Theft has been the theme for the retail industry’s earnings season this month, and with it the industry metric known as “shrink.” But sports-centric retailer Hibbett Inc. said Friday that the hit to margins from theft wasn’t that much.
So-called “shrink” is a metric retailers use to measure losses of items attributed to theft, fraud or employee error. But retailers calculate it differently, and some observers say that crime data — and executive commentary — are often too broad and vague to adequately gauge the issue, and risk warping the policy response.
“Similar to most retailers, we’ve seen some elevated shrink levels really over the last couple of years,” Ben Knighten, senior vice president of store operations, said on Hibbett’s
HIBB,
earnings call.
“You know, organized crime is real and it does impact us,” he continued. “That said, kind of comparing to last year, shrink really hasn’t had a material impact to our gross margin percentage. I’d also point out that’s included our guidance for the back half of the year. We really focus on, you know, customer service, and that’s really our biggest deterrent from a shrink perspective and doing that each and every day.”
Chief Executive Mike Longo said that, similar to remarks from Walmart Inc.
WMT,
thefts had been “uneven” across the nation. Hibbett runs nearly 1,150 Hibbett, City Gear and Sports Additions stores across 36 states.
Hibbett did not immediately respond to a request for more information. Shares of Hibbett jumped 21.7% on Friday, after the company reported a better-than-expected profit.
That jump came after results earlier in the week from athletic-gear retailers Foot Locker Inc.
FL,
and Dick’s Sporting Goods Inc.
DKS,
both of which prompted investors to race for the exits. Both retailers are retrenching amid shaky demand trends. But they cited theft as a growing issue.
However, Nordstrom Inc.
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said “We have not seen continuing rising of shrinkage that has exceeded what we plan.”
Shares of Hibbett are down 34% so far this year.
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