Hibbett Sports, Inc. F1Q10 (Qtr End 05/02/09) Earnings Call Transcript

Transcript by:

Hibbett Sports, Inc. (HIBB)

Q1 2010 Earnings Call

May 22, 2009 10:00 am ET

Executives

Mickey Newsome – CEO

Gary Smith – VP & CFO

Jeffry Rosenthal – President & COO

Analysts

Rick Nelson – Stephens Inc.

Chris Horvers – JPMorgan

Dan Wewer – Raymond James

Sean McGowan – Needham & Company

Mitch Kaiser – Piper Jaffray

Anthony Lebiedzinski – Sidoti & Company

John Lawrence – Morgan, Keegan

Seth Cohen – Unspecified Company

David Turner – Avondale Partners

David Magee – Suntrust Robinson Humphrey

Sam Poser – Sterne, Agee

Chris Svezia - Susquehanna Financial Group

Presentation

Operator

Good morning everyone, and welcome to the Hibbett Sports, Inc. conference call. At this time for opening remarks and introductions I would like to turn the conference over to the Chairman and Chief Executive Officer, Mr. Mickey Newsome.

Mickey Newsome

Good morning everyone. This is Mickey Newsome. We have with us also Gary Smith, our Chief Financial Officer and Jeffry Rosenthal, our President and Chief Operating Officer We appreciate you being on our conference call today and we appreciate your interest in Hibbett Sporting Goods. Before we start, Gary Smith will cover the Safe Harbor language.

Gary Smith

Thank you. 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.

Mickey Newsome

Thank you Gary, as you know from our press release late yesterday, our first quarter earnings per share were $0.38 compared to $0.32 first quarter last year and we had a 16.4% increase in net income year over year. It’s the best first quarter earnings per share ever at Hibbett.

In very challenging times we feel that we are effectively managing our business. For instance our net cash is $34.6 million at the end of the quarter versus $20.7 million at the end of the fourth quarter. Inventory per store is down 5%.

From a real estate standpoint we opened 14 new stores and closed six. We ended the quarter with 753 stores. We plan to open 65 to 70 stores this year and close 20 to 25. We deal with a lot of small landlords and we and they are experiencing a lot of uncertainty.

Many new store deals are falling out because of lack of money on the landlord side and small landlords are having a great difficulty getting bank financing. But our real estate team is working very hard and smart and we feel that we can get our new stores this year.

More then 95% of our new stores will be in strip centers, very similar to last year. Mostly in small isolated markets where a sporting goods store is needed. We will also expand approximately 15 over performing stores that need more square footage to continue their sales increase.

When the retail environment improves we will grow our store base at a faster rate. We have identified almost 400 additional small markets to put Hibbett Sporting Goods stores in, in just our 24 state area. Now for some further comments we’ll go to our President, and Chief Operating Officer, Jeffry Rosenthal.

Jeffry Rosenthal

Good morning, overall sales for the quarter increased 8% and same store sales increased 2.4%. February sales were up 9.56% versus 1.9% last year. March was up 1.23% versus 8% down last year. April was minus 5.4% versus last year up 9.8%.

Our store personnel continues to improve on items per transaction. Number of items per transaction are up 1.88% and the average selling point price of items are up slightly. From the merchandise, active wear was up slightly on a comp store basis. Women’s was up mid single-digits and youth was up mid single-digits.

Key vendors, Nike and Under Armour, continue to perform well. Urban Apparel as planned was off double-digits. College and pro licensed apparel was down mid single-digits. However we had some key drivers during the quarter such as North Carolina winning the NCAA Championship and New Era 5950 major league baseball headwear.

Overall apparel inventory is down and much cleaner then last year. Accessories were up high double-digits; socks, shoe care and sunglasses. Oakley and Nike and Under Armour performed well. Our new systems with replenishment continue to make us be in stock more often.

Our footwear was up mid single-digits. Key performers were Nike Shox, Air Force One’s, Jordan’s, Under Armour training and running, ASICS technical running, Converse and DC shoes. Men’s was up low single-digits, women’s was off mid single-digits, and kid’s was up double-digits.

Cleats, which continue to perform well were up mid single-digits with kid’s baseball cleats and women’s softball cleats. Equipment was down mid single-digits, however volleyball, football, soccer, and basketball were up low single-digits.

Fitness was off low single-digits and baseball was off mid single-digits. We feel good about our first quarter performance with well-managed inventory and with our margin improvement. So far Q2 has started off slow off high single-digits versus mid single-digit gains last year going against the stimulus checks from one year ago.

And the movement of going against tax-free days will make second quarter a challenge. Last year in the second quarter there were 11 states with tax-free holidays and last year at third quarter there was one state. This year there is going to be only two states in the second quarter where there are 11 states in the third quarter.

Read the rest of this transcript for free on seekingalpha.com