Please ensure Javascript is enabled for purposes of website accessibility

Why Hibbett Sports Stock Surged Today

By Joe Tenebruso – Updated Jul 21, 2020 at 5:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The athletics-inspired fashion retailer is not just surviving but thriving during the coronavirus crisis.

What happened 

Shares of Hibbett Sports (HIBB 3.63%) jumped on Tuesday, following the sports apparel retailer's second-quarter sales update. By the close of trading, Hibbett's stock was up nearly 13% after rising more than 26% earlier in the day.

So what

Hibbett expects its second-quarter comparable-store sales to climb more than 70% year over year. That crushed Wall Street's estimates; analysts had expected comps growth of only 15.7%. 

Hibbett says the gains will be driven by both its stores and its e-commerce, whose comps are predicted to rise by roughly 60% and 200%, respectively.

"We believe our sales have been positively impacted by multiple factors, including pent-up consumer demand, temporary and permanent store closures by our competitors, and stimulus money," CEO Mike Longo said in a press release. "These circumstances yielded increased traffic to our stores and website and the opportunity for new customers to experience our trademark service."

A person is drawing an upwardly sloping line labeled sales.

Hibbett Sports' sales forecast dazzled investors on Tuesday. Image source: Getty Images.

For the first half of the year, Hibbett estimates that its comps will rise by approximately 20%, including a 7% increase in store-based comps and a 140% surge in digital sales.

Hibbett also noted that it paid back the $50 million it borrowed during the early stages of the coronavirus pandemic, since the funds were not needed.

Now what

Hibbett's omnichannel strategy appears to be paying off. Its efforts to strengthen its e-commerce operations are certainly bearing fruit, as shown by its impressive digital sales growth. Moreover, Hibbett's ability to effectively sell its wares both in stores and online is helping it take share from its traditional retail competitors, many of whom will not survive the COVID-19 crisis.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.