Hibbett Sports, Inc. (NASDAQ/GS: HIBB):
- Comparable Sales Increase 3.8% in
Fourth Quarter
- Record Annual Sales of $1.0
Billion
- Fourth Quarter EPS of $0.36 Per Share,
$0.57 Excluding Non-Recurring Costs
- Initiates Plan to Close Underperforming
Stores
- Issues Fiscal 2020 Outlook
Hibbett Sports, Inc. (NASDAQ/GS: HIBB), an athletic specialty
retailer, today provided the following business updates:
Note: The fourth quarter and Fiscal 2019 ended on
February 2, 2019, included 13 weeks of results in the fourth
quarter and 52 weeks of results in Fiscal 2019. The fourth quarter
and Fiscal 2018 ended on February 3, 2018, included 14 weeks
of results in the fourth quarter and 53 weeks of results in Fiscal
2018.
Fourth Quarter Results
Net sales for the 13-week period ended February 2, 2019,
increased 14.7% to $306.0 million (including $49.1 million for City
Gear), compared with $266.7 million for the 14-week period ended
February 3, 2018, (including $13.5 million for the 53rd week).
Comparable store sales increased 3.8% on a 13-week to 13-week
basis. Comparable store sales will not include sales from City Gear
until the fourth quarter of Fiscal 2020. E-commerce sales
represented 10.6% of total sales for the fourth quarter.
Gross margin was 31.1% of net sales for the 13-week period ended
February 2, 2019, compared with 31.5% for the 14-week period ended
February 3, 2018. The decrease was mainly due to a $1.9 million
expense incurred to amortize an inventory step-up value related to
the City Gear acquisition. Excluding acquisition costs, non-GAAP
gross margin was 31.7% of net sales for the 13-week period ended
February 2, 2019. The fourth quarter of Fiscal 2018 included a
non-recurring charge $0.9 million to establish a reserve against
the Company’s Team Division inventory as a result of selling the
business.
Store operating, selling and administrative expenses were 25.5%
of net sales for the 13-week period ended February 2, 2019,
compared with 23.2% of net sales for the 14-week period ended
February 3, 2018. The increase was mainly due to $2.8 million in
non-recurring costs related to the acquisition of City Gear, and
$0.3 million in non-recurring severance costs due to the
elimination of 30 positions in the field organization and corporate
office in order to streamline operations. Excluding non-recurring
costs, non-GAAP store operating, selling and administrative
expenses were 24.5% of net sales for the 13-week period ended
February 2, 2019. The fourth quarter of Fiscal 2018 included a
non-recurring gain of $3.1 million due to the sale of the Company’s
Team Division.
Net income for the 13-week period ended February 2, 2019, was
$6.6 million compared with net income of $9.7 million for the
14-week period ended February 3, 2018. Excluding non-recurring
costs, non-GAAP net income for the 13-week period ended February 2,
2019, was $10.5 million. Earnings per diluted share was $0.36 for
the 13-week period ended February 2, 2019, compared with earnings
per diluted share of $0.51 for the 14-week period ended February 3,
2018. Excluding non-recurring costs, non-GAAP earnings per diluted
share was $0.57 for the 13-week period ended February 2, 2019.
Earnings per diluted share for the 14-week period ended February 3,
2018, included a non-recurring gain of $0.07 per diluted share due
to the sale of the Company’s Team Division, and a benefit of $0.08
per diluted share due to the 53rd week in Fiscal 2018.
Jeff Rosenthal, President and Chief Executive Officer, stated,
“We are quite pleased with the fourth quarter results, which was
driven by significant progress on our strategic initiatives along
with compelling assortments from our key vendors. Our omni-channel
initiative continues to deliver strong results, with online sales
increasing 60% to 10.6% of total sales in the quarter. We are
seeing significant improvement in web traffic and good traction
with Buy Online, Pickup in Store (BOPIS) and improvements to our
mobile app. At the same time, we continue to improve the
productivity of our store base by closing unproductive stores and
positioning the City Gear banner to drive sales for the fashion
consumer.”
For the quarter, Hibbett acquired 136 City Gear stores, opened
12 new stores (including 2 City Gear stores), expanded one
high-performing store, and closed 27 underperforming stores
bringing the store base to 1,163 in 35 states as of February 2,
2019.
Strategic Realignment – Accelerated
Store Closure Plan
As the retail environment continues to evolve, the Company is
focused on improving the productivity of the store base while
continuing to grow its omni-channel business to serve customers
where and when they want to shop. As a result, subsequent to the
year ended February 2, 2019, the Company has decided to close
approximately 95 Hibbett stores in Fiscal 2020, while opening 10 to
15 new Hibbett and City Gear stores. This is expected to result in
non-recurring impairment and store closure charges in the range of
$0.15 to $0.20 per diluted share in Fiscal 2020. Associates will be
extended opportunities to transition to similar positions at other
Hibbett stores wherever possible.
