HIBB

Hibbett Sports, Inc. (HIBB)

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Industry: Consumer Services
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Hibbett Sports (HIBB)

Q4 2013 Earnings Call

March 15, 2013 10:00 am ET

Executives

Michael J. Newsome - Executive Chairman

Scott Justin Bowman - Chief Financial Officer and Senior Vice President

Jeffry O. Rosenthal - Chief Executive Officer and President

Rebecca A. Jones - Senior Vice President of Merchandising & Marketing

Analysts

Sean P. Naughton - Piper Jaffray Companies, Research Division

Peter S. Benedict - Robert W. Baird & Co. Incorporated, Research Division

Daniel R. Wewer - Raymond James & Associates, Inc., Research Division

N. Richard Nelson - Stephens Inc., Research Division

Sam Poser - Sterne Agee & Leach Inc., Research Division

David G. Magee - SunTrust Robinson Humphrey, Inc., Research Division

Sean P. McGowan - Needham & Company, LLC, Research Division

Mark E. Smith - Feltl and Company, Inc., Research Division

Eric B. Tracy - Janney Montgomery Scott LLC, Research Division

Anthony C. Lebiedzinski - Sidoti & Company, LLC

Seth Sigman - Crédit Suisse AG, Research Division

Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Hibbett Sports Fourth Quarter 2013 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Friday, March 15, 2013. And I would now like to turn the conference over to Mr. Mickey Newsome, Executive Chairman. Please go ahead, sir.

Michael J. Newsome

Thank you, operator. With us also is our CEO and President, Jeff Rosenthal; our Senior VP of Finance and CFO, Scott Bowman; our Senior VP of Merchandise and Marketing, Becky Jones; and our Senior VP of Store Operations, Cathy Pryor. We appreciate all of you all being on our call today. We appreciate your interest in Hibbett Sporting Goods.

Before we start, Scott Bowman will cover the Safe Harbor language.

Scott Justin Bowman

Thank you, and good morning. 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 in the company's press release and SEC filings.

Michael J. Newsome

Thank you, Scott. Now our President and CEO, Jeff Rosenthal, will speak with you.

Jeffry O. Rosenthal

Good morning. As you know from our press release this morning, our fourth quarter earnings per share were up $0.73 versus $0.59 a year ago, a 24% increase. Overall sales increased 14% to $217.4 million compared to $190.7 million a year ago. Comparable store sales increased 4.9%. Sales for the year increased 11.8% to $818.7 million compared with $732.6 million a year ago. Earnings per share increased 26.5% to $2.72 compared with $2.15 a year ago. Our fiscal 2013 results were accomplished by excellent assortments, great customer service, outstanding support from our distribution team, home office support team and all of our suppliers.

Comps by month are as follows: November, we were up 5.1%; December was up 8.2% on top of 7.2% a year ago; January was down 3.7%. We lost revenue in the last 2 weeks due to the tax refunds being delayed. It affected our quarter comps by 1%.

From a real estate perspective, we opened 27 new stores, expanded 4 high-performing stores and closed 2 underperforming stores, bringing the store base to 873 stores in 29 states as of February 2. Our strategy continues to work very well, and there is no reason that Hibbett cannot be nationwide in the future. There are plenty of small isolated markets to go into. For fiscal year 2014, the company expects to open 65 to 70 new stores, expand approximately 18 high-performing stores and close 15 to 20 underperforming stores.

We are up low-single digits through yesterday, March 14. However, in the last 4 weeks, we have been running mid-single digits. There have been many factors that are still in effect since it's tax refunds shifts, payroll taxes and the early Easter that will impact our run rate for the rest of the quarter.

Our guidance for fiscal 2014 is in the range of $2.85 to $3.05, and an increase in comparable store sales in the low to mid-single-digit range. This includes the reduction of $0.07 due to the 53rd week in fiscal 2013. With our strategy to go to small markets, our investments in technology and a new distribution center and in our people, we will continue to grow at a faster rate and continue to lead the industry in profitability.

Michael J. Newsome

Thank you, Jeff. And next, our Senior VP of Merchandise and Marketing will speak with you, Becky Jones.

Rebecca A. Jones

Good morning. We completed our year with solid performance in the fourth quarter. Branded activewear, accessories and footwear were strong performers and drove our top line results. Fleece drove results in all activewear categories with Under Armour being the clear winner. We saw good performances in the North Face, Nike and adidas fleece as well. Our fashion men's business was also a bright spot for the quarter with Jordan apparel, adidas originals and Levi's business on a strong trend.

The accessory business is healthy across the board with all categories enjoying good strong growth. Headwear, socks and sunglasses experienced big increases, and top-performing suppliers were Nike, Under Armour and Oakley. Licensed products were driven by NBA and headwear. The NFL business was soft for our markets across the -- as a whole, and the Hibbett license group did a phenomenal job preparing and executing product assortments for Alabama's 15th national championship. Our ability to have products in local markets immediately after the win reinforces our small market strategy, and the coordination between merchandising and operations enables us to take advantage of this opportunity once again.

Footwear business grew double digits. Basketball footwear had a terrific quarter. Jordan product is in high demand. Under Armour men's and youth performance basketball was very good as well. We also saw positive momentum in lifestyle product. Youth footwear had a great quarter in Jordan, adi [ph] Original classics and Nike Air Max 90s. The running categories were basically flat to last year as a whole. As the running business moderates, the team has adjusted appropriately with footwear inventories in good shape to continue to grow and thrive. Top-performing categories in equipment business was basketball and football. Both categories saw double-digit increases.

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