HIBB - Earnings call transcript Q3 2020

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Operator

Greetings. And welcome to the Hibbett Sports Third Quarter 2020 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 Friday, November 22, 2019.

to Finance conference and like [Indiscernible] to now of Director Investor would turn over the Jason I Relations. Please go ahead.

Unidentified Company Representative

Thank review the for Hibbett which ended Sports and year X, of joining and results XXXX. November months quarter the you operating third XXXX, nine fiscal on company's for financial first to

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

that from company's differ the the may in discussed noted those and statements. results materially forward-looking future should It anticipated be

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

call to information I the of understandings nature Lastly, to that on out remarks to believed limit of this information, it period of webcast this conference like of a of conference XX, based Sports are archived accurate policy point during as XXXX. November Hibbett today's call time-sensitive of date, management's XX Because would and the this the days. is replay

Humphrey, Chief turn like Financial to Scott Officer. now the Interim call to over I'd

Scott Humphrey

highlights followed start I'll cover a Jared Jeff prior with Today then the quarter, Chief a Senior XXXX general of by morning we to today's prepared Merchant, quarter CEO, Operations. Jared update. and third third call. business Briskin, earnings Jeff Sports Rosenthal, with Store merchandising, call will and and from good along Hibbett and Welcome fiscal Thanks And Cathy VP everyone. President on review Jason. have Senior with us the the remarks VP quarter with the of

an extension a reported and As on results the reminder, will basis. combined we business Hibbett the City of as Gear be treat a

not specific gross profitability business. to it's margin, Gear metrics such, expense other the for our City As or provide intent

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

For XX.X% the third compared total XX% sales. year's sales to and quarter third positive comparable comp quarter, quarter increased consecutive net last million This X.X%. increased to sales of our overall fourth of was $XXX.X

$XX.X City Net million sales for Gear. includes

sales sales e-commerce XX.X% Our continued for consolidated accelerate to the of quarter. representing

migrated during the online successfully Gear’s Digital to City platform Hibbett quarter. Platform also We the third

net sales compared increased sales period. Year-to-date $XXX.X the million account increase. $XXX.X nine Year-to-date year, through comp of X.X%. to million XX% City $XXX.X year during the months last this for first increased of million Gear same the sales to

a XX Gross completed quarter. a lower basis due was decrease cost driven occupancy the at offset sales have e-commerce sales, product lower Margin The points to tend margin we than percentage in year. which percentage to costs in as The higher sales. by a product more percent store store closures increased increase the occupancy to reductions than run principally this attributable of margin

quarter. percent Gear from basis increased of a City basis, predominantly expenses of as SG&A increased expenses. last versus On addition points GAAP SG&A the XX a approximately sales

of out earn to SG&A the in from basis Gear Included the million a XXX is the quarter, in valuation charge calculation. X.X which acquisition for a City points added the contingent

preliminary thresholds acquisition yearend other included of the and the XX-K, Gear's sheet. Note The City included in for in was of As contingent achievement out fair we XXXX our X XXXX discussed XXXX. Gear of earn two fiscal City agreement EBITDA payments the based liabilities purchase in value on consolidated fiscal liability balance certain

And I current earn earnings. previously. period million, current XXXX, as forecasts performance through X.X liability fiscal City out recorded Gear for the increased are liability based mentioned for and was the on in changes XXXX Subsequent

We business in expect we some continued volatility Gear opportunities. the this realize expense continue as to City

incurred the of This to to finalization and $X.X a CEO XX related removed basis retirement an non-GAAP agreement. in charge the net we quarter. EPS the of not from to $X.XX represents additional million amount Additionally, and SG&A SG&A points was consolidated

is the non-GAAP with compared per Consolidated last adjustments, earnings earnings including our year. per quarter share the per share compared normalized share last quarter to year, per $X.XX share share for $X.XX $X.XX $X.XX in consolidated per was

months first the through year-to-date first non-GAAP a $X last diluted $X.XX On quarters $X.XX we our is nine the first the adjustments, XX last earnings nine versus share share for per After versus normalized of period months earnings year. same the three for have basis, $X.XX for diluted per delivered fully year.

