HIBB - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Hibbett Sports Fourth Quarter and Year-End 2019 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Friday, March 22, 2019. I would now like to turn the conference over to Mr. Communications. Corporate with Watson Pat Please go sir. ahead,

Patrick Watson

X, Thank company’s financial everyone, and year on for the joining the review fiscal February ended which to Sports XXXX, and quarter Hibbett fourth you, XXXX. operating for results

are future Before with facts, management’s call during and reliance that remind discussed Private which results events uncertainties future comments noted in the statements. in are of on in those the made be provisions I the respect response we company’s current on questions, this and to of reflect historical Securities These XXXX may are forward-looking statements. would Safe forward-looking differ the begin, performance, based and subject Act to should the Harbor everyone like risks. not materially to It including Litigation conference views to company’s from Reform financial that anticipated your statements, and those

could have this the contribute and information. the or to Commission. more with factors of in in other the differences to morning, release that news on company’s you and sources Annual these filings such Form Some We Exchange Securities Report for in XX-K cause issued described the been refer earlier

Please archived conference remarks Scott like of replay this accurate information of information, it Lastly, to out turn I’d this Financial call webcast I of to based nature the time-sensitive date, Because Scott. policy a to Chief XX the of of during the limit Bowman, ahead, to period this days. like the Officer. March now are that today’s Hibbett Sports to and call of would go over call management’s as conference believed point on understandings XX, XXXX. is

Scott Bowman

prepared to the will and Store President CEO; earnings quarter fourth highlights Jared financials, results with Senior fourth fourth good Keep and remarks and Senior today’s we full-year along have and VP of last weeks Briskin, VP Hibbett start the Cathy review full-year Sports Operations. Rosenthal, included with with and you, I versus and with Jeff on included from Pryor, the with results XX Chief quarter then us the of Thank in Jeff Merchant; morning. that call full-year versus call. the update. Today, weeks quarter weeks and prior year. XX Jared by weeks quarter, XX fourth business followed year, a XX in mind merchandising and general Welcome

and full was As a extra reminder, last fourth an share $X.XX slightly million year count. year the share last a quarter. per year at for sales last in lower $X.XX to the accounted to benefit week average $XX.X year’s per in additional additional The share lower due

sales For Gear be in fourth X.X% quarter, XXXX. to Gear included sales sales December This impacted in the the the year’s to to expenses our the Depreciation million $XXX the positions included City of and integration November, of the due positive fiscal $XX.X Team to Gross fourth the due the increased XX.X% $X.X to and quarter, inventory Gear. The Division. points increased the rate in quarter, City to amortize Gear a starting for XX million amortization was business. to related of due to related in Gear each the last non-recurring to the due decreased profit of $X percent profit quarter rate include compared sales was was Gear SG&A City sales, the year’s Division. liquidation of XX.X%, last negatively corporate recognized quarter. inventory related value closures. of rate quarter million, City Team and to sales. million mainly quarter, reserve in of as step-up related mainly $X.X Comp in XX% XX office. total were increased X.X% XX total represented month, negative due and in year. of a E-commerce expense XX.X%. did gain related reduction for XX.X% points the in of By Gross $XXX,XXX of severance income was the which basis not taken million fourth basis XXX sales costs which basis of fourth positive Operating will against sales sale last acquisition. X.X%, increased in also the to increased tax City acquisition we depreciation which store of sale In an January. inventory last comp income and City comp $XXX,XXX by year’s field In of organization was sales $X.X of the a non-recurring points our quarter. incurred X% of expense versus acceleration XX.X% the to rate million to mainly X.X%

into team per share this I and managing and and costs. has while report non-recurring non-recurring $XX.X was the omni-channel like top driving adding expenses, share, quarter share per per a exciting great The in margin expect continue fiscal gross income Excluding growth line earnings new costs, to e-commerce would fourth serve operating $X.XX customer. XXXX. to of done capabilities $X.XX we the and job million. was to that was our excluding business Diluted also profitable

million City acquisition perspective, million to excluding Gear $X.XX million on XXX,XXX year For as Inventory the $XX credit a company We our and initiatives our $XXX quarter, million have year share further under made $X.X major approximately in a we full-year, and the last at existing spent in finished $X.XX, facilities. with purchase million authorization. outstanding from basis. million the progress remaining revolving versus for and the higher for $XX $XX and cash balance sheet Also, million. non-recurring per mainly $XX.X the on shares company ended From per-store the was for the CapEx $XX.X of XX.X% on last with X.X% repurchased the year, increased the costs. borrowings due in was earnings quarter year,

fiscal focus turn like would highlights to provide our XXXX, to I related guidance. some our to we As

