Hibbett (HIBB, Financial) experienced a significant drop today, with Q4 (Jan) revenues and FY25 sales guidance not meeting analyst expectations. The company, primarily focused on footwear, which accounts for about two-thirds of its FY24 revenues, has seen its shares decline by approximately 17% after reaching one-year highs earlier in the month. This downturn follows a disappointing forecast from Foot Locker (FL, Financial) and contrasts sharply with the success of Dick's Sporting Goods (DKS, Financial), which reported strong Q4 (Jan) growth.
Key points from Hibbett's Q4 performance include:
- Revenue growth of 1.8% year-over-year to $466.6 million in Q4, falling short of analyst expectations with a -6.4% decline in comparable store sales, heavily impacted by a -9.2% drop in physical retail sales despite a +6.9% increase in e-commerce.
- Decreases in sales across all categories, with footwear and apparel experiencing mid to high-single digit declines, and team sports sales dropping by over 30%. Women's footwear was the only category to see growth, albeit in the low-single digits.
- Management cited promotional activity and inflation as significant challenges, noting a decrease in inventory levels but an increase in operating costs, leading to a 70 basis point decrease in gross margins to 34.5% in Q4.
- The company's FY25 guidance reflects these challenges, predicting EPS of $8.00-8.75, flat to +2% revenue growth, and same-store sales growth ranging from negative low-single digits to flat. This guidance suggests a cautious outlook amid a transition to fewer promotions and potential consumer resistance.
Despite the challenges faced by Hibbett and the broader retail sector, there are potential positive trends for the company, particularly if consumers adjust to fewer markdowns. However, following the impressive performance of DKS, it remains the preferred choice in the sporting goods retail market.