Jeff Rosenthal, President and Chief Executive Officer, stated,
“While these decisions are never easy, we believe it is in the best
interest of our shareholders as we continue to evolve the business
and adapt to changing shopping patterns. Going forward, we will
continue to invest in our business with the goal of providing a
differentiated product assortment and customer experience that
aligns with today’s consumer.”
Fiscal 2019 Results
Net sales for the 52-week period ended February 2, 2019,
increased 4.2% to $1.0 billion compared with $968.2 million for the
53-week period ended February 3, 2018. Comparable store sales
increased 2.2% on a 52-week to 52-week basis.
Gross margin was 32.6% of net sales for the 52-week period ended
February 2, 2019, compared with 32.3% for the 53-week period ended
February 3, 2018. Excluding acquisition expenses related to the
$1.9 million amortization of an inventory step-up value, non-GAAP
gross margin was 32.8% for the 52-week period ended February 2,
2019. The 53-week period ended February 3, 2018, included a $0.9
million non-recurring charge to establish a reserve against the
Company’s Team Division inventory as a result of selling the
business.
Store operating, selling and administrative expenses were 26.2%
of net sales for the 52-week period ended February 2, 2019,
compared with 23.9% of net sales for the 53-week period ended
February 3, 2018. Excluding costs relating to the acquisition of
City Gear of $4.3 million and non-recurring severance costs of $0.3
million, non-GAAP store operating, selling and administrative
expenses were 25.7% of net sales for the 52-week period ended
February 2, 2019. The 53-week period ended February 3, 2018,
included a non-recurring gain of $3.1 million due to the sale of
the Company’s Team Division.
Net income for the 52-week period ended February 2, 2019, was
$28.4 million compared with $35.0 million for the 53-week period
ended February 3, 2018. Excluding non-recurring costs, non-GAAP net
income for the 52-week period ended February 2, 2019, was $33.3
million. Earnings per diluted share for the 52-week period ended
February 2, 2019, was $1.51 compared with $1.71 for the 53-week
period ended February 3, 2018. Excluding non-recurring costs,
non-GAAP earnings per diluted share was $1.77 for the 52-week
period ended February 2, 2019. Earnings per diluted share for the
53-week period ended February 3, 2018, included a non-recurring
gain of $0.07 per diluted share due to the sale of the Company’s
Team Division and a benefit of $0.07 per diluted share due to the
53rd week in Fiscal 2018.
For the year, Hibbett acquired 136 City Gear stores, opened 32
new stores, expanded or relocated 10 stores and closed 84
underperforming stores.
Balance Sheet and Stock
Repurchases
Hibbett ended the fourth quarter of Fiscal 2019 with $61.8
million of available cash and cash equivalents on the consolidated
balance sheet. As of February 2, 2019, Hibbett had $35.0 million in
debt outstanding and $65.0 million available under its credit
facilities.
During the fourth quarter, the Company repurchased 3,900 shares
of common stock for a total expenditure of $0.1 million. For Fiscal
2019, the Company repurchased 775,951 shares of common stock for a
total expenditure of $16.5 million. Approximately $188.0 million
remained authorized for future stock repurchases through January
29, 2022.
Fiscal 2020 Outlook
The Company provided the following guidance for Fiscal 2020:
- Earnings per diluted share in the range
of $1.50 to $1.70, which includes $0.25 to $0.35 per diluted share
for non-recurring costs associated with the integration of City
Gear, and costs associated with store closures. Excluding
non-recurring costs, non-GAAP earnings per diluted share are
expected to be in the range of $1.80 to $2.00.
- Comparable store sales in the range of
-1.0% to 1.0%.
- Approximately 10 to 15 new store
openings with approximately 95 store closures.
- Decline in gross margin rate in the
range of 25 to 45 basis points. Excluding non-recurring costs for
both years, non-GAAP gross margin is expected to decline in the
range of 35 to 55 basis points.
- Increase in SG&A expense rate in
the range of 15 to 25 basis points. Excluding non-recurring costs
for both years, approximately flat as a percentage of sales.
- Decline in depreciation expense in the
range of 10 to 20 basis points.
- Tax rate of approximately 24.5%.
- Capital expenditures of approximately
$18.0 million to $22.0 million.
- Share buyback of approximately $10.0
million to $15.0 million.
