Hibbett Sports 2014 Annual Report Download

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DEDICATED
TO SUCCESS

Table of contents

  • Page 1
    DEDICATED TO SUCCESS

  • Page 2
    ...2014 (52 Weeks) For the Year Net sales Operating income Earnings per basic share(1) Earnings per diluted share(1) $ 851,965 $ 113,891 $ 0002.74 $ 0002.70 Fiscal 2013 (53 Weeks) $ 818,700 $ 115,981 $ 0002.78 $ 0002.72 Balance Sheet Data Cash and cash equivalents Average inventory per store Working...

  • Page 3
    ...a competitive advantage of Hibbett, and we'll look to exploit these expanded capabilities. As we look out over the next several years, store growth will remain a key component of our strategy. We opened 72 new stores in Fiscal 2014 (including our first in Delaware and Pennsylvania), expanded 14 high...

  • Page 4
    ... our plans are in early stages at this point, we would anticipate having more announcements on our omni-channel strategy later in the year. Stay tuned. Over 7,500 associates in our stores, warehousing and logistics center and store support center strive for excellence at Hibbett Sports every day...

  • Page 5
    ...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...

  • Page 6
    ...closing sale price of $61.30 at August 2, 2013 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 15, 2014, was 25,817,480. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Annual Report...

  • Page 7
    ... 14. Directors, Executive Officers and Corporate Governance. Executive Compensation. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Certain Relationships and Related Transactions, and Director Independence. Principal Accounting Fees and Services. 60...

  • Page 8
    ...our expectations concerning future stock-based award types and our expectations concerning employee stock option exercise behavior; the possible effect of inflation, market decline and other economic changes on our costs and profitability, and ability to secure suitable locations for new stores; the...

  • Page 9
    ..., and hired Mickey Newsome, who is now our Chairman of the 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...

  • Page 10
    ...are currently located in enclosed malls or strip centers where a Hibbett Sports store is also present. Team Hibbett Team Sales, Inc. (Team), a wholly-owned subsidiary of the Company, is a supplier of customized athletic apparel, equipment and footwear primarily to school athletic programs in Alabama...

  • Page 11
    ... purchased land in Alabaster, Alabama (a suburb of Birmingham) and have since constructed a new wholesaling and logistics facility to replace our current facility. See "Risk Factors." We believe strong distribution support for our stores is a critical element of our expansion strategy and is central...

  • Page 12
    ... or special events, such as college or professional championships. Our merchandising staff, operations staff and management analyze current sporting goods trends primarily through the gathering and analyzing of daily sales activity available through point-of-sale terminals located in the stores...

  • Page 13
    ... historically served as the foundation of our promotional program and accounted for the majority of our total advertising costs in Fiscal 2014. Other advertising, such as our MVP customer loyalty program, the Hibbett website, social media, Hibbett trucks and outdoor billboards are used to reinforce...

  • Page 14
    ... 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...

  • Page 15
    ... and operating income and we may be unable to achieve our expansion plans for future growth. The opening of new retail stores has contributed significantly to our growth in net sales. In light of the challenging economic environment that has faced real estate developers over the past several years...

  • Page 16
    ... not be adequate to deal with such events in the future. If such events occur in areas in which we have our distribution center 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...

  • Page 17
    ... 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. We cannot guarantee that we will be able to acquire such merchandise at competitive prices or on competitive terms in the future...

  • Page 18
    ... lower our net sales, gross profit and operating income. The business in which we are engaged is highly competitive. The marketplace for sporting goods is highly fragmented as many different retailers compete for market share by utilizing a variety of store formats and merchandising strategies. We...

  • Page 19
    ... 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...

  • Page 20
    The Compensation Committee of our Board of Directors reviews a succession plan prepared by senior management in consideration of the loss of key personnel positions on a regular basis. The goal of the succession plan is to have a contingency plan that minimizes disruptions in the workplace until a ...

  • Page 21
    ...As a result of these and other factors, we face many external risks and internal factors in meeting our labor needs, including competition for qualified personnel, overall unemployment levels, prevailing wage rates, as well as rising employee benefit costs. Changes in any of these factors, including...

