Fly News Breaks for May 19, 2017
News For FL From the Last 2 Days
Jul 24, 2017 | 14:19 EDT
Shares of Foot Locker (FL) and Under Armour (UA) are sliding after Hibbett Sports (HIBB) provided negative preliminary results for the second quarter. Commenting on the news, Raymond James analyst Dan Wewer added that the read through is negative not only for Hibbett's vendors but also appears negative for Dick's Sporting Goods (DKS). PRELIMINARY RESULTS: Hibbett Sports has provided preliminary results for the second quarter ended July 29, stating that based on "very challenging sales trends," comparable store sales are expected to decrease approximately 10% for the second quarter. The company, which also and announced the launch of its new e-commerce site this morning, added that the decline in sales, along with significant pressure on gross margin, is expected to result in a loss of (19c) to (22c) per diluted share for the quarter. NEGATIVE READ-THROUGH: In a research note to investors, Raymond James' Wewer noted that Hibbett's same-store sales warning follows Finish Line's (FINL) first quarter release on June 23 that May sales suffered from weak consumer traffic and difficult product launch comparisons. The read through is negative for Hibbett's vendors, including Under Armour (UAA), said Wewer. While the analyst acknowledged that he is not sure if Hibbett's sales trends were company specific or reflective of the industry, he said the preannouncement also appears negative for Dick's. Meanwhile, Stifel analyst Jim Duffy told investors in a research note of his own that Hibbett's release is symptomatic of difficult retail trends in North America. While the analyst noted he sees negative comparable sales as a structural challenge to the retail business, he does expect poor second quarter performance to set up for an easy compare in the second quarter of 2018. Nonetheless, Duffy pointed out that the e-commerce launch timing is welcome ahead of back-to-school, providing a revenue benefit at lower operating margins near-term. He reiterated a Hold rating on Hibbett's shares. Voicing a similar opinion, his peer at SunTrust noted that Hibbett's profit warning was just the latest data point showing a lack of sector vitality right now. Fashion shifts, macro sluggishness and e-commerce shifts are all playing a role, analyst David Magee contended. Furthermore, the analyst pointed out that he does not think the sector weakness is confined to the company in what is usually a seasonally challenging period. Magee also reiterated a Hold rating on Hibbett. PRICE ACTION: In afternoon trading, shares of Hibbett have dropped about 31% to $13.52, while Foot Locker and Under Armour have slipped about 4% and 2%, respectively. Dicks Sporting Goods has also slid almost 6% to $35 per share.