Gear of all, details First fiscal would of provide effect in City XXXX. the to I like some on

will we treat gross forward, basis. as business, business Gear intent be the an provide combined and or expense means not a future. for specific the Hibbett results extension to As of that will profitability our we Gear City This the it reported move on margin, City is other metrics in

fourth incorporated provide fiscal consolidated it will Gear I into of in However, XXXX. quarter until City actual for sales business revenue the comp the starting is

the time for I this purposes, modeling will also details For following provide XXXX. at fiscal

fourth to Hibbett. to and compared quarter the For in index higher sale somewhat Gear seasonality, is first somewhat expected in City the lower quarter

expected occupancy margin, is than Hibbett in to to For but due rate expect be improvement somewhat We Gear’s opportunity to for margin be as of XXXX. lower for the work and rate the store fiscal integration process, a product percent lower a this to area logistics see expense. related City higher through sales lower gross and we

sales SG&A Hibbett. City is For expected to percent expense, compared Gear a to be as of lower

For a be depreciation, margin, sale. City similar Hibbett percent is as Gear be sales. to expected to of of a as And Hibbett Gear to similar percent to expected City is for operating

X% consolidated to to be Turning guidance, sales we negative the store comparable of range in to expect positive full-year X%. the

to base estimate of improve our Additionally, XX will underperforming stores. productivity we store close will we our continue the new and plan open XX stores approximately to XX and

decrease XX our For in the gross expect overall points. basis XX to range rate margin, of to we

points. both to the basis gross the point XX expect for XX With XX costs of to in non-recurring SG&A, an we respect in decline XX margin Excluding non-GAAP basis range years, is range. to to expected increase

Depreciation Excluding expected for of be and we of XX.X%, is the which flat non-recurring to costs both year’s range to approximately percent we in rate decline approximately compared SG&A expect expect last tax to of basis XX sales. to years, be our XX rate XX.X%. as a to points,

we per which associated the City to earnings associated share Finally, the closures. $X.XX, with integration and share costs of non-recurring to to $X.XX be includes with store of expect for $X.XX Gear costs $X.XX per range in

Excluding $X.XX be in of expected to range share is the to earnings non-recurring costs, $X. non-GAAP per

to program $XX $XX XXXX allocation, to year. our million repurchase capital to the stock to buyback million in expect Turning share fiscal and for we in expect continue

million. we capital expenditures, million $XX For to to $XX expect spend

million end With review, Jared. turn the that the we our to plan call $XX outstanding the Finally, debt on now over full the year. by fiscal in will I of of repayment

Jared Briskin

Scott. Good morning. you, Thank

not reminder in a As City Gear comparable will until sales include prepared stores the my fourth quarter. this trends, remarks, reflective of

Adidas. including across Brooks, from products platforms digits and fourth and mid-single our men’s kids retro the Max and other Balance, Nike, growth During double double up consecutive Goose Yeezy Force posting footwear Air gains. partners, sales and our six quarter, and footwear Significant from and PUMA, digits comp Vans, was Champion. Jordan, business Air drivers New from also quarter seen was franchises brand retro-inspired up were and were Growth digits. women’s increased Both of

