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HIBB AT A GLANCE

P/E ► 18.2 AVG EV/EBITDA ► 8.78 AVG ROA ► 11% HIGH ROE ► 20.2% AVG Debt to Equity ► 0.669 AVG Current Ratio ► 2.51 AVG Interest Coverage Ratio ► 148 HIGH

 

 

 

 

 

 

Hibbett Sports (NASDAQ: HIBB) sells sporting goods in 688 stores in 23 states, predominately in the Sun Belt, Mid-Atlantic, and lower Midwest regions of the U.S.A. It focuses on markets where there is little to no direct competition - small counties with as few as 30,000 people - and as a result, its stores are smaller than those of major sporting goods retailers Dick's Sporting Goods (50,000 square feet) and Big 5 (11,000 square feet).^[1] It also differs from its peers in selling only full-priced products rather than a mix of premium and discount goods.

In Q3 of 2010, Hibbett had $145.9 in net sales, a 4.1% increase from the year before, while its net income grew 14.7% to $8.8 million. A major contributing factor to these increases came from the opening of seven new stores during the quarter (compared to two store closings). For the whole of fiscal 2010, the company plans to open 42 new stores and close approximately 20 stores.^[2]

Hibbett mainly competes with local independent sporting goods stores rather than national chains because of its small store size, and its lack of discount offerings. Hibbett depends on discretionary income to build its sales - its products are not necessary commodities. As such, the company is exposed to a hurting U.S. economy, the credit crunch, and seasonal fluctuations.

Business Overview

Hibbett Store Locations, fiscal year 2009^[3]

Hibbett Sports sells soft goods (athletic and sport apparel/footwear) and hard goods (durable items such as baseball bats, footballs, etc.), all of which are circulated from the company's 220,000 square foot distribution center in Birmingham, Alabama.^[4] Hibbett sells its products at individual stores, through its website, hibbett.com, and through its team sales division, Hibbett Team Sports, Inc. The company emphasizes team sports and is a leading supplier of customized athletic apparel, equipment, and footwear to athletic and youth programs primarily in Alabama.

Unlike other sporting goods chains who offer discounted merchandise, Hibbett sells all of its products at full price. With an average store space of 5,000 square feet, Hibbett stores are much smaller than other sporting goods venues--Big 5 stores average 11,000 square feet, while a typical Dick's Sporting Goods store measures 50,000 square feet.^[5][6][7] The size and location of Hibbett stores deliver low operating costs and allow the company to target counties that represent between 30,000 and 100,000 people--something its larger competitors cannot do.^[8] The company relies on strategically located distribution centers to move new products to its rural locations.

Hibbett primarily operates in strip centers, anchored by Wal-Mart and enclosed malls. Although Hibbett seeks the Wal-Mart customer, the two companies' strategies greatly differ. Wal-Mart sells hunting, fishing, and camping equipment, in addition to food and household appliances, while Hibbett focuses on equipment for team sports. Wal-Mart carries about 30 types of baseball gloves; Hibbett carries about 80. Wal-Mart focuses on discounted items as a self-service store, whereas Hibbett offers fully-priced products as a full-service store.

In fiscal 2009 (February 2008 to January 2009), Hibbett sold over $564.1 million in products with a net income of $29.45 million. ^[9]

Despite the 2008 economic recession, Hibbett has consistently produced high operating margins compared to other public sporting goods companies:

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(Read More about Hibbett Sports' key trends and forces...)