HIBB - Earnings call transcript Q4 2020

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Operator

Greetings. And welcome to the Hibbett Sports Fourth Quarter 2020 Earnings Conference Call.

During this presentation, participants are in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Friday, March 20, 2020.

turn and over Investor to Director Jason pleasure Finance of Relations. my the to conference Freuchtel, It's Please go ahead, sir.

Jason Freuchtel

quarter results Good morning. the the which operating review February X, Sports Hibbett year XXXX. fourth ended for on Thank you Company's for financial joining and XXXX, fiscal to and

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

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

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

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

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

Scott Humphrey

earnings Mike Today, [Technical the and Senior to and Longo, Difficulty] Jared and we everyone. have Thanks, and Jason, good morning, us Hibbett Merchant. Sports Chief and fiscal VP Briskin, CEO, President with XXXX call. year-end Welcome

prepared along the highlights with Mike update. the the general the merchandising, quarter year followed full results, review on quarter start with a from then will by remarks with cover Jared fourth and call of today's I'll and business

reminder, will a time we Gear the included Gear as in treat one year. have were as marked basis. an now business the the that Gear reported results extension a be quarter City combined owned consolidated of sales, and we City comp first sales fourth As on the for City Hibbett over business our The

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

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

to Total XXXX year, sales sales X.X%. For year. to previous fiscal the full increased for compared net $X,XXX.X increased in comparable XX.X% $X,XXX.X million million, the

e-commerce the sales year. XX.X% increased prior to compared Our

to points quarter occupancy gross the Our this store have due on percent XX completed to a margin the as increased a of costs attributable mostly we lower closures year. in basis, GAAP basis sales

However, basis as adjusted closed when margin stores add-backs our we to accelerated on there closures and occur. an store basis, XX occupancy expense points gross the decreased are in by Hibbett XX January, more

as e-commerce year, in basis margin. sales as overall reduced percentage our mix margin Difficulty] a our full XX [Technical the by the gross our decreased points For acquisition. of increase total SG&A

was of on increased has And current $X.X sales percent fourth Gear in XXXX fair the purchase the contingent XXXX year, liability value quarter. achievement points earnings. liabilities our impact certain Subsequent the million, sheet. an based liability through earn-out in XXX acquisition the fiscal last agreement City and other period of for thresholds liability As in we as City Gear's fiscal recorded payments in balance which included fiscal X performance included for current XXXX. for XXXX, discussed of forecasts note on in City earn-out the XXXX preliminary changes the XX-K basis consolidated two a year-end of are and was based of EBITDA Gear's The

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

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

costs On SG&A former basis, a the higher was CEO’s e-commerce due quarter and points agreement year fourth retirement higher. quarter XX prior of higher sales, of typically percent our as which an the basis adjusted drive a to sales than SG&A combination

I the expenses an constituted points prior which For XX.XX% of than sales as the of our in contingent sales fiscal XX of were previously. sales earn-out XX.XX% City SG&A the Gear higher a percent basis, year On adjusted year. to the full year, basis expenses compared discussed prior expenses, our due SG&A to

per earnings tax a compared was $X.XX share share a year's for compared the XXXX, $X.XX fiscal which the tax share was versus income in per compared share per earnings share our last full-year $X.XX fiscal XX.X%, for share year, On a rate for earnings basis, a earnings year. compares last quarter $X.XX to increase. The XX.X%. per After for adjustments, of XXXX our versus And per fiscal is normalized a per per with year. our last for quarter rate share consolidated last share we share year. $X.XX Consolidated of to per $X.XX year. Including share fiscal per prior per XX.X% XX.X% XX% $X.XX rate to the $X.XX adjustments, was was the during have normalized full delivered