revolving to off the related of the million at borrowings balance of Gear the the paid acquisition. expect credit X to of the ended fiscal company in be And the to $XXX.X Turning end $XX.X year's end with million the our cash we sheet, to quarter by third million quarter. facilities had versus We continue City on that last year.

last Inventory not third number quarter, increased last but include year's City Gear’s does XX.X% year's inventory. from

the percent Our quarter last total XX.X% improved has end a aged inventory of the to inventory XX.X% year. as of at versus third

existing other under share total purchased million stores, Gear, $X.X a made Hibbett quarter Stores to million rebranded the in about and for our under we Also, we XXX,XXX initiatives. program. City of quarter At approximately CapEx on progress $X further four the in shares spent the capital million repurchase had opened authorization. as end, We the four remaining company $XXX

first our digits. quarter the now year following We fourth updating in we’re to guidance with the months year our full the increase sales based changes. expectations and strength comparable XXXX our mid-single of of the fiscal full So expect to nine turning guidance, on

to within basis XX quarter. fiscal of items plus basis estimate a gross in we points. we margin down flat of of a increase includes the late an both to years, additional store This liquidating to assumption in gross non-GAAP change XX fall of excluding margin the be range in rate an overall our points points to impact For XX basis expect the up expect in range of fourth non-recurring inventories

With rate percent range respect increase the SG&A to points. a points expect we XX an as basis XX the of in of to sales, basis

years, costs basis we non-GAAP non-recurring basis the for to excluding last XX However, rate from SG&A both points to expect improve fiscal XX year. points

integration share share non-recurring adjustments. SG&A costs range store our in finally, fair As includes which GAAP with a of be associated earnings And cost the per to and reminder, City $X.XX Gear and the with to out includes accelerated to estimate contingent for expect earn additional an plan. for we per $X.XX diluted $X.XX, value of closure $X.XX acquisition

non-GAAP Company in and Excluding non-recurring $X.XX now diluted not $X.XX costs, add of non-GAAP CEOs $X.XX. EPS income is to The backs expected these earnings in reduction the for to projections. for range the related time transition included to to has net one executive its per costs be share compensation the

million previous million of Jared For $XX CapEx, of we now now to million. expect the $XX and turn call I'll to compared spend review for million with to between merchandising. guidance $XX $XX over

Jared Briskin

you, Good Thank Scott. morning.

early about include comp back-to-school QX period. double-digit Impactful consecutive the of are fourth prepared This quarter. fall very the the exceptionally my and game. fourth apparel excited drove launch comparable improvement. strong momentum not comp calendar our will remarks trends. reminder, posting selling Gear until in business City a store store delayed was reflective stores a We're As as

Our with on footwear results investments influenced business consumers, back have our in and by focus clearly other our been improved categories engagement sharp the footwear. connecting to

strength of from comp coming consecutive strong quarter third our business. business launch mid-teens non-launch posting increased as quarter, sales results all our footwear women's ninth Men's, our the calendar During double-digits were well and strong with as kids up games. in a

driven numerous Force Era calendar by franchises. Sports the on and A for Vans, NMD. in Strong strong Armour to quarter, back-to-school. Yeezy, Brooks, by Boost results significant also Ultra Retro Wear Nike gains. and also strong and sportswear Max achieved Champion an Under was One exceptionally Jordan business were during footwear Adidas by led and improvement led Air launch was

active were part including were T-shirts gain Apparel genders wear the in wear. exceptionally while single latter quarter. was positive, fleece layer strong shorts quarter, and of strong in low All up base were double-digit in digits. the a men's the and inactive earlier

was mid-single planned as other results as decrease we lunch backpacks, categories. down Strong positive bags was results. categories drove Much had dollars totes, investment digits. to Accessories this socks were and Licensed moved business our of such around double-digit. key back-to-school

