Hibbett Sports Inc. saw its stock fall in early trading after the sports retailer reported that its sales grew, but profits dipped and the company tightened up its forecast.
Net income for the quarter fell to $6.5 million down from $7 million. Earnings per diluted share were 29 cents, a penny better than last year’s 28 cents a share and 2 cents better than the FactSet estimate for 27 cents a share.
Net sales for the three months ended July 30 increased 3.9 percent to $206.9 million from $199.3 million a year earlier. This was lighter than the FactSet estimate for $210 million. Comparable store sales increased 0.8 percent. The sales miss caused investors to sell the stock off by 3 percent to $36.48.
“We were pleased with our overall results and are encouraged by the progress on our major initiatives,” said chief executive officer Jeff Rosenthal. “Footwear continues to show significant strength, driven by our differentiated assortment and continued improvement in allocation and in-stock position.”
Gross profits were 33 percent of net sales for the quarter versus last year’s 32.7 percent. The increase was attributed to the company’s improved merchandise margin rates.
“We also continue to see improvement in our merchandise margin rate, driven by improved systems and promotional management,” Rosenthal added. “Looking forward, we feel we are well positioned for our back-to-school season with our product assortments and early deliveries of merchandise for this important period.”
Expenses as a percentage of sales grew as the company spends more on its omnichannel efforts and experienced lower comp-store sales. During the quarter, Hibbett opened 14 new stores, expanded one high-performing store and closed eight underperforming stores.
The company spent $21 million repurchasing shares during the quarter and the stock has fallen 9 percent over the past year. During the last three months, the stock has improved by 12 percent as investors believe the chain will benefit from the liquidation of rival Sports Authority.
Hibbett updated its outlook for fiscal 2017 and tightened its guidance to $2.93 to $3.02 from $2.90 to $3.04.