2018 Annual Report
Hibb 2018 Design.indd 2
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FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
Fiscal 2018
Fiscal 2017
For the Year
Net sales
Operating income
Earnings per basic share (1)
Earnings per diluted share (1)
Balance Sheet Data
Cash and cash equivalents
Average inventory per store
Working capital
Total assets
Long-term capitalized lease obligations
Stockholders’ investment
Treasury shares repurchased
Cost of treasury shares purchased
$ 968,219
56,678
$
1.72
$
1.71
$
73,544
$
235
$
$ 231,207
$ 461,846
$
2,522
$ 319,596
2,843
54,506
$
$ 972,960
96,764
$
2.75
$
2.72
$
38,958
$
260
$
$ 242,192
$ 458,854
$
2,857
$ 334,040
1,236
43,058
$
NET SALES
(IN MILLIONS)
.
0
3
7
9
$
2
.
8
6
9
$
.
1
3
4
9
$
.
5
3
1
9
$
.
0
2
5
8
$
EARNINGS PER
DILUTED SHARE(1)
.
7
8
2
$
.
0
7
2
$
.
2
9
2
$
.
2
7
2
$
1
7
.
1
$
TOTAL STORES
8
7
0
1
,
9
7
0
1
,
4
4
0
1
,
8
8
7 9
2
9
14 15 16
17
18
14 15 16 17
18
14 15 16 17
18
(1) Except for Fiscal 2018, which is comprised of 53 weeks, all fiscal years presented are
comprised of 52 weeks. No dividends were declared or paid.
Hibb 2018 Design.indd 3
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LETTER TO
STOCKHOLDERS
There’s no turning back, it’s a digital world; and whether
our customers arrive on foot, connect over the web or visit
via social media, we must be prepared to connect, intrigue
and sell. We are ready! Our capabilities in omni-channel
retail advanced significantly last year, and we have more to
do in Fiscal 2019 and beyond.
During Fiscal 2018, we continued to grow our customer
base by connecting with more and more customers
through e-commerce and selected store expansion. In
July 2017, we launched a new, transactional e-commerce
website, offering an expansive assortment of footwear,
apparel and team equipment while providing customers
a robust, user-friendly experience. The site is fully
integrated with our brick-and-mortar stores, including
visibility of in-store inventory, the ability to fulfill online
orders from stores, the ability to return online purchases
in stores, and full integration of the newly enhanced
Hibbett Rewards program.
The launch of our e-commerce site has been a key
strategic goal for Hibbett for the past several years, and
we took time to invest in our infrastructure to do it the right
way, with state-of-the art design and without the drag of
legacy technology that some other retailers now face. Our
main objective has been to provide a seamless shopping
experience for our customers with a platform that will allow
us to expand our assortment significantly over time. We
have always prided ourselves on convenience, and we
believe we can now be top of mind when our customers
shop for athletic footwear, apparel, and equipment.
Ease of shopping continues to improve across all
channels, and we are expanding our assortments every day
to better serve our customers. We will continue to place
a significant focus on omni-channel in the coming year,
enhancing our customers’ shopping experience through
exciting new functionality. The first of this functionality
will come with the launch of our new mobile app in the first
quarter of Fiscal 2019. Our new app will be incredibly useful
to our customers, as we are experiencing more than 80%
of our website traffic from a mobile device. Our new app
makes it easier to shop online, provides greater convenience
around our loyalty program, and will include a very exciting
raffle functionality for new shoe launches. Customers will
be able to sign up for launches through the app and will be
1,079
STORES
35
STATES
The launch of our e-commerce site
has been a key strategic goal for
Hibbett for the past several years,
and we took time to invest in our
infrastructure to do it the right way...
–Jeffry O. Rosenthal
notified electronically with the results of the raffle. Ease
of use is paramount in this process, and we believe we
will be best in class with this functionality. Additionally,
in late Fiscal 2019, we plan to roll out features that will
allow customers to buy online, pickup in store (BOPIS),
and reserve in store, which will give customers even more
choices and convenience in how they want to shop.
We continue to see strong results from the relaunch of
our loyalty program and experienced a 25% year-over-year
increase in new member sign-ups during the fourth quarter
of Fiscal 2018. Total member revenue was up 24%, driven by
increases in member sign-ups, transactions per member,
and average transaction value. In the fourth quarter, our
rewards program accounted for 57% of our sales versus
50% in the prior year. We will continue this momentum in
Fiscal 2019 with full integration of our loyalty program in our
mobile app, providing great visibility and ease of use while
delivering real value to our members.
Fiscal 2018 was a 53-week period, which affected both
sales and earnings. Net sales for the 53-week period ended
February 3, 2018, which included $13.5 million from the
53rd week, decreased 0.5% to $968.2 million, compared
with $973.0 million for the 52-week period ended January 28,
2017. On a 52-week to 52-week basis, comparable store
sales decreased 3.8%, but this metric improved steadily
after mid-year and was positive 1.6% for the fourth quarter.
Hibb 2018 Design.indd 4
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1
AWESOME WEBSITE + SOCIAL MEDIA EXPERIENCE
E-commerce sales, which commenced around mid-year,
represented 6.3% of total sales for Fiscal 2018 and gained
momentum at the end of the year. Earnings per diluted
share for the 53-week period ended February 3, 2018, which
included a one-time gain of $0.07 per diluted share due to
the sale of the Company’s Team Division and a benefit of
$0.07 per diluted share due to the 53rd week in Fiscal 2018,
was $1.71 compared with $2.72 for the 52-week period
ended January 28, 2017.
Balance sheet strength has long characterized our
company, and this past year was no exception. We ended
Fiscal 2018 with $74 million of available cash and cash
equivalents, up from $39 million last year, and we again
finished the year with no outstanding bank debt and the
full availability of $60 million under our unsecured credit
facilities. During Fiscal 2018, we continued to utilize
our strong cash flow for the benefit of stockholders by
repurchasing 2.8 million shares of common stock for a total
expenditure of almost $55 million. Approximately $204.1
million remained authorized for future stock repurchases as
of February 3, 2018.
During Fiscal 2018, we also opened 44 new stores,
expanded 11 high performing stores and closed 43
underperforming stores. We ended Fiscal 2018 with a total
of 1,079 stores in 35 states. As we have remarked in the
past, our ongoing focus has been and will remain on the
optimization of our store base to improve return on invested
capital. While we continue to believe our chain has ample
room to run in terms of physical expansion, patience in the
process will enable us to generate stronger stockholder
returns over the long-term, especially considering our
successful omni-channel presence.
In closing, let me say we are excited by the emerging
opportunities to expand our customer base beyond
brick-and-mortar stores to anywhere in the United States
where there is an internet connection. This optimism is
already being validated by outsized e-commerce traffic
patterns in states where we have only a few stores.
Although brick-and-mortar retail remains challenging, we
are gratified by the progress we’re making on our major
initiatives and will continue to transform the business to
best meet customer needs.
Thank you for your ongoing interest and support of our
company and the confidence you express in our business
through your share ownership.
Sincerely,
Jeffry O. Rosenthal
Chief Executive Officer and President
Hibb 2018 Design.indd 5
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: February 3, 2018
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from: __________________________ to __________________________
Commission file number:
000-20969
HIBBETT SPORTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
20-8159608
(I.R.S. Employer
Identification No.)
2700 Milan Court, Birmingham, Alabama 35211
(Address of principal executive offices, including zip code)
205-942-4292
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 Par Value Per Share
Title of Class
NASDAQ Global Select Market
Name of each exchange on which registered
Securities registered pursuant to section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.
Yes
X
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.
Yes
No
X
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
X
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232-
405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files).
Yes
X
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.
__X__
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
Accelerated filer X
Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act.
_____
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
No
X
The aggregate market value of the voting stock held by non-affiliates of the Registrant (assuming for purposes of this
calculation that all executive officers and directors are “affiliates”) was $313,135,768 on July 29, 2017, based on the
closing sale price of $15.25 at July 28, 2017 for the common stock on such date on the NASDAQ Global Select
Market.
The number of shares outstanding of the Registrant’s common stock, as of March 23, 2018, was 18,974,641.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the 2018 Annual Meeting of Stockholders to be held on May 30, 2018
are incorporated by reference into Part III of this Annual Report on Form 10-K. Registrant’s definitive Proxy
Statement will be filed with the Securities and Exchange Commission on or before April 30, 2018.
- 2 -
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HIBBETT SPORTS, INC.
INDEX
PART I
Item
Item
Item
Item
Item
Item
Business.
1.
1A. Risk Factors.
1B. Unresolved Staff Comments.
2.
Properties.
Legal Proceedings.
3.
4. Mine Safety Disclosures.
PART II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Item
Item
Item
Item
Item
Purchases of Equity Securities.
Selected Consolidated Financial Data.
6.
7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
7A. Quantitative and Qualitative Disclosures About Market Risk.
8.
9.
Financial Statements and Supplementary Data.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.
Item
Item
9A. Controls and Procedures.
9B. Other Information.
PART III
Item
Item
Item
10. Directors, Executive Officers and Corporate Governance.
11.
12.
Executive Compensation.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
Item
Item
13. Certain Relationships and Related Transactions, and Director Independence.
14.
Principal Accounting Fees and Services.
PART IV
15.
Item
16.
Item
Exhibits and Consolidated Financial Statement Schedules.
Form 10-K Summary.
Signatures
- 3 -
Introductory Note
References to “we”, “our”, “us” and the “Company” used throughout this document refer to Hibbett Sports,
Inc. and its subsidiaries. Unless specifically indicated otherwise, any reference to the following years or fiscal years
relates to:
Year
2019 or Fiscal 2019
2018 or Fiscal 2018
2017 or Fiscal 2017
2016 or Fiscal 2016
Related Fiscal Year End
February 2, 2019
February 3, 2018
January 28, 2017
January 30, 2016
Weeks in
Fiscal Period
52
53
52
52
PART 1
Item 1. Business.
Cautionary Statement 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. They include
statements preceded by, followed by or including words such as “believe,” “anticipate,” “could,” “expect,” “intend,”
“may,” “outlook,” “plan,” “predict,” “should,” “will,” “target,” “estimate” or other similar expressions, whether in the
negative or affirmative. For example, our forward-looking statements include statements regarding:
our anticipated net sales, including comparable store net sales changes, net sales growth, gross margins,
expenses and earnings;
our business strategy, target market presence and its expected impact on our net sales growth;
our store growth, including our plans to add, expand, relocate or close stores, our square footage growth,
our markets’ ability to support such growth, our ability to secure suitable locations for new stores and the
suitability of our wholesale and logistics facility;
our expectations regarding technology, including our omni-channel platform and other methods for
engaging our customers, as well as cyber security;
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;
our cash needs, including our ability to fund our future capital expenditures, working capital requirements
and repurchases of Company common stock under our repurchase program;
our analysis of our risk factors and their possible effect on financial results;
our ability and plans to renew our revolving credit facilities;
our expectations regarding our capital expenditures and dividend policy;
our seasonal sales patterns and assumptions concerning customer buying behavior;
our expectations regarding competition;
our estimates and assumptions as they relate to preferable tax and financial accounting methods, accruals,
inventory valuations, long-lived assets, store closures, 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;
the possible effect of inflation, market decline and other economic changes on our costs and profitability;
our assessment of the materiality and impact on our business of recent accounting pronouncements adopted
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 expectations concerning vendor level purchases and related discounts;
the future reliability of, and cost associated with, our sources of supply, particularly imported goods;
- 4 -
the loss of key vendor support; and
our ability to mitigate the risk of possible business interruptions.
You should assume that the information appearing in this report is accurate only as of the date it was issued.
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” as well as “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included elsewhere in this report.
Our forward-looking statements could be wrong in light of these risks, uncertainties and assumptions. The
future events, developments or results described in this report could turn out to be materially different. We have no
obligation to publicly update or revise our forward-looking statements after the date of this Annual Report and you
should not expect us to do so. Investors should also be aware that while we do, from time to time, communicate with
securities analysts and others, we do not, by policy, selectively disclose to them any material non-public information in
connection with any statement or report issued by any analyst regardless of the content of the statement or report. We
do not, by policy, confirm forecasts or projections issued by others. Thus, to the extent that reports issued by securities
analysts contain any projections, forecasts or opinions, such reports are not our responsibility.
Our Company
Our Company began in 1945 under the name Dixie Supply Company in Florence, Alabama. Although we
initially specialized primarily in the marine and small aircraft business, by 1960, we were solely in the sporting goods
business. In 1965, we opened our second store, Dyess & Hibbett Sporting Goods, in Huntsville, Alabama, and hired
Mickey Newsome, who is now Chairman of our Board. The following year, we opened another sporting goods store in
Birmingham and by the end of 1980, we had 12 stores in central and northwest Alabama with a distribution center
located in Birmingham and our central accounting office in Florence. We became a public company in October 1996.
Today, we are a leading athletic-inspired omni-channel retailer operating stores primarily located in small
and mid-sized communities, and an e-commerce website under Hibbett.com. As of February 3, 2018, we operated
1,079 stores consisting of 1,060 Hibbett Sports stores and 19 smaller-format Sports Additions athletic shoe stores in 35
states. The Hibbett Sports store is an approximately 5,000 square foot store located primarily in strip centers which are
frequently influenced by a major chain retailer such as a Wal-Mart store.
Our current primary merchandising strategy is to provide a broad assortment of quality brand name footwear,
apparel, accessories and athletic equipment at competitive prices in a conveniently located full-service environment. At
the end of the second quarter of Fiscal 2018, we successfully launched our e-commerce website. We will continue to
grow our online business aggressively, while continuing to enhance our stores to improve the overall customer
experience. We believe that the breadth and depth of our brand name merchandise consistently exceeds the product
selection carried by most of our competitors, particularly in our smaller markets. Many of these brand name products
are highly technical and require expert sales assistance. We continuously educate our sales staff on new products and
trends through coordinated efforts with our vendors.
Our Executive Officers
Our current executive officers and their prior business experience are as follows:
Jeffry O. Rosenthal, age 60, has been our Chief Executive Officer and President since March 2010. He
also currently serves on our Board of Directors. Formerly, he served as President and Chief Operating Officer from
February 2009 through March 2010 and as Vice President of Merchandising from August 1998 through February
2009. Prior to joining us, Mr. Rosenthal was Vice President and Divisional Merchandise Manager for Apparel with
Champs Sports, a division of Foot Locker, Inc., from 1981 to 1998.
Scott J. Bowman, age 51, was hired as our Senior Vice President and Chief Financial Officer in July 2012.
Prior to joining us, Mr. Bowman was Division Chief Financial Officer – Northern Division of The Home Depot, a
large home improvement retailer. Previously, Mr. Bowman served The Home Depot as their Senior Director,
Finance – IT for approximately three years. In prior retail experience, he has worked in various controller and
accounting management positions.
- 5 -
Jared S. Briskin, age 45, was appointed our Senior Vice President and Chief Merchant in September 2014.
Formerly, he served as Vice President/Divisional Merchandise Manager of Footwear and Equipment from March
2010 through September 2014 and Vice President/Divisional Merchandise Manager of Apparel and Equipment from
June 2004 through March 2010. Prior to his appointment to Vice President in 2004, Mr. Briskin held various
merchandising positions across multiple categories since joining the Company in April 1998.
Cathy E. Pryor, age 54, has been our Senior Vice President of Operations since 2012. Formerly, she
served as Vice President of Operations from 1995 to 2012. She joined our Company in 1988 serving in areas of
increasing responsibility including district manager and Director of Store Operations.
Our Employees
As of February 3, 2018, we employed approximately 9,200 employees, of which approximately 3,100 are
full-time employees. None of our employees are represented by a labor union. The number of part-time employees
fluctuates depending on seasonal needs. We consider our relationship with our employees to be good and have not
experienced significant interruptions of operations due to labor disagreements. We have implemented programs in
our stores and corporate offices to ensure that we hire and promote the most qualified employees in a non-
discriminatory way.
Employee Development: We develop our training programs in a continuing effort to service the needs of
our customers and employees. These programs include DVD training in all stores for the latest in technical detail of
new products and new operational and customer service techniques. Because we primarily promote or relocate
current employees to serve as managers for new stores, training and assessment of our employees is essential to our
sustained growth.
One of the most significant training programs we have is Hibbett University or “Hibbett U”, which is an
intensive, five-day session designed specifically for store management.
Our Business Strategy
We target small to mid-sized markets with branded products and provide a high level of customer service.
This market strategy enables us to achieve significant cost benefits including lower corporate expenses, reduced
logistics costs and increased economies of scale from marketing activities. We use information systems to maintain
tight controls over inventory and operating costs and continually search for ways to improve efficiencies and the
customer experience through information system upgrades. In addition, we establish greater customer, vendor and
landlord recognition as a leading athletic specialty retailer in these communities. We believe our ability to align our
merchandising mix to local preferences and trends differentiates us from our national competitors.
We strive to hire enthusiastic sales people with an interest in sports. Our extensive training program focuses
on product knowledge and selling skills and is conducted through the use of in-store clinics, interactive group
discussions and store associate training, self-study courses and Hibbett University designed specifically for store
management.
Our Store Concepts
Hibbett Sports: Our primary retail format is Hibbett Sports, an approximately 5,000 square foot store located
primarily in strip centers, which are usually near a major chain retailer such as a Wal-Mart store. In considering
locations for our Hibbett Sports stores, we take into account the size, demographics, quality of real estate and
competitive conditions in each market. Of these stores, 864 Hibbett Sports stores are located in strip centers, which
include free-standing stores, with the remaining 196 stores located in enclosed malls, the majority of which are the only
enclosed malls in their county.
Hibbett Sports stores offer a core merchandising mix of localized footwear, apparel, accessories and
equipment designed to appeal to a wide range of customers within each market. We strive to respond quickly to major
sporting events such as Bowl or National Championship games and similar sporting events in college or professional
football, baseball and basketball involving teams of local interest within our markets.
- 6 -
Sports Additions: We operate 19 Sports Additions (SA) stores, an approximately 2,500 square foot store
located primarily in enclosed malls. Approximately 90% of the merchandise carried in our SA stores is athletic
footwear with the remainder consisting of caps and a limited assortment of apparel. SA stores offer a more fashion-
based merchandise assortment compared to our Hibbett Sports stores. Most of our SA stores are located where a
Hibbett Sports store is also present.
Team: In December 2017, we sold a portion of the assets and ceased the operations of Hibbett Team Sales,
Inc. (Team), a wholly-owned subsidiary of the Company. Team was a supplier of customized athletic apparel,
equipment and footwear primarily to school athletic programs in Alabama and parts of Georgia, Florida and
Mississippi. Team sold its merchandise directly to educational institutions and youth associations. The operations of
Team were independent of the operations of our retail stores.
None of our store concepts meets the quantitative or qualitative requirements of Accounting Standards
Codification (ASC) Topic 280, Segment Reporting.
Our Growth Strategy
We identify markets for our Hibbett Sports stores under a clustered expansion program. This approach
primarily focuses on opening new stores within a two-hour driving distance of an existing Hibbett location, allowing us
to take advantage of efficiencies in logistics, marketing and regional management. It also aids us in building a better
understanding of appropriate merchandise selection for the local market. In addition to proximity to existing Hibbett
stores, we also consider population, economic conditions, local competitive dynamics, availability of suitable real
estate and potential for return on investment when evaluating potential markets.
Omni-channel strategy: We recognize that our customer is evolving and looking to engage with us in
multiple ways. As a result, we continue to make investments that will enable us to engage our customer specifically in
the digital commerce channel. In addition to having store-to-store and store-to-home capability allowing us to use our
chain-wide inventory to satisfy a customer sale, we now have an e-commerce website allowing customers to shop
across both channels. In Fiscal 2018, we began development of our mobile app, which will complement our mobile
site and provide our customers with even more advanced features such as shopping, loyalty and Raffle capabilities. We
expect to rollout our mobile app to both iPhone and Android users in the first half of Fiscal 2019.
Our Logistics
We maintain a single wholesale and logistics facility in Alabaster, Alabama (a suburb of Birmingham) where
we receive and ship substantially all of our merchandise. For key products, we maintain backstock at the facility that is
allocated and shipped to stores through an automatic replenishment system based on inventory levels and sales.
Merchandise is typically delivered to stores weekly via Company-operated vehicles or third-party logistics providers.
See “Risk Factors.”
We believe strong logistics support for our stores is a critical element of our expansion strategy and is central
to our ability to maintain a low cost operating structure. We use third-party logistics providers to gain efficiencies to
approximately 25% of our outlying stores. Our wholesale and logistics facility is designed with significant automation
and operational efficiencies. We expect the facility will support our growth over the next several years.
Our Merchandise
Our merchandising strategy is to provide a broad assortment of premium brand name footwear, apparel,
accessories and athletic equipment at competitive prices in a full service environment.
- 7 -
The following table indicates the approximate percentage of net sales represented by each of our major
product categories:
Footwear
Apparel
Equipment
Fiscal 2018
55%
28%
17%
100%
Fiscal 2017
52%
29%
19%
100%
Fiscal 2016
49%
29%
22%
100%
We believe that the assortment of brand name merchandise we offer consistently exceeds the merchandise
selection carried by most of our brick and mortar competitors, particularly in our smaller markets. Many of these brand
name products have limited availability and/or are technical in nature requiring considerable sales assistance. We
coordinate with our vendors to educate the sales staff at the store level on new products and trends.
Although the core merchandise assortment tends to be similar for each Hibbett store, important demographic,
local and/or regional differences exist. Accordingly, our stores offer products that reflect preferences for particular
demographics as well as interests from each community. Our knowledge of these interests, combined with access to
leading vendors, enables our merchandising staff to react quickly to emerging trends or special events, such as fashion
shifts or athletic events.
Our merchandising staff, operations staff and management analyze current trends primarily through the lens of
our store typing strategy. This information is gathered and analyzed utilizing our business intelligence tool. Other
strategic measures we utilize to recognize trends or changes in our industry include:
maintaining close relationships with vendors and other retailers;
studying other retailers for best practices in merchandising;
attending various trade shows, both in our industry and outside as well as reviewing industry trade
publications;
actively participating in industry associations such as the National Sporting Goods Association (NSGA);
visiting competitor store locations;
monitoring industry data sources and periodicals;
monitoring product selection at competing stores and online; and
communicating with our regional vice presidents, district managers and store managers.
The merchandising staff works closely with store personnel to meet the requirements of individual stores for
appropriate merchandise in sufficient quantities. See “Risk Factors.”
Our Vendor Relationships
The athletic specialty retail business is brand name driven. Accordingly, we maintain positive relationships
with a number of well-known vendors to satisfy customer demand. We believe that our stores are among the primary
brick and mortar retail distribution avenues for brand name vendors that seek to penetrate our target markets. As a
result, we are able to attract considerable vendor interest and establish long-term partnerships with vendors. As our
vendors expand their product lines and grow in popularity, we expand sales of these products within our stores. In
addition, as we continue to increase our store base and enter new markets, our vendors increase their brand presence
within these regions. We also work with our vendors to establish favorable pricing and to receive cooperative
marketing funds. See “Risk Factors.”
