Hibbett Sports, Inc. (HIBB)

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Hibbett Sports, Inc. (HIBB)

F2Q10 Earnings Call

August 21, 2009 10:00 am ET


Michael J. Newsome – Chairman and Chief Executive Officer

Gary Smith – Chief Financial Officer

Jeffry O. Rosenthal – President and Chief Operating Officer

Cathy E. Pryor – Vice President of Store Operations


Dan Wewer - Raymond James

Oliver Wintermantel - Morgan Stanley

David Magee - Suntrust Robinson Humphrey

Sean McGowan - Needham & Company

Rick Nelson - Stephens Inc.

Sam Poser - Sterne, Agee & Leach

Anthony Lebiedzinski - Sidoti & Co.

Kristine Koerber - JMP Securities

Chris Svezia - Susquehanna Financial Group

Sean McGowan - Needham & Company

[Seth Cohen – Valennor]

John Lawrence - Morgan Keegan & Company

Mitchell Kaiser - Piper Jaffray



Good day everyone and welcome to the Hibbett Sports conference call. Today’s call is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Chairman and Chief Executive Officer, Mr. Mickey Newsome. Please go ahead sir.

Michael J. Newsome

Thank you, operator. This is Mickey Newsome. I have with me Gary Smith our Chief Financial Officer, Jeff Rosenthal our President and Chief Operating Officer, and Cathy Pryor our VP of Store Operations. We appreciate your being on the call today and your interest in Hibbett Sporting Goods.

But before we start, Gary Smith our CFO will cover the Safe Harbor language.

Gary 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

Thank you, Gary. As you know from our press release yesterday we had a very challenging quarter. We believe last year’s second quarter stimulus checks affected our second quarter comps this year approximately 5%. Also the tax-free holidays are tax-free holidays are very important in this economy and 10 of the 12 states in our area that have tax-free holidays shifted from the second quarter last year to the third quarter this year. We believe this affected our comps another 1 to 2%.

Overall comp store sales in the third quarter have improved to negative, low single digits and we have not comps the tax-free holidays in the state of Texas from last year because that state moved the holidays back one week. Ten percent of our stores are in the state of Texas. We believe the consumer is absolutely buying closer to need. Several states including Arkansas, North Carolina and parts of Florida have moved school start dates back one to two weeks. This negatively affects comps in the first part of August. It helps in the last part of August. We will know a lot more about our comp store sales next week after all this is comped.

Now for further comments we’ll go to Jeff Rosenthal, our President and Chief Operating Officer.

Jeffry O. Rosenthal

Looking at merchandise in the second quarter we had three major areas of business, apparel, equipment and footwear. Apparel is broken into two areas, licensed and active wear. Licensed is broken into college and pro. College was off low single digits. Pro was off double digits. Active wear was off low single digits. Women’s and kid’s apparel both comped up.

Our accessory business was excellent, up double digits, which consists of socks, shoe care, sunglasses and miscellaneous accessories. Our store operations team did a great job in selling items per transaction up mid single digits.

Equipment was off low single digits. However, we comped up in fitness, football, basketball and volleyball.

Our most difficult business was footwear, off mid to high teens with all genders off. However our cleated footwear was up low single digits. All in all, we had a very tough quarter.

We are look forward to third quarter as we are pleased with our inventory levels and the age of our inventory. We have many product initiatives that should be very positive. Our E3 Automatic Replenishment System has continued to be a major force in apparel and equipment and accessories. We expect that we will get better and look forward in helping footwear with replenishment as we go forward.

Our average price was down mid single digits, our strips outperformed malls and our non-urban outperformed our urban. We have approximately 75% of our stores are strip centers and 25% are mall.

Michael J. Newsome

Thank you, Jeff. Now for our real estate and new store report. In the second quarter we opened nine new stores and closed three. For the year, we now plan to open 50 to 52 new stores and close 20 and expand 18 to 20 high performing stores. We have expanded 21 stores in the last three years and the results have been very positive.

Now we’re not changing our store model. An expansion means going from 5,000 to 7,500 square feet or approximately a 50% expansion. Now we primarily operate in small towns with county populations of 30 to 80,000 people. We primarily deal with small Mom-and-Pop landlords. They are having big problems financing in this economy. Year-to-date we and the landlords have committed to 87 new store deals just for this year, 37 of the 87 or 42% of our deals have fallen out. It will not be done this year because the landlord cannot deliver the space.

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