Sports-related apparel retailer Hibbett (HIBB -1.46%) reported quarterly earnings this morning that beat estimates and raised full-year guidance, and the initial reaction was strongly positive. The stock popped more than 6% in pre-market trading. So investors may be wondering why shares were trading 11.5% below Thursday's closing price, as of 2 p.m. EDT.
Hibbett blew past analyst earnings estimates with net income of $2.86 per diluted share compared to a consensus estimate of $1.44 per share. Sales also beat forecasts, and the company revised its full fiscal-year earnings estimate to a range of $11.00 to $11.50 compared to the prior guidance of $8.50 to $9.00 per diluted share. That's all good news, but it seems investors feel that it was all already priced in. Hibbett stock had already jumped almost 16% in just the first four days of this week. Today's drop doesn't quite reverse all of those gains.
With the stock back close to where it began the week, investors are probably looking at several potential headwinds mentioned by the company. As business has recovered from the pandemic impacts, comparisons will be more difficult going forward. While it was all positive news, the company's updated guidance only brings it to the close of its fiscal year ended Jan. 29, 2022.
Issues that several other retailers have commented on were also brought up by Hibbett management. It said it provided "limited forward guidance" because of what it said was "uncertainty in the business environment, potential legislation that could negatively impact our business, changes in consumer spending habits and ongoing supply chain disruptions."
Supply chain issues have been particularly notable this earnings season. While strong demand is the other side of the supply equation, investors who drove shares up so much earlier in the week seemed to feel that some uncertainty looking ahead warranted caution. It does look like the company-specific news was all positive this quarter, however.