Our Information Systems
We continue to use technology as an enabler of our business strategies. We have implemented and
maintained systems targeted at improving financial control, cost management, inventory control, merchandise
planning, logistics, replenishment, and product allocation. In recent years, we have focused on information systems
that are designed to be used in all stores, yet are flexible enough to meet the unique needs of each specific store
location. In Fiscal 2018, we added our digital channel as we continue our omni-channel retailing transition. In
Fiscal 2019, we will pursue further channel integration and a more seamless and frictionless set of capabilities aimed
at enhancing our customers shopping experience in store, online and through our mobile solutions.
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Our communications network sends and receives critical business data to and from our stores, our third
party cloud providers, and our managed hosting facility (primary data center). Our information is processed in a
secure environment to protect both the actual data and the physical assets. We attempt to mitigate the risk of cyber-
security threats and business interruptions by maintaining strong security protocols, threat monitoring, regular risk
reviews, and a detailed disaster recovery plan.
We strive to maintain highly qualified and motivated teams of individuals to support our information
systems, which includes security, help desk, engineering, operations, quality assurance, business analysis, solution
development and project managers. Our systems are monitored 24 hours a day. Our management believes that our
current systems and practice of implementing regular updates will continue to support our current needs and future
growth. We use a strategic information systems planning process that involves senior management and is integrated
into our overall business planning and enterprise risk management. Information systems projects are prioritized
based upon strategic, financial, regulatory and other business criteria.
Our Marketing and Promotion
We target marketing opportunities to increase awareness and to drive traffic to our stores and
website. Direct mail continued to be a core component of our marketing budget in Fiscal 2018, and we began
significant investments in digital marketing with the launch of ecommerce. Because these investments are yielding
strong response, we will continue to grow digital marketing in Fiscal 2019. We utilize the Hibbett marketing team, as
well as external digital marketing agencies to ensure execution and returns from these new programs.
We offer a customer loyalty program, the Hibbett Rewards program, whereby customers can earn awards that
can be redeemed in our stores. Our Rewards program represents a significant portion of overall sales. In Fiscal 2018,
we launched an improved program that provides more value to our customers and makes it easier to use. As a result,
we significantly increased our member base in Fiscal 2018, which we will utilize in our marketing efforts going
forward. We expect to further improve our Rewards program in Fiscal 2019 to drive member acquisition and sales.
Our Competition
The business in which we are engaged is highly competitive. The marketplace for athletic specialty
merchandise is highly fragmented as many different brick and mortar and online retailers compete for market share by
utilizing a variety of formats and merchandising strategies. We compete with department and discount stores,
traditional shoe stores, specialty sporting goods shops, local sporting goods stores, outlet centers, mass merchandisers,
e-commerce retailers and, in some of our large and mid-size markets, national sporting goods superstores. In addition,
we face competition from vendors that sell directly to consumers.
Although we face competition from a variety of competitors, we believe that our stores are able to compete
effectively by providing a premium assortment of footwear, apparel, accessories and team sports equipment.
Additionally, we differentiate our store experience through extensive product knowledge, customer service and
convenient locations. We believe we compete favorably with respect to these factors in the smaller markets
predominantly in the South, Southwest, Mid-Atlantic and Midwest regions of the United States. See “Risk Factors.”
Our Trademarks
Our Company, by and through subsidiaries, is the owner or licensee of trademarks that are very important
to our business. For the most part, trademarks are valid as long as they are in use and/or their registrations are
properly maintained. Registrations of trademarks can generally be renewed indefinitely as long as the trademarks
are in use.
Following is a list of active trademarks registered and owned by the Company:
Hibbett Sports, Registration No. 2717584
Sports Additions, Registration No. 1767761
Hibbett, Registration No. 3275037
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Seasonality
We experience seasonal fluctuations in our net sales and results of operations. We typically experience
higher net sales in early spring due to spring sports and annual tax refunds, late summer due to back-to-school
shopping and winter due to holiday shopping. In addition, our quarterly results of operations may fluctuate
significantly as a result of a variety of factors, including the timing of new store openings, the amount and timing of
net sales contributed by new stores, weather fluctuations, merchandise mix, demand for merchandise driven by local
interest in sporting events, and the timing of sales tax holidays and annual tax refunds.
Although our operations are influenced by general economic conditions, we do not believe that, historically,
inflation has had a material impact on our results of operations as we are generally able to pass along inflationary
increases in costs to our customers.
Available Information
Hibbett Sports, Inc.’s website address is www.hibbett.com. Our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A, reports on beneficial
ownership of our securities on Forms 3, 4 and 5 and all amendments to those reports are available free of charge
through our website, as soon as reasonably practicable after such material is electronically filed with, or furnished
to, the U.S. Securities and Exchange Commission (SEC). Our website is the primary source of publicly disclosed
news about Hibbett Sports, Inc. In addition to accessing copies of our reports online, you may request a copy of our
Annual Report on Form 10-K for the fiscal year ended February 3, 2018, at no charge, by writing to: Investor
Relations, Hibbett Sports, Inc., 2700 Milan Court, Birmingham, Alabama 35211.
The SEC also maintains a website at www.sec.gov where reports, proxy and information statements, and
other information regarding issuers that file electronically can be accessed. In addition, we make available, through
our website, the Company’s Code of Business Conduct and Ethics, Corporate Governance Guidelines and the
written charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance
Committee. Information contained on our website is not included as part of, or incorporated by reference into, this
Annual Report.
Item 1A. Risk Factors.
You should carefully consider the following risks, as well as the other information contained in this report,
before investing in shares of our common stock. The occurrence of one or more of the circumstances or events
described in this section could have a material adverse effect on our business, financial condition, results of operations,
cash flows or on the trading prices of our common stock. The risks and uncertainties described in this Annual Report
on Form 10-K are not the only ones facing us. Additional risks and uncertainties not known to us at this time or that
we currently believe are immaterial also may adversely affect our business and operations.
Risks Related to Our Business and Industry
If we are unable to successfully maintain a relevant omni-channel experience for our customers, we may not be
able to compete effectively and our sales and profitability may be adversely affected.
We expect competition in the e-commerce market to intensify in the future as the Internet continues to
facilitate competitive entry into the market and comparison shopping by consumers. As a result, a growing portion
of total consumer expenditures with retailers is occurring through digital platforms rather than traditional retail
stores as consumers increasingly embrace shopping online and through mobile commerce applications. Our future
success could be adversely affected if we are unable to identify and capitalize on retail trends, including technology,
e-commerce and other process efficiencies to gain market share and better service our customers.
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In Fiscal 2018, we successfully launched our omni-channel platform, which integrated digital commerce
with our stores to provide a seamless experience for our customers. In addition, we are developing a mobile app,
which will complement our e-commerce site and provide our customers with customized advanced features. We
began the development of the mobile app in Fiscal 2018 and expect to implement the rollout of the mobile app in the
first half of Fiscal 2019. We cannot give any assurances that our omni-channel platform or our mobile app, when
implemented, will perform in a manner that will give us the ability to attract and retain customers, increase sales and
successfully compete with other online retailers. If we do not successfully maintain a relevant omni-channel
experience or successfully implement the mobile app for our customers or attract online buyers through our omni-
channel and mobile app, our sales and profitability could be adversely affected.
We are increasing the use of social media as a means of interacting and enhancing the shopping
experiences of our customers. If we are unable to attract and retain team members or contract third parties with the
specialized skills to support our omni-channel platform, or are unable to implement improvements to our customer-
facing technology in a timely manner, our ability to compete and our results of operations could be adversely
affected. In addition, if our website and our other customer-facing technology systems do not function as designed,
the customer experience could be negatively affected, resulting in a loss of customer confidence and satisfaction, as
well as lost sales, which could adversely affect our reputation and results of operations.
Pressure from our competitors may force us to reduce our prices or increase our spending on marketing and
promotion, which could lower our net sales, gross profit and operating income.
The business in which we are engaged is a highly competitive and evolving market. The marketplace for
athletic specialty merchandise is highly fragmented as many different brick and mortar and online retailers compete for
market share by utilizing a variety of formats and merchandising strategies. We compete with department and discount
stores, traditional shoe stores, specialty sporting goods shops, local sporting goods stores, outlet centers, mass
merchandisers, e-commerce retailers and, in some of our large and mid-size markets, national sporting goods
superstores. In addition, we face competition from vendors that sell directly to consumers. Direct sales by vendors
may adversely affect our market share and reduce our revenues.
Many of our competitors have greater financial, marketing and distribution resources than we do, which
enable them to spend significantly more on marketing and other initiatives. In addition, many of our competitors
employ price discounting policies that, if intensified, may make it difficult for us to reach our sales goals without
reducing our prices. Should our competitors increase spending on marketing and other initiatives such as additional
discounting, if our marketing funds decrease for any reason, or should our marketing, promotions or initiatives be less
effective than our competitors, there could be a material adverse effect on our results of operations and financial
condition. As a result, we may also need to spend more on marketing, promotions and initiatives than we anticipate.
Inadequate marketing that is less effective than our competitors could inhibit our ability to maintain relevance in the
market place and drive increased sales.
We cannot guarantee that we will continue to be able to compete successfully against existing or future
competitors. Expansion into markets served by our competitors, entry of new competitors or expansion of existing
competitors into our markets could be detrimental to our business, financial condition and results of operations.
Our inability to identify and anticipate changes in consumer demands and preferences and our inability to respond
to such consumer demands in a timely manner could reduce our net sales or profitability.
Our products appeal to a broad range of consumers whose preferences cannot be predicted with certainty and
are subject to rapid change. Our success depends on our ability to identify product trends as well as to anticipate and
respond to changing merchandise trends and consumer demand in a timely manner. We cannot assure you that we will
be able to continue to offer assortments of products that appeal to our customers or that we will satisfy changing
consumer demands in the future. Accordingly, our business, financial condition and results of operations could be
materially and adversely affected if:
we are unable to identify and respond to emerging trends, including shifts in the popularity of certain
products;
we miscalculate either the market for the merchandise in our stores or our customers’ purchasing habits;
or
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consumer demand unexpectedly shifts away from athletic footwear or our more profitable apparel lines.
In addition, we may be faced with significant excess inventory of some products and missed opportunities
for other products, which could decrease our profitability.
Security threats, including physical and cyber-security threats, and unauthorized disclosure of sensitive or
confidential information could harm our business and reputation with our consumers.
The protection of Company, customer and employee data is critical to us. Through our sales, marketing
activities and use of third-party information, we collect and retain certain personally identifiable information that our
customers provide to purchase products, enroll in promotional programs, register on our website, or otherwise
communicate and interact with us. This may include, but is not limited to, names, addresses, phone numbers, driver
license numbers, e-mail addresses, contact preferences, personally identifiable information stored on electronic
devices, and payment account information, including credit and debit card information. We also gather and retain
information about our employees in the normal course of business. Furthermore, our online operations depend upon
the secure transmission of confidential information over public networks, such as information permitting cashless
payments.
We have security measures designed to protect against the misappropriation or corruption of our systems,
intentional or unintentional disclosure of confidential information or disruption of our operations. Our risk
remediation procedures include an annual IT risk assessment based on the SANS Institute Critical Security Controls
framework which prioritizes security functions that are effective against the latest Advanced Targeted Threats while
emphasizing security controls that have demonstrated real world effectiveness. While we maintain insurance
coverage that may, subject to policy terms and conditions, cover certain aspects of our cyber risks, such insurance
coverage may be insufficient to cover our losses or all types of claims that may arise in the continually evolving area
of cyber risk.
Even so, these security measures may be compromised as a result of third-party breaches, burglaries, cyber-
attacks, errors by employees or employees of third-party vendors, faulty password management, misappropriation of
data by employees, vendors or unaffiliated third-parties or other irregularity, and result in persons obtaining
unauthorized access to our data or accounts. Despite such safeguards for the protection of such information, we
cannot be certain that all of our systems and those of our vendors and unaffiliated third-parties are entirely free from
vulnerability to attack or compromise given that the techniques used to obtain unauthorized access, disable or
degrade service, or sabotage systems change frequently. During the normal course of our business, we have
experienced and we expect to continue to experience attempts to breach our systems, and we may be unable to
protect sensitive data and the integrity of our systems or to prevent fraudulent purchases. Moreover, an alleged or
actual security breach that affects our systems or results in the unauthorized release of personally identifiable
information could:
materially damage our reputation and negatively affect customer satisfaction and loyalty;
expose us to negative publicity, individual claims or consumer class actions, administrative, civil
or criminal investigations or actions; and
cause us to incur substantial costs, including but not limited to, costs associated with remediation
for stolen assets or information, litigation costs, lost revenues resulting from unauthorized use of
proprietary information or the failure to retain or attract customers following an attack, and
increased cyber protection costs.
If we lose any of our key vendors or any of our key vendors fail to supply us with quality brand name
merchandise at competitive prices, we may not be able to meet the demand of our customers and our net sales
and profitability could decline.
We are a retailer of manufacturers’ branded items and are thereby dependent on the availability of key
products and brands. Our top three vendors accounted for approximately 80% of our total inventory purchases during
Fiscal 2018. Our business is dependent upon close relationships with vendors and our ability to purchase brand name
merchandise at competitive prices. As a retailer, we cannot control the supply, design, function or cost of many of the
products we offer for sale. Moreover, certain merchandise that is in high demand may be allocated by vendors based
upon the vendors’ internal criteria, which is beyond our control.
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As a result, our sales could decline if we are not provided with a sufficient allocation of high demand
merchandise from one or more of our key vendors or if the vendor’s merchandise were to decline in quantity, quality or
desirability to our customers. Our profits could decline if we are unable to pass along any increases in the cost of brand
merchandise from our key vendors, including costs resulting from higher tariffs or taxes on imported merchandise. In
addition, many of our vendors provide us with return privileges, volume purchasing allowances and cooperative
marketing such that any changes to such benefits could have an adverse effect on our business.
We believe that we have long-standing and strong relationships with our vendors and that we have adequate
sources of brand name merchandise on competitive terms. However, the loss or decline of key vendor support could
have a material adverse effect on our business, financial condition and results of operations. There can be no
assurances that we will be able to acquire such merchandise at competitive prices or on competitive terms in the future.
We also rely on services and products from non-merchandise vendors. A disruption in these services or
products due to the financial condition or inefficient operations of these vendors could adversely affect our business
operations.
We rely heavily on information systems to conduct our business. Problems with our information systems could
disrupt our operations and negatively impact our financial results and materially adversely affect our business
operations.
Our ability to manage and operate our business depends significantly on information technology systems.
Specifically, we rely on our information systems to effectively manage our sales, logistics, merchandise planning
and replenishment, to process financial information and sales transactions and to optimize our overall inventory
levels. We could experience adverse events relating to our information systems, including, among other things,
system failures, problems with integrating various data sources, challenges in transitioning to upgraded or
replacement systems or difficulty in integrating new systems. Although we attempt to mitigate the risk of possible
business interruptions through change control protocols and a disaster recovery plan, which includes storing critical
business information off-site, the failure of these systems to operate effectively and support growth and expansion
could materially adversely impact the operation of our business.
Most of our information system infrastructure is centrally located, and we rely on third-party service
providers for certain system applications that are hosted remotely or in cloud-based applications. There is a risk that
we may not have adequately addressed risks associated with using third-party providers or cloud-based applications.
Such risks include security issues such as adequate encryption and intrusion detection; user access control; data
separation; the impact of technical problems such as server outages; their disaster recovery capabilities; and exit
strategies. A service provider disruption or failure in any of these areas could have a material adverse effect on our
business.
In addition, insufficient investment in technology, inadequate preventive maintenance, investment in the
wrong technology, delayed replacement of obsolete equipment, shifts in technology, the failure to attract and retain
highly-qualified IT personnel and inadequate policies to identify our technology needs could have a material adverse
effect on our business.
Our failure to effectively manage our real estate portfolio may negatively impact our operating results.
Effective management of our real estate portfolio is critical to our omni-channel strategy. All of our stores are
subject to leases and, as such, it is essential that we effectively evaluate a range of considerations that may influence the
success of our long-term real estate strategy. Such considerations include but are not limited to:
changing patterns of customer behavior from physical store locations to online shopping in the
context of an evolving omni-channel retail environment;
the appropriate number of stores in our portfolio;
the formats, sizes and interior layouts of our stores;
the locations of our stores, including the demographics and economic data of each store;
the local competition in and around our stores;
the primary lease term of each store and occupancy cost of each store relative to market rents; and
distribution considerations for each store location.
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If we fail to effectively evaluate these factors or negotiate appropriate terms or if unforeseen changes arise, the
consequences could include, for example:
having to close stores and abandon the related assets while retaining the financial commitments of
the leases;
incurring costs to remodel or transform our stores;
having stores or distribution channels that no longer meet the needs of our business; and
bearing excessive lease or occupancy expenses.
These consequences could have a materially adverse impact on our profitability, cash flows and liquidity. The
financial impact of exiting a leased location can vary greatly depending on, among other factors, the terms of the lease,
the condition of the local real estate market, demand for the specific property and our relationship with the landlord. It
is difficult for us to influence some of these factors, and the costs of exiting a property can be significant. In addition to
rent, we could still be responsible for the maintenance, taxes, insurance and common area maintenance charges for
vacant properties until the lease commitment expires or is terminated.
Our success depends substantially on the value and perception of the brand name merchandise we sell.
Our success is largely dependent on our consumers’ perception and connection to the brand names we carry,
such as Nike, Under Armour, Reebok, adidas, Easton, The North Face, etc. Brand value is based in part on our
consumer’s perception on a variety of subjective qualities so that even an isolated incident could erode brand value and
consumer trust, particularly if there is considerable publicity or litigation. Consumer demand for our products or
brands could diminish significantly in the event of erosion of consumer confidence or trust, resulting in lower sales
which could have a material adverse effect on our business, financial condition and results of operations.
We would be materially and adversely affected if all or a significant portion of our single wholesale and logistics
facility were shut down.
We currently operate a single wholesale and logistics facility in Alabaster, Alabama, a suburb of Birmingham,
where we receive and ship substantially all of our merchandise. Any natural disaster or other serious disruption to this
facility would damage a portion of our inventory and could impair our ability to adequately stock our stores and
process returns of products to vendors and could adversely affect our net sales and profitability. In addition, we could
incur significantly higher costs and longer lead times associated with shipping our products to our stores during the
time it takes for us to reopen or replace the facility.
Further, because we rely on a single wholesale and logistics facility, our growth could be limited if our facility
reaches full capacity. Such restraint could result in a loss of market share and our inability to execute our business
strategy and could have a material adverse effect on our business, financial condition and operating results.
A disruption in the flow of imported merchandise or an increase in the cost of those goods could significantly
decrease our net sales and operating income.
Many of our largest vendors source a majority of their products from foreign countries. Imported goods are
generally less expensive than domestic goods and contribute significantly to our favorable profit margins. Our
ability to provide quality imported merchandise on a profitable basis may be subject to political and economic
factors and influences that we cannot control. National or international events, including changes in government
trade or other policies, could increase our merchandise costs and other costs that are critical to our operations. If
imported merchandise becomes more expensive, we may find it difficult to pass the increase on to customers. If
imported merchandise becomes unavailable, the transition to alternative sources by our vendors may not occur in
time to meet our demands or the demands of our customers. Products from alternative sources may also be more
expensive or may be of lesser quality than those our vendors currently import. Risks associated with reliance on
imported goods include:
increases in the cost of purchasing or shipping foreign merchandise resulting from, for example:
import tariffs, taxes or other governmental actions affecting trade, including the United States
imposing antidumping or countervailing duty orders, safeguards, remedies or compensation and
retaliation due to illegal foreign trade practices;
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foreign government regulations;
rising commodity prices;
increased costs of oceanic shipping;
changes in currency exchange rates or policies and local economic conditions; and
trade restrictions, including import quotas or loss of “most favored nation” status with the United
States.
disruptions in the flow of imported goods because of factors such as:
raw material shortages, work stoppages, labor availability and political unrest;
problems with oceanic shipping, including blockages or labor union strikes at U.S. or foreign
ports; and
economic crises and international disputes.
In addition, to the extent that any foreign manufacturer from whom our vendors are associated may directly
or indirectly utilize labor practices that are not commonly accepted in the United States, we could be affected by any
resulting negative publicity.
Disruptions in the economy and in financial markets could adversely affect consumer purchases of discretionary
items, which could reduce our net sales.
In general, our sales represent discretionary spending by our customers. Discretionary spending is affected by
many factors that are outside our control, including, among others, general business conditions, interest rates, inflation,
household income, consumer debt levels, the availability of consumer credit, tax rates and tax refunds, sales tax
holidays, energy prices, unemployment trends, home values and other matters that influence consumer confidence and
spending. Disruptions in the U.S. economy, financial markets or other economic conditions affecting disposable
consumer income may adversely affect our business. A reduction in customer traffic to our stores or a shift in customer
spending to products other than those sold by us or to products sold by us that are less profitable could result in lower
net sales, decreases in inventory turnover or a reduction in profitability due to lower margins.
Increases in transportation or shipping costs, climate change regulation and other factors may negatively impact
our results of operations.
We rely upon various means of transportation, including ship and truck, to deliver products to our wholesale
and logistics facility, our stores and our customers. Consequently, our results can vary depending upon the price of
fuel. The price of oil has fluctuated significantly over the last few years. In addition, governmental efforts to combat
climate change through reduction of greenhouse gases may result in higher fuel costs through taxation or other means.
Any increases in fuel costs would increase our transportation costs.
In addition, general labor shortages or strikes in the transportation or shipping industries could negatively
affect transportation and shipping costs and our ability to supply our stores in a timely manner. We also rely on
efficient and effective operations within our wholesale and logistics facility to ensure accurate product delivery to our
stores. Failure to maintain such operations could adversely affect net sales.
We may face difficulties in meeting our labor needs to effectively operate our business.
We are heavily dependent upon our labor workforce in the geographic areas where we conduct our business.
Our compensation packages are designed to provide benefits commensurate with our level of expected service.
However, within our retail and logistics operations, we face the challenge of filling many positions at wage scales that
are appropriate to the industry and competitive factors. In addition, there is the risk that prevailing wage rates for our
labor workforce will increase in the future and that the costs of employee benefits will rise, resulting in increased
expenses that could adversely affect our profitability. We also face other risks in meeting our labor needs, including
competition for qualified personnel and overall unemployment levels. Changes in any of these factors, including a
shortage of available workforce in areas in which we operate, could interfere with our ability to adequately service our
customers or to open suitable locations and could result in increasing labor costs.
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We depend on key personnel, the loss of which may adversely affect our ability to run our business effectively and
our results of operations.
We benefit from the leadership and performance of our senior management team and other key employees.
