Hibbett Reports Second Quarter Results
August 28, 2020
Download PDF- Comparable Sales Increase 79.2%; YTD Comparable Sales Increase 22.2%
- Brick and Mortar Comparable Sales Increase 65.2%
- E-Commerce Sales Increase 212.2%
-
GAAP Net Income Per Diluted Share of
$2.38 -
Adjusted Earnings Per Diluted Share of
$2.95
Finally,
Second Quarter Results
Net sales for the 13-week period ended
Gross margin was 37.0% of net sales for the 13-week period ended
Store operating, selling and administrative (SG&A) expenses were 22.6% of net sales for the 13-week period ended
Net income for the 13-week period ended
For the quarter, we opened three stores, rebranded four Hibbett stores to City Gear stores and closed eight stores, bringing the store base to 1,077 in 35 states as of
We ended the second quarter of Fiscal 2021 with
Inventory at the end of the second quarter of Fiscal 2021 was
Fiscal Year-to-Date Results
Net sales for the 26-week period ended
Gross margin was 33.4% of net sales for the 26-week period ended
SG&A expenses were 26.6% of net sales for the 26-week period ended
Net income for the 26-week period ended
Fiscal 2021 Outlook
Due to the ongoing uncertainty from the COVID-19 pandemic, the recent expiration of enhanced unemployment benefits, the timing and length of the back-to-school season and the potential for additional government stimulus measures, we are providing limited guidance for the second half of Fiscal 2021.
Our expected financial results for the second half of Fiscal 2021 are influenced by several factors:
- We believe the increase in traffic into our stores in the second quarter was driven by pent-up demand, temporary closures of competitors and government stimulus payments. A significant portion of this traffic was the result of new customers. We expect to retain many of these customers which will drive sales growth.
- Permanent closures of competitors, which we believe is now beginning to take effect, will also drive sales volume and traffic increases as these competitors’ liquidation sales conclude.
- Accelerating consumer adoption of e-commerce, which we believe is likely a permanent change, will continue to benefit our omni-channel business.
- Our strong vendor relationships allow us to meet customer demand for fashion inspired athletic footwear, apparel and accessories both in-store and online.
Based on the considerations above, we forecast the following GAAP results for the second half of the Fiscal 2021 in comparison to the second half of Fiscal 2020:
- Comparable sales increases in the mid-single digits;
- Gross margin improvement of approximately 50 to 70 basis points;
- SG&A leverage of approximately 70 to 90 basis points; and
-
Diluted earnings per share in the range of
$0.85 to$1.00 , assuming an effective tax rate of approximately 26.0% and a diluted share count of approximately 16.9 million.
Additionally, non-GAAP adjustments in the second half of Fiscal 2021 are not expected to be material.
Sole School Initiative
Investor Conference Call and Simulcast
The Company will also provide an online Web simulcast and rebroadcast of its second quarter conference call. The live broadcast of Hibbett’s quarterly conference call will be available online at hibbett.com under the Investor Relations tab on
About
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, SG&A expenses and operating income or loss as a percentage of net sales. Management believes these non-GAAP financial measures are useful to investors to facilitate comparisons of our current financial results to historical operations and the financial results of peer companies, as they exclude the effects of items that may not be indicative of, or are unrelated to, our underlying operating results, such as expenses related to the COVID-19 pandemic, the acquisition of City Gear and our accelerated store closure plan in Fiscal 2020. The costs related to the COVID-19 pandemic include impairment charges of goodwill, tradename and other assets, change in the contingent earnout valuation, paid-not-worked labor costs net of related tax credits and lower of cost or market (LCM) inventory reserve charges. The costs related to the acquisition of City Gear include amortization of inventory step-up value, professional service fees, change in valuation of the contingent earnout, legal and accounting fees. Costs related to the strategic realignment plan included lease and equipment impairment costs, third party liquidation fees, store exit costs, and residual net lease costs and were specific to Fiscal 2020.
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 measure prepared in accordance with GAAP, please see the sections titled “GAAP to Non-GAAP Reconciliation” that accompany this press release.
