ |
131,437 |
Operating lease obligations |
|
71,666 |
|
|
71,448 |
|
|
73,142 |
Credit facility |
|
7,545 |
|
|
45,296 |
|
|
103,577 |
Finance lease obligations |
|
534 |
|
|
538 |
|
|
929 |
Accrued payroll expense |
|
14,656 |
|
|
8,488 |
|
|
7,707 |
Other accrued expenses |
|
14,452 |
|
|
14,013 |
|
|
14,183 |
Total current liabilities |
|
236,922 |
|
|
236,214 |
|
|
330,975 |
Operating lease obligations |
|
242,231 |
|
|
245,649 |
|
|
228,645 |
Finance lease obligations |
|
1,287 |
|
|
1,423 |
|
|
1,116 |
Other liabilities |
|
7,638 |
|
|
6,911 |
|
|
5,594 |
Stockholders’ investment |
|
447,253 |
|
|
419,025 |
|
|
399,015 |
Total liabilities and stockholders’ investment |
$ |
935,331 |
|
$ |
909,222 |
|
$ |
965,345 |
HIBBETT, INC. AND SUBSIDIARIES Supplemental Information (Unaudited) |
|||||||
|
13-Weeks Ended |
||||||
|
May 4,
|
|
April 29,
|
||||
Sales Information |
|
|
|
||||
Net sales (decrease) increase |
|
(1.8 |
)% |
|
|
7.4 |
% |
Comparable store sales (decrease) increase |
|
(5.8 |
)% |
|
|
4.1 |
% |
|
|
|
|
||||
Store Count Information |
|
|
|
||||
Beginning of period |
|
1,169 |
|
|
|
1,133 |
|
New stores opened |
|
6 |
|
|
|
12 |
|
Rebranded stores |
|
— |
|
|
|
— |
|
Stores closed |
|
(6 |
) |
|
|
(2 |
) |
End of period |
|
1,169 |
|
|
|
1,143 |
|
|
|
|
|
||||
Estimated square footage at end of period (in thousands) |
|
6,637 |
|
|
|
6,485 |
|
|
|
|
|
||||
Balance Sheet Information |
|
|
|
||||
Average inventory per store |
$ |
317,587 |
|
|
$ |
383,164 |
|
|
|
|
|
||||
Share Repurchase Information |
|
|
|
||||
Shares purchased under our Repurchase Program |
|
— |
|
|
|
159,592 |
|
Cost (in thousands) |
$ |
— |
|
|
$ |
10,199 |
|
Settlement of net share equity awards |
|
59,490 |
|
|
|
47,177 |
|
Cost (in thousands) |
$ |
4,270 |
|
|
$ |
2,833 |
|
|
|
|
|
||||
Dividend Information |
|
|
|
||||
Number of declarations |
|
1 |
|
|
|
1 |
|
Cash paid (in thousands) |
$ |
2,949 |
|
|
$ |
3,173 |
|
Total paid per share |
$ |
0.25 |
|
|
$ |
0.25 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240605853201/en/
Robert Volke - SVP, Chief Financial Officer
Gavin Bell - VP, Finance & Investor Relations
205-944-1312
Source: Hibbett, Inc.
FAQ
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