If we lose the services of any of our principal executive officers or other skilled and experienced personnel, we may
not be able to fully implement our business strategy or run our business effectively and operating results could
suffer. The Compensation Committee of our Board of Directors reviews, on a regular basis, a succession plan
prepared by senior management that addresses the potential loss of key personnel positions. The goal of the
succession plan is to have a contingency plan that minimizes disruptions in the workplace until a suitable
replacement can be found, but no assurance can be given that we will be able to retain existing or attract additional
qualified personnel when needed.
Further, as our business grows, we will need to attract and retain additional qualified personnel in a timely
manner and develop, train and manage an increasing number of management-level sales associates and other
employees. Competition for qualified employees could require us to pay higher wages and benefits to attract a
sufficient number of qualified employees, and increases in the minimum wage or other employee benefit costs could
increase our operating expense. An inability to attract and retain personnel as needed in the future could negatively
impact our net sales growth and operating results.
Our operating results are subject to seasonal and quarterly fluctuations. Furthermore, our quarterly operating
results, including comparable store net sales, will fluctuate and may not be a meaningful indicator of future
performance.
We experience seasonal fluctuations in our net sales and results of operations. We typically experience higher
net sales in early spring due to spring sports and annual tax refunds, late summer due to back-to-school shopping and
winter due to holiday shopping. In addition, our quarterly results of operations may fluctuate significantly as a result of
a variety of factors, including the timing of new store openings, the amount and timing of net sales contributed by new
stores, weather fluctuations, merchandise mix, demand for merchandise driven by local interest in sporting events, and
the timing of sales tax holidays and annual tax refunds. Any of these events, particularly in the fourth quarter, could
have a material adverse effect on our business, financial condition and operating results for the entire fiscal year.
Comparable store net sales vary from quarter to quarter, and an unanticipated decline in comparable store net
sales may cause the price of our common stock to fluctuate significantly. Factors which could affect our comparable
store net sales results include:
shifts in consumer tastes and fashion trends;
calendar shifts of holiday or seasonal periods;
the timing of income tax refunds to customers;
increases in personal income taxes paid by our customers;
calendar shifts or cancellations of sales tax-free holidays in certain states;
the success or failure of college and professional sports teams within our core regions;
changes in or lack of tenants in the shopping centers in which we are located;
pricing, promotions or other actions taken by us or our existing or possible new competitors; and
unseasonable weather conditions or natural disasters.
We cannot assure you that comparable store net sales will increase at the rates achieved in prior periods or that
rates will not decline.
We are subject to regional risks due to our stores within the South, Southwest, Mid-Atlantic and Midwest regions of
the United States.
Our stores are heavily concentrated in certain regions of the United States. We are subject to regional risks,
such as the regional economy, weather conditions and natural disasters, increasing costs of electricity, oil and natural
gas, as well as government regulations specific in the states and localities within which we operate. In addition, falling
oil prices may adversely affect employment and consumer spending in those states that are within our regions that rely
on oil revenues as a significant part of the economies of those states. We sell a significant amount of merchandise that
can be adversely affected by significant weather events that postpone the start of or shorten sports seasons or that limit
participation of fans and sports enthusiasts.
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Unforeseen events, including public health issues and natural disasters such as earthquakes, hurricanes,
tornados, snow or ice storms, floods and heavy rains could disrupt our operations or the operations of our suppliers;
significantly damage or destroy our retail locations; prohibit consumers from traveling to our retail locations; or prevent
us from resupplying our stores or wholesale and logistics facility. We believe that we take reasonable precautions to
prepare for such events; however, our precautions may not be adequate to deal with such events in the future. If such
events occur in areas in which we have our wholesale and logistics facility or a concentration of retail stores, or if they
occur during peak shopping seasons, it could have a material adverse effect on our business, financial condition and
results of operations.
We sell a significant amount of licensed team sports merchandise, the sale of which may be subject to
fluctuations based on the success or failure of such teams. The poor performance by college and professional sports
teams within our core regions of operations, as well as professional team lockouts, could cause our financial results to
fluctuate year over year.
Risks Related to Our Capital Structure
We manage cash and cash equivalents beyond federally insured limits per financial institution and purchase
investments not fully guaranteed by the Federal Deposit Insurance Corporation (FDIC), subjecting us to investment
and credit availability risks.
We manage cash and cash equivalents in various institutions at levels beyond federally insured limits per
institution, and we purchase investments not guaranteed by the FDIC. Accordingly, there is a risk that we will not
recover the full principal of our investments or that their liquidity may be diminished. In an attempt to mitigate this
risk, our investment policy emphasizes preservation of principal and liquidity. We cannot be assured that we will not
experience losses on our deposits or investments.
We face risk that financial institutions may fail to fulfill commitments under our committed credit facilities.
We have financial institutions that are committed to providing loans under our revolving credit facilities.
There is a risk that these institutions cannot deliver against these obligations in a timely matter, or at all. If the financial
institutions that provide these credit facilities were to default on their obligation to fund the commitments, these
facilities would not be available to us, which could adversely affect our liquidity and financial condition. For
discussion of our credit facilities, see “Liquidity and Capital Resources” in Item 7 and Note 5 to our consolidated
financial statements.
Risks Related to Ownership of Our Common Stock.
The market price of our common stock, like the stock market in general, is likely to be highly volatile.
Factors that could cause fluctuation in our common stock price may include, among other things:
actual or anticipated variations in quarterly operating results;
changes in financial estimates by investment analysts and our inability to meet or exceed those estimates;
additions or departures of key personnel;
market rumors or announcements by us or by our competitors of significant acquisitions, divestitures or
joint ventures, strategic partnerships, large capital commitments or other strategic initiatives;
changes in retail sales data that indicate consumers may spend less on discretionary purchases; and
sales of our common stock by key personnel or large institutional holders.
Many of these factors are beyond our control and may cause the market price of our common stock to decline,
regardless of our operating performance.
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Significant stockholders or potential stockholders may attempt to effect changes or acquire control over our
company, which could adversely affect our results of operations and financial condition.
Stockholders may from time to time attempt to effect changes, engage in proxy solicitations or advance
stockholder proposals. Responding to proxy contests and other actions by activist stockholders can be costly and
time-consuming, disrupting our operations and diverting the attention of our Board of Directors and senior
management from the daily operations of our business or pursuing our business strategies. As a result, activist
stockholder campaigns could adversely affect our results of operations and financial condition.
There can be no assurance that we will continue to repurchase our common stock or that we will repurchase our
common stock at favorable prices.
In November 2015, our Board of Directors authorized a stock repurchase program (Program) under which
we may purchase up to $300.0 million of our outstanding common stock through February 2, 2019. The purchases
may be made from time to time in the open market (including, without limitation, the use of Rule 10b5-1 plans),
depending on a number of factors, including our evaluation of general market and economic conditions and the
trading price of our common stock. The Program may be extended, modified, suspended or discontinued at any
time. We expect to fund the Program with existing cash on hand, cash generated from operations, and/or
borrowings under our revolving lines of credit. A reduction in, or the completion or expiration of, our Program
could have a negative effect on our stock price. We can provide no assurance that we will repurchase our common
stock at favorable prices, or at all.
Risks Related to Governance, Regulatory, Legislative and Legal Matters.
Provisions in our charter documents and Delaware law might deter acquisition bids for us.
Certain provisions of our certificate of incorporation and bylaws may be deemed to have anti-takeover effects
and may discourage, delay or prevent a takeover attempt that a stockholder might consider in its best interest. These
provisions, among other things:
classify our Board of Directors into three classes, each of which serves for different three-year periods;
provide that a director may be removed by stockholders only for cause by a vote of the holders of not less
than two-thirds of our shares entitled to vote;
provide that all vacancies on our Board of Directors, including any vacancies resulting from an increase
in the number of directors, may be filled by a majority of the remaining directors, even if the number is
less than a quorum;
provide that special meetings of the common stockholders may only be called by the Board of Directors,
the Chairman of the Board of Directors or upon the demand of the holders of a majority of the total
voting power of all outstanding securities of the Company entitled to vote at any such special meeting;
and
call for a vote of the holders of not less than two-thirds of the shares entitled to vote in order to amend the
foregoing provisions and certain other provisions of our certificate of incorporation and bylaws.
In addition, our Board of Directors, without further action of the stockholders, is permitted to issue and fix the
terms of preferred stock, which may have rights senior to those of common stock. We are also subject to the Delaware
business combination statute, which may render a change in control of us more difficult. Section 203 of the Delaware
General Corporation Laws would be expected to have an anti-takeover effect with respect to transactions not approved
in advance by the Board of Directors, including discouraging takeover attempts that might result in a premium over the
market price for the shares of common stock held by stockholders.
Changes in federal, state or local laws, or our failure to comply with such laws, could increase our expenses and
expose us to legal risks.
Our Company is subject to numerous laws and regulatory matters relating to the conduct of our business. In
addition, certain jurisdictions have taken a particularly aggressive stance with respect to certain matters and have
stepped up enforcement, including fines and other sanctions. Such laws and regulatory matters include:
The Telephone Consumer Protection Act (TCPA) provisions that regulate telemarketing, auto-dialed and
pre-recorded calls as well as text messages and unsolicited faxes;
- 18 -
Labor and employment laws that govern employment matters such as minimum wage, exempt
employment status, overtime, family leave mandates and workplace safety regulations;
Securities and exchange laws and regulations;
New or changing laws relating to cybersecurity, privacy, cashless payments and consumer credit,
protection and fraud;
New or changing laws and regulations concerning product safety or truth in advertising;
The Americans with Disabilities Act and similar state laws that give civil rights protections to individuals
with disabilities in the context of employment, public accommodations and other areas;
New or changing federal and state immigration laws and regulations
The Patient Protection and Affordable Care Act provisions;
New or changing environmental regulations, including measures related to climate change and
greenhouse gas emissions; and
New or changing laws relating to state and local taxation and licensing, including sales and use tax laws,
withholding taxes and property taxes.
Our operations will continue to be subject to federal, state and local governmental regulation. Uncertainty
with respect to the U.S. presidential administration and Congress and potential changes that may be made in laws,
regulations and policies could exacerbate the risks above. Changes in domestic policy, including significant changes in
tax, trade, healthcare and other laws and regulations could affect our operations. For example, tax proposals may
include changes, which could, if implemented, have an adverse or a beneficial impact on our operations, including a
“border adjustment tax” or new import tariffs, which could adversely affect us because we sell imported products.
Proposals to modify or repeal the Patient Protection and Affordable Care Act, if implemented, may also affect us.
Unknown matters, new laws and regulations or stricter interpretations of existing laws or regulations may affect our
business or operations in the future and could lead to government enforcement and resulting litigation by private
litigants. Increasing regulations could expose us to a challenging enforcement environment or to third-party liability
(such as monetary recoveries and recoveries of attorney’s fees) and could have a material adverse effect on our
business and results of operations.
Our corporate legal department monitors regulatory activity and is active in notifying and updating applicable
departments and personnel on pertinent matters and legislation. Our Human Resources (HR) Department leads
compliance training programs to ensure our field managers are kept abreast of HR-related regulatory activity that
affects their areas of responsibility. We believe that we are in substantial compliance with applicable environmental
and other laws and regulations, and although no assurances can be given, we do not foresee the need for any significant
expenditures in this area in the near future.
Litigation may adversely affect our business, financial condition and results of operations.
Our business is subject to the risk of litigation by employees, consumers, suppliers, competitors, stockholders,
government agencies or others through private actions, class actions, administrative proceedings, regulatory actions or
other litigation. The outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult to assess
or quantify. We may incur losses relating to these claims, and in addition, these proceedings could cause us to incur
costs and may require us to devote resources to defend against these claims that could adversely affect our results of
operations. For a description of current legal proceedings, see “Part I, Item 3, Legal Proceedings.”
Product liability claims or product recalls can adversely affect our business reputation, expose us to lawsuits or
increased scrutiny by federal and state regulators and may not be fully covered by insurance.
We sell products, particularly athletic equipment, which entails an inherent risk of product liability and
product recall and the resultant adverse publicity. We may be subject to significant claims if the purchase of a
defective product from any of our stores causes injury or death. Our merchandise could be subject to a product recall
which could reflect negatively on our business reputation. We cannot be assured that product liability claims will not
be asserted against us in the future. Any claims made may create adverse publicity that would have a material
adverse effect on our business, reputation, financial condition and results of operations.
- 19 -
We and our vendors maintain insurance with respect to certain of these risks, including product liability
insurance and general liability insurance, but in many cases such insurance is expensive, difficult to obtain and no
assurance can be given that such insurance can be maintained in the future on acceptable terms, or in sufficient
amounts to protect us against losses due to any such events, or at all. Moreover, even though our insurance coverage
may be designed to protect us from losses attributable to certain events, it may not adequately protect us from
liability and expenses we incur in connection with such events.
We cannot be assured that we will not experience pressure from labor unions or become the target of labor union
campaigns.
While we believe we maintain good relations with our employees, we cannot provide any assurances that we
will not experience pressure from labor unions or become the target of labor union campaigns. The potential for
unionization could increase in the United States if federal legislation or regulatory changes are adopted that would
facilitate labor organization. Significant union representation would require us to negotiate wages, salaries, benefits
and other terms with many of our employees collectively and could adversely affect our results of operations by
increasing our labor costs or otherwise restricting our ability to maximize the efficiency of our operations.
Changes in rules related to accounting for income taxes, changes in tax laws in any of the jurisdictions in which we
operate or adverse outcomes from audits by taxing authorities could result in an unfavorable change in our effective
tax rate.
We operate our business in numerous tax jurisdictions. As a result, our effective tax rate is derived from a
combination of the federal rate and applicable tax rates in the various states in which we operate. Our effective tax rate
may be lower or higher than our tax rates have been in the past due to numerous factors, including the sources of our
income and the tax filing positions we take. We base our estimate of an effective tax rate at any given point in time
upon a calculated mix of the tax rates applicable to our Company and on estimates of the amount of business likely to
be done in any given jurisdiction. Changes in rules related to accounting for income taxes, changes in tax laws in any
of the jurisdictions in which we operate, expiration of tax credits formerly available, failure to manage and utilize
available tax credits, or adverse outcomes from tax audits that we may be subject to in any of the jurisdictions in which
we operate could result in an unfavorable change in our effective tax rate.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
We currently lease all of our existing 1,079 store locations and expect that our policy of leasing rather than
owning will continue as we continue to expand. Our leases typically provide for terms of five to ten years with options
on our part to extend. Most leases also contain a kick-out clause if projected sales levels are not met and an early
termination/remedy option if co-tenancy and exclusivity provisions are violated. We believe this leasing strategy
enhances our flexibility to pursue various expansion opportunities resulting from changing market conditions and to
periodically re-evaluate store locations. See “Risk Factors.”
As current leases expire, we believe we will either be able to obtain lease renewals for present store locations
or to obtain leases for equivalent or better locations in the same general area. Historically, we have not experienced
any significant difficulty in either renewing leases for existing locations or securing leases for suitable locations for
new stores. We do not anticipate any such difficulties into Fiscal 2019. Based primarily on our belief that we maintain
good relations with our landlords, that most of our leases are at approximate market rents and that generally we have
been able to secure leases for suitable locations, we believe our lease strategy will not be detrimental to our business,
financial condition or results of operations.
We own our corporate office building and our wholesale and logistics facility. We believe our wholesale
and logistics facility is suitable and adequate to support our operations for many years. See “Risk Factors.”
- 20 -
Store Locations
As of February 3, 2018, we operated 1,079 stores in 35 contiguous states. Of these stores, 211 are located in
enclosed malls, 27 are free-standing and 841 are located in strip-shopping centers, which are frequently near a Wal-
Mart store. The following shows the number of locations by state as of February 3, 2018:
Alabama
Arizona
Arkansas
California
Colorado
Delaware
Florida
Georgia
Illinois
Indiana
Iowa
Kansas
93
9
42
6
6
1
65
103
30
22
18
24
Kentucky
Louisiana
Maryland
Minnesota
Mississippi
Missouri
Nebraska
New Jersey
New Mexico
New York
North Carolina
Ohio
56
61
5
2
66
33
10
3
15
3
61
29
Oklahoma
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
West Virginia
Wisconsin
Wyoming
TOTAL
40
9
42
4
67
109
4
22
9
8
2
1,079
As of March 23, 2018, we operated 1,068 stores in 35 states.
Item 3. Legal Proceedings.
We are a party to various legal proceedings incidental to our business. Where we are able to reasonably
estimate an amount of probable loss in these matters based on known facts, we have accrued that amount as a
current liability on our balance sheet. We are not able to reasonably estimate the possible loss or range of loss in
excess of the amount accrued for these proceedings based on the information currently available to us, including,
among others, (i) uncertainties as to the outcome of pending proceedings (including motions and appeals) and (ii)
uncertainties as to the likelihood of settlement and the outcome of any negotiations with respect thereto. We do not
believe that any of these matters will, individually or in the aggregate, have a material effect on our business or
financial condition. We cannot give assurance, however, that one or more of these proceedings will not have a
material effect on our results of operations for the period in which they are resolved. At February 3, 2018 and
January 28, 2017, we estimated that the liability related to these matters was approximately $0.5 million and $0.1
million, respectively, and accordingly, we accrued $0.5 million and $0.1 million, respectively, as a current liability
in our consolidated balance sheets.
The estimates of our liability for pending and unasserted potential claims do not include litigation costs. It
is our policy to accrue legal fees when it is probable that we will have to defend against known claims or allegations
and we can reasonably estimate the amount of the anticipated expense.
From time to time, we enter into certain types of agreements that require us to indemnify parties against third-
party claims under certain circumstances. Generally, these agreements relate to: (a) agreements with vendors and
suppliers under which we may provide customary indemnification to our vendors and suppliers in respect to actions
they take at our request or otherwise on our behalf; (b) agreements to indemnify vendors against trademark and
copyright infringement claims concerning merchandise manufactured specifically for or on behalf of the Company; (c)
real estate leases, under which we may agree to indemnify the lessors from claims arising from our use of the property;
and (d) agreements with our directors, officers and employees, under which we may agree to indemnify such persons
for liabilities arising out of their relationship with us. We have director and officer liability insurance, which, subject to
the policy’s conditions, provides coverage for indemnification amounts payable by us with respect to our directors and
officers up to specified limits and subject to certain deductibles.
If we believe that a loss is both probable and estimable for a particular matter, the loss is accrued in
accordance with the requirements of ASC Topic 450, Contingencies. With respect to any matter, we could change our
belief as to whether a loss is probable or estimable, or its estimate of loss, at any time.
- 21 -
Item 4. Mine Safety Disclosures.
None.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Our common stock is traded on the NASDAQ Global Select Market (NASDAQ/GS) under the symbol HIBB.
The following table sets forth, for the periods indicated, the high and low sales prices of shares of our Common Stock
as reported by NASDAQ.
Fiscal 2018:
First Quarter ended April 29, 2017
Second Quarter ended July 29, 2017
Third Quarter ended October 28, 2017
Fourth Quarter ended February 3, 2018
Fiscal 2017:
First Quarter ended April 30, 2016
Second Quarter ended July 30, 2016
Third Quarter ended October 29, 2016
Fourth Quarter ended January 28, 2017
High
$
$
$
$
33.70
25.70
15.60
24.95
High
$
$
$
$
36.37
36.67
41.63
45.80
Low
$
$
$
$
25.90
15.25
13.40
12.80
Low
$
$
$
$
32.07
34.92
33.64
32.70
On March 23, 2018, the last reported sale price for our common stock as quoted by NASDAQ was $22.20 per
share. As of March 23, 2018, we had 12 stockholders of record.
- 22 -
The graph below matches Hibbett Sports, Inc.'s cumulative 5-Year total shareholder return on common
stock with the cumulative total returns of the NASDAQ Composite index and the NASDAQ Retail Trade index. The
graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of
all dividends) from 1/31/2013 to 1/31/2018.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Hibbett Sports, Inc., the NASDAQ Composite Index
and the NASDAQ Retail Trade Index
$350
$300
$250
$200
$150
$100
$50
$0
1/13
1/14
1/15
1/16
1/17
1/18
Hibbett Sports, Inc.
NASDAQ Composite
NASDAQ Retail Trade
*$100 invested on 1/31/13 in stock or index, including reinvestment of dividends.
Fiscal year ending January 31.
Hibbett Sports, Inc.
NASDAQ Composite
NASDAQ Retail Trade
1/13
100.00
100.00
100.00
1/14
113.96
133.35
127.83
1/15
89.33
152.66
143.03
1/16
61.07
153.70
175.90
1/17
62.67
187.33
212.73
1/18
42.92
249.85
315.35
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Dividend Policy. We have never declared or paid any dividends on our common stock. We currently intend
to retain our future earnings to finance the growth and development of our business and for our stock repurchase
program, and therefore do not anticipate declaring or paying cash dividends on our common stock for the foreseeable
future. Any future decision to declare or pay dividends will be at the discretion of our Board of Directors and will be
dependent upon our financial condition, results of operations, capital requirements and such other factors as our Board
of Directors deems relevant.
Equity Compensation Plans. For information on securities authorized for issuance under our equity
compensation plans, see “Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.”
- 23 -
Issuer Repurchases of Equity Securities
The following table presents our stock repurchase activity for the fourteen weeks ended February 3, 2018 (1):
Period
October 29, 2017 to November 25, 2017
November 26, 2017 to December 30, 2017
December 31, 2017 to February 3, 2018
Total
Total Number
of S hares
Purchased
452,633
124,263
34,700
611,596
Average
Price per
S hare
$
13.36
$
20.43
$
21.28
$
15.25
Total Number of
S hares
Purchased as
Part of Publicly
Announced
Programs
Approximate Dollar
Value of S hares that
may yet be
Purchased Under the
Programs (in
thousands)
452,633
124,200
34,700
611,533
$
$
$
$
207,368
204,830
204,092
204,092
(1) In November 2015, the Board of Directors authorized a Stock Repurchase Program of $300.0 million to
repurchase our common stock through February 2, 2019 that replaced an existing authorization. See Note 1, “Stock
Repurchase Program.”
Item 6. Selected Consolidated Financial Data.
The following selected consolidated financial data has been derived from the consolidated financial statements
of the Company. The data set forth below should be read in conjunction with “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and our “Consolidated Financial Statements and Supplementary
Data” and “Notes to Consolidated Financial Statements” thereto.
(In thousands, except per share amounts)
February 3,
2018
(53 weeks)
January 28,
2017
(52 weeks)
Fiscal Year Ended
January 30,
2016
(52 weeks)
January 31,
2015
(52 weeks)
February 1,
2014
(52 weeks)
$
968,219
655,502
312,717
$
972,960
634,364
338,596
$
943,104
610,389
332,715
$
913,486
586,702
326,784
$
851,965
542,700
309,265
231,832
24,207
56,678
231
56,447
21,417
35,030
$
222,785
19,047
96,764
268
96,496
35,421
61,075
$
$
$
2.75
2.72
22,240
22,427
203,673
17,038
112,004
292
111,712
41,184
70,528
$
192,648
15,990
118,146
293
117,853
44,269
73,584
$
181,527
13,847
113,891
188
113,703
42,826
70,877
$
$
$
2.95
2.92
23,947
24,129
$
$
2.90
2.87
25,369
25,620
$
$
2.74
2.70
25,870
26,266
S tatement of Operations Data:
Net sales
Cost of goods sold
Gross margin
Store operating, selling and administrative
expenses
Depreciation and amortization
Operating income
Interest expense, net
Income before provision for income taxes
Provision for income taxes
Net income
Basic earnings per share
Diluted earnings per share
Basic weighted average shares outstanding
Diluted weighted average shares outstanding
$
$
1.72
1.71
20,347
20,450
Note: No dividends have been declared or paid.