Our footwear business quarter. was well, big plus our for digits Apparel performed strong in and down to our exceptionally and apparel sizes along investment business low-single tall. with the connectivity with

clean have in products that gift of sports declines a licensed during offset exposure with the historically slightly digits. Our our as between by call Rosenthal. category. position with growth categories socks, turned Team to performance for was trend and been products, the limiting volleyball, business over gift-giving negative mid-single Christmas. and inflatables, gains Cleated to business and significant take category strong improving from advantage down overall with a in Equipment exited coming weak in The declines negative Thanksgiving was turn was the turned which soccer, products peak whole now quarter, quarter categories. to football. and inventory has significantly performance the I’ll the baseball, We negative. Jeff weak we’re

Jeffry Rosenthal

Jared. Thanks,

initiatives our in which have order e-commerce helped QX, online store This saw particularly grow, to to driven of of impact we Footwear sales company EBIT. increase in throughout QX the positively achieving quarter. our e-commerce conversion by There Increased in a Our that four was traffic profitability scale, healthy led continues on traffic, XX% we omni-channel now and been larger increases healthy strong comp In to were the product average year. and efficiencies operating fourth initiatives the the working contributes a mix growth business value. sales. were have and the business,

add, or full and our four buy this things would to pickup flexibility digital in Our buy were apps, online not the year. these and in like year the growth our marketing and to prior the is infancy replatforming customers gives BOPIS/ROPIS program, maturity featured I versus highly reserve redesigning store program, BOPIS programs, program in our of new store. and or online QX in the the e-mail available either in either our also mobile

XX% increase May, a – Earlier substantially a increased year-over-year to e-mails. new we program ease purchases resulted During this platform mobile e-mails and because primary increased In in the our apps traffic XX% less. and of our new drove sales. purpose of focused of saw Besides our digitized program, About this our purchases segmenting store, e-mail convenience traffic year, no which store of saw in The we we the sales. launched store store e-mail and made. process, moved traffic of these our legacy of and raffle and usage was which holidays, e-commerce, on from made drove are we buckets process participation, improvements the and apps. we new

my Hibbett. Hibbett our million CEO believe or and to XX ago, decision card Lastly, say, digital like to transactions. a store dial-up as of as know team, and over from initiatives, we to personal of position largest aware traffic. our marketing employees, to When can I where difficult I came customers and about made our the let ever the we of note, of proud in approximately and billion $XXX they thanks all incredibly locator for X,XXX to how Most had with efforts of first drove On XXX of years doing significant focus our I’m omni-channel using the online incredible well not, increases. websites stores you on we in company. Because have sales, that as than shop notably, more are are what credit saw Today, it growth would leadership $X us. move I sell, sections

and supported would want to proud stores have to with or – life employees are retail partners digital we the of to the have a over today. us who through I We where business worked are professional it. meaningful. our It you. who X,XXX and Hibbett of of equal We helped this been who tremendously thank than vendor make not helped part tirelessly I’m many has without my of an of be all be people portion There any today have so the grow each me greater and awesome all in years. who presence ride

can I first in it’s like learned the when shoes. all the at of got you end $X the very just my tennis it T-shirts industry, lesson an to simple a I a as making Finally, remember old always you of hour, be remind XX-year I’d job that if day, and

Scott Bowman

much, That very will on. idea we are you Jeff. now ready questions. for Thank Frank, live

Operator

[Operator you. please moment One first Thank Instructions] the for question.

first Camilo Please Lyon line of Our comes proceed. the Canaccord question from Genuity. with

Camilo Lyon

Thank Jeff, and the your to you. all morning, best and you Good retirement.

Jeffry Rosenthal

Thank you.

Camilo Lyon

wanted I to initiatives. guys ask – great you quarter. the I performance a to guys had you wanted apparel about ask your in

Some piece that Jared performance comments there on interesting the made.