With we ended the fiscal be no related zero borrowings sheet. paid as the our balance potential $XX.X Gear off acquisition during million the year. year revolving end we to substantial on to debt the to year. withstand slowdown in Company the million City business to $XX able for activity with well-positioned debt We in coronavirus hand, the any in ended million and cash related our credit feel $XX.X facilities pandemic. with on to Turning year versus of cash the the The last at

the from increased Inventory last year. fiscal X.X% end our of

existing CapEx total we has improved of rebranded of XXXX for made end XXX,XXX had under million and two Company purchased total in our We fiscal repurchase versus XX percentage approximately inventory XX of we $XX.X remaining inventory stores, existing inventory our further opened of to a program. authorization. the shares Our the capital XX.X% Gear, seven stores in on to million quarter spent XX.X% a Also, City progress stores expanded share the relocated as in as total Hibbett At year. other initiatives. year-end, our stores, at $XX.X under about $XXX last million aged the

a to now the I'll over review merchandising. call for Jared of turn

Jared Briskin

morning, Scott. Thank you, Good everyone.

trends Gear. include reflective City of storage and now As a reminder, my prepared remarks are comparable

quarter, fifth gain. executive momentum our posting our fourth comp the continued, During store consecutive

Our sharp leading is driving with focus results. and investments in our strategy of sneakers

able we that launch While excited results, the about calendar shifts, has to seen include These changes overcome. quarter our and unfavorable date challenges were weather.

posting digit fourth gains comparable Our quarter comp. results our is made business. This low non-launch had kids’ business. gains footwear, were across women’s and driven strong sales of double calendar and a our possible quarter in our in performance XXth in continued performance results improvement a by double-digit men's, These strong was straight launch We footwear. by

the Retro brand was performed models Brooks, as came Air strong Force resonated. to broader continued Other as with Jordan Rings models, investments and platform Converse. well. and Reebok performances models as as strong such quarter sportswear Max such X from We Air and well [ph] perform had and Champion, X a in Nike exceptionally JX

showed down that apparel by down. women’s licensed Wrestling, connectivity results softball to was planned Challenges reduction apparel, sneakers, Team but continued Apparel business low-single-digits across to were track wear perform on strong in and our well business. in performed challenges down in and drove Strength low-single-digits. was in and fitness other offset products including by Apparel categories men’s was exceptionally offset well. licensed, active plan. products. kids’ feasible the was and categories, sports but a

to I'll turn Longo. the now call over Mike

Mike Longo

you, Jared. everyone. Good Thank morning,

in for proud of We're four. quarter team the the results very turned

lead this terrific More importantly, very associates stores, our and sales each and in every our proud I'm who the serve day. customers team to

took on Sports. spend asked As of Hibbett I role background. few at on CEO I recently all you my minutes was the to a know,

Airborne, successful back very academy. the Army, in a XX-year in career career an the the and starting my XXnd U.S. officer I out economics So, at had infantry paratrooper and in then WestPoint, I short, at as teaching a finished

military, people with great I interview lucky was with was the to that enough for exactly mission. company, perfect the one right have left me, and was a exactly I AutoZone. When The fit

in I in XX at my ran merchandising, the an of So, me and stores retail. AutoZone, years the provided chain, and all disciplines all supply education that

December. day, City partner chain to eventually Presley, Jeff to chain the business bought years, Hibbett. I the XX And where a and a XXXX, accepted XX-store position we in sold that, us CEO in we present that turned XXX-store those Gear. I Following brings into That in my

team. to member here. But, the to be about at be I'm proud that's to team. to me. proud I'm that Sports. I'm And proud Hibbett the be be proud enough a I'm leader of of

on move what to Hibbett. XX the I've learned past days in at Let's

ability us customer That and from it. to competition to based I our the the that selection, now a believe apart going deliver ever-improving wherever and further to future. great is our will dedicated will whenever success they great we and even learned, customer We sales our team a we our serving services our in to set service, products consume customers choose and success model. product to our a culture our key our on business and have and forward stores, have be our in

reality soon the our with going But and hear want pretty respect more to about current coronavirus. you're also situation I'm to to sure

by We're First this thing concerned though. affected those first is about directly virus. deeply

them Many Our equal and And thoughts and place. to concerns assist physically them. get our and parts, to trying our to go prayers to hope affected them, economically. with are the we're best, best and better people are we our out a some in

a Hibbett this resilient of out face things like would problem. that few are I in help to Sports point the There remain

retailer. practicing to And we're put in opposed any set in in and in and box and Midwest deal as of a you smaller less the box And major that other also given imagine social of operator obviously, have over issues. would care great an who the concentrations but centers. unsaid, taking time common to we're the to stores a at week's number every period, a one, population would it services don't want distancing retailer has disinfecting For a staff We're saying disinfecting with different and CDC I a means a customers big of small in without markets, a in sense between -- guidelines, of people go exposure the we it don't the stores place. mostly in goes measure and great following services that store South

result a that reduced staffing. and They're as open. And and I are that to of do stores with decision thought, deliberation our with regards want to safety careful reduced open also thought and hours and make currently has that the point staff operating come welfare.