- 24 -
(In thousands, except Other Data and Selected Store Data)
Other Data:
Net sales (decrease) increase
Comparable store sales
Gross margin (as a % to net sales)
Store operating, selling and administrative
expenses (as a % to net sales)
Depreciation and amortization (as a % to net
sales)
Provision for income taxes (as a % to net
sales)
Net income (as a % to net sales)
Balance S heet Data:
Cash and cash equivalents
Average inventory per store
Working capital
Total assets
Long-term capital lease obligations
Stockholders' investment
Treasury shares repurchased
Cost of treasury shares purchased
S elected S tore Data:
Stores open at beginning of period
New stores opened
Stores closed
Stores open at end of period
Stores expanded during the period
Estimated square footage at end of period
February 3,
2018
(53 weeks)
January 28,
2017
(52 weeks)
Fiscal Year Ended
January 30,
2016
(52 weeks)
January 31,
2015
(52 weeks)
February 1,
2014
(52 weeks)
-0.5%
-3.8%
32.3%
3.2%
0.2%
34.8%
3.2%
-0.4%
35.3%
23.9%
22.9%
21.6%
2.5%
2.2%
3.6%
2.0%
3.6%
6.3%
1.8%
4.4%
7.5%
7.2%
2.9%
35.8%
21.1%
1.8%
4.8%
8.1%
4.1%
1.8%
36.3%
21.3%
1.6%
5.0%
8.3%
$
$
$
$
$
$
73,544
235
231,207
461,846
2,522
319,596
2,843
54,506
$
$
$
$
$
$
$
38,958
260
242,192
458,854
2,857
334,040
1,236
43,058
$
$
$
$
$
$
$
32,274
271
225,178
442,372
3,149
310,846
2,236
91,332
$
$
$
$
$
$
$
88,397
243
253,373
452,397
3,029
324,781
1,206
60,971
$
$
$
$
$
$
$
66,227
244
232,235
416,345
2,889
304,023
366
20,095
$
1,078
44
(43)
1,079
11
6,140
1,044
65
(31)
1,078
8
6,141
988
71
(15)
1,044
16
5,974
927
80
(19)
988
9
5,649
873
72
(18)
927
14
5,331
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with Item 6, “Selected Consolidated Financial
Data” and our consolidated financial statements and related notes appearing elsewhere in this report. This Annual
Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. See “Cautionary Statement Regarding Forward-Looking Statements” and Part I, Item 1A. “Risk
Factors.”
General Overview
Hibbett Sports, Inc. is a leading athletic-inspired fashion retailer primarily located in small and mid-sized
communities across the country. Founded in 1945, Hibbett stores have a rich history of convenient locations,
personalized customer service and access to coveted footwear, apparel and equipment from top brands like Nike,
Under Armour and Adidas. Consumers can browse styles, find new releases or shop looks by visiting their nearest
store or by visiting www.Hibbett.com. Follow us @HibbettSports. We became a public company in October 1996.
As of February 3, 2018, we operated a total of 1,079 retail stores in 35 states composed of 1,060 Hibbett Sports stores
and 19 Sports Additions athletic shoe stores.
- 25 -
The Hibbett Sports store is our primary retail format and is an approximately 5,000 square foot store located
primarily in strip centers which are usually near a major chain retailer such as a Wal-Mart store. Our Hibbett Sports
store base consisted of 841 stores located in strip centers, 27 free-standing stores and 211 enclosed mall locations as of
February 3, 2018.
Hibbett operates on a 52- or 53-week fiscal year ending on the Saturday nearest to January 31 of each year.
The consolidated statements of operations for Fiscal 2018 included 53 weeks of operations while the consolidated
statements of operations for Fiscal 2017 and Fiscal 2016 included 52 weeks of operations. Fiscal 2019 will include
52 weeks of operations.
Executive Summary
Following is a highlight of our financial results over the last three fiscal years:
Net sales (in millions)
Operating income, percentage to net sales
Comparable store sales
Net income (in millions)
Net income, percentage (decrease) increase
Diluted earnings per share
Fiscal 2018
(53 weeks)
968.2
$
5.9%
-3.8%
35.0
-42.6%
1.71
$
$
Fiscal 2017
(52 weeks)
973.0
$
10.0%
0.2%
61.1
-13.4%
2.72
$
$
Fiscal 2016
(52 weeks)
943.1
$
11.9%
-0.4%
70.5
-4.2%
2.92
$
$
During Fiscal 2018, Hibbett opened 44 new stores and closed 43 underperforming stores, bringing the store
base to 1,079 in 35 states as of February 3, 2018. Inventory on a per store basis at February decreased by 9.9%
compared to the prior fiscal year. Hibbett ended Fiscal 2018 with $73.5 million of available cash and cash
equivalents on the consolidated balance sheet and full availability under its $60.0 million unsecured credit facilities.
Due to the 53rd week in Fiscal 2018, each quarter in Fiscal 2019 starts one week later than the same quarter in
Fiscal 2018. The charts below present comparable store sales and net sales for Fiscal 2018 as originally reported and as
adjusted to represent the same 13-week period as the Fiscal 2019 quarters:
First
Quarter
Second
Quarter
Fiscal 2018
Third
Quarter
Fourth
Quarter Full Year
Comparable store sales increase (originally reported)
Comparable store sales increase (adjusted for week shift)
Impact of week shift
-4.9% -11.7% -1.3%
-4.8% -11.0% 0.3%
1.6%
0.7%
0.1%
1.6%
1.0%
-0.6%
-3.8%
-3.6%
0.2%
Net sales (originally reported)
Net sales (adjusted for week shift)
Impact of week shift
First
Quarter
Second
Quarter
Fiscal 2018
Third
Quarter
Fourth
Quarter Full Year
$
$
$
275.7
275.2
(0.5)
$
$
$
188.0
206.0
18.0
$
$
$
237.8
220.6
(17.2)
$
$
$
266.7
265.8
(0.9)
$
$
$
968.2
967.6
(0.6)
For Fiscal 2018, total company-wide square footage was flat. Our plan for Fiscal 2019 is to decrease total
company-wide square footage by approximately 2.0% as we continue to optimize our store base and maximize return
on invested capital. To supplement new store openings, we continue to expand high performing stores, increasing the
square footage in 11 existing stores in Fiscal 2018 for an average increase in square footage of 33.0%.
- 26 -
In Fiscal 2018, comparable store sales decreased 3.8%, although footwear experienced a low-single digit
comparable store sales gain. For Fiscal 2019, comparable store sales are expected to be in the range of -1.0% to 2.0%.
We expect overall gross margin rate to increase from 70 to 100 basis points, driven by improvement in merchandise
margin as a result of an improved inventory position. Logistics expenses are expected to increase slightly as a
percentage of net sales due to increased fulfillment costs, while store occupancy expenses are expected to be relatively
flat as a percentage of net sales.
We expect operating, selling and administrative expenses to increase as a percentage of net sales in Fiscal
2019. This is primarily due to increased operational and marketing costs associated with our e-commerce business,
investments made in our people and omni-channel initiative, and higher compensation costs associated with more
normalized incentive compensation. We believe these expenses will help us grow and will strengthen our competitive
position for the long term. We also expect to continue to generate sufficient cash to enable us to expand and remodel
our store base, to enable capital expenditures including technology upgrade projects and to repurchase our common
stock under our stock repurchase program.
Comparable store sales data for the periods presented reflects sales for our traditional format Hibbett Sports
and Sports Additions stores open throughout the period and the corresponding period of the prior fiscal year, and e-
commerce sales. If a store remodel, relocation or expansion results in the store being closed for a significant period of
time, its sales are removed from the comparable store sales base until it has been open a full 12 months.
Recent Accounting Pronouncements
See Note 2 of Item 8 of this Annual Report on Form 10-K for the fiscal year ended February 3, 2018, for
information regarding recent accounting pronouncements.
Results of Operations
The following table sets forth the percentage relationship to net sales of certain items included in our
consolidated statements of operations for the periods indicated.
Net sales
Cost of goods sold
Gross margin
Store operating, selling and administrative expenses
Depreciation and amortization
Operating income
Interest (expense) income, net
Income before provision for income taxes
Provision for income taxes
Net income
Note: Columns may not sum due to rounding.
February 3,
2018
(53 weeks)
Fiscal Year Ended
January 28,
2017
(52 weeks)
100.0%
67.7
32.3
23.9
2.5
5.9
-
5.8
2.2
3.6%
100.0%
65.2
34.8
22.9
2.0
10.0
-
9.9
3.6
6.3%
January 30,
2016
(52 weeks)
100.0%
64.7
35.3
21.6
1.8
11.9
-
11.9
4.4
7.5%
- 27 -
Fiscal 2018 Compared to Fiscal 2017
Net sales. Net sales decreased $4.8 million, or 0.5%, to $968.2 million for Fiscal 2018 from $973.0 million
for Fiscal 2017. Furthermore:
We opened 44 Hibbett Sports stores while closing 43 underperforming Hibbett Sports stores for net
addition of 1 store in Fiscal 2018. Stores not in the comparable store net sales calculation accounted
for $53.4 million of net sales. We expanded 11 high performing stores.
Comparable store net sales for Fiscal 2018 decreased 3.8% compared to Fiscal 2017.
During Fiscal 2018, 968 stores were included in the comparable store sales comparison. Comparable store
net sales were driven by gains in footwear, offset by declines in apparel and equipment. Significant increases were
achieved in basketball and lifestyle footwear, while accessories, socks, hydration, college apparel, women’s
activewear and performance running footwear experienced significant declines. In Fiscal 2018, we saw an increase
in average ticket and a slight decrease in items per transaction.
Gross margin. Cost of goods sold includes the cost of merchandise, occupancy costs for stores, occupancy
and operating costs for our wholesale and logistics facility and ship-to-home freight. Gross margin was $312.7
million, or 32.3% of net sales, in Fiscal 2018, compared with $338.6 million, or 34.8% of net sales, in Fiscal 2017.
Furthermore:
Merchandise gross margin decreased 258 basis points as a percentage of net sales due to promotional
markdowns, the introduction of e-commerce sales and a one-time charge of approximately $0.9 million
to establish a reserve against the inventory of our Team business.
Wholesale and logistics expense increased eight basis points as a percentage of net sales due to
increased data processing costs associated with our omni-channel initiative and increased
transportation costs.
Store occupancy expense decreased 17 basis points as a percentage of net sales mainly due to savings
realized in utility costs resulting from cost savings initiatives.
Store operating, selling and administrative expenses. Store operating, selling and administrative expenses
were $231.8 million, or 23.9% of net sales, for Fiscal 2018, compared with $222.8 million, or 22.9% of net sales, for
Fiscal 2017. Furthermore:
Total salary and benefit costs increased 67 basis points as a percentage of net sales due to de-leverage
associated with lower comparable store sales and hiring to support our e-commerce business..
Expenses associated with our omni-channel initiative increased 82 basis points as a percentage of net
sales due to the launch of our e-commerce business and on-going operational and marketing costs to
support the e-commerce business.
Overall expenses decreased 32 basis points due to a $3.1 million one-time gain resulting from the sale
of the Company’s Team Division.
Credit card fees decreased 21 basis points mainly due to the implementation of EMV chip technology
in our stores.
We expect overall store operating, selling and administrative expenses to increase as a percentage of
net sales in Fiscal 2019 due to continued investments related to our omni-channel initiative,
operational and marketing costs associated with our e-commerce business, and higher compensation
costs to remain competitive in the marketplace.
Depreciation and amortization. Depreciation and amortization as a percentage of net sales was 2.5% of net
sales in Fiscal 2018 and 2.0% of net sales in Fiscal 2017. In Fiscal 2018, depreciation expense increased due to the
addition of new stores and the capitalization of omni-channel and other IT investments. We expect depreciation
expense to be relatively flat as a percentage of net sales in Fiscal 2019.
- 28 -
Provision for income taxes. The combined federal, state and local effective income tax rate as a percentage
of pre-tax income was 37.9% for Fiscal 2018 and 36.7% for Fiscal 2017. The increase in rate was primarily due to
an accounting standards change (ASU 2016-09) for stock-based compensation. This new accounting standard
stipulates that the income tax effect of fluctuations in the value of stock-based awards between the grant date and
vesting date are to be recorded directly to income tax expense. In the past, this effect was recorded directly to equity.
This change primarily affects the first quarter due to timing of stock-based awards. For Fiscal 2019, we expect our
federal effective income tax rate to decline mainly due to the Tax Cuts and Jobs Act, which lowered our federal
income tax rate from 35% to 21%. We do not expect major changes in our state and local income tax rates.
Fiscal 2017 Compared to Fiscal 2016
Net sales. Net sales increased $29.9 million, or 3.2%, to $973.0 million for Fiscal 2017 from $943.1
million for Fiscal 2016. Furthermore:
We opened 65 Hibbett Sports stores while closing 31 underperforming Hibbett Sports stores for net
addition of 34 stores in Fiscal 2017. Stores not in the comparable store net sales calculation accounted
for $28.1 million of the increase in net sales. We expanded eight high performing stores.
Comparable store net sales for Fiscal 2017 increased 0.2% compared to Fiscal 2016.
During Fiscal 2017, 941 stores were included in the comparable store sales comparison. Comparable store
net sales were driven by gains in footwear, offset by declines in apparel and equipment. Significant increases were
achieved in basketball and lifestyle footwear, while college apparel, women’s activewear, baseball equipment,
football equipment and fitness equipment experienced declines. In Fiscal 2017, we saw an increase in average ticket
and a slight decrease in items per transaction.
Gross margin. Cost of goods sold includes the cost of merchandise, occupancy costs for stores and
occupancy and operating costs for our wholesale and logistics facility. Gross margin was $338.6 million, or 34.8%
of net sales, in Fiscal 2017, compared with $332.7 million, or 35.3% of net sales, in Fiscal 2016. Furthermore:
Merchandise gross margin decreased as a percentage of net sales due to increased markdowns and
promotional activity needed to liquidate seasonal and aged inventory, as well as the negative effect of
product mix due to higher footwear sales.
Wholesale and logistics expenses remained flat as a percentage of net sales for Fiscal 2017. Increased
data processing costs associated with our omni-channel initiative were offset by a decrease in freight
and shipping expenses.
Store occupancy expense increased 16 basis points as a percentage of net sales mainly due to de-
leverage associated with lower comparable sales.
Store operating, selling and administrative expenses. Store operating, selling and administrative expenses
were $222.8 million, or 22.9% of net sales, for Fiscal 2017, compared with $203.7 million, or 21.6% of net sales, for
Fiscal 2016. Furthermore:
Total salary and benefit costs increased 75 basis points as a percentage of net sales due to de-leverage
associated with lower comparable store sales, the hiring of our e-commerce team and the hiring of IT
support related to our omni-channel initiative.
Professional fees increased 21 basis points as a percentage of net sales due to expenses related to our
omni-channel initiative.
Repair and maintenance costs increased 13 basis points as a percentage of net sales due to repairs
related to storm damage and HVAC repairs.
Depreciation and amortization. Depreciation and amortization as a percentage of net sales was 2.0% of net
sales in Fiscal 2017 and 1.8% of net sales in Fiscal 2016. In Fiscal 2017, depreciation expense increased due to the
addition of new stores and the capitalization of IT investments.
Provision for income taxes. The combined federal, state and local effective income tax rate as a percentage
of pre-tax income was 36.7% for Fiscal 2017 and 36.9% for Fiscal 2016. The decrease in rate resulted primarily
from utilization of available federal and state tax credits.
- 29 -
Liquidity and Capital Resources
Our capital requirements relate primarily to new store openings, stock repurchases, facilities and systems to
support company growth and working capital requirements. Our working capital requirements are somewhat seasonal
in nature and typically reach their peak near the end of the third and the beginning of the fourth quarters of our fiscal
year. Historically, we have funded our cash requirements primarily through our cash flow from operations and
occasionally from borrowings under our revolving credit facilities. Due to the low interest rates currently available, we
are using excess cash on deposit to offset bank fees versus investing such funds in an equity market or in interest-
bearing deposits.
Our consolidated statements of cash flows are summarized as follows (in thousands):
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Operating Activities.
February 3,
2018
(53 weeks)
111,926
$
(22,900)
(54,440)
34,586
$
Fiscal Year Ended
January 28,
2017
(52 weeks)
78,675
$
(29,409)
(42,582)
6,684
$
January 30,
2016
(52 weeks)
58,479
$
(24,677)
(89,925)
(56,123)
$
Cash flow from operations is seasonal in our business. Typically, we use cash flow from operations to
increase inventory in advance of peak selling seasons, such as winter holidays, the spring sales period and late summer
back-to-school shopping. Inventory levels are reduced in connection with higher sales during the peak selling seasons
and this inventory reduction, combined with proportionately higher net income, typically produces a positive cash flow.
Net cash provided by operating activities was $111.9 million for Fiscal 2018 compared with net cash provided
by operating activities of $78.7 million and $58.5 million in Fiscal 2017 and Fiscal 2016, respectively. The increase in
net cash provided by operating activities for Fiscal 2018 compared to Fiscal 2017 and Fiscal 2016 was impacted by the
following:
Net income provided cash of $35.0 million, $61.1 million and $70.5 million during Fiscal 2018, Fiscal
2017 and Fiscal 2016, respectively.
Ending inventory per store declined 9.9% and 4.0% at February 3, 2018 and January 28, 2017,
respectively, compared to the prior year. Fiscal 2018 and Fiscal 2017 inventory declined on a per store
basis mainly due to vendor returns, cancellations and markdowns taken to liquidate excess. The change
in inventory provided cash of $27.5 million and $2.4 million during Fiscal 2018 and Fiscal 2017,
respectively, and used cash of $42.7 million during Fiscal 2016.
The change in accounts payable provided cash of $16.4 million in Fiscal 2018, used cash of $11.4 million
in Fiscal 2017 and provided cash of $4.0 million in Fiscal 2016. The increase in Fiscal 2018 and
decrease in Fiscal 2017 resulted mainly from the timing of receipts prior to our peak selling seasons.
Non-cash charges included depreciation and amortization expense of $24.2 million, $19.0 million and
$17.0 million during Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively, and stock-based
compensation expense of $3.9 million, $4.6 million and $5.2 million during Fiscal 2018, Fiscal 2017 and
Fiscal 2016, respectively. Stock-based compensation in Fiscal 2017 was affected by a higher than
historical forfeiture of restricted stock and performance-based awards. Fluctuations in stock-based
compensation generally result from the achievement of performance-based equity awards at greater or
lesser than their granted level, fluctuations in the price of our common stock and levels of forfeitures in
any given period. Depreciation expense has increased in each fiscal year due to investments in facilities
and information technology systems, but is expected to be relatively flat in Fiscal 2019.
- 30 -
Investing Activities.
Cash used in investing activities in Fiscal 2018, Fiscal 2017 and Fiscal 2016 totaled $22.9 million, $29.4
million and $24.7 million, respectively. Gross capital expenditures used $23.1 million, $29.7 million and $25.1 million
during Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively. Capital expenditures in all periods primarily consisted
of new stores, relocations, remodels and expansions of existing stores and IT projects.
We opened 44 new stores, expanded 11 existing stores and relocated and/or remodeled six additional existing
stores during Fiscal 2018. We opened 65 new stores, expanded eight existing stores and relocated and/or remodeled
two additional existing stores during Fiscal 2017. We opened 71 new stores, expanded 16 existing stores and relocated
and/or remodeled three additional existing stores during Fiscal 2016.
We estimate the cash outlay for capital expenditures in the fiscal year ending February 2, 2019 will be
approximately $20.0 million to $25.0 million, which relates to expenditures for:
Continued enhancements to our omni-channel capability;
Information system infrastructure, projects, upgrades and security (including our new mobile app);
The opening of new stores, the remodeling, relocation or expansion of selected existing stores; and
Other departmental needs.
Of the total budgeted dollars for capital expenditures for Fiscal 2019, we anticipate that approximately 39%
will be related to information technology, consisting primarily of expenditures for projects, infrastructure and various
system enhancements, upgrades and security. Approximately 36% will be related to the opening new stores, store
expansions and relocations and store remodels. The remaining 25% relates primarily to specific department
expenditures and includes facility upgrades, transportation equipment, automobiles, fixtures and security equipment for
our stores.
Financing Activities.
Net cash used in financing activities was $54.4 million, $42.6 million and $89.9 million in Fiscal 2018, Fiscal
2017 and Fiscal 2016, respectively. The financing activity cash fluctuation between years is primarily the result of
repurchases of our common stock. We expended $54.5 million, $43.1 million and $91.3 million on repurchases of our
common stock during Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively, which included cash used to settle net
share equity awards of $0.7 million, $0.9 million and $2.1 million during Fiscal 2018, Fiscal 2017 and Fiscal 2016,
respectively.
Financing activities also consisted of proceeds from stock option exercises and employee stock plan
purchases. As stock options are exercised and shares are purchased through our employee stock purchase plan, we will
continue to receive proceeds and expect a tax deduction; however, the amounts and timing cannot be predicted.
At February 3, 2018, we had two unsecured revolving credit facilities that allow borrowings up to $30.0
million each, and which renew in March 2018 and April 2018. The facilities do not require a commitment or agency
fee nor are there any covenant restrictions. We plan to renew these facilities as they expire and do not anticipate any
problems in doing so; however, no assurance can be given that we will be granted a renewal or terms which are
acceptable to us. As of February 3, 2018, we did not have any debt outstanding under either of these facilities.
Subsequent to February 3, 2018, we renewed one of our $30.0 million facilities which allows for
borrowings up to $30.0 million at a rate agreed upon between lender and borrower at the time loan is made. The
renewal was effective March 22, 2018 and will expire on April 30, 2019.
- 31 -
The following table lists the aggregate maturities of various classes of obligations and expiration amounts
of various classes of commitments related to Hibbett Sports, Inc. at February 3, 2018 (in thousands):
Contractual Obligations
Long-term debt obligations
Capital lease obligations (1)
Interest on capital lease obligations (1)
Operating lease obligations (1)
Purchase obligations (2)
Other liabilities (3)
Total
Payment due by period
Less than 1
year
-
$
663
227
59,596
7,877
524
68,887
$
1 - 3 years
-
$
1,240
325
92,561
2,641
-
96,767
$
3 - 5 years
-
$
724
173
51,665
283
-
52,845
$
More than
5 years
-
$
558
38
36,124
-
2,516
39,236
$
Total
-
$
3,185
763
239,946
10,801
3,040
257,735
$
(1) See “Part II, Item 8, Consolidated Financial Statements Note 6 – Leases.”