  • Page 22
    ... 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 HR compliance training programs to ensure our field managers are...

  • Page 23
    ...Colorado Delaware Florida Georgia Iowa Illinois Indiana Kansas 87 6 42 8 1 49 92 9 26 23 23 Kentucky Louisiana Maryland Minnesota Mississippi Missouri Nebraska New Mexico North Carolina Ohio Oklahoma 56 48 2 1 62 33 9 11 54 20 42 Pennsylvania South Carolina South Dakota Tennessee Texas Utah Virginia...

  • Page 24
    ...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...

  • Page 25
    ..., 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...

  • Page 26
    ... 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...

  • Page 27
    ... 30, 2013 December 1, 2013 to January 4, 2014 January 5, 2014 to February 1, 2014 Total Total Number of S hares Purchased 9,500 5,000 7,000 21,500 Average Price per S hare $ 61.58 $ 64.21 $ 59.76 $ 61.60 (1) In November 2012, the Board of Directors authorized a Stock Repurchase Program of $250...

  • Page 28
    ... 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...

  • Page 29
    ... of customer service. As of February 1, 2014, we operated a total of 927 retail stores in 31 states composed of 910 Hibbett Sports stores and 17 Sports Additions athletic shoe stores. Our primary retail format and growth vehicle is Hibbett Sports, an approximately 5,000-square-foot store located...

  • Page 30
    ...weeks) $ 732.6 12.8% 6.8% $ 59.1 27.3% $ 2.15 Net sales (in millions) Operating income, percentage to net sales Comparable store sales increase Net income (in millions) Net income, percentage (decrease) increase Diluted earnings per share During Fiscal 2014, Hibbett opened 72 new stores and closed...

  • Page 31
    ... Hibbett Sports stores for net stores opened of 54 stores in Fiscal 2014. Stores not in the comparable store net sales calculation accounted for $19.9 million of the increase in net sales. We expanded, remodeled or relocated 17 high performing stores. Store openings and closings are reported net...

  • Page 32
    ... new store openings. Stock-based compensation decreased by 8 basis points as a percentage of net sales due to the achievement of certain performance awards at a lower level than those achieved in the prior year and the expectation of future awards being achieved at less than the goal established...

  • Page 33
    ...of the Work Opportunity Tax Credit program and the resolution of an income tax matter with a state taxing authority in Fiscal 2012. Liquidity and Capital Resources Our capital requirements relate primarily to new store openings, stock repurchases, facilities and systems to support company growth and...

  • Page 34
    ... Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively. Capital expenditures in Fiscal 2014 included our new corporate headquarters, our inventory markdown optimization system and construction costs on our new wholesale and logistics facility. We use cash in investing activities to build new stores...

  • Page 35
    ...common stock during Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively. Financing activities also consisted of proceeds from stock option exercises and employee stock plan purchases and the excess tax benefit from the exercise of incentive stock options. As stock options are exercised and shares...

  • Page 36
    ... are recorded net of returns and discounts and exclude sales taxes. We offer a customer loyalty program, the MVP Rewards program, whereby customers, upon registration, can earn points in a variety of ways, including store purchases, website surveys and other activities on our website. Based on the...

  • Page 37
    ... the balance of gift cards for which we believe the likelihood of redemption by the customer is remote. Based on our analyses of redemption activity, we have determined the likelihood of redemption for gift cards 5 years after the date of initial issuance is remote. For Fiscal 2014, Fiscal 2013 and...

  • Page 38
    ... granted under our equity incentive plans and stock purchase rights associated with the Employee Stock Purchase Plan. 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...

  • Page 39
    ... 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...

  • Page 40
    ... our Company are included in response to this item Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of February 1, 2014 and February 2, 2013 Consolidated Statements of Operations for the fiscal year ended February 1, 2014, February 2, 2013 and January 28, 2012...

  • Page 41
    ... Registered Public Accounting Firm The Board of Directors and Stockholders Hibbett Sports, Inc.: We have audited the accompanying consolidated balance sheets of Hibbett Sports, Inc. and subsidiaries as of February 1, 2014 and February 2, 2013, and the related consolidated statements of operations...

