Hibbett Sports, Inc. F3Q09 (Quarter End 11/1/08) Earnings Call Transcript

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Hibbett Sports, Inc. (HIBB)

F3Q09 Earnings Call

November 21, 2008 10:00 am ET

Executives

Michael J. Newsome - Chairman of the Board, Chief Executive Officer

Gary A. Smith - Chief Financial Officer, Vice President

Jeffry O. Rosenthal - Vice President - Merchandising

Analysts

Rick Nelson - Stephens, Inc.

Analyst for John Shanley - Susquehanna Financial Group

Oliver Wintermantle - Morgan Stanley

Sean McGowan - Needham & Company

Sam Poser - Sterne, Agee & Leach

Dan Wewer - Raymond James & Associates

David Cumberland - Robert W. Baird & Co., Inc.

David Magee - SunTrust Robinson Humphrey

Jeff Mintz - Wedbush Morgan Securities, Inc.

[Anthony Lebodzinski] - Sidoti & Company

Reed Anderson - D.A. Davidson & Co.

Rob Wilson - Tiburon Research

Analyst for Mitchell Kaiser - Piper Jaffray

Camilo Lyon - Banc of America Securities

Presentation

Operator

Welcome to the Hibbett Sports, Inc. conference call. Today’s call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to the Chairman and Chief Executive Officer, Mr. Mickey Newsome.

Michael J. Newsome

With me also is Jeff Rosenthal, our Vice President of Merchandising, and Gary Smith, our Chief Financial Officer. We appreciate you being interested in Hibbett Sporting Goods today and thanks for being on the call. Before we start, Gary Smith will cover the Safe Harbor language.

Gary A. Smith

In order for us to take advantage of Safe Harbor rules, I would like to remind you that any projections or statements made today reflect our current views with respect to future events and our financial performance. There is no assurance that such events will occur or that any projections will be achieved. Our actual results could differ materially from any projections due to various risk factors which are described from time-to-time in our periodic reports with the SEC.

Michael J. Newsome

As you know from our press release late yesterday, our third quarter earnings per share were $0.26 versus $0.25 one year ago. Also we increased our annual guidance to $0.97 to $1.04 from $0.93 to $1.03. Comp store sales for the third quarter were +0.4%. Total sales increased 8.1%. Overall transactions were up 5.4% indicating slightly less traffic but items per transaction increased 3% to 4%. Our store operations team did a great job of selling each customer more products.

Comp store sales for August were +4%. We had a great month and there are some reasons for it. First of all, in August footwear was a very large percent of the business and footwear’s where our strength has been. Also in August we feel that customers are waiting longer to time of need to buy. It did affect a negatively late July but it certainly helped August. Also in August we had the tax-free holidays as you know and we feel that in a soft economy tax-free holidays are more meaningful. Of course the tax-free holidays were in August last year also.

September was a tougher month; -3.7%. As you know most of our stores are in the Sunbelt. In the Sunbelt this year we had two hurricanes and one tropical storm. We did not have any last year. It affected 78 stores for a total of 330 completely closed days and many partially closed days. Gas shortages and the price of gas hurt traffic late in the month. Footwear becomes less important in September relative to August. Of course the negative news in regard to the stock market was certainly a factor too in September.

In October we did come back versus September. We were down 1%. Cooler weather helped us. It was cooler this October versus last October. We didn’t have any storms of course. We still had gas prices very high early in the month but they come down late in the month and it helped. The gas shortage went away.

Third quarter our non-urban stores outperformed our urban stores which has been the trend for several quarters.

November. The first two weeks of November, we’re pretty positive about it actually. We’re up 1%, that’s non-audited, but we feel good about that. That’s the first two weeks.

Now for some comments on new stores. Third quarter we opened 22 new stores and closed eight for a quarter ending total of 726. For the year we expect to open 75 to 79 new stores and close approximately 12. That gives us a 9.5% store growth rate for the year, less than we had planned. Our landlords have delayed several deals into next year and several deals are delayed indefinitely. In fact we had 22 deals that were going to be this year that got delayed to next year and another 20 that’s put off indefinitely.

Now for some further comments on merchandise, Jeff Rosenthal will speak with you.

Jeffry O. Rosenthal

We have three major areas of business: Apparel, footwear and equipment.

Apparel is broken into two areas: pro and college licensed apparel and active wear. Active wear was up slightly led by Nike and Under Armour technical products. Kids and women’s active wear continues to run up. Urban apparel continues to be very challenging as planned. We expect active wear to be strong through the fourth quarter with the help from our new E3 replenishment system and our focus on key items.

Licensed was down mid-single digits. We are hoping the fourth quarter will improve with some of our key teams such as Alabama and the Tennessee Titans. Mixed martial arts apparel has performed very well and will continue through the fourth quarter.

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