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Hibbett (NASDAQ:HIBB) was downgraded to Sell at Williams Trading after the retailer reeled in full-year earnings expectations.
The Alabama-based seller of sports equipment missed on top and bottom lines as comparable sales came in slower than expectations and gross margins contracted sharply. Despite the contraction, inventory levels continued to grow in the quarter, prompting deep cuts to earnings forecasts.
Management called out impacts on low-income consumers and persistent promotional activity in the retail industry for the pessimistic outlook.
Following the miss and slashed outlook, Williams Trading analyst Sam Poser downgraded the stock to Sell, noting the Q1 results were “challenging as expected, but the outlook was far worse” than anticipated.
“HIBB’s product assortments are not compelling customers to buy lots of stuff,” he told clients.
He cut his price target to $37 from a prior $54 alongside the downgrade. Shares of Hibbett (HIBB) slumped 9.58% on Friday. Academy Sports & Outdoors (ASO) -1.15% followed Hibbett downwards on the day, but fellow sportswear retailers Dick’s Sporting Goods (DKS) +2.73% and Foot Locker (FL) +0.8% rose in contrast to their Alabama-based competitor.
Dick’s recently exceeded earnings expectations in its Q1 print, differing from both Hibbett (HIBB) and Foot Locker (FL).
More on sports retail earnings:
Barclays picks recession scenario winners and losers from the retail sector
Nike, Under Armour slide following Foot Locker’s lackluster Q1 results (update)
DICK’S Sporting Goods: Solid Company That Is Fairly Valued
Foot Locker catches two downgrades after earnings day disaster
Electronics, department stores lead declines in weak retail sales report