Baseball, Team plan. sports business positive. was was wrestling down low were single softball, volleyball digits, well and performed but on and

the Soccer were negative football quarter. and during

fourth we in the confidence momentum quarter, have As head and into our we business.

growth, are products declining and invested heavily that have our and in We are in categories investments categories. driving reduced

before. the and I'll period, the remains and our call assortments to Jeff over fresher Rosenthal. than than Inventory are connected ago turn now ever significantly more focused year

Jeff Rosenthal

morning. Good Jordan. Thanks,

our with results. pleased quite are We quarter third

the Our and quarter positive in our quarter first fiscal quarter comparable XX.X% with our XXXX, of quarter represents third sales since in increase strongest fourth sales. comparable the consecutive increase

continues strategic business with and perform The been team and to by team within The possible made by our our performance mortar the e-commerce evidenced positive well, growth sports. team's apparel focus to head locations, our of as in our sales sneakers, both concept has and brick comparable tote business. execution very our and lead connect

Gear can now enhance the to and of complete year, we through integration. has will for synergies the one City acquisition part as been continue Hibbett results the

and and our are earnings enthusiastic very increase going are We guidance. sales business forward, about our pleased annual to

the business delivering business is e-commerce sales. to total Our as over now outperform expectations, of continues XX%

very limited marketing was programs. improvements including, quarter diligently not we transform to to our busy to and Third omni-channel company large but as e-commerce, continue

entire Gear launched our payment several additional our by delivery have all added website City the XX pivot in In e-commerce, markets, apps, our across to channels. our last with double-digits we marketing grown ability communicate flexibility combined refreshed same and day for customers days, and and customers,

The changes saw the changes at both growing a quarter channel customers, are resonating making growth are and new customers, we with also comps are this existing sizable our Not attracting only have resonated we customers. store with digital XX% our with the fastest we the comp. digital are making

in the saw loyalty a enrollments prior year. over This increase quarter, we XX%

our experience. made have in continuing progress differentiating We retail

best We markets. the on our most will also for underserved shopping providing convenient continue down to the and double experience merchandise

the example, an launch online traditional reserve online win currently in to and six shopping process pick-up ways we at coveted shoes. store, offer pick-up our a shipped store, store, Physical shop. As day and app right same was using in purchase home, to and to to delivery buy e-commerce

Our be in experiences and stores. the We year. new to seventh of be our to produce collaborations online half shopping technology match and exciting some considering customers. where also buying mix of next shipping and to were first This our ways way for shop will available will we'll

cannot I the enough will or associates Who one future. help be be ready will pivot for this retailer. and company thank their sure, seeing our has will the But how to hard work to for things a they all list true knows our come omni-channel want but been strategic grow to Thank have accomplished to vision is long served. This want to so we life. however never our in together and thing customers, dedication easy, all. you many transforming

for now questions. Operator, ready are we

Operator

[Operator Susquehanna. question Instructions] Sam you. first Thank Our with from comes Poser

You question. may with proceed your

Samuel Poser

for number It the the guidance. guess -- up. e-commerce morning. question if have about my just the I questions. in you a a can you I Good versus Thank thinking taking us quarter? store and on I of how -- on fourth looks follow some have idea then you're as I give one, have the question

Jeff Rosenthal

initiatives to planned growth and Yes, exciting some we're think continuing I quarter. and see for fourth e-comp have

continuing it, on planning our a story. part growth think, I be of to big So,

Samuel Poser

stores I be in But do they QX? positive the in QX were you to as Understood. expect mean,

Jeff Rosenthal

Yes.

Samuel Poser

and taking I end And in EPS Am It then, so, still towards and that here. to come reach prospects sales as growth of -- so low that guidance and thinking margin close, of balance on the if looks just end the the if the making same-store you of top wrong? provided increased you about the not could based guidance, gross beyond ranges your SG&A. the

Scott Humphrey

No.