- Full repayment of $35.0 million in debt
related to the City Gear acquisition.
Investor Conference Call and
Simulcast
Hibbett Sports, Inc. will conduct a conference call at 10:00
a.m. ET on Friday, March 22, 2019, to discuss fourth quarter Fiscal
2019 results. The number to call for the live interactive
teleconference is (212) 231-2902. A replay of the conference
call will be available until March 29, 2019, by dialing
(402) 977-9140 and entering the passcode, 21914893.
The Company will also provide an online Web simulcast and
rebroadcast of its fourth quarter Fiscal 2019 conference call. The
live broadcast of Hibbett’s quarterly conference call will be
available online at www.hibbett.com under Investor Relations on
March 22, 2019, beginning at 10:00 a.m. ET. The online
replay will follow shortly after the call and be available for
replay for 30 days.
Hibbett, headquartered in Birmingham, Alabama, is a leading
athletic-inspired fashion retailer with more than 1,100 stores
under the Hibbett Sports and City Gear banners, primarily located
in small and mid-sized communities. Founded in 1945, Hibbett has a
rich history of convenient locations, personalized customer service
and access to coveted footwear, apparel and equipment from top
brands like Nike, Jordan, Adidas, and Under Armour. Consumers can
browse styles, find new releases, shop looks and make purchases
online or in their nearest store by visiting www.hibbett.com or
www.citygear.com. Follow us @hibbettsports and @citygear.
About Non-GAAP Financial
Measures
This press release includes certain non-GAAP financial measures,
including adjusted net income, earnings per share, gross margin and
SG&A expenses as a percentage of net sales. Management believes
that non-GAAP net income, earnings per share, gross margin and
SG&A expenses as a percentage of net sales, which exclude the
effects of non-recurring expenses related to the acquisition of
City Gear and our accelerated store closure plan, are useful
measures for providing more accurate comparisons of our current
financial results to historical operations, forward looking
guidance and the financial results of peer companies. The
non-recurring costs related to the acquisition of City Gear include
amortization of inventory step-up value and professional service
fees and expenses consisting primarily of investment banking, legal
and accounting fees and expenses. In future periods, such
acquisition-related costs may include one or more of the following
categories of expenses: (i) transition and integration costs, (ii)
professional service fees and expenses and (iii)
acquisition-related adjustments. Future non-recurring costs related
to the accelerated store closure plan may include: (i) lease and
equipment impairment costs, (ii) third party liquidation fees,
(iii) store exit costs, and (iv) residual lease costs.
While our management uses these non-GAAP financial measures as a
tool to enhance their ability to assess certain aspects of our
financial performance, our management does not consider these
measures to be a substitute for, or superior to, the information
provided by GAAP financial statements. Consistent with this
approach, we believe that disclosing non-GAAP financial measures to
the readers of our financial statements provides such readers with
useful supplemental data that, while not a substitute for GAAP
financial statements, allows for greater transparency in the review
of our financial and operational performance. It should be noted as
well that our non-GAAP information may be different from the
non-GAAP information provided by other companies.
For a reconciliation of these non-GAAP financial measures to the
most directly comparable financial measures prepared in accordance
with GAAP, please see the sections titled “GAAP to Non-GAAP
Reconciliation” that accompany this press release.
A WARNING ABOUT FORWARD LOOKING STATEMENTS: Certain matters
discussed in this press release are “forward looking statements” as
that term is used in the Private Securities Litigation Reform Act
of 1995. Forward looking statements address future events,
developments or results and typically use words such as “believe,”
“anticipate,” “expect,” “intend,” “plan,” “forecast,” “guidance,”
“outlook,” “estimate,” “continue,” “will,” “may,” “could,”
“possible,” “potential” or other similar words, phrases or
expressions. For example, our forward-looking statements include
statements regarding expectations around our online sales, our new
mobile app and our Buy Online Pick Up in Store and Reserve Online
capabilities, non-recurring costs related to the acquisition of
City Gear, costs associated with store closures, the repayment of
debt related to the City Gear acquisition, productivity of our
store base, earnings per diluted shares, comparable store sales,
store openings and closures, gross margin, SG&A expense,
depreciation expense, tax rate, capital expenditures and our stock
repurchase program. Such statements are subject to risks and
uncertainties that could cause actual results to differ materially,
including economic conditions, industry trends, merchandise trends,
vendor relationships, customer demand, and competition. For a
discussion of these factors, as well as others which could affect
our business, you should carefully review our Annual Report and
other reports filed from time to time with the Securities and
Exchange Commission, including the “Risk Factors,” “Business” and
“MD&A” sections in our Annual Report on Form 10-K filed on
March 30, 2018, and in our Quarterly Reports on Form 10-Q filed on
June 13, 2018, September 13, 2018 and December 13, 2018. In light
of these risks and uncertainties, the future events, developments
or results described by our forward-looking statements in this
document could be materially and adversely different from those we
discuss or imply. We are not obligated to release publicly any
revisions to any forward-looking statements contained in this press
release to reflect events or circumstances occurring after the date
of this report and you should not expect us to do so.
