Hibbett Reports First Quarter Results
May 26, 2020
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GAAP Loss Per Share of (
$0.92 ); Adjusted Diluted Earnings Per Share of$0.31 - Same Store Sales Decline 19.5%; E-Commerce Sales Increase 110.5%
-
Strong Balance Sheet Provides Ample Liquidity; Cash Flow Provided by Operations of
$3.9 Million
Adapting to the COVID-19 Business Environment
Throughout this challenging time, the Company was able to navigate a rapidly changing retail landscape by leveraging omni-channel and distribution capabilities, having access to and availability of in-demand products, taking decisive action to protect liquidity and demonstrating the ability to reopen stores quickly when circumstances allowed. A few highlights include:
- Total comp sales were down less than 20% versus the prior year despite having our store fleet open for approximately 60% of the total available selling days in the quarter.
- Digital traffic was up over 80% and conversion increased 26% for the quarter compared to the prior year. Over 40% of online sales in the second half of the quarter were new customers.
- Inventory allocation systems and distribution infrastructure ramped up to support increased online demand.
- The Merchandise team proactively managed the flow of goods in collaboration with our vendor partners, resulting in a decrease in year-over-year inventory and an inventory balance that remained in line with demand.
- Worked with merchandise and non-merchandise vendors to extend terms.
- Converted two unsecured, demand lines of credit into a single secured line of credit with a one-year term.
- Nearly 700 stores were open to the public at the end of the quarter and over 1,000 are open today. Many reported significant comparable sales increases upon their reopening.
In addition, the Company continues to be proactive in protecting the health and safety of our team members and customers and all locations are subject to the following safety guidelines:
- Stores are being extensively cleaned on a daily basis.
- The number of customers allowed in stores open to the public is limited and social distancing is being practiced and maintained.
- Store employees or customers exhibiting any symptoms are not permitted to enter the store.
- Hand sanitizer is readily available to all team members and customers.
- Curbside pick-up is available for all Buy Online, Pick-up In-Store orders where allowed.
- Contactless payment is available in all stores.
For more information, please visit www.hibbett.com/shop-safely-in-stores.html.
First Quarter Results
Net sales for the 13-week period ended
Gross margin was 27.5% of net sales for the 13-week period ended
Store operating, selling and administrative (SG&A) expenses including goodwill impairment was 33.1% of net sales for the 13-week period ended
Net loss for the 13-week period ended
For the quarter, the Company opened three stores, rebranded two Hibbett stores to City Gear stores and closed eight stores, bringing the store base to 1,078 in 35 states as of
Balance Sheet and Stock Repurchases
Hibbett ended the first quarter of Fiscal 2021 with
Inventory at the end of the first quarter of Fiscal 2021 was
During the first quarter, the Company repurchased 458,913 shares of common stock for a total expenditure of
Fiscal 2021 Outlook
Due to the continued uncertainty regarding the overall impact COVID-19 will have on its business, the Company is not providing a full-year outlook at this time.
Investor Conference Call and Simulcast
The Company will also provide an online Web simulcast and rebroadcast of its first quarter 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 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 excess 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 COVID‑19 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, 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: changed 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 successfully execute our strategic realignment and realize its expected benefits; 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 COVID-19, or other significant or catastrophic events; fluctuations in the costs of our products; 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. 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.