(2) Purchase obligations include all material legally binding contracts such as software license commitments and
service contracts. The table above also includes a stand-by letter of credit in conjunction with our self-
insured workers’ compensation and general liability insurance coverage. Contractual obligations that are not
binding agreements, including purchase orders for inventory, are excluded from the table above. Store utility
contracts, including waste disposal agreements, are also excluded.
(3) Other liabilities include amounts accrued for various deferred compensation arrangements. See “Part II, Item
8, Consolidated Financial Statements Note 7 – Defined Contribution Benefit Plans” for a discussion regarding
our employee benefit plans.
Non-current liabilities have been excluded from the above table to the extent that the timing and/or amount of
any cash payment are uncertain. Excluded from this table are approximately $1.2 million of unrecognized tax
benefits, which have been recorded as liabilities in accordance with ASC Topic 740, Income Taxes, as the
timing of such payments cannot be reasonably determined. See “Part II, Item 8, Consolidated Financial
Statements Note 1 – Deferred Rent” for a discussion on our deferred rent liabilities. See “Part II, Item 8,
Consolidated Financial Statements Note 9 – Income Taxes” for a discussion of our unrecognized tax benefits.
Off-Balance Sheet Arrangements
We have not provided any financial guarantees through February 3, 2018. We have not created, and are not
party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or
operating our business. We do not have any arrangements or relationships with entities that are not consolidated
into the financial statements.
Inflation and Other Economic Factors
Our ability to provide quality imported merchandise on a profitable basis may be subject to political and
economic factors and influences that we cannot control. National or international events, including changes in
government trade or other policies, could increase our merchandise costs and other costs that are critical to our
operations. Consumer spending could also decline because of economic pressures. See “Risk Factors.”
We do not believe that inflation has had a material impact on our financial position or results of operations
to date. A high rate of inflation or other increases in the cost of conducting our business in the future may have an
adverse effect on our ability to maintain current levels of gross profit and selling, general and administrative
expenses as a percentage of net sales if the selling prices of our merchandise do not increase with these increased
costs.
- 32 -
Our Critical Accounting Policies
Our critical accounting policies reflected in the consolidated financial statements are detailed below.
Revenue Recognition. We recognize revenue in accordance with the Accounting Standards Codification
(ASC) Topic 605, Revenue Recognition. Sales are recorded net of returns and discounts and exclude sales taxes. We
recognize retail store revenue at the point of sale when the customer takes possession of the merchandise. We
recognize ship-to-home revenue when the order ships. Shipping and handling costs billed to customers are included
in net sales.
Layaways: Customers have the option of paying a down payment and placing merchandise on layaway.
The customer may make further payments in installments, but the entire purchase price must be received by us
within 30 days. The down payment and any installments are recorded as short-term deferred revenue until the
customer pays the entire purchase price for the merchandise.
Customer Orders: Customers may order merchandise available in other Hibbett store locations for pickup
in the selling store at a later date. Customers make a deposit payment with the remaining balance due at pickup.
The deposits are recorded as short-term deferred revenue until the remaining balance is paid and the customer takes
possession of the merchandise.
Customer Loyalty Program: We offer a customer loyalty program, the Hibbett Rewards program, whereby
customers, upon registration, can earn points that convert to reward certificates at defined thresholds. Reward
certificates can be redeemed in our stores or online. An estimate of the obligation related to the program, based on
historical certificate redemption rates, is recorded as a current liability and a reduction of net retail sales in the
period earned by the customer. At February 3, 2018 and January 28, 2017, the amount recorded in other accrued
expenses on our consolidated balance sheet for reward certificates issued was not material.
Gift Cards: Proceeds received from the issuance of our non-expiring gift cards are initially recorded as
deferred revenue. Revenue is subsequently recognized at the time the customer redeems the gift cards and takes
possession of the merchandise. Unredeemed gift cards are recorded in accounts payable on our consolidated balance
sheet.
The net deferred revenue liability for gift cards, customer orders and layaways at February 3, 2018 and
January 28, 2017 was $6.2 million and $5.8 million, respectively, recognized in accounts payable on our
consolidated balance sheet. Income from unredeemed gift cards is recognized on our consolidated statements of
operations as a reduction to store operating, selling and administrative expenses when the likelihood of redemption
becomes remote. We have determined the likelihood of redemption is remote when redemptions are equal to or less
than five percent of the remaining balances of gift cards aged by activation year. Gift card breakage was not
material in Fiscal 2018, Fiscal 2017 or Fiscal 2016.
Inventories. Inventories are valued using the lower of weighted average cost or net realizable value
method. Items are removed from inventory using the weighted average cost method.
Lower of Cost and Net Realizable Value: We regularly review inventories to determine if the carrying
value exceeds net realizable value, and we record an accrual to reduce the carrying value to net realizable value as
necessary. We account for obsolescence as part of our lower of cost and net realizable value accrual based on
historical trends and specific identification. As of February 3, 2018 and January 28, 2017, the accrual was $5.2
million and $5.5 million, respectively. The accrual as of February 3, 2018, includes $0.9 million related to
liquidation of our Team operations. A determination of net realizable value requires significant judgment.
Shrink Reserves: We accrue for inventory shrinkage based on the actual historical results of our physical
inventory counts. These estimates are compared to actual results as physical inventory counts are performed and
reconciled to the general ledger. Physical inventory counts are performed on a cyclical basis. As of February 3,
2018 and January 28, 2017, the accrual was $1.4 million and $1.3 million, respectively.
- 33 -
Inventory Purchase Concentration: Our business is dependent to a significant degree upon close
relationships with our vendors. Our largest vendor, Nike, represented 57.9%, 57.0% and 57.5% of our purchases for
Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively. Our second largest vendor, adidas, represented 11.0% 5.5%
and 4.2% of our purchases for Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively. Our third largest vendor,
Under Armour, represented 10.8%, 16.4% and 15.9% of our purchases for Fiscal 2018, Fiscal 2017 and Fiscal 2016,
respectively.
Accrued Expenses. On a monthly basis, we estimate certain significant expenses in an effort to record
those expenses in the period incurred. Our most significant estimates relate to payroll and payroll tax expenses,
property taxes, insurance-related expenses and utility expenses. Estimates are primarily based on current activity
and historical results and are adjusted as facts change. Determination of estimates and assumptions for accrued
expenses requires significant judgment.
We use a combination of third-party insurance and self-insurance for a number of risks including workers’
compensation, general liability, property liability and employee-related health benefits, a portion of which is paid by
our employees. The estimates and accrual for the liabilities associated with these risks are regularly evaluated for
adequacy based on the most current available information, including historical claims experience and expected
future claim costs.
Income Taxes. We estimate the annual tax rate based on projected taxable income for the full year and
record a quarterly income tax provision in accordance with the anticipated annual rate. As the year progresses, we
refine the estimates of the year’s taxable income as new information becomes available, including year-to-date
financial results. This continual estimation process often results in a change to our expected effective tax rate for the
year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate
occurs so that the year-to-date provision reflects the expected annual tax rate. Significant judgment is required in
determining our effective tax rate and in evaluating our tax position and changes in estimates could materially
impact our results of operations and financial position.
We account for uncertain tax positions in accordance with ASC Subtopic 740-10. The application of
income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous.
As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures.
Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in
our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance
sheets and statements of operations. See “Part II, Item 8, Consolidated Financial Statements Note 9 – Income
Taxes” for additional detail on our uncertain tax positions.
Legal Proceedings and Claims. Estimated amounts for claims that are probable and can be reasonably
estimated are recorded as liabilities in the consolidated balance sheets. The likelihood of a material change in these
estimated accruals is dependent on new claims as they may arise and the favorable or unfavorable outcome of
particular litigation. As additional information becomes available, we assess the potential liability related to pending
litigation and revise estimates as appropriate. Such revisions in estimates of the potential liability could materially
impact our results of operations and financial position. See “Risk Factors.”
Impairment of Long-Lived Assets. We continually evaluate whether events and circumstances have
occurred that indicate the remaining balance of long-lived assets may be impaired and not recoverable. Our policy
is to adjust the remaining useful life of depreciable assets and to recognize any impairment loss on long-lived assets
as a charge to current income when events or changes in circumstances indicate that the carrying value of the assets
may not be recoverable. Impairment is assessed considering the estimated undiscounted cash flows over the asset’s
remaining life. If estimated cash flows are insufficient to recover the investment, an impairment loss is recognized
based on a comparison of the cost of the asset to fair value less any costs of disposition. Evaluation of asset
impairment requires significant judgment and estimates. See “Risk Factors.”
Stock-Based Compensation. We measure stock-based compensation for all share-based awards granted
based on the estimated fair value of those awards at grant date. The cost of restricted stock units and performance-
based restricted stock units is determined using the fair value of our common stock on the date of grant. We use the
Black-Scholes valuation model to estimate the fair value at the date of grant for options granted under our equity
incentive plans and stock purchase rights associated with the Employee Stock Purchase Plan.
- 34 -
Stock-based compensation is expensed over the service period of the awards. Performance-based awards
are expensed based on the probability of achievement of the underlying target, which is estimated and adjusted as
financial results dictate during the performance period. The Black-Scholes valuation model requires the input of
assumptions and estimates which are regularly evaluated and updated when applicable. These include estimating
the length of time vested stock options will be retained before being exercised (expected term), the estimated
volatility of our common stock price over the expected term and the risk-free interest rate based on the annual
continuously compounded risk-free rate with a term equal to the option’s expected term. In addition, prior to Fiscal
2018 and the adoption of Accounting Standard Update 2016-09 – Compensation – Stock Compensation:
Improvements to Employee Share-Based Payment Accounting, we estimated the number of awards that will
ultimately not complete their vesting requirements (forfeitures).
Changes in these assumptions and estimates can materially affect the estimate of fair value of stock-based
compensation and consequently, the related expense recognized on the consolidated statements of operations. Our
stock option grants have a life of up to ten years and are not transferable. Therefore, the actual fair value of a stock
option grant may be different from our estimates. We believe that our estimates incorporate all relevant information
and represent a reasonable approximation in light of the difficulties involved in valuing non-traded stock options.
Leases. We lease all our stores and certain transportation equipment. We evaluate each lease at inception
to determine whether the lease will be accounted for as an operating or capital lease. The term of the lease used for
this evaluation includes renewal option periods only in instances in which the exercise of the renewal option can be
reasonably assured and failure to exercise such option would result in an economic penalty. The majority of our
stores are operating leases.
Many of our operating lease agreements contain rent holidays, rent escalation clauses and/or contingent
rent provisions. We recognize rent expense on a straight-line basis over the expected lease term, including
cancelable option periods where failure to exercise such options would result in an economic penalty. We use a
time period for our straight-line rent expense calculation that equals or exceeds the time period used for depreciation
on leasehold improvements. In addition, the commencement date of the lease term is the earlier of the date when we
become legally obligated for the rent payments or the date when we take possession of the building for initial setup
of fixtures and merchandise.
We make judgments regarding the probable term for each lease, which can impact the classification and
accounting for a lease as capital or operating, the escalations in payments that are taken into consideration when
calculating straight-line rent and the term over which landlord allowances received are amortized. These judgments
may produce materially different amounts of depreciation, amortization and rent expense than would be reported in
a specific period if different assumed lease terms were used.
Dividend Policy
We have never declared or paid any dividends on our common stock. We currently intend to retain our future
earnings to finance the growth and development of our business and for our stock repurchase program, and therefore do
not anticipate declaring or paying cash dividends on our common stock for the foreseeable future. Any future decision
to declare or pay dividends will be at the discretion of our Board of Directors and will be dependent upon our financial
condition, results of operations, capital requirements and such other factors as our Board of Directors deems relevant.
Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer (see “Part II, Item 9A, Controls and
Procedures”).
- 35 -
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Investment and Credit Availability Risk
We manage cash and cash equivalents in various institutions at levels beyond federally insured limits per
institution, and we may purchase investments not guaranteed by the FDIC. Accordingly, there is a risk that we will
not recover the full principal of our investments or that their liquidity may be diminished. In an attempt to mitigate
this risk, our investment policy emphasizes preservation of principal and liquidity.
We also have financial institutions that are committed to provide loans under our revolving credit facilities.
There is a risk that these institutions cannot deliver against these obligations. See “Risk Factors.”
Interest Rate Risk
Our net exposure to interest rate risk results primarily from interest rate fluctuations on our credit facilities,
which bears interest at a rate which varies with LIBOR, prime or federal funds rates. At the end of Fiscal 2018 and
Fiscal 2017, we had no borrowings outstanding under any credit facility.
There were seven days during the 53 weeks ended February 3, 2018, where we incurred borrowings against
our credit facilities for an average and maximum borrowing of $4.1 million and $4.9 million, respectively, and an
average interest rate of 2.78%.
There were 19 days during the 52 weeks ended January 28, 2017, where we incurred borrowings against
our credit facilities for an average borrowing of $6.6 million. During Fiscal 2017, the maximum amount
outstanding against these agreements was $11.8 million and the weighted average interest rate was 2.50%.
Quarterly and Seasonal Fluctuations
We experience seasonal fluctuations in our net sales and results of operations. We typically experience
higher net sales in early spring due to spring sports and annual tax refunds, late summer due to back-to-school
shopping and winter due to holiday shopping. In addition, our quarterly results of operations may fluctuate
significantly as a result of a variety of factors, including the timing of new store openings, the amount and timing of
net sales contributed by new stores, weather fluctuations, merchandise mix, demand for merchandise driven by local
interest in sporting events, and the timing of sales tax holidays and annual income tax refunds.
Although our operations are influenced by general economic conditions, we do not believe that, historically,
inflation has had a material impact on our results of operations as we are generally able to pass along inflationary
increases in costs to our customers.
Item 8. Consolidated Financial Statements and Supplementary Data.
The following consolidated financial statements and supplementary data of our Company are included in
response to this item:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of February 3, 2018 and January 28, 2017
Consolidated Statements of Operations for the fiscal years ended February 3, 2018, January
28, 2017 and January 30, 2016
Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2018, January
28, 2017 and January 30, 2016
Consolidated Statements of Stockholders’ Investment for the fiscal years ended February 3,
2018, January 28, 2017 and January 30, 2016
Notes to Consolidated Financial Statements
All other schedules are omitted because they are not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
- 36 -
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Hibbett Sports, Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Hibbett Sports, Inc. and subsidiaries (the
Company) as of February 3, 2018 and January 28, 2017, the related consolidated statements of operations,
stockholders’ investment, and cash flows for each of the fiscal years in the three-year period ended February 3,
2018, and the related notes (collectively, the consolidated financial statements). We also have audited the
Company’s internal control over financial reporting as of February 3, 2018, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of February 3, 2018 and January 28, 2017, and the results of its operations and
its cash flows for each of the fiscal years in the three-year period ended February 3, 2018, in conformity with U.S.
generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of February 3, 2018, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the
Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.
- 37 -
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
KPMG LLP
We have served as the Company’s auditor since 2002.
Birmingham, Alabama
March 30, 2018
- 38 -
HIBBETT SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share information)
ASSETS
Fe bruary 3, 2018
January 28, 2017
Current Assets:
Cash and cash equivalents
Receivables, net
Inventories, net
Prepaid expenses and other
T otal current assets
Property and Equipment:
Land and buildings
Buildings under capital lease
Equipment
Equipment under capital lease
Furniture and fixtures
Leasehold improvements
Construction in progress
Less accumulated depreciation and amortization
Net property and equipment
Deferred income taxes, net
Other assets, net
T otal Assets
LIABILITIES AND STO C KHO LDERS' INVESTMENT
Current Liabilities:
Accounts payable
Capital lease obligations
Accrued payroll expenses
Deferred rent
Other accrued expenses
T otal current liabilities
Capital lease obligations
Deferred rent
Unrecognized tax benefits
Other liabilities
T otal liabilities
$
73,544
6,599
253,201
13,430
346,774
$
38,958
8,902
280,701
9,703
338,264
28,588
3,652
93,163
1,702
34,892
91,218
4,795
258,010
148,312
109,698
28,396
3,652
84,332
1,407
35,170
87,159
7,300
247,416
135,782
111,634
2,176
3,198
461,846
$
5,285
3,671
458,854
$
$
93,435
663
10,424
5,909
5,136
115,567
$
77,046
595
8,268
5,050
5,113
96,072
2,522
20,291
1,294
2,576
142,250
2,857
21,664
1,401
2,820
124,814
Stockholders' Investment:
Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares
issued
Common stock, $.01 par value, 80,000,000 shares authorized,
38,862,929 and 38,739,079 shares issued at February 3, 2018 and January
28, 2017, respectively
Paid-in capital
Retained earnings
T reasury stock, at cost, 19,910,291 and 17,067,482 shares repurchased
at February 3, 2018 and January 28, 2017, respectively
T otal stockholders' investment
T otal Liabilities and Stockholders' Investment
-
-
389
180,536
731,901
387
174,719
697,658
(593,230)
319,596
461,846
$
(538,724)
334,040
458,854
$
See accompanying notes to consolidated financial statements.
- 39 -
HIBBETT SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
Net sales
Cost of goods sold
Gross margin
Store operating, selling and administrative
expenses
Depreciation and amortization
Operating income
Interest income
Interest expense
Interest expense, net
Income before provision for income taxes
Provision for income taxes
Net income
Basic earnings per share
Diluted earnings per share
Weighted average shares outstanding:
Basic
Diluted
February 3, 2018
(53 weeks)
$
968,219
655,502
312,717
Fiscal Year Ended
January 28, 2017
(52 weeks)
$
972,960
634,364
338,596
January 30, 2016
(52 weeks)
$
943,104
610,389
332,715
231,832
24,207
56,678
39
(270)
(231)
56,447
222,785
19,047
96,764
24
(292)
(268)
96,496
203,673
17,038
112,004
31
(323)
(292)
111,712
$
21,417
35,030
$
35,421
61,075
$
41,184
70,528
$
1.72
$
2.75
$
2.95
$
1.71
$
2.72
$
2.92
20,347
20,450
22,240
22,427
23,947
24,129
See accompanying notes to consolidated financial statements.
- 40 -
HIBBETT SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash Flows From Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Deferred income taxes and unrecognized income tax benefit,
net
Excess tax benefit from stock option exercises
Loss (gain) on disposal and write-down of assets, net
Stock-based compensation
Changes in operating assets and liabilities:
Receivables, net
Inventories, net
Prepaid expenses and other
Other assets
Accounts payable
Deferred rent
Accrued expenses and other
Net cash provided by operating activities
Cash Flows From Investing Activities:
Capital expenditures
Proceeds from sale of property and equipment
Other
Net cash used in investing activities
Cash Flows From Financing Activities:
Cash used for stock repurchases
Net payments on capital lease obligations
Excess tax benefit from stock option exercises
Cash used to settle net share equity awards
Proceeds from options exercised and purchase of shares under
the employee stock purchase plan
Net cash used in financing activities
Fe bruary 3,
2018
(53 weeks)
Fiscal Ye ar Ende d
January 28,
2017
(52 weeks)
January 30,
2016
(52 weeks)
$
35,030
$
61,075
$
70,528
24,207
19,047
17,038
3,488
-
597
3,880
2,303
27,500
(3,074)
185
16,389
(514)
1,935
111,926
(23,081)
288
(107)
(22,900)
(53,794)
(601)
-
(712)
667
(54,440)
1,418
(99)
238
4,592
(1,826)
2,398
(1,712)
351
(11,410)
3,623
980
78,675
(29,733)
154
170
(29,409)
(42,115)
(485)
99
(943)
862
(42,582)
1,285
(900)
(156)
5,198
501
(42,691)
2,186
(443)
4,017
3,228
(1,312)
58,479
(25,147)
298
172
(24,677)
(89,212)
(346)
900
(2,120)
853
(89,925)
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
34,586
38,958
73,544
$
6,684
32,274
38,958
$
(56,123)
88,397
32,274
$
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest
Income taxes, net of refunds
$
261
$
285
$
308
$
15,104
$
35,057
$
42,500
Supplemental Schedule of Non-Cash Activities:
Property and equipment additions under capital leases
$
352
$
342
$
508
See accompanying notes to consolidated financial statements.
- 41 -
HIBBETT SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT
(in thousands)
C ommon Stock
Tre asury Stock
Numbe r of
Share s
38,466
-
Amount
385
$
-
Paid-In
C apital
$
162,675
-
Re taine d
Earnings
566,055
$
70,528
Numbe r of
Share s
13,596
-
162
1
1,753
Balance -January 31, 2015
Net income
Issuance of shares through the
Company's equity plans
Adjustment to income tax benefit
from exercises of employee stock
options
Purchase of shares under the
stock repurchase program
Settlement of net share equity
awards
Stock-based compensation
Balance -January 30, 2016
Net income
Issuance of shares through the
Company's equity plans
Adjustment to income tax benefit
from exercises of employee stock
options
Purchase of shares under the
stock repurchase program
Settlement of net share equity
awards
Stock-based compensation
Balance -January 28, 2017
Net income
Issuance of shares through the
Company's equity plans
Adjustment for adoption of
accounting standard
Purchase of shares under the
stock repurchase program
Settlement of net share equity
awards
Stock-based compensation
Balance -Fe bruary 3, 2018
-
-
-
-
-
636,583
61,075
-
-
-
-
-
697,658
35,030
-
(83)
-
-
5,198
169,543
-
960
(376)
-
-
4,592
174,719
-
665
1,272
(787)
-
-
-
-
38,628
-
111
-
-
-
-
38,739
-
124
-
-
-
-
-
-
386
-
1
-
-
-
-
387
-
2
-
-
Total
Stockholde rs'
Inve stme nt
324,781
$
70,528
1,754
(83)
Amount
$
(404,334)
-
-
-
-
-
2,193
(89,212)
(89,212)
43
-
15,832
-
-
-
(2,120)
-
(495,666)
-
-
-
(2,120)
5,198
310,846
61,075
961
(376)
1,209
(42,115)
(42,115)
26
-
17,067
-
-
-
(943)
-
(538,724)
-
-
-
(943)
4,592
334,040
35,030
667
485
-
-
38,863
-
-
389
$
-
3,880
180,536
$
-
-
-
-
$
731,901
2,818
(53,794)
(53,794)
25
-
19,910
(712)
-
$
(593,230)
(712)
3,880
319,596
$
See accompanying notes to consolidated financial statements.
