HIBB HIBBETT SPORTS, INC
Sector financial performance:
This company, which is primarily a traditional retailer of sport goods selling footwear (more than 50% of total sales), apparels, and equipment (17%), has been grouped into traditional sporting goods retailer sector in sport goods & service industry.
It seems that the demand for sports goods has been weak and declining in the past several years as indicated by the decreasing same store sales in the typical retailers during the same period of time. The downward trend seems to be speeding up as indicated by the average growth in the same store sales (down 3.4 and 1.7% for 2018 and 2017 respectively). The decrease in the same store sales has been reflected primarily in some of equipment categories such as hunting and skiing and apparels generally. We have seen strong demand for footwear products, especially branded products.
Due to intensive promotion and deleveraging of store related expenses as a result of expansion of new stores, companies’ margin went worse in the past several years. As revenue went down, their EBI/share went down by 25% and 27% in 2018 and 2017 respectively. The typical gross margin for retailers in this sector is about 31% in 2018, the SG&A as percentage of sales is 27%, and the operating margin was down to about 4% in 2018. And the EBI/sales ratio was about 3% in 2018.
The typical enterprise price/EBI ratio is 12.
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Company performance:
It seems that the demand for equipment and apparels of this company has been weak and declining in the past several years as indicated by the declining same store sales of products in those categories. The demand for footwear products seems to keep steady during the same period.
The first three months of fiscal 2019 compared with the same period of the 2018 (ended April 30 2018)
Net revenue decreased about 0.4%.
Same store sales decreased 0.3% due to the decrease in licensed products offset by increase in active wear and footwear products.
Fiscal 2017 compared with fiscal 2016
Net revenue decreased about 0.5%.
Same store sales decreased 3.8% due to the decrease in apparels and equipment offset by increase in footwear.
Fiscal 2016 compared with fiscal 2015
Net revenue increased about 3.2%.
Same store sales increased 0.2% due to increase in footwear products offset by decrease in apparels and equipment.
Its gross margin (including merchandise and occupancy) was down from 35% to about 32% due primarily to decrease in merchandise margin as a result of promotion. With the increased SG&A as percentage of sales (up to about 27% in 2018 due to deleveraging of store operation related expenses as a result of increased new stores), its operating margin went down to about 5% currently. Its EBI/share declined significantly in the past two years.
Stock performance
This company is having an enterprise price/EBI ratio of 13. We think that its stock was relatively fairly valued COMPARED similar sport good retailer:Big 5 Sporting Goods Corporation and DICK'S SPORTING GOODS.