Hibbett CEO: upgraded business is stronger than pre-pandemic

Hibbett Inc (NASDAQ: HIBB) closed 8.0% up today on slightly better-than-expected earnings outlook that overshadowed weak Q4 results and dovish full-year guidance for sales.

What Hibbett Q4 earnings report tells us

• Per-share earnings of $1.25 were below $1.35 expected.
• A 1.7% increase in quarterly sales marginally missed Street expectations.
• Brick and mortar comparable sales sank 1.6%, only partially offset by a 1.8% increase in digital.
• Operating margin narrowed by 220 basis points to stand at 6.0%.
• Inventory was up 9.5% YoY, as per the earnings press release.
• Quarter ended with $17.1 million in cash and equivalents.

Hibbett future guidance and CEO’s remarks

Hibbett blamed supply constraints, inflation, lack of government stimulus, and wage pressures as it forecast sales to remain relatively flat this year. Assuming supply issues ease later in fiscal 2023, same-store sales are expected to see a low-single-digit decline.

The footwear company anticipates an up to 160 basis points hit to gross margin this year. It, however, forecasts $9.75 to $10.50 in EPS, the mid of which is above the analysts’ call for $9.85. In the earnings press release, CEO Mike Longo said:

Although the second half of the fourth quarter was weaker than anticipated due to ongoing supply chain challenges, inflation concerns for the consumer and increased COVID-19 cases, we believe these negative factors will begin to subside in the coming months. Our upgraded business model differentiates us from our competition and is more capable of sustained profitable growth than prior to the pandemic.