After the company (NASDAQ:$HIBB) posted quarter two results for fiscal 2018, Hibbett Sports shares plunged on Friday, declining as much as 18.3%. This plunge in stock reflects worse-than-expected results as well as lowered guidance in a challenging retail environment.
“We experienced a very difficult retail environment in the quarter, with a significant decline in transactions and resulting pressure on gross margin,” Jeff Rosenthal, CEO of the company, said.
Here’s What You Should Know About Hibbett Sports Shares + The Report:
For quarter two, Hibbett generated revenue of $188 million, which is down 9.2% compared to the 2016 quarter. Additionally, Hibbett posted a loss per share of $0.15, which is down from EPS of $0.29 in the 2016 quarter.
For the most part, the declining revenue was driven by a disturbing 11.7% decrease in comparable-store sales. In the meantime, the Alabama-based company’s profitability faced tremendous pressure due to a drop in gross margin, from a rate of 33% in the 2016 quarter to 28.9% in quarter two. “The decrease was mainly due to promotions and markdowns taken to liquidate excess and aged inventory, and de-leverage of logistics and store occupancy expenses associated with lower comparable store sales,” management said.
What Does the Future Look Like?
In regards to its outlook, Hibbett Sports decided to reduce its forecast for EPS. Right now, management calls for fiscal 2018 earnings per share to be between the range of $1.25 and $1.35. This is significant, as it’s down from a previous guidance range of $2.35 to $2.55. Essentially, this lower guidance range reflects Hibbett Sports management’s expectations for a lower gross profit margin.
Moving forward, Rosenthal said he forecasts “the external environment to remain challenging.” However, looking on the bright side of things, Rosenthal announced that early e-commerce sales seem to be promising, as they have surpassed management’s expectations. “We will continue our efforts to grow our online business aggressively in the future,” the CEO said, “while continuing to improve our stores to provide a great overall customer experience.”
Regardless of today’s decline in Hibbett Sports shares, I wouldn’t say it’s absolutely necessary to avoid the stock just yet.
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