Despite a challenged apparel business in Q2, Hibbett Inc. said footwear sales remained consistent throughout the quarter, reflecting the retailer’s strong assortment of high-heat brands and an improved launch calendar.
“Our footwear business remained consistent in this environment,” said Hibbett president and CEO Mike Longo in a call with investors on Friday morning. “And we’re encouraged by our customers response to our product line.”
Overall, Hibbett reported a decrease in net sales in Q2 of 4.6 percent to $374.9 million. Comparable sales decreased 7.3 percent. Net income was $10.9 million, or $0.85 per diluted share, compared with the prior year’s net income of $24.7 million, or $1.86 per diluted share.
While footwear was Hibbett’s strongest category in the quarter, Q2 shoe sales declined in the low single digits versus the prior year, due to a slow start to the quarter resulting from weak performance from secondary brands and an unfavorable launch calendar. These factors improved through the back half of the quarter, driven by a better launch calendar and the start of the back-to-school season.
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“Footwear results continue to be driven by product launches, as well as the basketball, lifestyle and casual categories,” said Hibbett EVP of merchandising Jared Briskin in the call. “In addition, we continue to see an improving trend in our running business.”
While running product is typically a smaller portion of Hibbett’s overall business, changes to the assortment and the introduction of product in time for back to school drove the business to a strong performance in Q2.
“We certainly have enhanced our focus on the performance running category, and have evolved our lifestyle running categories and new iterations,” Briskin said. “We feel good about the running business.
Hibbett Sports is one of just a few wholesale retailers that still carries high-heat sneaker brands like Nike and Adidas, both of which have dialed back their business with other wholesale partners. Hibbett also resumed selling Yeezy products in Q3 after reportedly pulling the brand from shelves and cancelling future orders in the midst of Kanye West’s antisemitic statements last year. As the product only recently launched in stores, Hibbett declined to comment to analysts on the impact of the brand thus far.
When it comes to capturing footwear demand, Briskin said success depends on a variety of factors, but having the right brands is crucial.
“If the product is right, and the consumer perceives value in the product, then that value creation could come from launch and scarcity, materials, the story or franchise management. A lot of things can drive that value and demand,” he said, adding that Hibbett is confident in its footwear launch calendar for the rest of the year.
Footwear was also a standout category at Dick’s Sporting Goods, which also enjoys strong relationships with premium brands like Nike. The retailer said it even plans to convert about 100 more stores to have a “full-service footwear” selection in 2023, bringing this set-up to more than 75 percent of Dick’s stores. At the same time, Foot Locker — in the midst of a turnaround plan — reported a sales drop and loss in the second quarter as consumers pull back spending on discretionary products like footwear.
Hibbett reiterated its full year outlook and expects total sales to be between flat and up 2.0 percent in fiscal year 2024. Diluted EPS is expected to be in the range of $7.00 to $7.75.