help Our their employees necessary we us precautions ensure that those but also safety. customer to to safety. And open, have precautions stay ensure want balance with to

Our waiting us have too. their in I on the customers. customers yesterday that expressed to remain for open desire saw stores

our pick ROPIS locations, continue e-commerce distribution best-in-class center. platform at and as utilize continue well well, effect. execute As to same to great our we our as time, from BOPIS retail services the to we orders to our And

business. Our to so. platform open another a platform and and and demonstration remain business for continues utilize mortar our remains digital and is perform integration new The curbside service with our to yet way of will brick strong digital

staffing. corporate, you is refer as office remotely or we're store able strong And support center, to cybersecurity our Our reduced controls. to might operating work on it with an

distribution is supporting center and our great digital and doing a also business. job operational our the DC, Our stores

available credit. issue. facts liquidity. you some topic an have cash gave we is balance The cover in next our not I to and you In of on Scott and the also sheet an remind it presentation. want the case, figures I will earlier again, is line

liquidity withstand period a a of shutdown time. can long for Our

projected well have Our and the excess model will disruption take any the the past foreseeable to prices, liquidity our of short-term in for future, timeframes. ability us indicates well we manage

it we and if a terms reduced, -- with make so. that of have the our are can our our you great landlords. obvious locations ability all our ones to [ph] necessary becomes And be have POs to all can preserve model already our we extended. relationships leased. adjustments to do to Additionally, are off, leased And CapEx locations store inbound, on be We're managing reminder, of the they're ticked all liquidity, some have would

match we have of our relationship course, on where XX% with are great staffing the leases we have We And year. can relatively we short-term reduce a landlords. renewal every to can demand. always XX% -- coming And to up

in of So, find to to I'm up and lead to And in. we I'm I'm customers, of excited ability be here. task great the our this conclusion, team. on set to confident ourselves delivering in confident in I'm excited owners. our plans. are employees circumstances our to our we commitments withstand

are we ready Operator, for questions.

Operator

sir. from with Benedict comes the first Thank question-and-answer the We'll Please Baird. now session. proceed. you, question begin of Instructions] Our Peter [Operator line

Peter Benedict

for bit one, the willing guys. I of kind quarter that, Hi, I Thanks guys first far? how guess, to has but question. first the to would unique situation. this obviously speak be a you to gone don't typically like the is a do of know you so

just know and March, far maybe then what's thus February for at accomplished was So, in feel how been to-date. getting a business we least the in so

Mike Longo

were regions, e-commerce result. to well. has that had comp, we that? until all all doing But week last were can as Results well, any strong. color and to on were This our prior very Jared, cover hitting like good. very, Obviously, of remained positive week. over you'd in a Sure. changed Scott cylinders, Mike. brands is the up of all first part very to last and good add Jared very, midweek We a and that, chime I'll the that

Jared Briskin

know you No, I think that, Mike.

I think in before really very positioning the of our health the And inventory, of confident seeing results in pleased we demand our we very the plan, were we're the with our were slowdown. inventory. confident

Peter Benedict

Thanks. helpful. That's

probably gone down the does the I negative but -- as well? And but, the stepped e-commerce are so, e-commerce down mean, has mean stores I that well. that as has mean,

Mike Longo

day E-commerce and positive the -- continues upon operate, a to territory. depending normally

results still we're seeing good So, there.

Peter Benedict

And the what Okay. time for is had you back, of cut thought this CapEx base kind any maybe could? Thanks, off much is on how Mike. flexibility. holding give sense mentioned buyback, And being? on then, And plan you thoughts if Can for CapEx you the for us year? of to a your there you that

Mike Longo

all those We’re going review to options.