HIBBETT SPORTS, INC.
AND SUBSIDIARIES Unaudited Condensed Consolidated Statements
of Operations (Dollars in thousands, except per share amounts)
February 2,
2019
February 3,
2018
February 2,
2019
February 3,
2018
(13 Weeks) (14 Weeks) (52 Weeks) (53
Weeks) Net sales $ 305,964 $ 266,738 $ 1,008,682 $ 968,219 Cost
of goods sold 210,865 182,761 679,947
655,502 Gross margin 95,099 83,977 328,735 312,717 Store
operating, selling and administrative expenses 77,932 61,945
264,142 231,832 Depreciation and amortization 8,204
6,148 27,052 24,207 Operating income 8,963
15,884 37,541 56,678 Interest expense (income), net 371
54 (17 ) 231 Income before provision for
income taxes 8,592 15,830 37,558 56,447 Provision for income taxes
1,958 6,097 9,137 21,417 Net
income $ 6,634 $ 9,733 $ 28,421 $ 35,030 Basic
earnings per share $ 0.36 $ 0.51 $ 1.52 $ 1.72 Diluted
earnings per share $ 0.36 $ 0.51 $ 1.51 $ 1.71
Weighted average shares outstanding: Basic 18,290
19,069 18,644 20,347 Diluted 18,470
19,186 18,826 20,450
HIBBETT SPORTS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets (In
thousands)
February 2,
2019
February 3,
2018
Assets Cash and cash equivalents $ 61,756 $ 73,544
Inventories, net 280,287 253,201 Other current assets 25,813
20,029 Total current assets 367,856 346,774 Property and
equipment, net 115,394 109,698 Goodwill 23,133 - Tradename
intangible 32,400 - Other assets 7,282 5,374 Total
assets $ 546,065 $ 461,846
Liabilities and Stockholders'
Investment Accounts payable $ 107,315 $ 93,435 Credit
facilities 35,000 - Capital lease obligations 1,017 663 Accrued
expenses 29,941 21,469 Total current liabilities
173,273 115,567 Long-term capital lease 1,994 2,522 Other
noncurrent liabilities 34,749 24,161 Stockholders' investment
336,049 319,596 Total liabilities and stockholders'
investment $ 546,065 $ 461,846
HIBBETT SPORTS, INC. AND SUBSIDIARIES
Supplemental Information (Unaudited)
February 2,
2019
February 3,
2018
February 2,
2019
February 3,
2018
(13 Weeks) (14 Weeks) (52 Weeks) (53
Weeks)
Sales
Information
Net sales increase (decrease) 14.7 % 8.0 % 4.2 % -0.5 % Comparable
sales increase (decrease) 3.8 %(1) 1.6 %(2) 2.2 %(1) -3.8 %(2)
Store Count
Information
Beginning of period 1,042 1,081 1,079 1,078 Stores acquired 136 -
136 - New stores opened 12 12 32 44 Stores closed (27 )
(14 ) (84 ) (43 ) End of period 1,163
1,079 1,163 1,079
Stores expanded or relocated 1 2 10 11 Estimated square
footage at end of period (in thousands) 6,542 6,140
Balance Sheet Information
Average inventory per store $ 241,004 $ 234,663
Share Repurchase
Program
Shares 3,900 611,596 775,951 2,842,809 Cost (in thousands) $ 66 $
9,326 $ 16,540 $ 54,506 1) Represents the increase in
comparable sales from the 13 weeks and 52 weeks ended February 3,
2018, to the 13 weeks and 52 weeks ended February 2, 2019. 2) As
originally reported for the fourth quarter ended February 3, 2018.
The comparable sales increase was 1.0% for the 13 weeks and the
comparable sales decrease was 3.7% for the 52 weeks, adjusted for
the week shift due to the 53rd week in Fiscal 2018.