Disclosure Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Other than statements of historical facts, all statements which address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, such things as our Fiscal 2021 outlook, future capital expenditures, expansion, strategic plans, financial objectives, dividend payments, stock repurchases, growth of the Company’s business and operations, including future cash flows, revenues, and earnings, the impact of the COVID-19 pandemic on our business and other such matters, are forward-looking statements. The forward-looking statements contained in this press release reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward‑looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, or performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to: changes in general economic or market conditions that could affect overall consumer spending or our industry; changes to the financial health of our customers; our ability to successfully execute our long‑term strategies; our ability to effectively drive operational efficiency in our business; the potential impact of new trade, tariff and tax regulations on our profitability; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts; the impact of public health crises, including the COVID-19 pandemic, or other significant or catastrophic events; fluctuations in the costs of our products; acceleration of costs associated with the protection of the health of our employees and customers; loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner, including due to port disruptions; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to successfully manage or realize expected results from acquisition, including our acquisition of City Gear, and other significant investments or capital expenditures; the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology; risks related to data security or privacy breaches; our ability to raise additional capital required to grow our business on terms acceptable to us; our potential exposure to litigation and other proceedings; and our ability to attract key talent and retain the services of our senior management and key employees.
These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. For additional discussion on risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise.
Unaudited Condensed Consolidated Statements of Operations (Dollars in thousands, except per share amounts) |
|||||||||||||||||||||||||
|
13-Weeks Ended |
|
26-Weeks Ended |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
% to
|
|
|
% to
|
|
|
% to
|
|
|
% to
|
||||||||||||||
Net sales |
$ |
441,607 |
|
|
|
$ |
252,440 |
|
|
|
|
$ |
711,445 |
|
|
|
$ |
595,735 |
|
|
|
||||
Cost of goods sold |
278,010 |
|
63.0 |
% |
|
176,067 |
|
|
69.7 |
% |
|
473,701 |
|
66.6 |
% |
|
400,759 |
|
|
67.3 |
% |
||||
Gross margin |
163,597 |
|
37.0 |
% |
|
76,373 |
|
|
30.3 |
% |
|
237,744 |
|
33.4 |
% |
|
194,976 |
|
|
32.7 |
% |
||||
Store operating, selling and administrative expenses |
99,835 |
|
22.6 |
% |
|
