On Monday, Telsey Advisory Group maintained a Market Perform rating for Hibbett Sports (NASDAQ:HIBB) with a steady price target of $87.50.
The firm's assessment follows recent financial disclosures from comparable retailers, which have painted a varied picture of the athletic footwear and apparel industry. While in-demand brands and products continue to see robust spending, Nike (NYSE:NKE)'s performance has been uneven, with basketball emerging as its strongest segment.
Hibbett Sports, which attributed 18% of its 2023 revenue to apparel, is witnessing a lag in this category compared to footwear. The company's latest earnings call expressed concerns over a cautious consumer sentiment and a lack of fresh offerings, which may affect its projections for 2024.
Telsey anticipates a 4.0% decline in comparable store sales for the first quarter of 2024, a contrast to the previous year's 4.1% increase. This projection is slightly more pessimistic than the FactSet consensus estimate of a 3.8% decrease.
The analyst predicts a modest gross margin improvement for Hibbett Sports, expecting a 50 basis points increase to 34.2%, which is narrowly below the FactSet consensus of 34.4%. This potential uptick is attributed to a reduction in promotional activity compared to the previous year when the company increased markdowns to manage excess inventory.
However, selling, general, and administrative (SG&A) expenses are expected to rise by 105 basis points to 24.7%, slightly above the FactSet estimate of 25.0%. This anticipated increase is due to various factors, including wage inflation, new store openings, technological investments, higher incentive compensation, transaction fees, and data processing costs.
In summary, Telsey forecasts a year-over-year contraction in operating margin of 55 basis points, bringing it to 9.5%, which is in line with the FactSet consensus of 9.4%. The earnings per share (EPS) are projected at $2.71, outpacing the FactSet expectation of $2.63. These figures reflect the firm's analysis of Hibbett Sports' potential financial performance amidst a shifting retail landscape.
InvestingPro Insights
As Hibbett Sports (NASDAQ:HIBB) navigates the challenges of the retail landscape, recent data and analysis from InvestingPro provide a deeper look into the company's financial health and market performance. With a market capitalization of approximately $1.03 billion and a price-to-earnings (P/E) ratio of 10.4, Hibbett demonstrates a valuation that is attractive to some investors, particularly in light of its strong return over the last year, with a price total return of 141.18%. This robust growth is further underscored by the company's significant price uptick over the last six months, with a 32.85% return.
InvestingPro Tips highlight that management's aggressive share buybacks could signal confidence in the company's future, while the company's ability to cover interest payments with its cash flows provides reassurance about its financial stability. Additionally, Hibbett's liquid assets exceed short-term obligations, indicating solid liquidity. However, analysts have tempered expectations, with four analysts revising their earnings downwards for the upcoming period.
For investors looking for more in-depth analysis, there are additional tips available on InvestingPro, which can be accessed at https://www.investing.com/pro/HIBB. To enhance your research experience, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With these insights and data, investors can make more informed decisions regarding Hibbett Sports' place in their portfolios.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.