I think that's fair.

the so is fourth I to the certainly we launch little outlook. a to think and schedule be holiday add we've to with taken volatile, conservatism last quarter a little guidance year that than and different EPS view going on a our conservative wanted schedule

Samuel Poser

you. year? that key then, now them -- have the your how Thank the And product City how vendors launch treating how Gear as last from does well-positioned the to calendar Jared, is new for acquisition. compared with to not may prior has And the been well much you

Gear City the of sort out balance the year? are And of what expectations of coming for the

Jared Briskin

feel feel product both done results Yes. well referenced strong of like quarter. comes have really has Certainly reinforce we're is that during on some launches the And to we work with plan lot the Sam, shift. third Gear's We we the for a Scott changes, really it We along the positioning. access strong City QX. more along really for to been volatility when to really, focused very certainly positioned with have Thanksgiving allocations banners. a date like really

Samuel Poser

right. I'll again. so on hop All Thanks much.

Jared Briskin

Thanks, Sam.

Scott Humphrey

you. Thank

Operator

Our next Benedict. Peter from comes question

your with proceed may questions. You

Peter Benedict

Hey, guys.

question, And maybe fourth and First the margin you change how can dive That's just about XQ? the little guidance? quarter around product product understand within gross maybe help first question. margin; us in margins thinking that performed how you're my deeper

Scott Humphrey

Yes.

the So the positive e-commerce and run strong lower in on third product versus in on e-commerce store down bit sales, QX a sales, comp bit margin increase tends but product prior the quarter. by margin a brought still a year side, store to little little

drop where year, QX about comp for is came you of QX. we XXX the point from what to basis at look If you have QX in last

the so, our talked inventory into just cleaner good and Jarred about And position we QX. really about going things feel

So we that do to really if able repeat that the we be was range based we'd guidance on provided. QX were – is in and margin all from to gross

Peter Benedict

And were going in third right? like if tease core margins, to know make we sounds – strong the want product trajectory Okay. on occupancy with with assume some quarter gross leverage quarter, it the in there the little I and maybe I gets underlying because but were they're margin got up I've that so -- comp, margins product just sure the be then a to out fourth down

Scott Humphrey

Yes.

little, the flat. but down basically not So,

Peter Benedict

Flat.

required City to EBIT figure some or How is are either year mentioned Thanks And next year. out to I then, to is, thinking helpful. going next forward? know, in we've my what business on level synergies how – guess growth That's trying for structure pace just maintain kind margins. SG&A I'm what of comp think the should got SG&A that forward? maybe question tap, but you. of now going Okay. in leverage still of Scott. be Gear even about thinking we that the I of kind we Jeff, should the really really into expense about Thank the

Scott Humphrey

question. a It's good

Gear of headquarters into Our end the basically is to corporate integrate year. plan fiscal City Hibbett this at the

before. And so, be we that that's recognize synergies integration should some was SG&A from to cost able Jeff mentioning what

specific Gear. so to think – think that I is I City

process the budgeting we're think I in our still middle of for next year.

at this look that with certainly hard on much quarter once a get next discussion have taking so, a And process. the we SG&A, deeper through

Peter Benedict

Okay. Fair enough. Thanks so much.

Scott Humphrey

Thank you, Peter.

Jared Briskin

Thanks, Peter.

Operator

Chartiers Our next Monness, with & question Crespi comes from Jim Hardt.

with You may questions. proceed your

Jim Chartiers

taking as for launches, back-to-school you on impactful curious quarter Hi. how Thanks bit questions. how might in I us was back-to-school was just that any for shift quarter? in color been -- shopping of shift third on give if In third well? have can Thanks. my impactful little a

Jared Briskin

was QX There Yes. referenced shifting. the launch on We call.

business some was the So really strength the was as we of as We quarter strong weeks September of saw last that, in assortment. accelerator the certainly into August, our some back-to-school we some call. did on but our driven well. back-to-school in from was shift strong our key around the their But see of by October referenced very and September a business category peak then and saw October change July

I with September early back-to-school be So, Hibbett business our back-to-school. and that don't related October to consider for

strategy execution was in very period. we strength that So that was feel during our business and our of general just sound

Jim Chartiers

for today? how mean, And that of Great. on the e-commerce, out came profitability for I where City e-commerce then is can launch? quickly Gear, Hibbett then And gate.

for Is that digit single a like reasonable now on high it's platform? expectation City the Gear e-comm a that think, I Hibbett penetration.