As on you changing by moment are moment basis. can a imagine, things

or hear in you email answer, because in current dealing an If a timeframe. we're us pause text it's situation a and an the probably checking with

changing. CapEx we're So, to spending. modify things going Yes, are

determined it of in get in and modifications they're those. plan and forward buybacks, it just and out the of you We'll place, not shouldn't of Some we'll already in and current is future to because and to -- business out you wise can't it the and in look the investments business. yet. at all willing the future examine go We're tell you get

Peter Benedict

few start Last to it launch the That's if But, fair, be as months. the out the suppliers be could we Mike. question, might here know next second this. your chain Let's maybe about operational first to you point. over think on the of weigh quarter? as as the that look demand though Any taking timeframe people kind and take to that start shape will reasonably as good over the calendars some and this where of -- least at -- Jared, I supply changes the looks seems don't at in footwear though,

Jared Briskin

situation not have regard this a least from of of is fluid. changes. through I second, right this confident obviously not is changes, a chain say at any minute. as with Again, second, date launch want Peter, have a felt right point. we're perspective, the and almost mentioned, the supply From as seen we by quarter, perspective, mitigation first as second, right when fluid, to lot at changes we seen minute this Yes. with Mike be dealing I to and there; situation of this we quite But, any careful the

Operator

your proceed from Crespi & next of with the Chartier our line Jim Monness, question with comes Please Hardt. question. on, Continuing

Jim Chartier

of had Following the on much question, first to-date have What quarter how still the of percentage left? the sales up you in quarter?

Scott Humphrey

I'm sorry…

Mike Longo

the I halfway is through is -- quarter, your question we're the think, think I answer.

Jim Chartier

Yes.

purchases conservatively dial half And the and of inventory of back as the are about then, terms the maybe of starting for some Are planning, year guys more rest back year? to Okay. you well? thinking the plan in you how

Jared Briskin

like very supplier on mitigate while conversation a and our demand Again, ensuring inventory commitment with as the future trying working partners. as discussed, situation, what that we're from potential well slowdown. looks as we perspective, minute partners see fluid the much As very constant situation, to with we're very, fluid some our by as

have We incredible with partnerships and incredible support. our vendors

here some like inventory we have we through of think So, this manage flexibility significant go the to as we the appropriately balance cycle.

Jim Chartier

what then, rate as what have have is you there? be What just And Okay. adoption Hibbett City as the Gear, rollout the e-commerce e-commerce at City and been any has there successful done? on Gear reason can't see

Mike Longo

well. transition has very, Gear gone e-commerce very The City

the platform, added Gear bar the also adding has of below that digital out none. correct gone to is that but seen well. as we it level. process. it fulfillment break think Gear me, We've business Our will And Scott results. to very reiterate, the the City phenomenal I in continue City we don't stores And to best has some most very, And

Scott Humphrey

Correct. No.

Jim Chartier

you see, what the And of I longer guess, Hibbett’s Gear term? Okay. for terms what and businesses? Mike, in biggest store you going do I do guess, the forward then opportunities And for opportunity, see two City

Mike Longo

brands running the the customer Thank brands see facing parallel both at them to tracks. that the very Great They us, successful Keeping separation with piece. question. consumer. brands of is least you. different on operating, things, We important super two the stand of the are down for two

ideas allows merchandising categories. lessons can also and consolidating that is for best our that the we in things back ideas to consolidated have were for. to expand City Our best-in-class the learned we best synergies and for savings Hibbett team other do us the Meanwhile, in of And looking the the office them to in Gear, that leverage the Hibbett. them and in we Gear best put and job in take put all City

we say has So, And capitalizing room strategy. successful. The been our we're on may Gear been the to City great has a future. I so there's myself, if like very success. It more and -- was grow acquisition, in it

Your specific count well. was as store question

the level, to Gear the continuing at modest grow the Sports and same City Hibbett are a We for brand brand. answer

Operator

next Susquehanna. from question. your Poser with Continuing on, line with the of proceed Samuel question Please our comes

Samuel Poser

right sort to Simon, Thank some given like closed, control now the you give of you Can you. your are stores many how -- close, welcome me that And -- Mike. mall out have many folks tell could how closed? and of the party,

Mike Longo

majority stores of open. are the The

let's in dozen XX move. are a the dozen upwards Simon result of -- had a as XXX Majority just say And after to was jump traffic. have our that We localities overnight had than the prior to XX sales sores saw characterize of as percentages range, a I current few ahead. -- Simon. a said, that in it's not not closed closed of open. quarter, it's some less current We're But that. yesterday We are decent so. to stores the I in and but still in going We're

Samuel Poser

Let to keep than when sneaker. house, be good? a good the out people that and getting do they're sales, come make At I'm to their of -- want paid, latest this I that might lot harm I'm of to to you're want and government couldn't their decision me mean, open, might sure the for the more if short-term may day, people stay while end buy the the people houses. in the wondering And wondering encouraging people -- stores to telling

Mike Longo

of point view. your certainly That's

case. eyes view that that’s own we're our of two and we're employees the my safe safe. what Our our And is with customers keeping saw is keeping yesterday I point

four upwards store the in and clean. customers You're store, is staff the the there's it keeping in in a store and two of customers

point of So, view…. I your understand

Samuel Poser

a has are you’re to I that. I out mean, it customers But work out. go than telling I you as saying keep and to the -- all to and mean, okay to the it's come okay little customers more still going there? Isn't this there's understand clean that. to it's sort stores go of the So, staff

Mike Longo

at to point. out assuming I'm some you today got

how So, intended take statement look, you good I view it My for your and -- and it. we is point it of stands. appreciate

Operator

a have [Operator Instructions] with Perry question of We the line of Alex America. Bank from now

Alex Perry

And Thanks question. for taking my Mike. welcome,

quarter? much City the can can first, Later of solution my of then, first Just fashion-focused comment for just Klarna, That's stores between you banner the out you one. more chain? helped and how versus e-commerce your on Gear and Buy the the Now, difference parse rest sort help the separately, Hibbett us And this quarter Pay

Mike Longo

strategy. and more We're Thank question. platform important success would helps a do Klarna what for products you. amplify been otherwise great part it. and us been And able and it digital very digital continues be appreciative and of our they to have an to purchase. Good do how of customers they it's make those available our to

him have lateral handle he'll In to specifics, terms disclosed. and since and have what those, of I'm going Scott to know not we let historically

Scott Humphrey

Yes.

QX. And a the comped some but City just not saying perform in our City we I on well, given business. had so, Gear saying standpoint, They now revenue Gear we rolled comp, had to which mean, segmenting from we're -- out them they typically, positive numbers very just continue until was into that are.

we're now. and kind everything forward big moving company rolling so, of one And as together

Alex Perry

on where begin That's around expense? just days, terms closing, of that of other like of And of the help some of Great. just And burden? pull in sort if here my then, like offsets other one, to what are there last marketing chance share you the sort SG&A tenants helpful. rent guess, could landlords rent I then, the really the is some Thanks. you clauses,

Mike Longo

to landlords question. I'll Scott look we a our through let the multiple relationship. all Certainly, issues. all we yet. of with work have right We're us. we locations It's answers question. And the a great think in great landlords, don't at We're question. have conference now trying the Good taking a the that. with know Many finish

Scott? So,

Scott Humphrey

on at said, Yes. and the looking I basis. No, case by Mike as leases situations think we're I think the a case

reduced. stores, be I of us. slowdown lots forward supplies, list you potentially yes, of or scenario on kind going marketing, I SG&A mean, different have a would to in worst would kind question, expenses, you in more what in of maintenance different be the a business think slowdown I would as the of a things and As areas that other on mentioned cut talk for where where travel far there's situation significantly out altogether case your or goes reduced lot

I So, think good yes, question.

we're evaluating looking think, a this just good I the multiple both and and on as and going I for to what's scenarios, But at forward. day Mike react trying may to think, a happen times to prepare future. going really Jared mentioned, hypothesis for what

Operator

Thank This that you. once call. a for ask conclude And and there thank are disconnect no day. does conference Thank your We again. you please great your all today's further questions. participation Have lines. you you

Hibbett (HIBB) 20 Mar 202020 Q4 Earnings call transcript