Will Hibbett's (HIBB) Strategic Initiatives Propel Growth?

Is Hibbett Sports, Inc. (NASDAQ:HIBB) part of your portfolio? If not, this might be the right time to add the stock as it looks very promising supported by its solid financials, store expansion and small-market strategies.

Hibbett operates sporting goods stores in small-to-mid-sized markets in the South, Southwest, Mid-Atlantic and lower Midwest regions of the U.S. It focuses mainly on small towns and counties with population between 25,000 and 75,000. This strategy provides the company a niche market and lends it a competitive edge over larger rivals due to less competition and lower operating costs.

Further, the company seems to be on track with its store expansion program . In fact, the company targets markets with high potential for future growth. Going forward, the company expects to gain from its small market strategy as it continues to strengthen its presence across the country.

Moreover, Hibbett has introduced a new store system that would enable it to view its actual in-store inventory across all its stores and accordingly generate more sales. The company believes that this effort is the beginning of its digital strategy, which will integrate its stores and digital presence with its customers.

Additionally, this sporting goods retailer boasts a debt-free balance sheet and generates a strong operating cash flow. These provide it with financial flexibility to drive growth. Also, these facilitate the company to undertake shareholder-friendly moves such as share repurchases.

We note that the company was able to post strong first-quarter fiscal 2017 results on the back of the aforesaid endeavors. Notably, this was the third straight quarter of earnings beat as the bottom line gained from solid sales, improved margins and lower costs. Moreover, continued gains from its merchandise initiatives drove the upside in the quarter.

Also, the company reiterated its fiscal 2017 guidance, anticipating continued growth in comparable sales as well as better margins driven by its store and inventory management initiatives. We believe the company’s solid surprise history coupled with its fiscal 2017 guidance indicate its future potential.

However, Hibbett is losing its market share to competitors that are entering its market with omni-channel business operations. The company faces stiff competition from retailers like Barnes & Noble, Inc. (NYSE:BKS) , Big 5 Sporting Goods Corp. (NASDAQ:BGFV) and Five Below, Inc. (NASDAQ:FIVE) .

Nonetheless, we believe that the aforementioned growth initiatives wiil support the company’s impressive momentum in future.