Hibbett Sports may be one of the biggest winners in apparel thus far throughout the COVID-19 pandemic even after closing nearly all of its 1,100 Hibbett Sports and City Gear stores for two months. The athletic-inspired fashion retailer anticipates second-quarter comparable sales will increase in excess of 70 percent compared with the prior year period.
While brick-and-mortar same-store sales are forecast to improve approximately 60 percent, Hibbett Sports estimates those of its digital channels to spike roughly 200 percent when the second quarter concludes on Aug. 1. Alongside the major revenue boost, inventory is currently forecast at quarter end to be well below prior year levels, according to a company statement.
Mike Longo, president and CEO of Hibbett Sports, called the sales results “exceptional.”
“Our resilient business model and dedicated team members are delivering on our commitment of superior customer service with a compelling merchandise assortment,” Longo said. “We believe our sales have been positively impacted by multiple factors, including pent-up consumer demand, temporary and permanent store closures by our competitors, and stimulus money. These circumstances yielded increased traffic to our stores and website and the opportunity for new customers to experience our trademark service. We expect that we will be able to retain many of these customers in the future.”
With that in mind, Hibbett expects that new customers will account for 25 percent of in-store sales on top of 40 percent of digital sales.
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The second-quarter numbers would be a strong rebound from the first quarter, when total sales dipped 21.4 percent to $269.8 million. E-commerce growth in that quarter hit 110.5 percent and represented 22.3 percent of net sales, with both Hibbett Sports and its City Gear brand enacting a curbside pickup system in March before store reopenings began in April.
For the first half of the year, total comparable stores sales are forecasted to increase approximately 20 percent, including an approximate 7 percent increase in brick-and-mortar comparable sales and an estimated 140 percent comparable sales growth in digital.
Hibbett has repaid the $50 million it borrowed in the first quarter under its credit facilities. This amount was originally borrowed in March as a precautionary measure to provide increased liquidity and financial flexibility due to uncertainty in global markets driven by the pandemic. Hibbett said it never used any of the excess funds.
Hibbett Sports still will not provide a full-year outlook due to the uncertain impact on the business from the pandemic, as well as other factors such as the expiration of enhanced unemployment benefits, uncertainty surrounding the back-to-school season and the possibility of additional government stimulus measures.
The retailer’s success may be a signal that other athletic apparel companies and the sporting goods sector as a whole are experiencing bounce backs. While Hibbett Sports saw its stock jump 16.32 percent to $26 per share around midday on July 21, Under Armour, Foot Locker, Dick’s Sporting Goods, Big 5 Sporting Goods and Sportsman’s Warehouse Holdings all saw stock jump early after Hibbett released its sales update.
Data indicates that consumers are adapting to a world in which gyms are closed, and instead taking to fitness activities on their own.
An NPD Checkout survey found that compared to pre-COVID behavior, exercising at home has increased by more than 70 percent and twice as many consumers are using online or app-based exercise classes.
“I think consumers will begin to gravitate even more so to the tried-and-true brands they trust, and I expect that their purchases will become more pragmatic,” wrote Matt Powell, vice president, senior industry advisor, sports at NPD Group in a June 8 blog post. “For example, we may see a shift away from sport lifestyle footwear to a more versatile and multipurpose performance shoe. Running footwear will likely see resurgence.”
Powell did note that he expects the return of physical retail to be “slow and painful,” so Hibbett’s second-quarter jump might not translate across retail competitors. He cited research from CivicScience, which found that 25 percent of customers who like to shop at Academy Sports and Outdoors say they would be comfortable shopping there in one to four months, while 50 percent said they would in more than four months.
“For customers who like to shop at Footlocker and The Finish Line, about 40 percent say they will shop there in one to four months, and about 30 percent say more than four months,” Powell said. “Based on the poll, Dick’s Sporting Goods has the most favorable outlook, with about half saying they would shop soon and 30 percent saying in one to four months. This tells me that the recovery of physical retail will be bumpy.”
Hibbett may have a built-in advantage compared to many of its peers in that its stores are largely in neighborhoods in mid-tier population centers. Only 20 percent of Hibbett Sports and City Gear stores are located in enclosed malls.
The Hibbett team has taken the effort to aid local communities with the launch of its Sole Schools program, an initiative that commits significant resources to improving the lives of future generations through multi-pronged youth outreach. This multi-million-dollar program will support selected high schools in communities where Hibbett stores are located. The company will provide more information on this program during its second-quarter conference call on Aug. 28.