HIBBETT SPORTS,
INC. AND SUBSIDIARIES Fiscal 2018 Comparable Sales and Net
Sales As Originally Reported and Adjusted for Week Shift
(a) (Unaudited) Fiscal 2018 First
Quarter Second Quarter Third Quarter
Fourth Quarter Full Year Comparable
sales (originally reported) -4.9 % -11.7 % -1.3 % 1.6 % -3.8 %
Comparable sales (adjusted for week shift) -4.8 %
-11.0 % 0.3 %
1.0 % -3.6 % Impact of week shift 0.1 %
0.7 % 1.6 % -0.6 % 0.2 %
Fiscal 2018 First Quarter
Second Quarter Third Quarter
Fourth Quarter Full Year Net sales (originally
reported) $ 275.7 $ 188.0 $ 237.8 $ 266.7 $ 968.2 Net sales
(adjusted for one week) $ 275.2 $ 206.0
$ 220.6 $ 265.8
$ 967.6 Impact of week shift $ (0.5 ) $ 18.0 $ (17.2
) $ (0.9 ) $ (0.6 ) (a) Due to the 53rd week in Fiscal 2018,
each quarter in Fiscal 2019 starts one week later than the same
quarter in Fiscal 2018. The charts above present comparable sales
and net sales for Fiscal 2018 as originally reported and as
adjusted to represent the same 13-week period as the Fiscal 2019
quarters.
HIBBETT SPORTS, INC. AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliation (Dollars in thousands,
except per share amounts)
(Unaudited)
Thirteen Weeks Ended February
2, 2019 Non-Recurring Costs GAAP Basis
(As Reported)
AcquisitionCosts
(1)
Severance
Costs (2)
Non-GAAP Basis
February 2,
2019
Net sales $ 305,964 $ - $ - $ 305,964 Cost of goods sold
210,865 1,911 - 208,954 Gross
margin 95,099 1,911 - 97,010 Store operating, selling and
administrative expenses 77,932 2,771 289 74,872 Depreciation and
amortization 8,204 - -
8,204 Operating income 8,963 4,682 289 13,934 Interest expense, net
371 - - 371 Income before
provision for income taxes 8,592 4,682 289 13,563 Provision for
income taxes 1,958 (1,067 ) (66 ) 3,091
Net income $ 6,634 $ 3,615 $ 223 $ 10,472
Basic earnings per share $ 0.36 $ 0.20 $ 0.01 $ 0.57
Diluted earnings per share $ 0.36 $ 0.20 $ 0.01 $
0.57 Weighted average shares outstanding: Basic
18,290 18,290 18,290 18,290
Diluted 18,470 18,470 18,470
18,470 1) Non-recurring acquisition costs
represent costs incurred during the thirteen weeks ended February
2, 2019, related to the acquisition of City Gear, LLC and consists
primarily of amortization of inventory fair-market value step-up
and legal, accounting and professional fees. 2) Non-recurring
severance costs represent costs incurred during the thirteen weeks
ended February 2, 2019, related to elimination of 30 positions to
streamline operations.
HIBBETT SPORTS, INC. AND SUBSIDIARIES GAAP to
Non-GAAP Reconciliation (Dollars in thousands, except per share
amounts)
(Unaudited) Fifty-Two Weeks Ended
February 2, 2019 Non-Recurring Costs GAAP Basis
(As Reported)
AcquisitionCosts
(1)
Severance
Costs (2)
Non-GAAP Basis
February 2,
2019
Net sales $ 1,008,682 $ - $ - $ 1,008,682 Cost of goods sold
679,947 1,911 - 678,036
Gross margin 328,735 1,911 - 330,646 Store operating,
selling and administrative expenses 264,142 4,299 289 259,554
Depreciation and amortization 27,052 -
- 27,052 Operating income 37,541 6,210
289 44,040 Interest income, net (17 ) -
- (17 ) Income before provision for income taxes
37,558 6,210 289 44,057 Provision for income taxes 9,137
(1,511 ) (70 ) 10,718 Net income
$ 28,421 $ 4,699 $ 219 $ 33,339
Basic earnings per share $ 1.52 $ 0.25 $ 0.01
$ 1.79 Diluted earnings per share $ 1.51 $ 0.25
$ 0.01 $ 1.77 Weighted average shares
outstanding: Basic 18,644 18,644
18,644 18,644 Diluted 18,826
18,826 18,826 18,826
1) Non-recurring acquisition costs represent costs incurred
during the fifty-two weeks ended February 2, 2019, related to the
acquisition of City Gear, LLC and consists primarily of
amortization of inventory fair-market value step-up and legal,
accounting and professional fees. 2) Non-recurring severance costs
represent costs incurred during the fifty-two weeks ended February
2, 2019, related to elimination of 30 positions to streamline
operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190322005049/en/
Scott J. BowmanSenior Vice President &Chief Financial
Officer(205) 942-4292
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