Hibbett Sports Scores With Solid Quarter and Favorable Outlook

It was downright depressing heading toward one of our local malls on Friday night. We were going to the nearby movie theaters but ultimately scrapped plans to see what was left inside the mall. We know for sure that at least two of the anchor stores are gone, those spaces are vacant, and the parking lot was not much different.

Amid the continual extinction process that modern-day retail has been experiencing for years, we still see the occasional ray of light. The opportunities to make money in the more traditional brick-and-mortar space are out there; the presumed death of all non-Amazon (AMZN)  sellers is still a bit premature. While the days of buy and hold are likely long gone, there still may be opportunities to buy beaten-up names with some life left, take profits and move on.

Last Friday, Hibbett Sports Inc. (HIBB) , which has been on a downslide since 2014 but also has presented some buying opportunities since then, put up some great third-quarter numbers and closed the day up 15%. Same-store sales rose 10.7% and revenue of $275.5 million beat consensus estimates by $14.7 million. Earnings per share of 32 cents were double the consensus estimate. E-commerce sales were 10.7% of total revenue for the quarter, up from 8.8% for the same quarter last year.

Guidance for fiscal 2020 was also strong. Hibbett now expects same-store sales growth will be in the 4% to 6% range, up from the previously expected 1% to 2%. Estimated EPS were increased to a range of $1.55-$1.65 from $1.35-$1.50.

During the quarter, HIBB repurchased another 372,000 shares and has reduced shares outstanding by about 33% over the past six-plus years. Hibbett expects to buy back between $25 million and $30 million in stock in fiscal 2020.

The balance sheet remains fairly solid, with $77 million, or around $4 per share, in cash and just $9 million in debt (Note: I am excluding operating lease liabilities, which were previously off-balance sheet but are now required to be reported).

Regarding our Friday night mall experience, another interesting thing I've been seeing (anecdotally) is that at least in our area the strip malls, which were the precursor to the emergence of the big enclosed shopping malls in the 1970s, seem to be doing just fine. They are attracting the customers, while the enclosed shopping malls seem to be going the way of the dinosaur.

My current retail reclamation projects include a couple unloved and controversial names, Ascena Retail Group Inc. ASNA , parent of Ann Taylor, Loft, Lane Bryant and others, and Fossil Group Inc. (FOSL) .

At the time of publication, Heller was long ASNA and FOSL.