80,334 |
|
|
31.8 |
% |
|
169,508 |
|
23.8 |
% |
|
154,373 |
|
|
25.9 |
% |
||||
|
— |
|
— |
% |
|
— |
|
|
— |
% |
|
19,661 |
|
2.8 |
% |
|
— |
|
|
— |
% |
||||
Depreciation and amortization |
7,484 |
|
1.7 |
% |
|
7,680 |
|
|
3.0 |
% |
|
14,354 |
|
2.0 |
% |
|
14,903 |
|
|
2.5 |
% |
||||
Operating income (loss) |
56,278 |
|
12.7 |
% |
|
(11,641 |
) |
|
(4.6 |
)% |
|
34,221 |
|
4.8 |
% |
|
25,700 |
|
|
4.3 |
% |
||||
Interest expense (income), net |
206 |
|
— |
% |
|
(73 |
) |
|
— |
% |
|
376 |
|
0.1 |
% |
|
(29 |
) |
|
— |
% |
||||
Income (loss) before provision for income taxes |
56,072 |
|
12.7 |
% |
|
(11,568 |
) |
|
(4.6 |
)% |
|
33,845 |
|
4.8 |
% |
|
25,729 |
|
|
4.3 |
% |
||||
Provision (benefit) for income taxes |
15,717 |
|
3.6 |
% |
|
(2,790 |
) |
|
(1.1 |
)% |
|
8,777 |
|
1.2 |
% |
|
6,650 |
|
|
1.1 |
% |
||||
Net income (loss) |
$ |
40,355 |
|
9.1 |
% |
|
$ |
(8,778 |
) |
|
(3.5 |
)% |
|
$ |
25,068 |
|
3.5 |
% |
|
$ |
19,079 |
|
|
3.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic earnings (loss) per share |
$ |
2.44 |
|
|
|
$ |
(0.49 |
) |
|
|
|
$ |
1.52 |
|
|
|
$ |
1.05 |
|
|
|
||||
Diluted earnings (loss) per share |
$ |
2.38 |
|
|
|
$ |
(0.49 |
) |
|
|
|
$ |
1.50 |
|
|
|
$ |
1.05 |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic |
16,535 |
|
|
|
17,906 |
|
|
|
|
16,540 |
|
|
|
18,107 |
|
|
|
||||||||
Diluted |
16,982 |
|
|
|
17,906 |
|
|
|
|
16,764 |
|
|
|
18,220 |
|
|
|
Unaudited Condensed Consolidated Balance Sheets (In thousands) |
|||||||||||
|
|
|
|
|
|
||||||
Assets |
|
|
|
|
|
||||||
Cash and cash equivalents |
$ |
217,809 |
|
|
$ |
66,078 |
|
|
$ |
97,790 |
|
Inventories, net |
182,035 |
|
|
288,011 |
|
|
270,563 |
|
|||
Other current assets |
19,922 |
|
|
18,423 |
|
|
14,285 |
|
|||
Total current assets |
419,766 |
|
|
372,512 |
|
|
382,638 |
|
|||
|
|
|
|
|
|
||||||
Property and equipment, net |
98,574 |
|
|
100,956 |
|
|
103,864 |
|
|||
Operating right-of-use assets |
222,896 |
|
|
229,155 |
|
|
218,443 |
|
|||
Finance right-of-use assets, net |
2,560 |
|
|
2,250 |
|
|
1,691 |
|
|||
|
— |
|
|
19,661 |
|
|
19,661 |
|
|||
Tradename intangible asset |
23,500 |
|
|
32,400 |
|
|
32,400 |
|
|||
Deferred income taxes, net |
15,161 |
|
|
8,996 |
|
|
6,846 |
|
|||
Other noncurrent assets |
4,386 |
|
|
3,829 |
|
|
4,068 |
|
|||
Total assets |
$ |
786,843 |
|
|
$ |
769,759 |
|
|
$ |
769,611 |
|
|
|
|
|
|
|
||||||
Liabilities and Stockholders’ Investment |
|
|
|
|
|
||||||
Accounts payable |
$ |
124,303 |
|
|
$ |
131,662 |
|
|
$ |
124,859 |
|
Operating lease liabilities |
61,463 |
|
|
60,649 |
|
|
57,232 |
|
|||
Credit facilities |
— |
|
|
— |
|
|
17,000 |
|
|||
Finance lease obligations |
868 |
|
|
886 |
|
|
896 |
|
|||
Accrued expenses |
60,794 |
|
|
40,464 |
|
|
32,720 |
|
|||
Total current liabilities |
247,428 |
|
|
233,661 |
|
|
232,707 |
|
|||
|
|
|
|
|
|
||||||
Long-term operating lease liabilities |
188,593 |
|
|
190,699 |
|
|
184,927 |
|
|||
Long-term finance lease obligations |
1,994 |
|
|
1,704 |
|
|
1,149 |
|
|||
Other noncurrent liabilities |
3,149 |
|
|