- 42 -
HIBBETT SPORTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF CRITICAL AND SIGNIFICANT
ACCOUNTING POLICIES
Business
Hibbett Sports, Inc. is a leading athletic-inspired fashion retailer primarily located in small and mid-sized
communities across the country. References to “we,” “our,” “us” and the “Company” refer to Hibbett Sports, Inc.
and its subsidiaries as well as its predecessors. Our fiscal year ends on the Saturday closest to January 31 of each
year. The consolidated statements of operations for Fiscal 2018 include 53 weeks of operations while Fiscal 2017
and Fiscal 2016 include 52 weeks of operations. Our merchandise assortment features a core selection of brand
name merchandise emphasizing athletic footwear, athletic and fashion apparel, team sports equipment and related
accessories. We complement this core assortment with a selection of localized footwear, apparel and accessories
designed to appeal to a wide range of customers within each market.
Principles of Consolidation
The consolidated financial statements of our Company include its accounts and the accounts of all wholly-
owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Occasionally, certain reclassifications are made to conform previously reported data to the current presentation.
Such reclassifications have no impact on total assets, total liabilities, net income or stockholders’ investment in any
of the years presented.
Use of Estimates in the Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with U.S. Generally Accepted
Accounting Principles (U.S. GAAP) requires management to make estimates and assumptions that affect:
the reported amounts of certain assets, including inventories and property and equipment;
the reported amounts of certain liabilities, including legal, tax-related and other accruals; and
the reported amounts of certain revenues and expenses during the reporting period.
The assumptions used by management could change significantly in future estimates due to changes in
circumstances and actual results could differ from those estimates.
Reportable Segments
Given the economic characteristics of the store formats, the similar nature of products offered for sale, the
type of customers, the methods of distribution and how our Company is managed, our operations constitute only one
reportable segment.
Customers
No customer accounted for more than 5.0% of our net sales during the fiscal years ended February 3, 2018,
January 28, 2017 or January 30, 2016.
Vendor Arrangements
We enter into arrangements with some of our vendors that entitle us to a partial refund of the cost of
merchandise purchased during the year or reimbursement of certain costs we incur to advertise or otherwise promote
their product. Volume-based rebates, supported by vendor agreements, are estimated throughout the year and
reduce the cost of inventories and cost of goods sold during the year. This estimate is regularly monitored and
adjusted for current or anticipated changes in purchase levels and for sales activity.
- 43 -
We also receive consideration from vendors through a variety of other programs, including markdown
reimbursements, vendor compliance charges and defective merchandise credits. If the payment is a reimbursement
for costs incurred, it is recognized as an offset against those related costs; otherwise, it is treated as a reduction to the
cost of merchandise. Markdown reimbursements related to merchandise that has been sold are negotiated by our
merchandising teams and are credited directly to cost of goods sold in the period received. If vendor funds are
received prior to merchandise being sold, they are recorded as a reduction of merchandise cost. Vendor compliance
charges and defective merchandise credits reduce the cost of inventories.
Marketing
We expense marketing costs when incurred. We participate in various marketing cooperative programs
with our vendors, who, under these programs, reimburse us for certain costs incurred. A receivable for cooperative
marketing to be reimbursed is recorded as a decrease to expense as advertisements are run.
The following table presents the components of our marketing expense (in thousands):
February 3,
2018
(53 weeks)
Fiscal Year Ended
January 28,
2017
(52 weeks)
January 30,
2016
(52 weeks)
Gross marketing costs
M arketing reimbursements
Net marketing costs
Cost of Goods Sold
$
$
$
13,356
(3,010)
10,346
10,382
(3,319)
7,063
$
$
$
9,983
(2,949)
7,034
We include merchandise costs, store occupancy costs, occupancy and operating costs for our wholesale and
logistics facility and ship-to-home freight in cost of goods sold. Costs associated with moving merchandise to and
between stores are included in store operating, selling and administrative expenses.
Stock Repurchase Program
In November 2015, the Board of Directors authorized a Stock Repurchase Program (2015 Program) of
$300.0 million to repurchase our common stock through February 2, 2019. The 2015 Program replaced an existing
plan that was adopted in November 2012 (2012 Program). Stock repurchases may be made in the open market or in
negotiated transactions, with the amount and timing of repurchases dependent on market conditions and at the
discretion of our management.
Under the 2015 Program, we repurchased 2.8 million shares of our common stock during Fiscal 2018 at a
cost of $54.5 million, including 24,432 shares acquired from holders of restricted stock to satisfy tax withholding
requirements of $0.7 million. Under the 2015 Program, we repurchased 1.2 million shares of our common stock
during Fiscal 2017 at a cost of $43.1 million, including 25,993 shares acquired from holders of restricted stock to
satisfy tax withholding requirements of $0.9 million.
Historically, under all stock repurchase authorizations, we have repurchased a total of 19.9 million shares
of our common stock at an approximate cost of $593.2 million as of February 3, 2018, and had approximately
$204.1 million remaining under the 2015 Program for stock repurchases. Shares acquired from holders of restricted
stock unit awards to satisfy tax withholding requirements do not reduce the authorization.
Cash and Cash Equivalents
We consider all short-term, highly liquid investments with original maturities of 90 days or less, including
commercial paper and money market funds, to be cash equivalents. We are exposed to credit risk in the event of
default by our financial institutions where we maintain deposits to the extent the amount recorded on the
consolidated balance sheet exceeds the FDIC insurance limits per institution. Amounts due from third-party credit
card processors for the settlement of debit and credit card transactions are included as cash equivalents as they are
generally collected within three business days. Cash equivalents related to credit and debit card transactions at
February 3, 2018 and January 28, 2017 were $3.9 million and $3.7 million, respectively.
- 44 -
Investments
We hold certain trading securities as investments in trust for the Hibbett Sports, Inc. Supplemental 401(k)
Plan (Supplemental Plan) and the Hibbett Sports, Inc. Executive Voluntary Deferral Plan (Deferral Plan). At
February 3, 2018, we had $2.9 million of investments of which $0.5 million was included in prepaid expenses and
other and $2.4 million was included in other assets, net. At January 28, 2017, we had $2.7 million of investments of
which $0.1 million was included in prepaid expenses and other and $2.6 million was included in other assets, net.
Net unrealized holding gains for Fiscal 2018 and Fiscal 2017 was $0.3 million and $0.1 million, respectively.
Receivables
Receivables consist primarily of tenant allowances due from landlords and cooperative marketing and other
amounts due from vendors. We analyze receivables for collectability based on aging of individual components,
underlying contractual terms and economic conditions. Recorded amounts are deemed to be collectible.
Inventories
Inventories are valued using the lower of weighted average cost or net realizable value method. Items are
removed from inventory using the weighted average cost method.
Lower of Cost and Net Realizable Value: We regularly review inventories to determine if the carrying
value exceeds net realizable value, and we record an accrual to reduce the carrying value to net realizable value as
necessary. We account for obsolescence as part of our lower of cost and net realizable value accrual based on
historical trends and specific identification. As of February 3, 2018 and January 28, 2017, the accrual was $5.2
million and $5.5 million, respectively. The accrual as of February 3, 2018, includes $0.9 million related to
liquidation of our Team operations. A determination of net realizable value requires significant judgment.
Shrink Reserves: We accrue for inventory shrinkage based on the actual historical results of our physical
inventory counts. These estimates are compared to actual results as physical inventory counts are performed and
reconciled to the general ledger. Physical inventory counts are performed on a cyclical basis. As of February 3,
2018 and January 28, 2017, the accrual was $1.4 million and $1.3 million, respectively.
Inventory Purchase Concentration: Our business is dependent to a significant degree upon close
relationships with our vendors. Our largest vendor, Nike, represented 57.9%, 57.0% and 57.5% of our purchases for
Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively. Our second largest vendor, adidas, represented 11.0% 5.5%
and 4.2% of our purchases for Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively. Our third largest vendor,
Under Armour, represented 10.8%, 16.4% and 15.9% of our purchases for Fiscal 2018, Fiscal 2017 and Fiscal 2016,
respectively.
Property and Equipment
Property and equipment are recorded at cost and include assets acquired through capital leases.
Depreciation on assets is principally provided using the straight-line method over the following estimated service
lives:
Buildings
Leasehold improvements
Furniture and fixtures
Equipment
39 years
3 – 10 years
7 years
3 – 7 years
In the case of leasehold improvements, we calculate depreciation using the shorter of the term of the
underlying leases or the estimated economic lives of the improvements. The term of the lease includes renewal
option periods only in instances in which the exercise of the renewal option can be reasonably assured and failure to
exercise such option would result in an economic penalty. We continually reassess the remaining useful life of
leasehold improvements in light of store closing plans.
- 45 -
Construction in progress has historically been comprised primarily of property and equipment related to
unopened stores and amounts associated with technology upgrades at period-end. At February 3, 2018,
approximately 84.0% of the construction in progress balance was comprised of costs associated with information
technology capital projects, including our new mobile app. The remaining balance consisted of costs associated with
our retail stores and logistics facility.
Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of
assets sold, retired or otherwise disposed of are removed from property and equipment and the related gain or loss is
credited or charged to net income.
Deferred Rent
Deferred rent primarily consists of step rent and allowances from landlords related to our leased properties.
Step rent represents the difference between actual operating lease payments due and straight-line rent expense,
which we record over the term of the lease, including the build-out period. This amount is recorded as deferred rent
in the early years of the lease, when cash payments are generally lower than straight-line rent expense, and reduced
in the later years of the lease when payments begin to exceed the straight-line rent expense. Landlord allowances
are generally comprised of amounts received and/or promised to us by landlords and may be received in the form of
cash or free rent. We record a receivable from the landlord in accordance with the terms of the lease and a deferred
rent liability. This deferred rent is amortized into net income (through lower rent expense) over the term (including
the pre-opening build-out period) of the applicable lease, and the receivable is reduced as amounts are realized from
the landlord.
In our consolidated statements of cash flows, the current and long-term portions of landlord allowances are
included as changes in cash flows from operations. The liability for the current portion of unamortized landlord
allowances was $5.1 million and $4.6 million at February 3, 2018 and January 28, 2017, respectively. The liability
for the long-term portion of unamortized landlord allowances was $15.1 million and $16.4 million at February 3,
2018 and January 28, 2017, respectively. We estimate the non-cash portion of landlord allowances was $1.2 million
and $1.4 million at February 3, 2018 and January 28, 2017, respectively.
Revenue Recognition
We recognize revenue in accordance with the Accounting Standards Codification (ASC) Topic 605,
Revenue Recognition. Sales are recorded net of returns and discounts and exclude sales taxes. We recognize retail
store revenue at the point of sale when the customer takes possession of the merchandise. We recognize ship-to-
home revenue when the order ships. Shipping and handling costs billed to customers are included in net sales.
Layaways: Customers have the option of paying a down payment and placing merchandise on layaway.
The customer may make further payments in installments, but the entire purchase price must be received by us
within 30 days. The down payment and any installments are recorded as short-term deferred revenue until the
customer pays the entire purchase price for the merchandise.
Customer Orders: Customers may order merchandise available in other Hibbett store locations for pickup
in the selling store at a later date. Customers make a deposit payment with the remaining balance due at pickup.
The deposits are recorded as short-term deferred revenue until the remaining balance is paid and the customer takes
possession of the merchandise.
Customer Loyalty Program: We offer a customer loyalty program, the Hibbett Rewards program, whereby
customers, upon registration, can earn points that convert to reward certificates at defined thresholds. Reward
certificates can be redeemed in our stores or online. An estimate of the obligation related to the program, based on
historical certificate redemption rates, is recorded as a current liability and a reduction of net retail sales in the
period earned by the customer. At February 3, 2018 and January 28, 2017, the amount recorded in other accrued
expenses on our consolidated balance sheet for reward certificates issued was not material.
Gift Cards: Proceeds received from the issuance of our non-expiring gift cards are initially recorded as
deferred revenue. Revenue is subsequently recognized at the time the customer redeems the gift cards and takes
possession of the merchandise. Unredeemed gift cards are recorded in accounts payable on our consolidated balance
sheet.
- 46 -
The net deferred revenue liability for gift cards, customer orders and layaways at February 3, 2018 and
January 28, 2017 was $6.2 million and $5.8 million, respectively, recognized in accounts payable on our
consolidated balance sheet. Income from unredeemed gift cards is recognized on our consolidated statements of
operations as a reduction to store operating, selling and administrative expenses when the likelihood of redemption
becomes remote. We have determined the likelihood of redemption is remote when redemptions are equal to or less
than five percent of the remaining balances of gift cards aged by activation year. Gift card breakage was not
material in Fiscal 2018, Fiscal 2017 or Fiscal 2016.
Store Opening and Closing Costs
New store opening costs, including pre-opening costs, are charged to expense as incurred. Store opening
costs primarily include payroll expenses, training costs and straight-line rent expenses. All pre-opening costs are
included in store operating, selling and administrative expenses as a part of operating expenses.
We consider individual store closings to be a normal part of operations and regularly review store
performance against expectations. Costs associated with store closings are recognized at the time of closing or when
a liability has been incurred. These costs were not significant in Fiscal 2018, Fiscal 2017 or Fiscal 2016.
Impairment of Long-Lived Assets
We continually evaluate whether events and circumstances have occurred that indicate the remaining
balance of long-lived assets may be impaired and not recoverable. Our policy is to recognize any impairment loss
on long-lived assets as a charge to current income when certain events or changes in circumstances indicate that the
carrying value of the assets may not be recoverable. Impairment is assessed considering the estimated undiscounted
cash flows over the asset’s remaining life. If estimated cash flows are insufficient to recover the investment, an
impairment loss is recognized based on a comparison of the cost of the asset to fair value less any costs of
disposition. Evaluation of asset impairment requires significant judgment.
Insurance Accrual
We are self-insured for a significant portion of our health insurance. Liabilities associated with the risks
that are retained by us are estimated, in part, by considering our historical claims experience. The estimated accruals
for these liabilities could be affected if future occurrences and claims differ from our assumptions. To minimize our
potential exposure, we carry stop-loss insurance that reimburses us for losses over $0.2 million per covered person
per year. As of February 3, 2018 and January 28, 2017, the accrual for these liabilities was $0.4 million and $0.6
million, respectively, and was included in other accrued expenses in the consolidated balance sheets.
We are also self-insured for our workers’ compensation, property and general liability insurance up to an
established deductible with a cumulative stop-loss on workers’ compensation. As of February 3, 2018 and January
28, 2017, the accrual for these liabilities (which is not discounted) was $0.7 million and was included in other
accrued expenses in the consolidated balance sheets.
Sales Returns
Net sales returns were $43.8 million for Fiscal 2018, $37.8 million for Fiscal 2017 and $34.8 million for
Fiscal 2016. The accrual for the effect of estimated returns was $0.5 million and $0.4 million as of February 3, 2018
and January 28, 2017, respectively, and was included in other accrued expenses in the consolidated balance sheets.
- 47 -
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
Standards that were adopted
In the first quarter of the current fiscal year (Fiscal 2018), we adopted Accounting Standard Update (ASU)
2016-09 – Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting.
Excess income tax benefits and tax deficiencies related to share-based payments are now recognized within income
tax expense in the statement of income, rather than within additional paid-in capital on the balance sheet. The
impact to our results of operations related to ASU 2016-09 in Fiscal 2018 was an increase in the provision for
income taxes of $0.7 million. The future impact on our results of operations will depend in part on the market prices
of our common stock on the dates there are taxable events related to equity awards. We elected to account for
forfeitures of share-based awards as they occur rather than estimate expected forfeitures, with the change being
applied on a modified retrospective basis that resulted in a cumulative effect reduction to retained earnings of $0.8
million as of January 28, 2017.
In July 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-11, Inventory –
Simplifying the Measurement of Inventory, which requires all inventory, other than inventory measured at last-in,
first out (LIFO) or the retail inventory method, to be measured at the lower of cost and net realizable value. This
ASU was effective for fiscal years beginning after December 15, 2016. The adoption of ASU 2015-11 did not have
any impact on our consolidated financial statements.
Standards that are not yet adopted
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU updates
accounting guidance on revenue recognition. In August 2015, the FASB provided a one-year deferral of the
effective date for annual and interim reporting periods beginning after December 15, 2017. We have completed a
scoping analysis of the standard and have identified the revenue streams that will be affected by ASU 2014-09. The
adoption of ASU 2014-09 will result in newly designed processes and internal controls related to:
gift card breakage which will be recognized in proportion to the customer redemption pattern as
opposed to when redemption of the gift card is deemed remote;
the stand-alone benefit received by customers through the Hibbett Rewards customer loyalty
program recorded as a separate performance obligation; and
gross rather than net recognition of our liability for net sales returns.
We will adopt this ASU on the first day of Fiscal 2019 using the modified retrospective method with a
cumulative adjustment to retained earnings. Adoption of the standard will not have a material impact on our
consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02 – Leases, which requires lessees to recognize leases on
the balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-
use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all
leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification
affecting the pattern and classification of expense recognition in the income statement. We expect to adopt ASU
2016-02 in our fiscal year beginning February 3, 2019 (Fiscal 2020), using the modified retrospective transition
approach. Our lease accounting software has been upgraded with ASU 2016-02 functionality.
While we continue to assess the effect of adoption of ASU 2016-02 and the available practical expedients,
we anticipate its implementation will result in recognition of approximately $155.0 million to $185.0 million in net
ROU assets and approximately $180.0 million to $210.0 million in lease liabilities. We do not expect a significant
change in our leasing strategy between now and adoption.
We continuously monitor and review all current accounting pronouncements and standards from the FASB
of U.S. GAAP for applicability to our operations. As of February 3, 2018, there were no other new
pronouncements, interpretations or staff positions that had or were expected to have a significant impact on our
operations.
- 48 -
NOTE 3. STOCK-BASED COMPENSATION
At February 3, 2018, we had four stock-based compensation plans:
(a) The 2015 Equity Incentive Plan (EIP) provides that the Board of Directors (Board) may grant equity
awards to certain employees of the Company at its discretion. The EIP was adopted effective July 1,
2015 and authorizes grants of equity awards of up to 1,000,000 authorized but unissued shares of
common stock. At February 3, 2018, there were 711,073 shares available for grant under the EIP.
(b) The 2015 Employee Stock Purchase Plan (ESPP) allows for qualified employees to participate in the
purchase of up to 300,000 shares of our common stock at a price equal to 85% of the lower of the
closing price at the beginning or end of each quarterly stock purchase period. The ESPP was adopted
effective July 1, 2015. At February 3, 2018, there were 254,795 shares available for purchase under
the ESPP.
(c) The 2015 Director Deferred Compensation Plan (Deferred Plan) allows non-employee directors an
election to defer all or a portion of their fees into stock units or stock options. The Deferred Plan was
adopted effective July 1, 2015 and authorizes grants up to 150,000 authorized but unissued shares of
common stock. At February 3, 2018, there were 135,353 shares available for grant under the Deferred
Plan.
(d) The 2012 Non-Employee Director Equity Plan (DEP) provides for grants of equity awards to non-
employee directors. The DEP was adopted effective May 24, 2012 and authorizes grants of equity
awards of up to 500,000 authorized but unissued shares of common stock. At February 3, 2018, there
were 306,701 shares available for grant under the DEP.
Our plans allow for a variety of equity awards including stock options, restricted stock awards, stock
appreciation rights and performance awards. As of February 3, 2018, we had only granted awards in the form of
stock options, restricted stock units (RSUs) and performance-based units (PSUs) to our employees. The annual
grants made for Fiscal 2018, Fiscal 2017 and Fiscal 2016 to employees consisted solely of RSUs. We have also
awarded PSUs to our Named Executive Officers (NEOs) and expect the Compensation Committee of the Board will
continue to grant PSUs to our NEOs in the future.
As of February 3, 2018, we had only granted awards in the form of stock, stock options and deferred stock
units (DSUs) to our Board members. Under the DEP, Board members currently receive an annual value of $75,000
worth of equity in the form of stock options or RSUs upon election to the Board and a value of $100,000 worth of
equity in any form allowed within the DEP, for each full year of service, pro-rated for Directors who serve less than
one full year. The Chairman of the Board receives an annual value of $150,000 of equity in any form allowed
within the DEP.
The terms and vesting schedules for stock-based awards vary by type of grant and generally vest upon
time-based conditions. Under the DEP, Directors have the option with certain equity forms to set vesting dates.
Upon exercise, stock-based compensation awards are settled with authorized but unissued company stock. All of
our awards are classified as equity awards.
- 49 -
The compensation cost for these plans was as follows (in thousands):
February 3,
2018
(53 weeks)
Fiscal Year Ended
January 28,
2017
(52 weeks)
January 30,
2016
(52 weeks)
Stock-based compensation expense by type:
Stock options
Restricted stock units
Employee stock purchases
Director deferred compensation
Total stock-based compensation expense
Income tax benefit recognized
Stock-based compensation expense, net of income tax
$
$
$
224
3,536
96
24
3,880
1,363
2,517
384
4,010
104
94
4,592
1,655
2,937
391
4,632
105
70
5,198
1,895
3,303
$
$
$
Stock-based and deferred stock compensation expenses are included in store operating, selling and
administrative expenses. There is no capitalized stock-based compensation cost.
The income tax benefit recognized in our consolidated financial statements, as disclosed above, is based on
the amount of compensation expense recorded for book purposes. The actual income tax benefit realized in our
income tax return is based on the intrinsic value, or the excess of the market value over the exercise or purchase
price, of stock options exercised and restricted stock unit awards vested during the period. The actual income tax
benefit realized for the deductions considered on our income tax returns for Fiscal 2018, Fiscal 2017 and Fiscal 2016
was from option exercises and restricted stock unit releases and totaled $0.9 million, $1.2 million and $2.5 million,
respectively.
Stock Options
Stock options are granted with an exercise price equal to the closing market price of our common stock on
the date of grant. Vesting and expiration provisions vary between equity plans, but options granted to employees
under the EIP typically vest over a four or five-year period in equal installments beginning on the first anniversary
of the grant date and typically expire on the eighth or tenth anniversary of the date of grant. Grants awarded to
outside directors under the DEP and Deferred Plan vest immediately upon grant and expire on the tenth anniversary
of the date of grant.
Following is the weighted average fair value of each option granted during Fiscal 2018. The fair value was
estimated on the date of grant using the Black-Scholes pricing model with the following weighted average
assumptions for each period:
Grant date
Exercise price
Weighted average fair value at date of grant
Expected option life (years)
Expected volatility
Risk-free interest rate
Dividend yield
April 29,
2017
M ar 14
$29.75
$8.47
4.46
30.24%
1.99%
None
Quarter Ended
October 28, 2017
Sep 16
$13.85
$4.20
4.46
33.27%
1.73%
None
Sep 30
$14.25
$4.09
3.98
33.38%
1.76%
None
February 3,
2018
Dec 31
$20.40
$6.37
3.98
36.18%
2.08%
None
We calculate the expected term for our stock options based on the historical exercise behavior of our
participants. Historically, an increase in our stock price has led to a pattern of earlier exercise by participants.
Grants made to our Directors have a contractual term of 10 years, while grants made to our employees have a
contractual term of 8 years. We have not awarded a stock option grant to employees since 2009. With the absence
of option grants to employees, we anticipate the expected term will remain relatively stable.
- 50 -
The volatility used to value stock options is based on historical volatility. We calculate historical volatility
using an average calculation methodology based on daily price intervals as measured over the expected term of the
option. We have consistently applied this methodology since our adoption of the provisions of ASC Topic 718,
Stock Compensation.
In accordance with ASC Topic 718, we base the risk-free interest rate on the annual continuously
compounded risk-free rate with a term equal to the option’s expected term. The dividend yield is assumed to be zero
since we have no current plan to declare dividends.
Activity for our option plans during Fiscal 2018 was as follows:
Options outstanding at January 28, 2017
Granted
Exercised
Forfeited, cancelled or expired
Options outstanding at February 3, 2018
Number of
S hares
263,604
41,549
(13,763)
(3,240)
288,150
Weighted
Average
Remaining
Contractual
Term
(Years)
5.11
Aggregate
Intrinsic
Value
($000's)
$
963
5.12
$
324
Weighted
Average
Exercise
Price
$
37.47
22.08
20.44
26.89
36.15
$
Exercisable at February 3, 2018
269,573
$
37.72
4.81
$
161
The weighted average grant-date fair value of options granted during Fiscal 2018, Fiscal 2017 and Fiscal
2016 was $6.42, $10.56 and $16.63, respectively. The compensation expense included in store operating, selling
and administrative expenses and recognized during Fiscal 2018, Fiscal 2017 and Fiscal 2016 was $0.2 million, $0.4
million and $0.4 million, respectively, before the recognized income tax benefit of $0.1 million each year.
The total intrinsic value of stock options exercised during Fiscal 2018, Fiscal 2017 and Fiscal 2016 was
$0.1 million, $0.6 million and $0.2 million, respectively. The total cash received from these stock option exercises
during Fiscal 2018, Fiscal 2017 and Fiscal 2016 was $0.3 million, $0.4 million and $0.4 million, respectively. For
Fiscal 2018, with the adoption of ASU 2016-09, excess income tax proceeds from stock option exercises are no
longer applicable. For Fiscal 2017 and Fiscal 2016, excess income tax proceeds from stock option exercises are
included in cash flows from financing activities as required by ASC Topic 230, Statement of Cash Flows. As of
February 3, 2018, there was approximately $42,000 of total unamortized unrecognized compensation cost related to
stock options. This cost is expected to be recognized over a weighted average period of 0.6 years.
Restricted Stock and Performance-Based Units
RSUs and PSUs are granted with a fair value equal to the closing market price of our common stock on the
date of grant. All PSUs have been awarded in the form of restricted stock units. Compensation expense is recorded
straight-line over the vesting period and, in the case of PSUs, at the estimated percentage of achievement. Restricted
stock unit awards to our employees generally cliff vest in four years from the date of grant for those awards that are
not performance-based. If a Director chooses to receive their annual equity award in stock and he or she defers the
vesting date, then the form of stock is a DSU. PSUs provide for awards based on achievement of certain
predetermined corporate performance goals and cliff vest in three to five years from the date of grant after
achievement of stated performance criterion and upon meeting stated service conditions.
- 51 -
The following table summarizes the restricted stock unit awards activity under all of our plans during Fiscal
2018:
RSUs
PSUs
Totals
We ighte d
Ave rage
Grant-Date
Fair Value
We ighte d
Ave rage
Grant-Date
Fair Value
Numbe r of
Awards
We ighte d
Ave rage
Grant-Date
Fair Value
Numbe r of
Awards
Numbe r of
Awards
299,368
111,790
-
(72,449)
(25,098)
$
46.68
29.75
-
50.91
41.27
95,475
54,900
(9,380)
(8,625)
-
$
44.71
29.30
45.30
54.73
-
394,843
166,690
(9,380)
(81,074)
(25,098)
$
46.20
29.60
45.30
51.31
41.27
313,611
$
40.10
132,370
$
37.55
445,981
$
39.34
Restricted stock unit awards
outstanding at January 28, 2017
Granted
PSU adjustment (1)
Vested
Forfeited, cancelled or expired
Restricted stock unit awards
outstanding at February 3, 2018
(1) PSU adjustment represents the net RSUs awarded to our NEOs above and below their target grants
resulting from the achievement of performance goals above or below the performance targets established at grant.
One goal was achieved at 50% and another goal was achieved at 80% for all performance equity awards released in
Fiscal 2018; therefore, the adjustment was negative.
The weighted average grant date fair value of our RSUs granted was $29.60, $35.12 and $50.48 for Fiscal
2018, Fiscal 2017 and Fiscal 2016, respectively. There were 166,690, 163,643 and 111,705 RSUs awarded during
Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively. The compensation expense included in store operating,
selling and administrative expenses and recognized during Fiscal 2018, Fiscal 2017 and Fiscal 2016 was $3.5
million, $4.0 million and $4.6 million, respectively, before the recognized income tax benefit of $1.3 million, $1.5
million and $1.7 million, respectively.
During Fiscal 2018, RSU awards of 81,074 unit awards, including 8,625 awards that were PSUs, vested
with an intrinsic value of $2.4 million. The total intrinsic value of our RSU awards outstanding and unvested at
February 3, 2018, January 28, 2017 and January 30, 2016 was $9.9 million, $12.9 million and $10.9 million,
respectively. As of February 3, 2018, there was approximately $5.2 million of total unamortized unrecognized
compensation cost related to RSU awards. This cost is expected to be recognized over a weighted average period of
2.3 years.
Employee Stock Purchase Plan
The Company’s ESPP allows eligible employees the right to purchase shares of our common stock, subject
to certain limitations, at 85% of the lesser of the market value at the end of each calendar quarter (purchase date) or
the beginning of each calendar quarter. Our employee purchases of common stock and the average price per share
through the ESPP were as follows:
Fiscal Year Ended
February 3, 2018
January 28, 2017
January 30, 2016
S hares
Purchased
23,555
14,890
12,251
Average
Price Per
S hare
$
$
$
16.36
28.48
33.40
- 52 -
The assumptions used in the option pricing model were as follows:
Weighted average fair value at date of grant
Expected life (years)
Expected volatility
Risk-free interest rate
Dividend yield
February 3,
2018
$4.06
0.25
30.2% - 36.2%
1.19% - 2.48%
None
Fiscal Year Ended
January 28,
2017
$6.98
0.25
30.1% - 32.0%
0.37% - 0.68%
None
January 30,
2016
$9.48
0.25
32.0% - 36.2%
0.02% - 0.09%
None
The expense related to the ESPP was determined using the Black-Scholes option pricing model and the
provisions of ASC Topic 718 as it relates to accounting for certain employee stock purchase plans with a look-back
option. The compensation expense included in store operating, selling and administrative expenses and recognized
during each of Fiscal 2018, Fiscal 2017 and Fiscal 2016 was $0.1 million.
Director Deferred Compensation
Under the Deferred Plan, non-employee directors can elect to defer all or a portion of their Board and
Board Committee fees into cash, stock options or deferred stock units. Those fees deferred into stock options are
subject to the same provisions as provided for in the DEP and are expensed and accounted for accordingly. Director
fees deferred into stock units are calculated and expensed each calendar quarter by taking total fees earned during
the calendar quarter and dividing by the closing price of our common stock on the last day of the calendar quarter,
rounded to the nearest whole share. The total annual retainer, Board and Board Committee fees for non-employee
directors that are not deferred into stock options, but which includes amounts deferred into stock units under the
Deferred Plan, are expensed as incurred in all periods presented. A total of 1,195, 2,542 and 1,812 stock units were
deferred under this plan in Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively. One director has elected to defer
compensation into stock units in calendar 2018.
The compensation expense included in store operating, selling and administrative expenses and recognized
during Fiscal 2018, Fiscal 2017 and Fiscal 2016 was $24,000, $94,000 and $70,000, respectively, before the
recognized income tax benefit of $9,000, $35,000 and $26,000, respectively.
NOTE 4. EARNINGS PER SHARE
The computation of basic earnings per share (EPS) is based on the number of weighted average common
shares outstanding during the period. The computation of diluted EPS is based on the weighted average number of
shares outstanding plus the incremental shares that would be outstanding assuming exercise of dilutive stock options
and issuance of restricted stock. The number of incremental shares is calculated by applying the treasury stock
method. The following table sets forth the computation of basic and diluted earnings per share in thousands:
Net income
Weighted average number of common shares
outstanding
Dilutive stock options
Dilutive restricted stock units
Weighted average number of common shares
outstanding and dilutive shares
February 3,
2018
(53 weeks)
$
35,030
Fiscal Year Ended
January 28,
2017
(52 weeks)
$
61,075
January 30,
2016
(52 weeks)
$
70,528
20,347
5
98
20,450
22,240
40
147
22,427
23,947
35
147
24,129
Basic earnings per share
Diluted earnings per share
$
1.72
$
1.71
$
2.75
$
2.72
$
2.95
$
2.92
- 53 -
In calculating diluted earnings per share for Fiscal 2018, 235,232 options to purchase shares of common
stock outstanding as of the end of the period were excluded in the computations of diluted earnings per share due to
their anti-dilutive effect. In calculating diluted earnings per share for Fiscal 2017, 104,091 options to purchase
shares of common stock outstanding as of the end of the period were excluded in the computations of diluted
earnings per share due to their anti-dilutive effect. In calculating diluted earnings per share for Fiscal 2016, 120,206
options to purchase shares of common stock outstanding as of the end of the period were excluded in the
computations of diluted earnings per share due to their anti-dilutive effect.
We excluded 50,100 nonvested stock awards granted to certain employees from the computation of diluted
weighted average common shares and common share equivalents outstanding, because they are subject to
performance-based annual vesting conditions which had not been achieved by the end of Fiscal 2018. Assuming the
performance criteria had been achieved at target as of February 3, 2018, the incremental dilutive impact would have
been 50,100 shares.
NOTE 5. DEBT
At February 3, 2018, we had two unsecured credit facilities, which are renewable in March and April 2018.
The March facility allows for borrowings up to $30.0 million with an interest rate agreed upon between lender and
borrower at the time loan is made. The April facility allows for borrowings up to $30.0 million at a rate of one
month LIBOR plus 2.5%. Under the provisions of both facilities, we do not pay commitment fees and are not
subject to covenant requirements. There were seven days during the 53 weeks ended February 3, 2018, where we
incurred borrowings against our credit facilities for an average and maximum borrowing of $4.1 million and $4.9
million, respectively, and an average interest rate of 2.78%. At February 3, 2018, a total of $60.0 million was
available to us from these facilities.
Subsequent to February 3, 2018, we renewed one of our $30.0 million facilities which allows for
borrowings up to $30.0 million at a rate agreed upon between lender and borrower at the time loan is made. The
renewal was effective March 22, 2018 and will expire on April 30, 2019.
At January 28, 2017, we had two unsecured credit facilities, which were renewable in August and
November 2017. The August facility allowed for borrowings up to $30.0 million with an interest rate at one month
LIBOR plus 2.0%. The November facility allowed for borrowings up to $50.0 million at a rate of prime plus 2%.
Under the provisions of both facilities, we did not pay commitment fees and were not subject to covenant
requirements. There were 19 days during the fifty-two weeks ended January 28, 2017, where we incurred
borrowings against our credit facilities for an average and maximum borrowing of $6.6 million and $11.8 million,
respectively, and an average interest rate of 2.50%. At January 28, 2017, a total of $80.0 million was available to us
from these facilities.
NOTE 6. LEASES
We have entered into capital leases for certain property and transportation equipment. At February 3, 2018,
total capital lease obligations were $3.2 million, of which $0.7 million was classified as a short-term liability and
included in capital lease obligations and $2.5 million was classified as a long-term liability and included in capital
lease obligations in our consolidated balance sheet. At January 28, 2017, total capital lease obligations were $3.5
million, of which $0.6 million was classified as a short-term liability and included in capital lease obligations and
$2.9 million was classified as a long-term liability and included in capital lease obligations in our consolidated
balance sheet. The cost basis of total assets under capital leases at February 3, 2018 and January 28, 2017 was $5.4
million and $5.1 million, respectively, with accumulated amortization at February 3, 2018 and January 28, 2017 of
$2.7 million and $2.1 million, respectively. Amortization expense related to assets under capital leases was $0.6
million, $0.6 million and $0.5 million in Fiscal 2018, Fiscal 2017 and Fiscal 2016, respectively.
- 54 -
We lease the majority of our stores under operating leases. The leases typically provide for terms of five to
ten years with options to extend at our discretion. Many of our leases contain scheduled increases in annual rent
payments and the majority of our leases also require us to pay maintenance, insurance and real estate taxes.
Additionally, many of the lease agreements contain tenant improvement allowances, rent holidays and/or rent
escalation clauses (contingent rentals) based on net sales for the location. For purposes of recognizing incentives and
minimum rental expenses on a straight-line basis over the terms of the leases, we use the date of initial possession to
begin amortization, which is generally when we enter the space and begin to make improvements in preparation of our
intended use.
Most of our store leases contain provisions that allow for early termination of the lease if certain pre-
determined annual sales levels are not met. Generally, these provisions allow the lease to be terminated between the
third and fifth year of the lease. Should the lease be terminated under these provisions, in some cases, the unamortized
portion of any landlord allowances related to that property would be payable to the landlord.
We also lease certain office equipment and transportation equipment under operating leases having initial
terms of more than one year.
During Fiscal 2018, we opened 44 new stores and increased our lease commitments by a net of 1 store. Of
the 44 new stores, the initial lease termination dates were between October 2022 and January 2025. At February 3,
2018, the future minimum lease payments under capital leases and the present value of such payments, and the
future minimum lease payments under our operating leases, excluding maintenance, insurance and real estate taxes,
were as follows (in thousands):
Fiscal 2019
Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
Thereafter
Total minimum lease payments
Less amount representing interest
Present value of total minimum lease payments
Capital
$
Operating
Total
$
$
889
863
702
460
438
596
3,948
763
3,185
59,596
51,259
41,302
30,558
21,107
36,124
239,946
-
239,946
60,485
52,122
42,004
31,018
21,545
36,720
243,894
763
243,131
$
$
$
Rental expense for all operating leases consisted of the following (in thousands):
M inimum rentals
Contingent rentals
February 3,
2018
(53 weeks)
$
54,337
4,931
59,268
$
Fiscal Year Ended
January 28,
2017
(52 weeks)
$
54,910
4,744
59,654
$
January 30,
2016
(52 weeks)
$
52,538
4,434
56,972
$
NOTE 7. DEFINED CONTRIBUTION BENEFIT PLANS
We maintain the Hibbett Sports, Inc. 401(k) Plan (401(k) Plan) for the benefit of our employees. The
401(k) Plan covers all employees who have completed one year of service. Participants of the 401(k) Plan may
voluntarily contribute from 1% to 100% of their compensation subject to certain yearly dollar limitations as allowed
by law. These elective contributions are made under the provisions of Section 401(k) of the Internal Revenue Code
which allows deferral of income taxes on the amount contributed to the 401(k) Plan. Effective Fiscal 2016, the
Board adopted the Safe Harbor provisions for our 401(k) Plan. For Fiscal 2018, Fiscal 2017 and Fiscal 2016, we
matched 100% of the first 3% of eligible compensation and 50% of the next 3% of eligible compensation for a total
possible match of 4.5% of the first 6% of eligible compensation. Contribution expense incurred under the 401(k)
Plan for Fiscal 2018, Fiscal 2017 and Fiscal 2016 was $1.4 million, $1.4 million and $1.0 million, respectively.
- 55 -
We maintain the Hibbett Sports, Inc. Supplemental 401(k) Plan (Supplemental Plan) for the purpose of
supplementing the employer matching contribution and salary deferral opportunity available to highly compensated
employees whose ability to receive Company matching contributions and defer salary under the 401(k) Plan was
limited because of certain restrictions applicable to qualified plans. The non-qualified deferred compensation
Supplemental Plan allows participants to defer up to 40% of their compensation. Historically, participants received
an employer matching contribution equal to $0.75 for each dollar of compensation deferred, subject to a maximum
of 4.5% of compensation and subject to Board discretion. The matching contribution under the Supplemental Plan
was set by the Board to equal no more than $0.75 for each dollar of compensation deferred under both the 401(k)
Plan and the Supplemental Plan up to 6.0% of compensation. Effective Fiscal 2016, with the adoption of the Safe
Harbor provisions under our 401(k) Plan, contributions to the Supplemental Plan are no longer subject to matching
provisions. There was no contribution expense incurred under the Supplemental Plan for Fiscal 2018 and Fiscal
2017. Contribution expense incurred under the Supplemental Plan for Fiscal 2016 was $19,000. The Supplemental
Plan is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended.
We maintain the Hibbett Sports, Inc. Executive Voluntary Deferral Plan (Voluntary Plan) that provides key
executives of the Company an opportunity to defer, on a pre-tax basis, up to 50% of their base salary and up to
100% of any bonus earned. Participants, at election, determine the date payout is to be made with payout options as
either a lump-sum payout or installment payments over 2 to 10 years. The Voluntary Plan is subject to the
Employee Retirement Income Security Act of 1974, as amended (ERISA) and was effective February 1, 2010 and is
also intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended.
We maintain a Flexible Spending Account Plan (FSA) that allows employees to set aside pre-tax amounts
for out-of-pocket health care and dependent care expenses. The health care FSA is subject to ERISA, whereas the
dependent care FSA is not. Employees are eligible to participate in the FSA upon meeting eligibility requirements
or upon a defined qualifying event, and may enroll annually during an open enrollment period. Plan amounts are
determined annually by the employee in advance and are subject to IRS dollar limitations. Employee elections, in
general, cannot be increased, decreased or discontinued during the election period. Unused amounts at the end of
the plan year are subject to forfeiture and such forfeitures can be used to offset administrative expenses.
NOTE 8. RELATED-PARTY TRANSACTIONS
The Company leases one store under a lease arrangement with AL Florence Realty Holdings 2010, LLC, a
wholly-owned subsidiary of Books-A-Million, Inc., (BAMM). One of our Directors, Terrance G. Finley is an
executive officer of BAMM. Minimum annual lease payments are $0.1 million, if not in co-tenancy, and the lease
termination date is February 2022. In Fiscal 2018, Fiscal 2017 and Fiscal 2016, minimum lease payments were $0.1
million. Minimum lease payments remaining under this lease at February 3, 2018 were $0.5 million.
NOTE 9. INCOME TAXES
A summary of the components of the provision/(benefit) for income taxes is as follows (in thousands):
Federal:
Current
Deferred
State:
Current
Deferred
Provision for income taxes
February 3,
2018
(53 weeks)
$
16,154
3,257
19,411
1,668
338
2,006
21,417
$
January 30,
2016
(52 weeks)
$
36,053
1,188
37,241
3,743
200
3,943
41,184
$
Fiscal Year Ended
January 28,
2017
(52 weeks)
$
31,007
1,359
32,366
3,042
13
3,055
35,421
$
- 56 -
A reconciliation of the statutory federal income tax rate to the effective tax rate as a percentage of income
before provision for income taxes follows:
Tax provision computed at the federal statutory rate
Effect of state income taxes, net of federal benefits
Enactment of the Tax Cuts and Jobs Act
Other, net
February 3,
2018
(53 weeks)
Fiscal Year Ended
January 28,
2017
(52 weeks)
January 30,
2016
(52 weeks)
33.72%
2.50
1.39
0.33
37.94%
35.00%
2.22
N/A
(0.51)
36.71%
35.00%
2.40
N/A
(0.53)
36.87%
With the enactment of the Tax Cuts and Jobs Act (the Act) on December 22, 2017, Fiscal 2018 financial
results include a $0.8 million non-cash increase in income tax expense resulting from revaluing our net deferred tax
assets to reflect the recently enacted 21.0% federal corporate tax rate effective January 1, 2018. These estimates are
based on our initial analysis of the Act and may be adjusted in future periods as required. The Act has significant
complexity, and implementation guidance from the Internal Revenue Service, clarifications of state tax law and the
completion of our tax return filings could all impact these estimates. We do not believe potential adjustments in
future periods would materially impact our financial condition or results of operations. The provisions of the Act
related to foreign earnings do not impact our financial statements.
Deferred income taxes on the consolidated balance sheets result from temporary differences between the
amount of assets and liabilities recognized for financial reporting and income tax purposes. The components of the
deferred income taxes, net, are as follows (in thousands):
Deferred rent
Inventories
Accruals
Stock-based compensation
Other
Total deferred tax assets
Accumulated depreciation and amortization
Prepaid expenses
Accruals
State taxes
Total deferred tax liabilities
Deferred income taxes, net
February 3,
2018
(53 weeks)
6,971
$
3,209
3,616
3,714
49
17,559
(14,395)
(644)
(224)
(120)
(15,383)
2,176
$
January 28,
2017
(52 weeks)
10,298
$
4,953
5,709
4,974
150
26,084
(19,735)
(836)
-
(228)
(20,799)
5,285
$
Deferred tax assets represent items that will be used as a tax deduction or credit in future tax returns or are
items of income that have not been recognized for financial statement purposes but were included in the current or
prior tax returns for which we have already properly recorded the tax benefit in the consolidated statements of
operations. At least quarterly, we assess the likelihood that the deferred tax assets balance will be recovered. We
take into account such factors as prior earnings history, expected future earnings, carryback and carryforward
periods and tax strategies that could potentially enhance the likelihood of a realization of a deferred tax asset. To the
extent recovery is not more likely than not, a valuation allowance is established against the deferred tax asset,
increasing our income tax expense in the year such determination is made. We have determined that no such
allowance is required.
- 57 -
We apply the provisions of ASC Subtopic 740-10 in accounting for uncertainty in income taxes. In
accordance with ASC Subtopic 740-10, we recognize a tax benefit associated with an uncertain tax position when, in
our judgment based on technical merits, it is more likely than not that the position will be sustained upon
examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we
initially and subsequently measure the tax benefit as the largest amount that we judge to have a greater than 50%
likelihood of being realized upon ultimate settlement with a taxing authority. Our liability associated with
unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits,
case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in
which they are identified. Our effective tax rate includes the net impact of changes in the liability for unrecognized
tax benefits and subsequent adjustments as considered appropriate by management.
We file income tax returns in the U.S. federal and various state jurisdictions. A number of years may
elapse before a particular matter for which we have recorded a liability related to an unrecognized tax benefit is
audited and finally resolved. Generally, we are not subject to changes in income taxes by the U.S. federal taxing
jurisdiction for years prior to Fiscal 2015 or by most state taxing jurisdictions for years prior to Fiscal 2014. While
it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe
our liability for unrecognized tax benefits is adequate. Favorable settlement of an unrecognized tax benefit could be
recognized as a reduction in our effective tax rate in the period of resolution. Unfavorable settlement of an
unrecognized tax benefit could increase the effective tax rate and may require the use of cash in the period of
resolution. Our liability for unrecognized tax benefits is generally presented as non-current. However, if we
anticipate paying cash within one year to settle an uncertain tax position, the liability is presented as current.
A reconciliation of the unrecognized tax benefit, excluding estimated interest and penalties, under ASC
Subtopic 740-10 follows (in thousands):
Unrecognized tax benefits - beginning of year
Gross increases - tax positions in prior period
Gross decreases - tax positions in prior period
Gross increases - tax positions in current period
Settlements
Lapse of statute of limitations
Unrecognized tax benefits - end of year
February 3,
2018
(53 weeks)
1,267
$
140
(7)
70
-
(314)
1,156
$
January 28,
2017
(52 weeks)
1,242
$
158
(26)
121
-
(228)
1,267
$
January 30,
2016
(52 weeks)
1,339
$
90
(39)
122
-
(270)
1,242
$
We classify interest and penalties recognized on unrecognized tax benefits as income tax expense. We
have accrued interest and penalties in the amount of $0.1 million as of February 3, 2018, January 28, 2017 and
January 30, 2016, respectively. During Fiscal 2018, Fiscal 2017 and Fiscal 2016, we recorded $4,000, $21,000 and
($5,000), respectively, for the accrual of interest and penalties in the consolidated statement of operations.
Of the unrecognized tax benefits as of February 3, 2018, January 28, 2017 and January 30, 2016, $1.0
million, $0.9 million and $0.9 million, respectively, if recognized, would affect our effective income tax rate.
NOTE 10. COMMITMENTS AND CONTINGENCIES
Annual Bonuses and Equity Incentive Awards
Specified officers and corporate employees of our Company are entitled to annual bonuses, primarily based on
measures of Company operating performance. At February 3, 2018 and January 28, 2017, there was $1.9 million and
$3.3 million, respectively, of annual bonus-related expense included in accrued payroll expenses.
In addition, the Compensation Committee (Committee) of the Board of Directors places performance criteria
on awards of PSUs made in the form of RSUs to our NEOs under the EIP. The performance criteria are tied to
performance targets with respect to future sales and operating income over a specified period of time. These PSUs are
expensed under the provisions of ASC Topic 718 and are evaluated each quarter to determine the probability that the
performance conditions set within will be met. We expect the Committee to continue to place performance criteria on
awards of RSUs to our NEOs in the future.
- 58 -
Legal Proceedings and Other Contingencies
We are a party to various legal proceedings incidental to our business. Where we are able to reasonably
estimate an amount of probable loss in these matters based on known facts, we have accrued that amount as a
current liability on our balance sheet. We are not able to reasonably estimate the possible loss or range of loss in
excess of the amount accrued for these proceedings based on the information currently available to us, including,
among others, (i) uncertainties as to the outcome of pending proceedings (including motions and appeals) and (ii)
uncertainties as to the likelihood of settlement and the outcome of any negotiations with respect thereto. We do not
believe that any of these matters will, individually or in the aggregate, have a material effect on our business or
financial condition. We cannot give assurance, however, that one or more of these proceedings will not have a
material effect on our results of operations for the period in which they are resolved. At February 3, 2018 and
January 28, 2017, we estimated that the liability related to these matters was approximately $0.5 million and $0.1
million, respectively, and accordingly, we accrued $0.5 million and $0.1 million, respectively, as a current liability
in our consolidated balance sheets.
The estimates of our liability for pending and unasserted potential claims do not include litigation costs. It
is our policy to accrue legal fees when it is probable that we will have to defend against known claims or allegations
and we can reasonably estimate the amount of the anticipated expense.
From time to time, we enter into certain types of agreements that require us to indemnify parties against third-
party claims under certain circumstances. Generally, these agreements relate to: (a) agreements with vendors and
suppliers under which we may provide customary indemnification to our vendors and suppliers in respect to actions
they take at our request or otherwise on our behalf; (b) agreements to indemnify vendors against trademark and
copyright infringement claims concerning merchandise manufactured specifically for or on behalf of the Company; (c)
real estate leases, under which we may agree to indemnify the lessors from claims arising from our use of the property;
and (d) agreements with our directors, officers and employees, under which we may agree to indemnify such persons
for liabilities arising out of their relationship with us. We have director and officer liability insurance, which, subject to
the policy’s conditions, provides coverage for indemnification amounts payable by us with respect to our directors and
officers up to specified limits and subject to certain deductibles.
If we believe that a loss is both probable and estimable for a particular matter, the loss is accrued in
accordance with the requirements of ASC Topic 450, Contingencies. With respect to any matter, we could change our
belief as to whether a loss is probable or estimable, or its estimate of loss, at any time.
NOTE 11. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tables set forth certain unaudited consolidated financial data for the quarters indicated (dollar
amounts in thousands, except per share amounts):
Net sales
Gross margin
Operating income (loss)
Net income (loss)
Fiscal Year Ended February 3, 2018
First
(13 weeks)
$
275,688
$
98,218
$
34,168
$
20,910
S econd
(13 weeks)
$
187,958
$
54,408
$
(5,162)
$
(3,176)
Third
(13 weeks)
$
237,834
$
76,113
$
11,787
$
7,564
Fourth
(14 weeks)
$
266,738
$
83,977
$
15,884
$
9,733
Basic earnings per share
Diluted earnings per share
$
$
0.98
0.97
$
$
(0.15)
(0.15)
$
$
0.37
0.37
$
$
0.51
0.51
- 59 -
Net sales
Gross margin
Operating income
Net income
Fiscal Year Ended January 28, 2017
(each 13 weeks)
First
282,092
105,002
44,342
27,906
$
$
$
$
S econd
$
$
$
$
206,933
68,257
10,118
6,510
Third
$
$
$
$
237,006
83,825
23,173
14,604
Fourth
$
$
$
$
246,929
81,512
19,132
12,055
Basic earnings per share
Diluted earnings per share
$
$
1.23
1.22
$
$
0.29
0.29
$
$
0.66
0.66
$
$
0.55
0.54
In the opinion of our management, this unaudited information has been prepared on the same basis as the
audited information. The operating results from any quarter are not necessarily indicative of the results to be
expected for any future period.
NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC Topic 820, Fair Value Measurement, establishes a three-level fair value hierarchy that prioritizes the
inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:
Level I – Quoted prices in active markets for identical assets or liabilities.
Level II – Observable inputs other than quoted prices included in Level I.
Level III – Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
The table below segregates all financial assets and liabilities that are measured at fair value on a recurring
basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to
determine the fair value (in thousands):
Short-term investments
Long-term investments
Total investments
February 3, 2018
Level II
$
-
-
$
-
Level III
$
-
-
$
-
Level I
$
463
2,418
2,881
$
January 28, 2017
Level II
$
-
-
$
-
Level III
$
-
-
$
-
Level I
$
79
2,666
2,745
$
Short-term investments are reported in prepaid expenses and other while long-term investments are
reported in other assets, net, in our consolidated balance sheets.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
(a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be
disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms and that such information is accumulated and
communicated to our management, including the Chief Executive Officer and President (principal executive officer)
and Senior Vice President and Chief Financial Officer (principal financial officer), as appropriate, to allow timely
decisions regarding the required disclosures.
- 60 -
As of February 3, 2018, our management, under the supervision and with the participation of our principal
executive officer and principal financial officer, performed an evaluation of the effectiveness of our disclosure
controls and procedures (as such term is defined in the Rules 13a-15(e) and 15d-15(e) under the Exchange Act).
Based upon this evaluation, our principal executive officer and principal financial officer concluded that our
disclosure controls and procedures were effective as of February 3, 2018.
(b) Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of
our management, including our principal executive officer and principal financial officer, we conducted an evaluation
of the effectiveness of our internal control over financial reporting as of February 3, 2018, based on the Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on our evaluation under the framework in Internal Control – Integrated Framework
(2013), our management concluded that our internal control over financial reporting was effective as of February 3,
2018.
KPMG LLP, our independent registered public accounting firm, has issued an audit report on the Company’s
internal control over financial reporting as of February 3, 2018 included in Item 8 herein.
(c) Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the fourth quarter of Fiscal
2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. Other Information.
None.
PART III
With the exception of the information incorporated by reference from our Proxy Statement for the 2018
Annual Meeting of Stockholders (2018 Proxy Statement) in Items 10, 11, 12, 13 and 14 of Part III of this Annual
Report on Form 10-K, our 2018 Proxy Statement is not to be deemed filed as a part of this Form 10-K.
Item 10. Directors, Executive Officers and Corporate Governance.
The following information required by this item is incorporated by reference from the 2018 Proxy Statement,
which will be filed on or around April 30, 2018:
• Information regarding our directors is found under the heading “The Board of Directors.”
• Information regarding compliance with Section 16 of the Securities Exchange Act of 1934, as amended, is
found under the heading “Section 16(a) Beneficial Ownership Reporting Compliance.”
• Information regarding the Company’s Audit Committee financial expert(s) is found under the heading
“Committees of the Board of Directors - Audit Committee - Audit Committee Financial Experts.”
• Information regarding the members of the Audit Committee is found under the heading “Committees of the
Board of Directors - Audit Committee.”
We have adopted a Code of Business Conduct and Ethics (Code) for all Company employees, including our
Named Executive Officers as determined for our 2018 Proxy Statement. We have also adopted a set of Corporate
Governance Guidelines (Guidelines) and charters for all of our Board Committees, including the Audit Committee,
Compensation Committee and Nominating and Corporate Governance Committee. We intend to make all required
disclosures regarding any amendment to, or a waiver of, a provision of the Code for senior executive and financial
officers as well as any change or amendments to our Guidelines or committee charters by posting such information on
our website. The Code, Guidelines and charters are posted on our website, www.hibbett.com under “Investor
Relations.”
- 61 -
The information concerning our executive officers required by this item is included in Part I of this Form 10-
K under the heading “Our Executive Officers.” Each of our executive officers is elected annually.
Item 11. Executive Compensation.
The following information required by this item is incorporated by reference from the 2018 Proxy Statement:
• Information regarding executive compensation is found under the headings “Compensation Discussion and
Analysis” and “Annual Compensation of Executive Officers.”
• Information regarding the report of the Compensation Committee on executive compensation is found
under the heading “Compensation Committee Report.”
• Information regarding Compensation Committee interlocks is found under the heading “Compensation
Committee Interlocks and Insider Participation.”
• Information regarding director compensation is found under the heading “Compensation of Non-Employee
Directors.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item regarding the stock ownership of directors, executive officers and five
percent beneficial owners is found under the heading “Security Ownership of Certain Beneficial Owners and
Management” in the 2018 Proxy Statement and is incorporated by reference.
The information required by this item regarding equity securities of the Company that are authorized for
issuance under its equity compensation plans is as follows:
Equity Compensation Plan Information (1)
(a)
(b)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(2)
Weighted
average
exercise price
of outstanding
options
(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a)) (3)
735,648
-
735,648
$36.18
-
$36.18
1,407,922
-
1,407,922
Plan Category
Equity compensation plans approved by
security holders
Equity compensation plans not approved by
security holders
TOTAL
(1) Information presented as of February 3, 2018.
(2) Includes 313,611 RSUs and 132,370 PSUs that may be awarded if specified targets and/or service periods
are met. It also includes 1,517 DSUs. The weighted average exercise price of outstanding options does
not include these awards.
(3) Includes 254,795 shares remaining under our ESPP and 135,353 shares remaining under our Deferred
Plan without consideration of shares subject to purchase in the purchasing period ending March 31, 2018.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information regarding related party transactions and director independence required by this item is
found under the headings “Related Person Transactions” and “Our Board of Directors and Corporate Governance
Matters - Director Independence” in the 2018 Proxy Statement and is incorporated by reference.
- 62 -
Item 14. Principal Accounting Fees and Services.
The information regarding principal accountant fees and services required by this item is found under the
headings “Audit Matters - Fees Paid to KPMG LLP” and “Audit Matters - Policy on Audit Committee Pre-Approval of
Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm” in the 2018 Proxy
Statement and is incorporated by reference.
Item 15. Exhibits and Consolidated Financial Statement Schedules.
PART IV
(a) Documents filed as part of this report:
Number
Description
1. Financial Statements.
Page
The following Consolidated Financial Statements and Supplementary Data of the Company
and Independent Registered Public Accounting Firm’s Report on such Consolidated
Financial Statements are included in Part II, Item 8 of this report:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of February 3, 2018 and January 28, 2017
Consolidated Statements of Operations for the fiscal years ended February 3, 2018, January
28, 2017 and, January 30, 2016
Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2018, January
28, 2017 and, January 30, 2016
Consolidated Statements of Stockholders’ Investment for the fiscal years ended February 3,
2018, January 28, 2017 and, January 30, 2016
Notes to Consolidated Financial Statements
36
37
38
39
40
41
2. Financial Statement Schedules.
All schedules for which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are not required under the related instructions or are
not applicable, and therefore have been omitted.
3. Exhibits.
The Exhibits listed below are the exhibits of Hibbett Sports, Inc. and its wholly owned
subsidiaries and are filed as part of, or incorporated by reference into, this report.
Certificates of Incorporation and By-Laws
3.1 Certificate of Incorporation of the Registrant; incorporated herein by reference to Exhibit 3.1
of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May
31, 2012.
3.2 Bylaws of the Registrant, as amended; incorporated herein by reference to Exhibit 3.2 of
the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May
31, 2012.
Form of Stock Certificate
4.1 Form of Stock Certificate; attached as Exhibit 99.1 to the Registrant’s Current Report on
Form 8-K filed on September 26, 2007.
Material Contracts
10.1 Promissory Note – Regions Bank Line of Credit; incorporated herein by reference to
Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on September 5, 2017.
- 63 -
Number
Description
Page
10.2 Amendment No. 10 to Loan Documents; incorporated herein by reference to Exhibit 10.1
of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 21, 2017.
10.3 Promissory Note – Regions Bank Line of Credit; incorporated herein by reference to
Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on December 1, 2017.
10.4 Amended and Restated Demand Note incorporated herein by reference to Exhibit 10.1
of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 26, 2018.
10.5 Hibbett Sports, Inc. 2012 Non-Employee Director Equity Plan; incorporated by reference
as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities
and Exchange Commission on May 31, 2012.
10.6 Hibbett Sports, Inc. Non-Employee Director Non-Qualified Option Agreement (Initial
Grant, Service Requirement); incorporated by reference as Exhibit 10.2 to the Registrant’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on
August 17, 2012.
10.7 Hibbett Sports, Inc. Non-Employee Director Restricted Stock Unit Award Agreement
(Initial Grant, Service Requirement); incorporated by reference as Exhibit 10.3 to the
Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 17, 2012.
10.7 Hibbett Sports, Inc. Non-Employee Director Non-Qualified Option Agreement (Annual
Grant; Fully Vested); incorporated by reference as Exhibit 10.4 to the Registrant’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on August 17,
2012.
10.9 Hibbett Sports, Inc. Non-Employee Director Restricted Stock Unit Award Agreement
(Annual Grant; Fully Vested); incorporated by reference as Exhibit 10.5 to the
Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 17, 2012.
10.10 Amended and Restated Agreement of Lease between Hibbett Sporting Goods, Inc. and
AL Florence Realty Holdings 2010, LLC, dated October 3, 2011; incorporated by
reference as Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 26, 2012.
10.11 Change in Control Severance Agreement; incorporated by reference as Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 24, 2008.
10.12 Executive Restricted Stock Unit Award Agreement; incorporated by reference as Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 11, 2008.
10.13 Hibbett Sports, Inc. 2015 Equity Incentive Plan; incorporated by reference as Exhibit 10.1
to the Registrant’s Registration Statement on Form S-8 filed with the Securities and
Exchange Commission on June 12, 2015.
10.14 Hibbett Sports, Inc. 2016 Executive Officer Cash Bonus Plan; incorporated by reference
as Appendix A to the Registrant’s Definitive Proxy Statement for the 2016 Annual
Meeting of Stockholders filed with the Securities and Exchange Commission on April 21,
2016.
10.15 Hibbett Sports, Inc. Executive Voluntary Deferral Plan; incorporated by reference as
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on November 20, 2009.
10.16 Hibbett Sports, Inc. 2015 Employee Stock Purchase Plan; incorporated by reference as
Exhibit 10.2 to the Registrant’s Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on June 12, 2015.
10.17 Hibbett Sports, Inc. 2015 Director Deferred Compensation Plan; incorporated by
reference as Exhibit 10.3 to the Registrant’s Registration Statement on Form S-8 filed
with the Securities and Exchange Commission on June 12, 2015.
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Number
Description
Page
10.18 Standard Restricted Stock Unit Award Agreement; incorporated by reference as Exhibit 10.2
to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on December 7, 2016.
Subsidiaries of the Registrant
21 List of Company’s Subsidiaries:
1) Hibbett Sporting Goods, Inc., a Delaware Corporation
2) Hibbett Team Sales, Inc., an Alabama Corporation
3) Hibbett Digital Management, LLC, an Alabama Limited Liability Company
4) Gift Card Services, LLC., a Virginia Limited Liability Company
5) Hibbett Wholesale, Inc., an Alabama Corporation
6) Hibbett Holdings, LLC, an Alabama Limited Liability Company
Consents of Experts and Counsel
23.1 Consent of Independent Registered Public Accounting Firm (filed herewith)
Certifications
31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer (filed herewith)
31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer (filed herewith)
32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
67
68
69
70
Interactive Data Files
The following financial information from the Annual Report on Form 10-K for the fiscal
year ended February 3, 2018, formatted in XBRL (eXtensible Business Reporting
Language) and submitted electronically herewith: (i) the Audited Consolidated Balance
Sheets at February 3, 2018 and January 28, 2017; (ii) the Audited Consolidated Statements
of Operations for the fiscal years ended February 3, 2018, January 28, 2017 and January 30,
2016; (iii) the Audited Consolidated Statements of Cash Flows for the fiscal years ended
February 3, 2018, January 28, 2017 and January 30, 2016; (vi) the Audited Statements of
Stockholders’ Investment for the fiscal years ended February 3, 2018, January 28, 2017 and
January 30, 2016; (v) the Notes to Audited Consolidated Financial Statements.
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
* XBRL Instance Document
* XBRL Taxonomy Extension Schema Document
* XBRL Taxonomy Extension Calculation Linkbase Document
* XBRL Taxonomy Extension Definition Linkbase Document
* XBRL Taxonomy Extension Label Linkbase Document
* XBRL Taxonomy Extension Presentation Linkbase Document
* Filed Within
Item 16. Form 10-K summary.
Not applicable.
- 65 -
SIGNATURES.
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
HIBBETT SPORTS, INC.
Date: March 30, 2018
By:
/s/ Scott J. Bowman
Scott J. Bowman
Senior Vice President and Chief Financial
Officer (Principal Financial and Accounting
Officer)
Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Jeffry O. Rosenthal
Jeffry O. Rosenthal
/s/ Scott J. Bowman
Scott J. Bowman
/s/ Michael J. Newsome
Michael J. Newsome
/s/ Anthony F. Crudele
Anthony F. Crudele
/s/ Jane F. Aggers
Jane F. Aggers
/s/ Karen S. Etzkorn
Karen S. Etzkorn
/s/ Terrance G. Finley
Terrance G. Finley
/s/ James A. Hilt
James A. Hilt
/s/ Ralph T. Parks
Ralph T. Parks
/s/ Alton E. Yother
Alton E. Yother
Chief Executive Officer, President and
Director (Principal Executive Officer)
March 30, 2018
Senior Vice President and Chief Financial
Officer (Principal Financial and Accounting
Officer)
March 30, 2018
Chairman of the Board
March 30, 2018
Lead Director
March 30, 2018
March 30, 2018
March 30, 2018
March 30, 2018
March 30, 2018
March 30, 2018
March 30, 2018
Director
Director
Director
Director
Director
Director
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1
AWESOME WEBSITE + SOCIAL MEDIA EXPERIENCE
CORPORATE INFORMATION
Corporate Offices
2700 Milan Court
Birmingham, Alabama 35211
(205) 942-4292
www.hibbett.com
Stock Transfer Agent and Registrar
Computershare Investor Services
P.O. Box 505000
Louisville, Ky 40233-5000
(800) 368-5948
Stockholders seeking information concerning stock
transfers, change of address, and lost certificates should
contact Computershare directly.
Annual Meeting
The 2018 Annual Meeting of Stockholders will be held at the
principal executive offices of Hibbett Sports, Inc., 2700 Milan
Court, Birmingham, Alabama, on Wednesday, May 30, 2018,
at 11:00 A.M., local time.
Company Counsel
Williams Mullen
Washington, D.C.
Independent Registered Public Accounting Firm
KPMG LLP
Birmingham, Alabama
Annual Report on Form 10-K
A copy of the Company’s Annual Report on Form 10-K for
the fiscal year ended February 3, 2018, as filed with the
Securities and Exchange Commission, may be obtained
without charge upon written request to the Company’s
Investor Relations department.
Stock Market Information
The Company’s common stock is traded on the NASDAQ
Global Select Market under the symbol HIBB. The following
table sets forth, for the periods indicated, the high and low
sales prices of shares of the common stock as reported by
NASDAQ:
Fiscal 2018:
Quarter ended April 29, 2017
Quarter ended July 29, 2017
Quarter ended October 28, 2017
Quarter ended February 3, 2018
Fiscal 2017:
Quarter ended April 30, 2016
Quarter ended July 30, 2016
Quarter ended October 29, 2016
Quarter ended January 28, 2017
High
$ 33.70
$ 25.70
$ 15.60
$ 24.95
High
$ 36.37
$ 36.67
$ 41.63
$ 45.80
Low
$ 25.90
$ 15.25
$ 13.40
$ 12.80
Low
$ 32.07
$ 34.92
$ 33.64
$ 32.70
BOARD OF DIRECTORS
Michael J. Newsome
Chairman of the Board,
Hibbett Sports, Inc.
Alton E. Yother
Senior Executive Vice President and
Chief Financial Officer (Retired),
Regions Financial Corporation
Jane F. Aggers
Consultant
Anthony F. Crudele
Lead Director
Executive Vice President, Chief
Financial Officer and Treasurer
(Retired),
Tractor Supply Company
Karen S. Etzkorn
Chief Information Officer,
Qurate Retail Group
Terrance G. Finley
Chief Executive Officer and President,
Books-A-Million, Inc.
OFFICERS
Jeffry O. Rosenthal
Chief Executive Officer, President and
Principal Executive Officer
Jared Briskin
Senior Vice President and
Chief Merchant
Scott J. Bowman
Senior Vice President, Chief Financial
and Principal Accounting Officer
Cathy E. Pryor
Senior Vice President of Operations
James A. Hilt
Executive Vice President,
Chief Marketing and eCommerce Officer,
Express, Inc.
Ralph T. Parks
President,
RT Parks, Inc.
Jeffry O. Rosenthal
Chief Executive Officer, President
and Principal Executive Officer,
Hibbett Sports, Inc.
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2700 MILAN COURT | BIRMINGHAM, AL 35211
2700 MILAN COURT | BIRMINGHAM, AL 35211
205.942.4292 | WWW.HIBBETT.COM
205.942.4292 | WWW.HIBBETT.COM
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