And more you how And stronger issues bit would give had just you If that, inventory part a that feel if on that if on you that think stocking the the when the quarter? assortment, And a give assortment, any into if be or us as that [ph] shortage great? to of you little color little back get you you do apparel those there expect could unfolded were to detail brands, the brands? in particular did, about overcome? more can also, you pockets branded

Jared Briskin

able solid. an for it’s that very that six-week lot Thanksgiving to where investment our by very that’s successful. to to Good we’ve us. and investments prior with a difficult been apparel business usually The Really driven very connectivity continue and our apparel and typically very was of post-Christmas that morning, sneaker in very Jared. promotional aligns provide made products, Yes. in business commodity period, was peak from a week perspective, it from perspective, business We branded significant apparel we’ve our an our business been closely make actually

business more actually kids, for some women’s that very continue connectivity We bit historically business some of did men’s for promotional driven a to and quarter. little were which by we have other strong that those commodity issues was the Our in. look of opportunities in

Camilo Lyon

another piece is I’m been a that in to correctly took the Speakers]? to that year stabilized, down, performance leg talking if understanding have so, before [Multiple And about had seemed you that had that

Jared Briskin

is. It

Camilo Lyon

Okay.

Jared Briskin

you’re Yes, that correctly. understanding

Camilo Lyon

plans – And that you of the that’s how if viewing do you’re product? that XXXX type alter for for did case, your

Jared Briskin

the trend and just we sportswear pieces been, connectivity was to Again, business. have we little a are, surprise We based six-week towards and off of that of continue period transition more to to the a that our but as have to aligned seeing and prior that as our continue apparel we business believe evolve had to that, closely it business been to continue we sneaker we need our possible. bit

Camilo Lyon

give from of you that And under And it. And things footwear, within got the about? the then, some context, would are not benefiting that that the you’re Gear seeing leverage now City you’re excited you’ve also power, the umbrella, such stores are to but buying allocation able Got an you highlights pipeline, also pertains in coming assortment? that to increased as what quarter, it terms the what moving what’s forward? only on from to innovation are Hibbett

Jared Briskin

Yes.

time. The going fourth to obviously, positioned quarter significantly business, strong improved we really tirelessly that we’ve forward. team a and worked footwear long was I quarter for were been a trend. Fourth for well think, the our ensure

Our fantastic opportunities brand of business have us, locations. really with partners working scale our and to to been providing more absolutely our footwear

entity working continue of leverage So does Gear certainly closely trend. combined buying that additional stores, extension and the City fashion and as that an We believe our see we’ll some absolutely power have together.

Camilo Lyon

somewhat sense three context, out [audio any a to with guess, the that as of disturbance] what Got unfolds this looking announcement, unfold? the replacement and a a find get there or any my the for CEO, Just of the been is will Jeff, done that years. candidate sort process four I question, of you’ve that you’d new omni-channel be we I would then business surprising with timing, sense initiative process it, sense when searching for, could of you’ve undertake within a last a urgency that kind happening? reposition And how of to lot and tasked great. to to trying if final ask, of

Jeffry Rosenthal

to or six be this to I’m Board of I and the lot And And I’m to mean, so and dude and months proud the Yes. could on And that, succeed. eight much we’ve much four going to be into sneaker possibly so take pulled as a feel even been, years, Hibbett, have I’m going I end and awesome the at to to and business I longer. the may Hibbett. that I it’s off. over got a want three accomplished difficult or day, really of this be last it continue

we be company got leader, I to have team to this able being felt the know four to what, end years, you have or of and transitioned play able be Hibbett really been team the own proud defense. to we’re We me be to playing continue I this offense, very from And should last own make at going business, got this a and and of been three behind what we’ve and way now it. I day, the to this I’ve do.

Camilo Lyon

it. Thank all best. and you, Got the

Jeffry Rosenthal

Thank you.

Operator

Our Baird. Peter with question W. – Please next comes Robert from W. Benedict proceed.

Peter Benedict

in view Thanks. how profitable what’s number? What’s consolidated gross annual just stores the the in an profitability, luck. annual to you, My best to margin Hey, sure first fourth EBIT the we And like, we’re on Scott, it you buildup an good. be maybe of to and is sounds help P&L going still required see walk question be the basis. and basis? margins through e-commerce kind touch of thank which with of here about in what is guys, the latest here, you kind Jeff, in mentioned on quarter. around us I’m that a e-commerce as terms think of you to or compare

Scott Bowman

off, They to a profitability growing first just Yes, the the side. a between striking for phenomenal in investing growth done job business e-comm of credit and the Sure. have the team. balance

we’re pretty much on so, And track.

