By leveraging its digital and distribution capabilities, Hibbett Sports has turned in a Q1 that president and CEO Mike Longo said sets the sporting goods and apparel retailer apart from many in the industry.
In a Nutshell: Hibbett Sports has so far reopened more than 1,000 of its store locations, and according to the company, “Many reported significant comparable sales increases upon their reopening.”
While stores were closed, employees were given additional paid time off, guaranteed hours, medical benefits and other perks at the beginning of the lockdown—which Longo said played a major role in giving the company the flexibility to restart so quickly.
“Our people showed their appreciation for these actions when we reopened stores by showing up and delivering their trademark service to our customers,” Longo said. “We’ve had no issues staffing our stores to service our customers.”
But the biggest boon for the company was on the e-commerce side of its business, where it focused its marketing efforts as the COVID-19 crisis set in.
“These efforts were rewarded with 110 percent growth in e-commerce sales in Q1 and the Q2 sales continue to be strong,” he said.
Digital traffic improved by 80 percent during the quarter, the company said, along with a 26 percent jump in conversion. More than 40 percent of digital sales in the second half of the quarter were from new customers, as well.
The company ramped up its inventory and distribution management infrastructure in response to this rapid e-commerce growth and inventory levels actually fell 2.6 percent to $242.0 million year-over-year.
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Sales: Revenue reached $269.8 million, down 21.4 percent from the comparable period last year, beating the Wall Street estimate of $243.67 million.
Still, there was no escape from the negative effects of the pandemic and comparable sales fell 19.5 percent during the quarter. Brick-and-mortar locations, specifically, fared worse with a 34 percent drop in comparable sales.
E-commerce growth hit 110.5 percent during the quarter and represented 22.3 percent of net sales. Both City Gear and Hibbett Sports also enacted a curbside pickup system in March before reopening began in April.
Gross margin fell as e-commerce sales became a larger part of the company’s business, dropping to 27.5 percent from 34.5 percent a year ago, exacerbated by a $5.1 million increase in inventory valuation reserves.
Earnings: Decreasing by 80.75 percent over its mark a year ago, Q1 earnings per share for Hibbett Sports came in at 31 cents, missing the Wall Street estimate of 65 cents.
CEOs Take: Longo praised the effort his company put in to keep Hibbett Sports operational during the early lockdown, emphasizing the ability of the company to pivot to digital sales without issue.
“Through the hard work of our Hibbett Sports and City Gear stores, the dedication of our distribution center employees and the seven-day-a-week work from our people in the Store Support Center, we accomplished a result that we believe sets us apart from the majority of retail,” Longo said.