Hibbett Sports Inc. HIBB has been in the red for a while now owing to its trend of dismal top-line performance in the past few quarters. This has been weighing on the company’s stock price as is evident from its year-to-date performance.

Shares of this Zacks Rank #5 (Strong Sell) company has declined nearly 25% year to date, underperforming the Zacks categorized Retail–Miscellaneous industry’s drop of 3.4%. Let’s find out more.

While Hibbett managed to put up a decent fourth-quarter fiscal 2017 performance with in-line top-line and bottom-line results, the company’s earnings dipped year over year. Earnings recovered from a miss reported in the last quarter, while sales crushed its seven-quarter long negative surprise trend.

However, effects of dismal top-line trend was reflected in the company’s comparable store sales (comps), which continued to decline marred by softness across the apparel and equipment businesses along with weak traffic in the holiday season, mitigated by continued strength in footwear business.

Following the unimpressive fourth quarter, the company provided fiscal 2018 outlook, where it expects comps to grow in a low-single digit range. Further, management anticipates gross margin to remain flat with fiscal 2017 and earnings to range from $2.65–$2.85 per share. The quarterly performance and an unenthusiastic guidance led to a downtrend in the Zacks Consensus Estimate.

Estimates for fiscal 2018 and fiscal 2019 have declined by 1 cent and 5 cents, respectively, to $2.75 per share and $2.91 per share. Further, the current Zacks Consensus Estimate of $1.15 per share for first-quarter fiscal 2017, reflects a year-over-year decline of nearly 5.8%.

Moreover, it is unfortunate to note that all this comes at a time when the sporting goods retail industry is gaining from competitive rationalization due to the recent liquidation of Sports Authority and Sports Chalet. While rivals DICK’S Sporting Goods Inc. DKS and Big 5 Sporting Goods Inc. BGFV are benefiting from increased sales owing to the closing of these competitor stores, we observe that Hibbett’s top-line does not largely reflect these gains.

Coming back to Hibbett, the company’s consumer driven business remains prone to unstable economic conditions. Further, it is exposed to seasonal risks as the seasonal nature of the company’s business generally attracts stronger sales in the spring and holiday seasons.

While we laud the company’s strategic growth initiatives, including the launch of eCommerce site, which is anticipated to boost the top line in fiscal 2018 and beyond. However, we would like to see more pronounced growth in its top line before we become optimistic on this sporting goods retailer.

Meanwhile, investors may consider a better-ranked stock in the same industry, which is MarineMax Inc. HZO, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MarineMax has advanced 10.1% in year to date. Further, the company has to its credit a spectacular earnings surprise history with an average beat of 131.2% recorded in the trailing four quarters.

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Big 5 Sporting Goods Corporation (BGFV): Free Stock Analysis Report
 
Dick's Sporting Goods Inc (DKS): Free Stock Analysis Report
 
Hibbett Sports, Inc. (HIBB): Free Stock Analysis Report
 
MarineMax, Inc. (HZO): Free Stock Analysis Report
 
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