Hibbett, Inc.

Third-quarter fiscal 2024 net sales were $431.9 million, down 0.3% from $433.2 million a year ago, and comparable sales declined 2.7%. Gross margin was 33.9% versus 34.3% last year, with lower average product margin and higher occupancy costs offset partly by better freight, shipping, shrink and logistics. SG&A improved to 23.0% of sales from 23.9%, and diluted EPS rose to $2.50 from $1.94. For the first nine months, net sales were $1.26 billion, up 1%, comparable sales fell 1.9%, gross margin was 33.5% versus 35.3%, and diluted EPS was $5.66 versus $6.71. For fiscal 2024, management now expects EPS of $8.00-$8.30, net sales flat to up approximately 2%, total comps down in the low-single-digit range, gross margin of about 33.9%-34.0%, SG&A of 23.1%-23.3%, operating margin of 7.6%-8.0%, capital expenditures of $60 million-$70 million, and about 40 net new stores.

Mike Longo said the quarter reflected strong execution in a challenging consumer environment, with Hibbett continuing to take market share through product mix, customer service, omnichannel capability, vendor relationships and underserved-market positioning. He emphasized strong back-to-school demand, especially in footwear, a favorable launch calendar, and the Nike Connected partnership as important strategic positives. His tone was confident and upbeat, but still grounded in the view that the company is investing for the long term rather than chasing short-term profit maximization.

Bob Volke highlighted that SG&A leverage was the main financial bright spot, with expense ratio improving to 23.0% from 23.9% thanks to tighter labor, professional fee and advertising controls. He said the gross margin decline was mainly from lower average product margin, down about 130 bps in the quarter, plus about 40 bps of occupancy deleverage, while freight/shipping/shrink/logistics improved. He also noted $29.6 million of cash, $96.9 million of debt on the unsecured revolver, quarter-end inventory of $398.1 million, $11.5 million of quarterly capex, $32 million of share repurchases, and a $0.25 quarterly dividend totaling about $3.1 million.

Analysts focused on consumer spending patterns, the inventory clean-up, gross margin outlook, e-commerce strength, store traffic, and whether the improved operating margin could become a longer-term baseline. Management said back-to-school was strong, but sales slowed after the peak period and apparel was hurt by weather and promotional pressure; they also said customers remain financially cautious but expect to spend more on footwear and online during the holidays. On the Nike Connected program, management said it should help acquisition, retention, and access to coveted product across both stores and digital, while also supporting a stronger loyalty offering.