Hibbett Reports Fourth Quarter and Fiscal 2019 Results
March 22, 2019
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- 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
Note: The fourth quarter and Fiscal 2019 ended on
Fourth Quarter Results
Net sales for the 13-week period ended
Gross margin was 31.1% of net sales for the 13-week period ended
Store operating, selling and administrative expenses were 25.5% of net
sales for the 13-week period ended
Net income for the 13-week period ended
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
Strategic Realignment –
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
Fiscal 2019 Results
Net sales for the 52-week period ended
Gross margin was 32.6% of net sales for the 52-week period ended
Store operating, selling and administrative expenses were 26.2% of net
sales for the 52-week period ended
Net income for the 52-week period ended
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
During the fourth quarter, the Company repurchased 3,900 shares of
common stock for a total expenditure of
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
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
Hibbett, headquartered in
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
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Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||
2019 |
2018 |
2019 |
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 | |||||||||||||
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Unaudited Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
2019 |
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 | ||||||
|
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 | ||||
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Supplemental Information | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
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(13 Weeks) | (14 Weeks) | (52 Weeks) | (53 Weeks) | |||||||||||||||||
Sales Information |
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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 |
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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 |
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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 |
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2) As originally reported for the fourth quarter ended |
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Fiscal 2018 Comparable Sales and |
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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. | |||||||||||||||||||||||||
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GAAP to Non-GAAP Reconciliation | ||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Thirteen Weeks Ended |
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Non-Recurring Costs | ||||||||||||||||||
GAAP Basis
(As Reported) |
Acquisition |
Severance
Costs (2) |
Non-GAAP Basis
2019 |
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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 |
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2) Non-recurring severance costs represent costs incurred during the
thirteen weeks ended |
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GAAP to Non-GAAP Reconciliation | ||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Fifty-Two Weeks Ended |
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Non-Recurring Costs | ||||||||||||||||||||
GAAP Basis
(As Reported) |
Acquisition |
Severance
Costs (2) |
Non-GAAP Basis
2019 |
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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 |
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2) Non-recurring severance costs represent costs incurred during the
fifty-two weeks ended |
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Senior Vice President &
Chief Financial
Officer
(205) 942-4292
Source: