What happened
Shares of Hibbett Sports, Inc. (HIBB -0.04%) fell 10.8% in May, according to data provided by S&P Global Market Intelligence, after the sporting goods retailer gave investors some bad news about the first quarter.
So what
In late April, Hibbett said it expected first-quarter 2017 same-store sales would be down 4% to 5% and earnings would be between $0.94 and $0.97 per share. So, investors were prepared for a fairly weak quarter.
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When final quarterly results were released in May, the company reported same-store sales down 4.9% versus a year ago and earnings were $0.97 per share. The bottom-line number was on the high end of expectations, but the same-store sales number was at the low end of guidance and that's more concerning for investors long term. Cost-cutting can only overcome so much lost sales, so if the negative top-line trend continues, it'll be tough to break even.
Now what
Management said that same-store sales were down by double digits in February, so results really could have been worse. And management does expect same-store sales to be between down 1% and up 1%, although this is down from previous guidance of low-single digits in same-store sales growth. This implies a big improvement in performance throughout the year, and management is betting on a new store-to-home strategy. While results may not have been what investors expected, shares trade at just 9.2 times the midpoint of fiscal year earnings guidance of $2.35 to $2.55 per share. And that's not a bad value if the company can just maintain flat results.
