Soft traffic prompts Hibbett to cut full-year guidance

A more cautious consumer led to weaker-than-anticipated traffic at Hibbett in the second quarter, prompting the sporting goods retailer to revise its earnings expectations for the full year.

Net sales for the 13-week period ended August 2 are expected to increase 4.2% to $194 million compared with $186.2 million for the year-ago period. Comparable store sales are expected to increase 0.1% for the quarter.

Increased markdowns related to reducing slow-selling and aged inventory ate away at the company’s gross profit, which is expected to be 33.4% of net sales for the quarter, compared with 34.3% for the 13-week period ended August 3, 2013. Management expects that gross profit will continue to be affected by increased markdowns in the near term, but the company added that the impact should moderate as fiscal year-end approaches. Management also expects gross profit to be affected by store occupancy and logistics costs, as these expenses are expected to increase as a percentage of net sales due to lower-than-anticipated comparable store sales.

“Although we were disappointed with our overall comparable store sales, there was a slight improvement in July as we moved into the back to school season,” president and CEO Jeff Rosenthal said. “As a result, we anticipate a healthier back to school shopping period. We continue to be very pleased with new store openings and new store productivity, and feel confident that new stores will continue to add meaningful revenue growth.”

Based on second quarter trends for comparable-store sales and gross profit, the company expects earnings per diluted share for the quarter to be in the range of $0.30 to $0.32, compared with $0.40 reported for the 13-week period ended August 3, 2013.

For the full year, the company anticipates earnings per diluted share to be in the range of $2.63 to $2.73, with comparable store sales increasing in the low single-digit range for the year. This compares to previous guidance of earnings per diluted share in the range of $2.78 to $2.98, and comparable store sales increasing in the low-to-mid single-digit range.

Hibbett Sports plans to report full second quarter results August 22.

The company operates sporting goods stores in small to mid-sized markets, predominately in the South, Southwest, Mid-Atlantic and Midwest regions of the United States. The company’s primary store format is Hibbett Sports, a 5,000-sq.-ft. store located in strip centers and enclosed malls.



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