Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user
You will be redirected back to your article in seconds

Hibbett Chief Merchant: Denim and Fleece Were ‘Standout Performers’ in Q4

Thank you for joining Sourcing Journal & industry leaders at our SOURCING SUMMIT NY, as we discussed the most pressing issues of the day. View the Summit on demand through Jan. 2, and stay tuned for the upcoming Companion Report.

Hibbett Sports saw sales for its fourth quarter jump 20.4 percent to $376.8 million and net income that reached $23.9 million, with apparel giving the athletic-inspired fashion retailer its biggest boost.

In a Nutshell: The apparel category at Hibbett Sports saw “high 30s” percentage comparable sales growth in the quarter, even outperforming the company’s strong footwear operation that saw “low 20s” percentage growth from lifestyle, basketball, performance, sandals and boots. The two categories, which represent 88 percent of the company’s business, have done Hibbett well in a year when team sports were either cancelled or limited, keeping the “high-teens” comp decline of team sports equipment from weighing the holiday down.

“Multiple fabrications, fits and patterns, and fleece tops and bottoms were exceptional during the quarter and drove our growth,” Jared Briskin, senior vice president and chief merchant at Hibbett Sports, told analysts on the company’s earnings call Friday morning. “We also saw strong results in outerwear tees and shorts. Our fashion brand performance continued to be exceptional. Denim and fleece were the standout performers for the quarter. Our partners in this area are very nimble, and we’ve been able to flow inventory to take advantage of the increased demand.”

Inventory at the end of the quarter was $202 million, a 29.9 percent decrease compared to the prior-year fourth quarter. Strong brick-and-mortar and e-commerce demand during the quarter in addition to ongoing constraints in the supply chain that have impacted the entire industry were the main drivers of the inventory reduction. 

Briskin said that aged inventory is at historical lows for the retailer as was anticipated, and expects that inventory decreases will moderate during the first quarter, and will be positive at the end of the second quarter, closer to 2020 levels.

“We have seen some improvement, it seems to get a little bit better every day but certainly still a challenge,” Briskin said. “I would agree that I do feel that as the marketplace does get caught up based off a demand that we’re seeing, there could be some pent-up demand for the products that we sell.”

Gross margin was 37.1 percent of net sales for the quarter, well ahead of the 31.5 percent of net sales calculated at the end of the prior year. The 560-basis-point increase was driven by higher sell through, a low promotional environment and leverage of store occupancy expenses. These impacts were slightly offset by a higher mix of e-commerce sales, which carry a lower margin due to incremental shipping costs.

The company slightly thinned out its store presence in the quarter. Hibbett opened 10 new stores, rebranded four Hibbett stores to City Gear stores and closed 21 total stores, bringing the store base to 1,067 in 35 states as of Jan. 30, 2021. Store closures were composed of underperforming stores and rebrands.

Hibbett ended the fourth quarter with $209.3 million of available cash and cash equivalents, and now has no debt outstanding. The company has full availability of its $75 million secured credit facility.

After a positive 2020, Hibbett now looks forward to the year ahead. For the full 2021 year (labeled by Hibbett as Fiscal 2022), the retailer plans to invest $45 million to $50 million in capital expenditures on various infrastructure projects that will enhance distribution and back office efficiency, as well as “attractive, organic” growth opportunities to increase sales.

For the year, Hibbett anticipates comparable sales to level out from this past year’s boom, ranging from growth in the negative low-single digits to positive low-single digits. Additionally, the company expects a gross margin decline of approximately 130 to 170 basis points due to more headwinds related to the supply chain and shipping costs.

On the most positive note for the future, diluted earnings per share for the year is expected in the range of $5.00 to $5.50, ahead of the past year’s $4.36 per diluted share.

Net sales: Fourth-quarter net sales for Hibbett increased 20.4 percent to $376.8 million compared with $313 million for period last year. Comparable sales increased 21.9 percent, with brick-and-mortar comparable sales increasing 17.7 percent.

E-commerce comparable sales grew by 44.8 percent and represented 17.1 percent of total net sales for the fourth quarter, compared to 14.2 in the prior year fourth quarter.

Sales of men’s products jumped in the “mid-20s” percentage, while women’s merchandise doubled the men’s performance with “high-40s” percent growth. Kids’ comp growth in the quarter was in the low teens.

For the full year, sales increased 19.9 percent to $1.42 billion from $1.18 billion in the prior year. Comparable sales increased 22.2 percent. Brick-and-mortar comparable sales were up 13.3 percent and e-commerce comparable sales increased 89.3 percent. E-commerce represented 16.7 percent of total sales on a full-year basis, compared to 10.4 percent of total sales in the comparable period last year.

Net earnings: Net income for the fourth quarter was $23.9 million, or $1.39 per diluted share, quadrupling from last year’s holiday period net income of $6 million, or 34 cents per diluted share. On an adjusted basis, net income for the 13-week period ended Jan. 30, 2021, was $24.1 million, or $1.40 per diluted share, compared with adjusted prior-year quarter’s net income of $9 million, or 51 cents per diluted share.

Net income for the full year was $74.3 million, or $4.36 per diluted share, compared to $27.3 million, or $1.52 per diluted share. On an adjusted basis, net profits totaled $104.3 million, or $6.12 per diluted share, compared to $41.9 million, or $2.33 per diluted share.

CEO’s Take: Mike Longo, president and CEO of Hibbett Sports, didn’t rule out the possibility of the retailer acquiring another business. Two years ago, Hibbett got a major boost when it brought on the digital-savvy City Gear brand for $113 million to expand into the Midwest, which Longo helmed amid the transaction before taking over as CEO of both brands last March.

“We are in those conversations. We will always look at every strategic alternative and we think it is a good practice,” Longo said. “You know we have vetted many opportunities. We’ll continue to look at other opportunities as they arise.”

Related Articles

More from our brands