As dividends, little things, and more it I overspend bit it that, said on some previous dollars able did did paid that out out quarter those efficiently. turns a calls, some and in we’re to on use advertising, we trying fourth as has

as bit standpoint. and a a pretty less year for profitability with things little this other along really a spells business some little we’re good picture e-commerce margin that better clearance bit the a So from selling

business, we fixed As you the fixed the line or where some drop business I’ve is have all to that volume cost bottom semi that look cost a at it kind of along said pretty the nicely. does

And so, this quarter to in sales. was positive. year finished close million run $XX we in rate The fourth

year So, next obviously, increase well. we have will as an

So will all that and will we’ve the the profitable bit, down side, making include drop And that $XXX been million well. million the as line $XX to bottom capability expenses fall functionality a business as to be on costs does so to prove us. for investments and those

Peter Benedict

as that guys specific Are helpful. as guys. out XXXX think you should see stores and performance biggest got kind maybe – in you initiatives obviously, it that’s to there, the would the could then better And in any drivers on? fourth there call Thanks, the XXXX? be of Okay, focused we about in comps trying the in What quarter. we moderating in to we decline the improve stores

Jeffry Rosenthal

what connectivity omni-channel. kind of about. talked It’s it full really of making we a It’s the

new it. chain, of through we’ve now that mean, Sneaker lots down really connectivity actually throughout amount work connectivity, digital of were where yesterday, that the media. how were adding We get program, the our know customers in our I that amount been to the we’re of just to connectivity presence, we through to getting the able liking continue our to We on people and get loyalty and people social on assortments the News.

with enhancing level have just sales all the year. it’s I really really even this than think that, it’s of quarter So to that coming that higher a all fourth did of – really to better part we together. increased the do And in

– service. to stores, and For Christmas example, ROPIS, BOPIS personally, that and what on and over like averaging it. type very I’ve we’ll That And be traffic times on it’s of I business. customer for out able many things, well. those million to customer, example, months, able go investment and gone minutes XX get to And on exactly $XXX and can’t days I they know a others, they’ve $XXX because things know, less community minutes. five they use experience unheard all store and this. what we know that, executed your way built in and doubts getting back before we’re shopping that over three less continue and and when sometimes and the really We’ve this to we than to had had were should late XX than even credit. be great to BOPIS use some average will And to tried a business of. BOPIS, from your ROPIS that’s – also XX to but to hours, to give we And team build the people million e-commerce four drive get years up store pretty XX work

Peter Benedict

great. That’s

And thank for you question, guess, kind of Now, to I my Jared. back last then, that.

more or we now. in initiatives you be or mile on XXXX, question. that what are should thinking footwear guidepost momentum what Thank thinking little last this can XXXX? you. about the terrific have you a particular? right – about That’s you be product XXXX? But momentum we think going are And drivers help obviously, in what as sustain about the in or Just what How that, my footwear guys to

Jared Briskin

Yes.

first all, we I the terribly of pipeline brands, specific full. mean, that believe think, absolutely without I is very about getting

been we’ve to products coming with coming excited the and that those really We’re regard out. balance are what’s the for year of positioned where about out

our our lot more and significant products of to One franchises for largest is business. and to that’s scale initiatives believe stores, we our a really differentiator those of of a store

So that from an initiatives initiative. perspective, biggest that’s our

business the looking in our better locations. to garnered access, We garnered have allocations. attack question now more sneaker without And really we’re question better of without

Peter Benedict

you. All luck, great. Thank Well, right. good guys. that’s Okay,

Jared Briskin

Thank you.

Operator

SIG. proceed. Our Instructions] with from of comes Please Poser question the Sam next line [Operator

Samuel Poser

Good revenue, morning. how of from your few mobile one, I the questions. now? of much have – digital coming is with digital Number that

Scott Bowman

mobile, I a it’s to think XX%, For Sam. XX%

Samuel Poser

And I the accelerated you launched since app? have – this not has – or mobile you how and mean, that accelerated

Scott Bowman

Yes.

