Hibbett, Inc. HIBB recently unveiled its fourth-quarter fiscal 2024 results, showcasing a meeting of the minds for earnings projection while sales witnessed a considerable year-over-year surge. Despite the bottom line experiencing a slight dip from the previous year, the top line of this Zacks Rank #3 (Hold) entity demonstrated commendable growth.

Over the last half-year, the company’s shares have outshined industry standards, soaring by a substantial 60.4% as opposed to the sector’s 36% stride.

A Closer Look at the Quarter

Hibbett’s adjusted earnings of $2.55 per share marked a 12.4% decline from the year-ago figure of $2.91. However, this aligns perfectly with the Zacks Consensus Estimate of $2.55 per share.

The net sales for the quarter under review escalated by 1.8% on a year-over-year basis, reaching a sum of $466.6 million. Nonetheless, this figure fell short of the Zacks Consensus Estimate of $477 million.

Peering into Financial Performance

Comparable sales witnessed a dip of 6.4% compared to the previous year, landing below expectations of a 1% decrease. In particular, brick-and-mortar comp sales plummeted by 9.2%, while e-commerce sales surged by 6.9%, excluding the 53rd-week impact.

Gross profit saw a minor 0.2% decline of $160.8 million year over year in the given quarter, missing our projection of $167.5 million. The gross margin contracted by 70 basis points to 34.5%, primarily due to a dip of 125 bps in the average product margin and a 55 bps surge in store-occupancy costs.

The company’s operating income stood at $40.6 million, reflecting a 19.9% decrease from the previous year. Correspondingly, the operating margin shrunk by 240 bps to hit 8.7% for the quarter.

The quarter also saw a 140 bps rise in store operating, selling, and administrative expenses as a percentage of sales, attributed to factors like escalating store wages and data processing costs.

Strategic Updates and Outlook

As of Feb 3, 2024, Hibbett boasted $21.2 million in cash and cash equivalents, alongside $45.3 million in outstanding debt. In the same quarter, the company dispersed a quarterly dividend of 25 cents per outstanding common share, amounting to $2.9 million.

For fiscal 2025 guidance, Hibbett anticipates net sales to either maintain stagnancy or escalate by 2%. The company envisions a promising growth phase in e-commerce sales, expecting a mid to high-single-digit hike.

Furthermore, Hibbett foresees earnings within the range of $8-$8.75 per share, with capital expenditure expected to be between $65-$75 million for fiscal 2025.

Exploring New Horizons

In the fourth quarter of fiscal 2024, Hibbett expanded its footprint with the opening of 14 new stores, adding up to a total of 1,169 stores across 36 states by Feb 3, 2024.

Bright Prospects and Solid Recommendations

We suggest keeping an eye on the promising stock performances of Abercrombie & Fitch (ANF), Gap (GPS), and American Eagle Outfitters (AEO).

Abercrombie & Fitch, with a Zacks Rank #1 (Strong Buy), shows a consistent growth trajectory with a significant earnings surprise over the trailing four quarters.

Similarly, Gap boasts a Zacks Rank of 1 and a notable earnings surprise average. American Eagle Outfitters, also holding a Zacks Rank of 1, displayed robust earnings growth in the preceding quarters.

With fiscal 2025 expecting notable net new store growth and an enhanced gross margin outlook for Hibbett, investors might find themselves in a tidal wave of opportunities with these industry stalwarts.

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