Scott Humphrey

Yes.

on to -- think may overall, But time percentages we're reasonable profitability a on that e-comm get from profitable, are so and The to -- expectation. going that money standpoint it's I small meaningful growth so a huge, but get maybe a numbers about us the take making to what think number. yes, a I business little it talking you're is be e-comm. there that's the

been earlier, in I tend because online for mentioned -- driver our more just than a position the you stores. do lower that's is to do clearance this really as cleaner I margin well. And year mean, definitely As you inventory product

So ways. us in other it's helping

Jim Chartiers

luck. best Thanks Great. and of

Jared Briskin

Thank you.

Operator

Susquehanna. question We follow-up have with from a Sam Poser

You with questions. proceed your may

Samuel Poser

-- increase wondering of the the same-store the call. beginning might range of was Did the missed I know, I at And you or you give Yes. to don't I month. by can have sales so, increase give it if us?

Scott Humphrey

the in it providing not. the monthly comp just launches with in to No, much And and we because did from business. it's because very general, around will away year-to-year, strength quarter a about of the moving to from gives prefer overall better picture it -- trying noisy so we're the gets talk get we data, you again,

Samuel Poser

Okay. your the expectations above And quarter? then, was every for month

Scott Humphrey

Yes, it was.

Samuel Poser

And kind comp of given is some idea then, people �� your that – could becoming you could the they of into in and to that the that ROPIS, may give how bring given the us how that, you important BOPIS in does that aided have come with What stores? business. –

Jared Briskin

business. X% Yes. XX% XX running is runs good about we rates plus attachment Sam, period, it to was XX% part it business the the come Around Christmas that in. the of business. when of have people in The do

our be our The We're not That buy now whole business enhanced was we that is and it the later. you continue other but as which really capability. was that out, where we can did significant going pay can to thing separating Klarna also part too to of go. has

Samuel Poser

the continuum projects that digital Gear on. the working And through of integration omni-channel City then you're lastly, like various we're and -- on through and

a be but that on off you that So, of sort have -- at of? sort like do exactly continuum you of where you where you to think never you foundation the at can work being of point you the where want are be

Scott Humphrey

the like feel foundation. We we Yes. have

for the to about business we how we We can do serve shopping. the friction how points really takeaway just continue. better. it It's customer laid – Now, have for really foundation really the

continuing the not market that. type of add and trying as same-day really build are the stay what ahead very things to Those delivery to continuing gives have we its technology knows we we about it's to the capability things. so other such to do that able going to much or – But future. of So We're have just who best-of-class that now much is bolt-on be that easily us so have it in now.

ideas and it. lots we always of And continue have we'll advance to

business that the last One able that with three to the put digital we've in to now business for intent and not but we two those far that is the very a so to stay of in the store can leader full of things this the being to accomplished foundation with and in grow been – some just there. we're strategy years behind really we company omni-channel things that content

Samuel Poser

and Okay. in that on color remarks you back-to-school. more your And footwear their some then was lastly, Armour business? regarding Jarred overall for mentioned you Under that Can give shoes? kids mostly prepared us Or

Jared Briskin

business gender. gender to compared a to our No. we stabilization see than footwear. Armour. across – nice was with focused It actually side prior assortment Under that and It had across the footwear well. more consumer it Armour with It and men's nice was It's resonated kid's But the women's. some from particularly was on in Under year

Samuel Poser

on which about I on other the it's apparel side, assume How bigger? the side,

Jared Briskin

been business. my it The of we We Armour And part layer. is base well through, business the stabilization get the and some historically us commentary towards it weather. talked the stabilization decline we apparel particularly referenced some stronger years latter as we The bigger. seen But see think, for in Yes. we've in seeing kid's. couple that quarter. are the Under but did been as has to some for men's I cooler Well, I around apparel of last in in has the business in that have which

Samuel Poser

All you. [Indiscernible]. Thank right.