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13-Weeks Ended |
|||||||||||
|
2020 |
|
2019 |
|||||||||
|
|
% to Sales |
|
|
% to Sales |
|||||||
Net sales |
$ |
269,837 |
|
|
|
|
$ |
343,295 |
|
|
||
Cost of goods sold |
195,690 |
|
|
72.5 |
% |
|
224,692 |
|
65.5 |
% |
||
Gross margin |
74,147 |
|
|
27.5 |
% |
|
118,603 |
|
34.5 |
% |
||
Store operating, selling and administrative expenses |
69,673 |
|
|
25.8 |
% |
|
74,038 |
|
21.6 |
% |
||
|
19,661 |
|
|
7.3 |
% |
|
— |
|
—% |
|||
Depreciation and amortization |
6,870 |
|
|
2.5 |
% |
|
7,223 |
|
2.1 |
% |
||
Operating (loss) income |
(22,057 |
) |
|
(8.2 |
)% |
|
37,342 |
|
10.9 |
% |
||
Interest income, net |
170 |
|
|
0.1 |
% |
|
46 |
|
—% |
|||
(Loss) income before provision for income taxes |
(22,227 |
) |
|
(8.2 |
)% |
|
37,296 |
|
10.9 |
% |
||
(Benefit) provision for income taxes |
(6,940 |
) |
|
(2.6 |
)% |
|
9,439 |
|
2.7 |
% |
||
Net (loss) income |
$ |
(15,287 |
) |
|
(5.7 |
)% |
|
$ |
27,857 |
|
8.1 |
% |
|
|
|
|
|
|
|||||||
Basic (loss) earnings per share |
$ |
(0.92 |
) |
|
|
|
$ |
1.52 |
|
|
||
Diluted (loss) earnings per share |
$ |
(0.92 |
) |
|
|
|
$ |
1.50 |
|
|
||
|
|
|
|
|
|
|||||||
Weighted average shares outstanding: |
|
|
|
|
|
|||||||
Basic |
16,546 |
|
|
|
|
18,308 |
|
|
||||
Diluted |
16,546 |
|
|
|
|
18,535 |
|
|
|
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|||||||||||
|
2020 |
|
2020 |
|
2019 |
||||||
Assets |
|
|
|
|
|
||||||
Cash and cash equivalents |
$ |
106,205 |
|
|
$ |
66,078 |
|
|
$ |
116,963 |
|
Inventories, net |
241,984 |
|
|
288,011 |
|
|
248,548 |
|
|||
Other current assets |
32,305 |
|
|
18,423 |
|
|
21,279 |
|
|||
Total current assets |
380,494 |
|
|
372,512 |
|
|
386,790 |
|
|||
|
|
|
|
|
|
||||||
Property and equipment, net |
97,771 |
|
|
100,956 |
|
|
107,673 |
|
|||
Operating right-of-use assets |
219,436 |
|
|
229,155 |
|
|
224,870 |
|
|||
Finance right-of-use assets, net |
2,548 |
|
|
2,250 |
|
|
2,228 |
|
|||
|
— |
|
|
19,661 |
|
|
19,661 |
|
|||
Tradename intangible asset |
23,500 |
|
|
32,400 |
|
|
32,400 |
|
|||
Deferred income taxes, net |
11,429 |
|
|
8,996 |
|
|
3,216 |
|
|||
Other noncurrent assets |
3,391 |
|
|
3,829 |
|
|
3,868 |
|
|||
Total assets |
$ |
738,569 |
|
|
$ |
769,759 |
|
|
$ |
780,706 |
|
|
|
|
|
|
|
||||||
Liabilities and Stockholders’ Investment |
|
|
|
|
|
||||||
Accounts payable |
$ |
98,149 |
|
|
$ |
131,662 |
|
|
$ |
105,834 |
|
Operating lease liabilities |
66,791 |
|
|
60,649 |
|
|
66,268 |
|
|||
Credit facilities |
50,000 |
|
|
— |
|
|
26,000 |
|
|||
Finance lease obligations |
876 |
|
|
886 |
|
|
973 |
|
|||
Accrued expenses |
27,832 |
|
|
40,464 |
|
|
22,926 |
|
|||
Total current liabilities |
243,648 |
|
|
233,661 |
|
|
222,001 |
|
|||
|
|
|
|
|
|
||||||
Long-term operating lease liabilities |
185,035 |
|
|
190,699 |
|
|
188,839 |
|
|||
Long-term finance lease obligations |
1,994 |
|
|
1,704 |
|
|
1,777 |
|
|||
Other noncurrent liabilities |
3,325 |
|
|
14,712 |
|
|
10,907 |
|
|||
Stockholders' investment |
304,567 |
|
|
328,983 |
|
|
357,182 |
|
|||
Total liabilities and stockholders' investment |
$ |
738,569 |
|
|
$ |
769,759 |
|
|
$ |
780,706 |
|
|
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|
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13-Weeks Ended |
||||||
|
2020 |
|