14,712 |
|
|
10,883 |
|
|||
Stockholders’ investment |
345,679 |
|
|
328,983 |
|
|
339,945 |
|
|||
Total liabilities and stockholders’ investment |
$ |
786,843 |
|
|
$ |
769,759 |
|
|
$ |
769,611 |
|
Supplemental Information (Unaudited) |
|||||||||||||||
|
13-Weeks Ended |
|
26-Weeks Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Sales Information |
|
|
|
|
|
|
|
||||||||
Net sales increase |
74.9 |
% |
|
19.6 |
% |
|
19.4 |
% |
|
22.6 |
% |
||||
Comparable sales increase |
79.2 |
% |
|
0.3 |
% |
|
22.2 |
% |
|
3.1 |
% |
||||
|
|
|
|
|
|
|
|
||||||||
Store Count Information |
|
|
|
|
|
|
|
||||||||
Beginning of period |
1,078 |
|
|
1,144 |
|
|
1,081 |
|
|
1,163 |
|
||||
New stores opened |
3 |
|
|
2 |
|
|
6 |
|
|
5 |
|
||||
Rebranded stores |
4 |
|
|
2 |
|
|
6 |
|
|
4 |
|
||||
Stores closed |
(8 |
) |
|
(40 |
) |
|
(16 |
) |
|
(64 |
) |
||||
End of period |
1,077 |
|
|
1,108 |
|
|
1,077 |
|
|
1,108 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Estimated square footage at end of period
|
6,069 |
|
|
6,239 |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Balance Sheet Information |
|
|
|
|
|
|
|
||||||||
Average inventory per store |
$ |
169,020 |
|
|
$ |
244,190 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Share Repurchase Information |
|
|
|
|
|
|
|
||||||||
Shares purchased under our Program |
— |
|
|
429,964 |
|
|
428,018 |
|
|
659,964 |
|
||||
Cost (in thousands) |
$ |
— |
|
|
$ |
8,945 |
|
|
$ |
9,748 |
|
|
$ |
13,745 |
|
Settlement of net share equity awards |
4,061 |
|
|
— |
|
|
34,956 |
|
|
29,432 |
|
||||
Cost (in thousands) |
$ |
59 |
|
|
$ |
— |
|
|
$ |
483 |
|
|
$ |
555 |
|
GAAP to Non-GAAP Reconciliation (Dollars in thousands, except per share amounts) (Unaudited) |
||||||||||||||||||
|
13-Week Period Ended |
|||||||||||||||||
|
GAAP Basis
|
|
Acquisition(1) |
|
COVID-19(2) |
|
Non-GAAP Basis
|
|||||||||||
|
|
|
|
|
|
|
|
% to
|
||||||||||
Cost of goods sold |
$ |
278,010 |
|
|
$ |
— |
|
|
$ |
(1,353 |
) |
|
|
$ |
279,363 |
|
63.3 |
% |
Gross margin |
$ |
163,597 |
|
|
$ |
— |
|
|
$ |
(1,353 |
) |
|
|
$ |
162,244 |
|
36.7 |
% |
SG&A expenses |
$ |
99,835 |
|
|
$ |
3,493 |
|
|
$ |
11,309 |
|
|
|
$ |
85,033 |
|
19.3 |
% |
Operating income |
$ |
56,278 |
|
|
$ |
3,493 |
|
|
$ |
9,956 |
|
|
|
$ |
69,727 |
|
15.8 |
% |
Provision (benefit) for income taxes |
$ |
15,717 |
|
|
$ |
979 |
|
|
$ |
2,791 |
|
|
|
$ |
19,487 |
|
4.4 |
% |
Net income |
$ |
40,355 |
|
|
$ |
2,514 |
|
|
$ |
7,166 |
|
|
|
$ |
50,035 |
|
11.3 |
% |
|
|
|
|
|
|
|
|
|
||||||||||
Diluted earnings per share |
$ |
2.38 |
|
|
$ |
0.15 |
|
|
$ |
0.42 |
|
|
|
$ |
2.95 |
|
|
1)
|
Excluded acquisition amounts during the 13-week period ended |
2)
|
Excluded amounts during the 13-week period ended |
|
13-Week Period Ended |
||||||||||||||||||
|
GAAP Basis
|
|
Acquisition(1) |
|
Strategic
|
|
Non-GAAP Basis
|
||||||||||||
|
|
|
|
|
|
|
|
% to Sales |
|||||||||||
Cost of goods sold |
$ |
176,067 |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
176,067 |
|
|
69.7 |
% |
Gross margin |
$ |