Jared Briskin

Thank you.

Operator

next Merrill comes of from Our question America with Alexander Perry Bank Lynch.

You your questions. with may proceed

Alexander Perry

quarter. question taking really on for Thanks congrats Hello. my a strong and

Thanks. seen be for of and business wear categories give sort the of apparel that seem a specifically, that's the could then, working. street And quarter you logo have within what of product are wear, fourth a a you slowdown in first, us type to while? the your sense product expectations for sort sort Just of been what strong and of

Jared Briskin

our exceptionally out of The Yes, on the was no side. to strong continues business there activewear I mean, logo business trends the problem, double-digit. some Men's wear been apparel resonate. was that and particularly have

between We a is movements brands of normal are some which course business. seeing

was business street exceptional. Our

Our business early exceptional. athletic in was great. I in particular shorts brand was were quarter the reference business fleece and fantastic. The T-shirts

assortment. big ensure and our is share thing apparel very, driving perspective. a to how to business. in-store from business life are of around think with telling are of like We're our back sneaker how driver trend the that and point results. the directly the connecting that lion are connected business sharp direction we relevant really to focus I primary outfits upgraded really the to apparel that's sneakers coming That's we and those business customers the us our very our We our apparel our they back been strong

Alexander Perry

super Got That's helpful. you.

can you And promotional environment sort of you season, follow-up, a the specifically selling the this us how sense holiday guess play your sort I will shortened guide? baked season? given of Just think that into is a on give

Jared Briskin

in. It's baked Yes.

what's It than should certainly our is business promotional the business. to really, we marketplace as and hard it marketplace. be promotions, sneaker direction that not promoted little have last rest like be marketplace, readily strong it would I possible back it strong mechanism. promotion apparel be has than won't not bit scarcer really necessarily to be to from a our desirability far expectations expected a really think lot the categories we assortment tied as year. that And I the that'll But create stay comment those started reinforce but of being the have to for out tie a are been and of in it We'll to be based earlier. more feels will that our off promotional. a as really in Certainly assortment has as our the away available. will to promotional

about feel we business where today. very, our good very stand and we apparel So

Alexander Perry

one just then one me here. Got And you. last for

in it sort tough that Just you sort were fourth as more out of that of this launches you're we year, possibly look the spread calendar third quarter, seems and launch the between a the lapping year? nuances give Any sense the sort of of quarter guess fourth and you a lap sort us plan fourth I sort of on quarter. to third between last Can quarters? that how and

Jared Briskin

Yes. from nuances. Gear to not on there's good where there's like calendar always Again comment feel the good have a I'm very models. always both and nuance, perspective. change, banner perspective we're on really We Hibbett focus perspective positioned going about feel about plan. launch we as always we We strong nuance City a banner a well from feel there's certain as

Alexander Perry

Best helpful. That's very of luck.

Jared Briskin

you. Thank

Operator

Our Instructions] from question GMT Capital. with North [Operator David comes next

proceed may with your You questions.

David North

questions. much a for financing central sales for third Hi. is my for customers Thank quarter? taking How you programs impact

Scott Humphrey

It e-comm of a that. business, percentage not was our good but giving particulars on we're out

David North

you. Thank right. All

Scott Humphrey

Thank you.

Operator

questions We this time. further at phone have no

Jeff Rosenthal

strategy to everyone thank We our like a participating for exciting quarter and having and Thank March. on this time to positioned future. to we come see call. look well forward It’s our year-end in call continue in fourth to the would very I fruition today's to to Great. you you. on are

Operator

lines. conference disconnect your the that thank and conclude please your call does participation for you we We today. That ask for you

Jared Briskin

Thank you.

Hibbett (HIBB) 22 Nov 192020 Q3 Earnings call transcript