2019 |
||||
Sales Information |
|
|
|
||||
Net sales (decrease) increase |
(21.4 |
)% |
|
25.0 |
% |
||
Comparable sales (decrease) increase |
(19.5 |
)% |
|
5.1 |
% |
||
|
|
|
|
||||
Store Count Information |
|
|
|
||||
Beginning of period |
1,081 |
|
|
1,163 |
|
||
New stores opened |
3 |
|
|
3 |
|
||
Rebranded stores |
2 |
|
|
2 |
|
||
Stores closed |
(8 |
) |
|
(24 |
) |
||
End of period |
1,078 |
|
|
1,144 |
|
||
|
|
|
|
||||
Estimated square footage at end of period (in thousands) |
6,088 |
|
|
6,446 |
|
||
|
|
|
|
||||
Balance Sheet Information |
|
|
|
||||
Average inventory per store |
$ |
224,475 |
|
|
$ |
217,262 |
|
|
|
|
|
||||
Share Repurchase Information |
|
|
|
||||
Shares purchased under our Program |
428,018 |
|
|
230,000 |
|
||
Cost (in thousands) |
$ |
9,748 |
|
|
$ |
4,799 |
|
Settlement of net share equity awards |
30,895 |
|
|
29,432 |
|
||
Cost (in thousands) |
$ |
424 |
|
|
$ |
556 |
|
|
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|
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|
13-Week Period Ended |
||||||||||||||||
|
GAAP Basis (As Reported) |
|
Acquisition(1) |
|
COVID-19(2) |
|
Non-GAAP Basis (As Adjusted) |
||||||||||
|
|
|
|
|
|
|
|
% to Sales |
|||||||||
Cost of goods sold |
$ |
195,690 |
|
|
$ |
— |
|
|
$ |
5,089 |
|
|
$ |
190,601 |
|
70.6 |
% |
Gross margin |
$ |
74,147 |
|
|
$ |
— |
|
|
$ |
5,089 |
|
|
$ |
79,236 |
|
29.4 |
% |
SG&A expenses |
$ |
69,673 |
|
|
$ |
654 |
|
|
$ |
4,433 |
|
|
$ |
64,586 |
|
23.9 |
% |
|
$ |
19,661 |
|
|
$ |
— |
|
|
$ |
19,661 |
|
|
$ |
— |
|
— |
% |
Operating (loss) income |
$ |
(22,057 |
) |
|
$ |
654 |
|
|
$ |
29,183 |
|
|
$ |
7,780 |
|
2.9 |
% |
(Benefit) provision for income taxes |
$ |
(6,940 |
) |
|
$ |
204 |
|
|
$ |
9,112 |
|
|
$ |
2,376 |
|
0.9 |
% |
Net (loss) income |
$ |
(15,287 |
) |
|
$ |
450 |
|
|
$ |
20,072 |
|
|
$ |
5,235 |
|
1.9 |
% |
|
|
|
|
|
|
|
|
|
|||||||||
Diluted (loss) earnings per share(3) |
$ |
(0.92 |
) |
|
$ |
0.03 |
|
|
$ |
1.21 |
|
|
$ |
0.31 |
|
|
1) |
Excluded acquisition amounts during the 13-week period ended |
|
2) |
Excluded amounts during the 13-week period ended |
|
3) |
Weighted average diluted shares outstanding were not adjusted for dilutive options and restricted stock in the calculation of GAAP loss per share. |
|
13-Week Period Ended |
|||||||||||||||
|
GAAP Basis (As Reported) |
|
Acquisition(1) |
|
Strategic Realignment(2) |
|
Non-GAAP Basis (As Adjusted) |
|||||||||
|
|
|
|
|
|
|
|
% to Sales |
||||||||
Cost of goods sold |
$ |
224,692 |
|
|
$ |
956 |
|
|
$ |
— |
|
$ |
223,736 |
|
65.2 |
% |
Gross margin |
$ |
118,603 |
|
|
$ |
956 |
|
|
$ |
— |
|
$ |
119,559 |
|
34.8 |
% |
SG&A expenses |
$ |
74,038 |
|
|
$ |
734 |
|
|
$ |
900 |
|
$ |
72,404 |
|
21.1 |
% |
Operating income |
$ |
37,342 |
|
|
$ |
1,690 |
|
|
$ |
900 |
|
$ |
39,932 |
|
11.6 |
% |
Provision for income taxes |
$ |
9,439 |
|
|
$ |
428 |
|
|
$ |
228 |
|
$ |
10,095 |
|
2.9 |
% |
Net income |
$ |
27,857 |
|
|
$ |
1,262 |
|
|
$ |
672 |
|
$ |
29,791 |
|
8.7 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share |
$ |
1.50 |
|
|
$ |
0.07 |
|
|
|
|
$ |
1.61 |
|
|
1) |
Excluded acquisition amounts during the 13-week period ended |
|
2) |
Excluded strategic realignment amounts during the 13-week period ended |
|
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