The And So functionality about forward, it’s increased I lot a I think, just functionality. new continues will people a raffle of finding better. members. attract bit. to that it looking even think, get are out some And

So that just and continued enhancements. I think will then help the

of functionality to done So, Bill team Quinn his so. the the do and of a improving just great has job app continue and we’ll

Samuel Poser

then Thank store you’re know overall this the what of the do you. help overall And And can secondly, what will And how like it to through business? the I walk and is and it structured closures. about or business will store to would you types how decision the closing? sort

Jared Briskin

that small for vast those in a and commodity-type the those that a sometimes we’re lot items anymore. in it’s is closing towns. majority that goods-oriented of are small more of stores smaller The stores too case those the Yes. markets, stores sporting are stores And it’s just where

even And on so the feel stronger. doors, business it’s those end make that at – good side on we’re more we kind pairing those And stores then and stores those Gear about where of with taking and hard momentum of the look City other the having fashion stores. we’ll really that off will a

towns will that smaller stores are in of closing true, where So, kind all say of more store the going productivity the forward, lot of probably and we’re a more would mindset base. our hold But of in improving sporting goods-oriented. that I the

Samuel Poser

those a sporting like specialty makes And goods-oriented stores structure or those the the – different a it store? is definition fashion store stuff small by margin than structure margins mixed would – different it than

Jared Briskin

big difference we’re going the not you an a volume the of and if a And typically It’s about average to the think Yes. enough is difference half really stores to store. not big closing, really they cause run needle. there move about that

impact. volume from So smaller a a standpoint, it’s

Samuel Poser

so Nike Jared, And one but then, to five of key is States, are to didn’t issue. you the you accounts be try With in Gotcha. the or force that the Nike, brand-specific, correct? I’ll want United

Jared Briskin

That is correct.

Samuel Poser

the And you? you what addition does what – giving are that anticipating Gear, City with what that is there? And of

Jared Briskin

had obviously, their Well, certainly relationship is The have included group a always Being focus companies our stronger. has relationship. I in think, helped great us.

Our access points are better.

are kid markets, can leverage improving, question, in we allocations certainly sneaker-obsessed to with them sneakers. and a really we of lot and we’ve are locations our certainly through more partnering got certainly kid. our that we more believe Nike know do we the get of brand Our to than a Without after

Samuel Poser

the And apparel, then – you side on and or performing more sell the things, performance as more women’s are – are evolving better. on Is the it’s of said men’s, apparel on how believe, on lastly, you you I – that side, apparel the are fashion side the fashion men’s opportunities apparels there? more do

Jared Briskin

double-digit in I women’s fourth quarter, the were there’s sneakers. No, a as mentioned big And focused. opportunity on the we side, where we’re in very

will business a through current our mix the apparel enhanced. last percentage Our women’s and our be was year lower We believe as to year, year. during sneakers very this that connectivity go with that significant within connects very business apparel of we sneaker

have our digital through in we story social we’re a platforms, the you the great we also that a if some telling channels through and told story. think, of long it’s imagery haven’t I a in reference time. stores But

we So premium-driven women’s our some where really think business excelled. do has sportswear to strong had products, a it’s really have time. take we But connectivity, going

Samuel Poser

be first would I degree on focus would when I of do guess, assume Nike, than Adidas, I’m brands to mean, leaving Fila, – out? that more so more fashion, top can mind Champion, that some it be we

Jared Briskin

They absolutely are.

Samuel Poser

very much. you Have Thank a good success.

Jared Briskin

Thanks, Sam. Thanks.

Samuel Poser

And, Jeff, we’re to going you. miss

Jeffry Rosenthal

you too. guys, I miss

Operator

this questions remarks. no Please time. with continue are further Mr. Rosenthal, the or at there closing presentation

Jeffry Rosenthal

call, the for you longer then. to talking very much on look to and forward listening being Thank today. talking you, much to very look May, not you with you Thank we and in for forward

Operator

that you you your the great your for thank day, for and gentlemen, please participation a conference does We ask that conclude today. and Ladies everyone. call disconnect line. Have

Hibbett (HIBB) 22 Mar 192019 Q4 Earnings call transcript