The retail operator of City Gear and Hibbett Sports’ banners faces H2 headwinds that may negatively impact its comp sales growth and gross margins for the period. Second half gross margins are forecast to dip from their H1/22 level due to likely higher freight and shipping costs and deleverage from store occupancy costs. Still, HIBB is forecasting mid-teens comp sales growth for the full year ending Jan. 29, 2022, with increases in both Q3 and Q4.

But senior management is aware of potential setbacks that industrywide supply chain issues may have on its business in the months ahead.

“There’s certainly some concerns with regard to the supply chain,” Hibbett’s SVP and Chief Merchant Officer Jared Briskin told analysts late last week. “I guess I would characterize it as chaotic and somewhat fluid. But we feel strongly about our flow of goods and ability to hit the numbers that we talked about.”

Wall Street reacted to Hibbett’s Q2 earning results early Friday and after the company’s conference call, sending the stock up more than 5 percent in pre-market trading only to send it down more than 9 percent later in the day, HIBB’s biggest single-day decline in 17 months, on supply chain concerns.

Briskin told analysts that the retailer has operated effectively “on a significant lower amount of inventory” and the H2 results will come down to the flow of inventory, when inventory arrives and how “trend right” the retailer can be for its customers.

Stressing that “demand continues to exceed supply,” President and CEO Mike Longo added, “…We’re going to see disruptions in the supply chain. It’s going to cause problems with timing. It’s going to cause increased freight costs. It’s going to cost us more in supply chain. But all of those are swapped by the benefits of an increased demand oversupply, and that gap continues to increase.”

But product price hikes are likely on the way. Briskin says any increases will be an opportunity for Hibbett/City Gear to “drive additional gross margin” as the retailer looks to push customers to other similar products if what they want is out-of-stock.

In Q2, Hibbett reported a 6 percent decline in year-over-year comparable sales, but a 73 percent gain from Q2/19’s level. Basketball and lifestyle products, including strong demand for Classics, drove the period’s footwear results that were down mid-single digits y-o-y. Women’s was the fastest growing segment in footwear and apparel. Ecommerce comp sales dipped 20.4 percent from Q2/20 to represent 13.1 percent of quarterly sales versus 15.7 percent last year.