On June 5, 2024, Hibbett Inc (HIBB, Financial) released its 8-K filing detailing the financial results for the first quarter of Fiscal 2025, which ended on May 4, 2024. Hibbett Inc, a retailer specializing in athletic-inspired fashion, operates small to midsize stores primarily in the South, Southwest, mid-Atlantic, and Midwest regions of the United States. The company offers a wide range of sporting goods, including apparel, footwear, accessories, and equipment for team sports, featuring brands such as Nike, Under Armour, Adidas, and The North Face.
Performance Overview
Hibbett Inc (HIBB, Financial) reported net sales of $447.2 million for the first quarter, a 1.8% decrease compared to $455.5 million in the same period last year. This figure fell short of the analyst estimate of $453.91 million. Comparable sales also declined by 5.8% year-over-year, reflecting a challenging market for athletic footwear and apparel.
Despite the sales decline, the company managed to achieve a gross margin of 35.8%, up from 33.7% in the prior-year period. This improvement was primarily driven by higher average product margins due to a lower promotional and clearance environment.
Financial Achievements and Challenges
Hibbett Inc (HIBB, Financial) reported a net income of $32.5 million, or $2.67 per diluted share, for the quarter, slightly below the analyst estimate of $2.70 per share. This compares to a net income of $35.9 million, or $2.74 per diluted share, in the same period last year.
Store operating, selling, and administrative expenses increased to 23.7% of net sales from 21.1% in the prior-year period. This rise was attributed to inflationary pressures on wages, benefits, and goods and services, as well as non-recurring professional fees related to the pending acquisition by JD Sports.
Key Financial Metrics
| Metric | Q1 FY 2025 | Q1 FY 2024 |
|---|---|---|
| Net Sales | $447.2 million | $455.5 million |
| Gross Margin | 35.8% | 33.7% |
| Net Income | $32.5 million | $35.9 million |
| Diluted EPS | $2.67 | $2.74 |
Balance Sheet and Cash Flow
As of May 4, 2024, Hibbett Inc (HIBB, Financial) had $28.7 million in cash and cash equivalents and $7.5 million in debt outstanding on its $160.0 million unsecured line of credit. Inventory levels decreased by 15.2% year-over-year to $371.3 million, reflecting improved inventory management.
The company did not repurchase any shares during the quarter and paid a quarterly dividend of $0.25 per share, resulting in a cash outlay of $2.9 million. Due to the pending acquisition by JD Sports, the company has suspended its stock repurchase program and future dividend payments.
Acquisition by JD Sports
Hibbett Inc (HIBB, Financial) announced a definitive agreement to be acquired by JD Sports Fashion plc, under which Hibbett stockholders will receive $87.50 in cash per share. The transaction is expected to close in the second half of 2024, subject to stockholder and regulatory approvals.
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.”
Conclusion
Hibbett Inc (HIBB, Financial) faced a challenging first quarter with a decline in sales and comparable store sales. However, the company managed to improve its gross margin and maintain profitability. The pending acquisition by JD Sports is expected to provide substantial value to stockholders and position the company for future growth. For more detailed financial information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Hibbett Inc for further details.