76,373 |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
76,373 |
|
|
30.3 |
% |
SG&A expenses |
$ |
80,334 |
|
|
|
$ |
7,553 |
|
|
$ |
892 |
|
|
$ |
71,889 |
|
|
28.5 |
% |
Operating (loss) income |
$ |
(11,641 |
) |
|
|
$ |
7,553 |
|
|
$ |
892 |
|
|
$ |
(3,196 |
) |
|
(1.3 |
)% |
(Benefit) provision for income taxes |
$ |
(2,790 |
) |
|
|
$ |
1,822 |
|
|
$ |
215 |
|
|
$ |
(753 |
) |
|
(0.3 |
)% |
Net (loss) income |
$ |
(8,778 |
) |
|
|
$ |
5,731 |
|
|
$ |
677 |
|
|
$ |
(2,370 |
) |
|
(0.9 |
)% |
|
|
|
|
|
|
|
|
|
|||||||||||
Diluted (loss) earnings per share |
$ |
(0.49 |
) |
|
|
$ |
0.32 |
|
|
$ |
0.04 |
|
|
$ |
(0.13 |
) |
|
|
1)
|
Excluded acquisition costs represent costs incurred during the 13-week period ended |
2)
|
Excluded strategic realignment amounts during the 13-week period ended |
GAAP to Non-GAAP Reconciliation (Dollars in thousands, except per share amounts) (Unaudited) |
|||||||||||||||||
|
26-Week Period Ended |
||||||||||||||||
|
GAAP Basis
|
|
Acquisition(1) |
|
COVID-19(2) |
|
Non-GAAP Basis
|
||||||||||
|
|
|
|
|
|
|
|
% to
|
|||||||||
Cost of goods sold |
$ |
473,701 |
|
|
$ |
— |
|
|
$ |
3,736 |
|
|
$ |
469,965 |
|
66.1 |
% |
Gross margin |
$ |
237,744 |
|
|
$ |
— |
|
|
$ |
3,736 |
|
|
$ |
241,480 |
|
33.9 |
% |
SG&A expenses |
$ |
169,508 |
|
|
$ |
4,147 |
|
|
$ |
15,743 |
|
|
$ |
149,618 |
|
21.0 |
% |
|
$ |
19,661 |
|
|
$ |
— |
|
|
$ |
19,661 |
|
|
— |
|
— |
% |
|
Operating income |
$ |
34,221 |
|
|
$ |
4,147 |
|
|
$ |
39,140 |
|
|
$ |
77,508 |
|
10.9 |
% |
Provision for income taxes |
$ |
8,777 |
|
|
$ |
1,183 |
|
|
$ |
11,903 |
|
|
$ |
21,863 |
|
3.1 |
% |
Net income |
$ |
25,068 |
|
|
$ |
2,964 |
|
|
$ |
27,237 |
|
|
$ |
55,270 |
|
7.8 |
% |
|
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share |
$ |
1.50 |
|
|
$ |
0.18 |
|
|
$ |
1.62 |
|
|
$ |
3.30 |
|
|
1)
|
Excluded acquisition amounts during the 26-week period ended |
2)
|
Excluded amounts during the 26-week period ended |
|
26-Week Period Ended |
||||||||||||||||
|
GAAP Basis
|
|
Acquisition(1) |
|
Strategic
|
|
Non-GAAP Basis
|
||||||||||
|
|
|
|
|
|
|
|
% to
|
|||||||||
Cost of goods sold |
$ |
400,759 |
|
|
$ |
956 |
|
|
$ |
— |
|
|
$ |
399,803 |
|
67.1 |
% |
Gross margin |
$ |
194,976 |
|
|
$ |
956 |
|
|
$ |
— |
|
|
$ |
195,932 |
|
32.9 |
% |
SG&A expenses |
$ |
154,373 |
|
|
$ |
8,287 |
|
|
$ |
1,846 |
|
|
$ |
144,240 |
|
24.2 |
% |
Operating income |
$ |
25,700 |
|
|
$ |
9,243 |
|
|
$ |
1,846 |
|
|
$ |
36,789 |
|
6.2 |
% |
Provision for income taxes |
$ |
6,650 |
|
|
$ |
2,389 |
|
|
$ |
477 |
|
|
$ |
9,516 |
|
1.6 |
% |
Net income |
$ |
19,079 |
|
|
$ |
6,854 |
|
|
$ |
1,369 |
|
|
$ |
27,302 |
|
4.6 |
% |
|
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share |
$ |
1.05 |
|
|
$ |
0.38 |
|
|
$ |
0.08 |
|
|
$ |
1.50 |
|
|
1)
|
Excluded acquisition costs represent costs incurred during the 26-week period ended |
2)
|
Excluded strategic realignment amounts during the 26-week period ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200828005035/en/
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