Hibbett Sports stock drops on earnings miss, 56% increase in inventory

Yahoo Finance Live anchors discuss the dip in stock for Hibbett Sports following third-quarter earnings.

Video transcript

[AUDIO LOGO]

JULIE HYMAN: And now we're gonna look at one stock that is giving up gains and then some. It's now off 11%. That's Hibbett Sports. Following a third-quarter earnings miss on both the top and bottom lines, the sporting goods company also reported a 56.4% increase in its inventory compared to the prior year. I think that might take the prize, the dubious prize, of being the biggest increase--

BRAD SMITH: The [? Hickey ?] Award?

JULIE HYMAN: --in inventory, yeah, of those-- of the companies that we've talked about, right? I think that's the biggest increase that we have seen.

BRIAN SOZZI: Just lose track after a while, Julie. All these double-digit increases after a while all look the same. But not a really good quarter for Hibbett. Margins under pressure in large part because of higher expenses to get products to the consumer.

Really-- and, you know, we were talking about the difference between UPS and FedEx. Look at this quarter from Hibbett compared to what we saw from Dick's Sporting Goods last week. Night and day. And I think that really it shows the scale of Dick's Sporting Goods and their ability to not only spread higher costs over more stores but just to get better product than a regional player like Hibbett.

BRAD SMITH: They did talk about a strong back-to-school season. That is something that we heard about from Dick's as well here. But then additionally, you think about what's taking place perhaps in the current quarter.

We're also coming off of a heavy spending weekend for both Black Friday and then some of the Cyber Monday results coming in. And it was interesting on some of the Adobe data that had come in, sporting goods sales actually surged 239% this past weekend compared with average daily sales in October. I wish we would get a year-over-year number on that because, I mean, just-- October, what, 7 [INAUDIBLE]

BRIAN SOZZI: I just sent him a text. I just sent him a text.

BRAD SMITH: Yeah, please do.

BRIAN SOZZI: Yeah, all right.

BRAD SMITH: Just--

JULIE HYMAN: Yeah,

BRAD SMITH: --get some answers on it.

JULIE HYMAN: --that is a weird, weird comparison metric.

BRAD SMITH: Yeah. So perhaps Hibbett Sports-- which I was looking at some of the drops that are coming out on Hibbett Sports online, they got the 7-Eleven Crocs. Perhaps that'll--

BRIAN SOZZI: Did you get a pair?

BRAD SMITH: I didn't buy a pair. Yeah, no. They're coming out today, though.

BRIAN SOZZI: OK.

BRAD SMITH: Yeah, interesting.

JULIE HYMAN: What do you-- like what do you think when you see somebody walking down the street in a pair of 7-Eleven Crocs?

BRAD SMITH: They love Slurpees.

BRIAN SOZZI: I think it's just billboards, Julie. I think it's billboards for the brand. They shouldn't be worn.

JULIE HYMAN: I think they can be worn but I think 7-Eleven should be paying those people. I don't think people should be paying for the shoes.

BRIAN SOZZI: Good job.

JULIE HYMAN: You're wearing ads on your feet.

BRIAN SOZZI: Good show. You're welcome.

BRAD SMITH: Yes.

JULIE HYMAN: [LAUGHS] And they did say, by the way, in the quarter that footwear did well.

BRAD SMITH: Yes.

JULIE HYMAN: It was apparel where they had some issues so they'll be selling lots of those 7-Eleven Crocs, I imagine.

BRAD SMITH: We'll see if the drops pay off there.