The Sporting Goods Store You May Like To Check Out

Satarupa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The increase in payroll taxes have no doubt decreased US citizens' take home pay, but I don’t see its impact in the apparel, footwear and accessories market. Almost all the companies in this industry are performing pretty well, which clearly shows that the slow economic recovery and the hike in payroll tax haven’t yet disrupted consumer spending trends. Recently, the sporting goods chain Hibbett Sports (NASDAQ: HIBB) lit up the Street with its fourth quarter earnings. Let’s have a closer look at the quarter.

Quick look at the quarter

Hibbett's fourth quarter earnings were indeed much better than expected. Its bottom line surged 24% to 73 cents, beating the Street expectations. Revenues also climbed 14% to $217.4 million, which was much better than analysts’ expectations. Its same store sales increased by 4.9% as the company enjoyed a strong holiday period backed by solid performance in its footwear, apparel, and accessories segments. The company enjoyed an extra week in its latest quarter, which added to the rising top and bottom lines. Hibbett’s earnings per diluted share increased 23.7% to $0.73, of which almost $0.07 was because of the profits earned from the 14th week.

As I have already said before, almost all the sporting goods companies reported better than expected quarterly results. The leading sporting goods retailer, Big 5 Sporting Goods Corporation, reported that their fourth quarter net sales increased to $243.6 million from $226.7 million for the same period last year. Its same store sales also climbed 6.5%. Meanwhile, the New York-based specialty athletic retailer, Foot Locker (NYSE: FL) managed to report a 14% surge in its top line. Its fourth quarter comparable-store sales increased 7.9%.

Hibbett’s rival Dick's Sporting Goods (NYSE: DKS) is also no exception. Its top line climbed 12% to $1.81 billion and its bottom line surged 36% to $1.03 per share. However, despite the rising numbers, Dick's Sporting Goods couldn't beat the Street estimates due to its improper inventory management. This definitely puts Hibbett in a better condition than its rival.

Apart from posting such strong quarterly results, all of these companies have focused on increasing their presence in the current lucrative market. Big 5 Sporting Goods Corporation added 8 new stores, as a result of which their total store count at the end of fiscal year reached 414. The company also has plans to inaugurate 15 to 20 new stores in fiscal 2013. Foot Locker has opened 85 new stores, remodeled or relocated 198 stores, and closed 119 stores during fiscal 2012, which means that their store count reached 3,335 stores in 23 countries in North America, Europe, Australia, and New Zealand. Rival Dick's Sporting Goods also opened 38 new stores during fiscal 2012 and plans to add 40 new stores to its count by the end of fiscal 2013. Clearly all of the companies are working hard to increase their store count for better market penetration.

Future Plans

Hibbett has always been focused on increasing its presence in the market. During the last quarter the company has opened 27 new stores and has expanded four stores. The company has also closed two underperforming stores. At the end of the last quarter Hibbett had a total of 873 stores, and the company plans to continue with their expansion strategy for the next fiscal year. Hibbett plans to open 60 to 70 new stores and expand 18 high performing stores for the current fiscal year. It also has plans to close up to 20 of its low performing stores. With more market presence and with such a promising market scenario, Hibbett is expected to increase both of its top and bottom lines for the coming quarters.

Foolish bottom line

All I can say is that Hibbett has a bright future. The company has reported an increase in its same store sales for the 13th consecutive quarter. The entire clothing industry seems to be in a good phase, as most of the companies across the industry are performing decently. Hibbett’s expansion strategy will further add to the company’s top and bottom line. This stock is thus worth watching. 

Satarupa Bose has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus