HIBBETT INC Management’s Discussion and Analysis of Financial Condition and Results of Operations. (Form 10-Q)

Caution Regarding Forward-Looking Statements

This document contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
address future events, developments and results and do not relate strictly to
historical facts. Any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. They include
statements preceded by, followed by or including words such as "believe,"
"anticipate," "expect," "intend," "plan," "forecast," "guidance," "outlook,"
"estimate" "will," "may," "could," "possible," "potential," or other similar
words, phrases or expressions. For example, our forward-looking statements
include statements regarding:
•the potential impact of COVID-19 on our business, operations and financial
•the uncertainty of future stimulus payments and extended unemployment benefits,
if any, and the related effects on consumer demand for our products and our
overall business;
•the potential impact of new trade, tariff, and tax regulations on our
•our ability to accurately forecast consumer demand for our products and manage
our inventory in response to changing demands;
•our cash needs, including our ability to fund our future capital expenditures,
working capital requirements, recurring quarterly dividends and repurchases of
Company common stock under our stock repurchase program (the "Repurchase
•our relationships with vendors and the loss of key vendor support;
•the possible effects of inflation, market decline and other economic changes on
our costs and profitability;

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•our ability to retain key personnel and other employees at Hibbett and City
Gear due to current labor challenges or otherwise;
•our anticipated net sales, comparable store net sales changes, net sales
growth, gross margins, expenses and earnings;
•our business strategy, omni-channel platform, logistics structure, target
market presence and the expected impact of such factors on our net sales growth;
•our store growth, including our plans to add, expand, relocate or close stores,
our markets' ability to support such growth, expected changes in total square
footage, our ability to secure suitable locations for new stores and the
suitability of our wholesale and logistics facility;
•our expectations regarding the growth of our online business and the role of
technology in supporting such growth;
•the future reliability of, and cost associated with, disruptions in the global
supply chain and the potential impacts on our domestic and international sources
of product, including the actual and potential effect of tariffs on
international goods imposed by the United States and other potential impediments
to imports;
•our policy of leasing rather than owning stores and our ability to renew or
replace store leases satisfactorily;
•the cost of regulatory compliance, including the costs and possible outcomes of
pending legal actions and other contingencies, and new or additional legal,
legislative and regulatory requirements to reduce or mitigate the effects of
climate change;
•our analysis of our risk factors and their possible effect on financial
•our seasonal sales patterns and assumptions concerning customer buying
•our ability to retain new customers;
•our expectations regarding competition;
•our estimates and assumptions as they relate to preferable tax and financial
accounting methods, accruals, inventory valuations, long-lived assets, carrying
amount and liquidity of financial instruments, fair value of options and other
stock-based compensation, economic and useful lives of depreciable assets and
leases, income tax liabilities, deferred taxes and uncertain tax positions;
•our expectations concerning future stock-based award types and the exercise of
outstanding stock options;
•our assessment of the materiality and impact on our business of adopting recent
accounting pronouncements issued by the Financial Accounting Standards Board;
•the possible effects of uncertainty within the capital markets, on the
commercial credit environment and on levels of consumer confidence;
•our analyses of trends as related to marketing, sales and earnings performance;
•our ability to receive favorable brand name merchandise and pricing from key
•the impact of technology on our operations and business, including
cyberattacks, cyber liability or potential liability for breaches of our privacy
or information security systems; and
•our ability to mitigate the risk of possible business interruptions, including,
without limitation, from political or social unrest and armed conflicts.

A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should not place undue reliance on forward-looking statements. Our forward-looking statements are based on currently available operational, financial and business information and speak only as of the date of this report. Our business, financial condition, results of operations and prospects may have changed since that date. For a discussion of the risks, uncertainties and assumptions that could affect our future events, developments or results, you should carefully review the risk factors described from time to time in our other documents and reports, including the factors described under “Factors of Risk” in our Form 10-K for the fiscal year ended January 29, 2022filed with the Security and Exchange Commission
(“SEC”) on March 25, 2022 (the “2022 Annual Report”). You should also read this information in conjunction with our unaudited condensed consolidated financial statements and accompanying notes and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

We cannot assure you that the results, events or circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. In addition, new risks and uncertainties emerge from time to time and it is impossible for us to predict all of the risks and uncertainties that could impact our forward-looking statements.

We do not undertake to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise, and you should not don’t expect us to. Investors should also be aware that although we communicate from time to time with securities analysts and others, we do not, as a matter of policy, selectively disclose to them material nonpublic information with an issued statement or report. by an analyst, regardless of the content of the statement or report. We do not, by policy, endorse forecasts or projections issued by


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others. Thus, to the extent that reports issued by securities analysts contain projections, forecasts or opinions, such reports are not our responsibility.

Investor access to documents filed by the company

We make available free of charge on our website, www.hibbett.com under “Investor Relations”, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports filed or furnished under Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Securities Exchange Act”) together with all Forms 3 , 4 and 5 filed by our executive officers and directors, as soon as the filed documents are made public by the SECOND on its EDGAR database at www.sec.gov. In addition to accessing copies of our reports online, you can request a free copy of our 2022 Annual Report by writing to: Investor Relations, Hibett, Inc., 2700 Court of Milan, Birmingham, Alabama 35211.


Hibbett, headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer, primarily located in underserved communities. Founded in 1945, Hibbett has a rich history of convenient locations, personalized customer service, and access to coveted footwear and apparel from top brands like Nike,
Jordanand adidas.

From April 30, 2022we operated a total of 1,105 retail stores under the Hibbett, City Gear and Sports Additions banners in 35 states:

Brand                    Square Footage    Strip Center(1)   Mall   Total
Hibbett                       5,800              727         180     907
City Gear                     5,100              145          37     182
Sports Additions(2)           2,900               3           13      16

(1) Strip malls include stand-alone stores and, for our Hibbett locations, are typically located near a major chain store. (2) Approximately 90% of the goods carried in our Sports Additions stores are athletic shoes.

Our merchandising emphasizes a TOE-TO-HEADTM approach. We provide a wide assortment of premium brand name team sports footwear, apparel, accessories and equipment at competitive prices in a full-service omnichannel environment. We believe that the assortment of branded merchandise we offer consistently exceeds the merchandise selection offered by most of our competitors, particularly in our underserved markets and neighborhood centers. Many of these branded products have limited availability and/or are technical in nature requiring considerable sales support. We coordinate with our vendors to educate our store-level sales staff on new products and trends.

Comparable store sales – Stores considered comparable stores include our Hibbett, City Gear and Sports Additions stores open throughout the reporting period and the same period last year, as well as online sales. We consider comparable store sales to be a key indicator of our current performance; measure sales growth and sales productivity of existing stores. Management believes that positive comparable store sales contribute to better leverage of operating costs, particularly labor and occupancy costs, while negative comparable store sales contribute to cost deleveraging. Comparable store sales also have a direct impact on our total net sales and cash level.

If a store’s renovation, relocation or expansion results in the store being closed for a significant period of time, its sales are removed from the comparable store’s sales base until it has been open for a full 12 months . In addition, rebranded stores are treated as new stores and are not reflected in comparable store sales until they have been open for a full 12 months under the new brand. In the 13 weeks ended April 30, 2022, we have included 1,060 stores and e-commerce sales in comparable store sales. In the 13 weeks ended May 1, 2021we have included 1,035 stores and online sales in comparable store sales.


Net sales for the 13 weeks ended April 30, 2022decreased by 16.3% to $424.1 millioncompared to $506.9 million for the 13 weeks ended May 1, 2021. Comparable store sales decreased 18.9%, with physical comparable store sales decreasing 22.0%. E-commerce sales rose 4.1% and accounted for 14.6% of total net sales in the first quarter, compared to 11.7% in the first quarter.


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the first quarter of the previous year. We believe stimulus funds in the first quarter of fiscal 2022 significantly boosted sales and generated leverage across a number of spending categories.

In addition to the positive impact of stimulus measures on sales in the first quarter of fiscal 2022, as noted above, the outbreak of the COVID-19 pandemic had a significant negative impact on sales in the first quarter of fiscal 2021. Accordingly, we believe that sales performance versus the first quarter of fiscal 2020 provides the most relevant pre-pandemic comparison. On a three-year basis, compared to the 13 weeks ended May 4, 2019net sales increased by 23.5% and comparable sales increased by 22.9%.

Store operating, selling and administrative (“SG&A”) expenses represented 22.5% of net sales for the 13 weeks ended April 30, 2022compared to 18.1% of net sales for the 13 weeks ended May 1, 2021. This increase is mainly the result of deleveraging resulting from lower sales.

During the first quarter of fiscal 2023, we opened nine new stores, renamed one store and closed one underperforming store, bringing the number of stores to 1,105 in 35 states in April 30, 2022. We ended the first quarter of fiscal 2023 with $23.2 million available cash and cash equivalents and $104.6 million
available under our credit facility. The net inventory was $314.9 million at
April 30, 2022, an increase of 72.6% compared to the first quarter of the previous year. Our inventory position has improved significantly during the quarter ended April 30, 2022
despite continued supply chain disruptions due to the impacts of the COVID-19 pandemic on manufacturing capacity, port backlogs, transportation equipment availability and international conflicts. Fundamental improvements to the customer experience and our ability to attract and stay in touch with underserved customers continue to strengthen our relationships with our supplier partners.

Significant Accounting Policies and Estimates

Our significant accounting policies are described in Section 1, Note 1 – Basis of presentation and significant accounting policies. The unaudited condensed consolidated financial statements are prepared in accordance with WE GAAP. The preparation of these unaudited condensed consolidated financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented. Actual results could differ from these estimates and assumptions. Our critical and significant accounting policies and estimates are further described in our 2022 Annual Report. There have been no changes in our accounting policies during the current period ended April 30, 2022that have materially affected our unaudited condensed consolidated financial statements.

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