  • Page 42
    HIBBETT SPORTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share information) ASSETS Current Assets: Cash and cash equivalents T rade receivables, net Accounts receivable, other Inventories, net Prepaid expenses and other Deferred income taxes, net T otal ...

  • Page 43
    HIBBETT SPORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) Net sales Cost of goods sold, including distribution center and store occupancy costs Gross profit Store operating, selling and administrative expenses Depreciation and ...

  • Page 44
    ... 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 Net (decrease) increase in cash and cash...

  • Page 45
    ...Balance-February 2, 2013 Net income Issuance of shares through the Company's equity plans, including tax benefit of $4,357 Adjustment to income tax benefit from exercises of employee stock options Purchase of shares under the stock repurchase program Stock-based compensation Balance-February 1, 2014...

  • Page 46
    ... 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 1, 2014, February 2, 2013 and January 28, 2012...

  • Page 47
    ...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 2012, the Board of Directors (Board) authorized a Stock Repurchase Program (2012 Program) of $250.0 million to...

  • Page 48
    ... us from sales to educational institutions for athletic programs. We do not require collateral, and we maintain an allowance for potential uncollectible accounts based on an analysis of the aging of accounts receivable at the date of the financial statements, historical losses and existing economic...

  • Page 49
    ... of store closing plans. Construction in progress has historically been comprised primarily of property and equipment related to unopened stores and costs associated with technology upgrades at period-end. At February 1, 2014, approximately 94% of the construction in progress balance was comprised...

  • Page 50
    ... are recorded net of returns and discounts and exclude sales taxes. We offer a customer loyalty program, the MVP Rewards program, whereby customers, upon registration, can earn points in a variety of ways, including store purchases, website surveys and other activities on our website. Based on the...

  • Page 51
    ... the consolidated financial statements at this time. NOTE 3. STOCK-BASED COMPENSATION At February 1, 2014, we had four stock-based compensation plans: (a) The Amended 2005 Equity Incentive Plan (EIP) provides that the Board of Directors may grant equity awards to certain employees of the Company at...

  • Page 52
    ...rated for Directors who serve less than one full year. The Chairman of the Board, Mr. Newsome, will receive an annual value of $150,000 worth of equity in any form he chooses allowed within the DEP beginning in Fiscal 2015. The terms and vesting schedules for stock-based awards vary by type of grant...

  • Page 53
    ... to be zero since we have no current plan to declare dividends. Activity for our option plans during Fiscal 2014 was as follows: Weighted Average Remaining Contractual Term (Years) 5.29 Options outstanding at February 2, 2013 Granted Exercised Forfeited, cancelled or expired Options outstanding at...

  • Page 54
    ... 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 sets the vesting period in the future, then the form of stock is...

  • Page 55
    ... 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 2014, Fiscal 2013 and Fiscal 2012 was $0.1 million. Director Deferred Compensation...

  • Page 56
    ...-dilutive effect. We excluded 34,550 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...

  • Page 57
    ... 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, including the net 54 lease commitments added during Fiscal 2014, were as follows (in thousands): Capital 619 623 632 632...

  • Page 58
    ...for Fiscal 2014, Fiscal 2013 and Fiscal 2012 was $0.8 million. 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...

  • Page 59
    ... 2012, there were no minimum annual lease payments. Minimum lease payments remaining under this lease at February 1, 2014 were $0.3 million. NOTE 9. INCOME TAXES A summary of the components of the provision/(benefit) for income taxes is as follows (in thousands): Fiscal Year Ended February 2, 2013...

  • Page 60
    ... Deferred income taxes, net $ $ $ $ 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...

  • Page 61
    ... 481(a) adjustment related to fixed and real asset deferred taxes. The accounting rules under ASC 740 treat the release of the regulations as a change in tax law as of the date of issuance and required us to determine the impact on our financial statements for the period ended February 1, 2014. Any...

  • Page 62
    ...Fiscal Year Ended February 1, 2014 S econd Third (13 weeks) (13 weeks) $ 186,235 $ 207,971 $ 63,927 $ 76,488 $ 16,966 $ 27,443 $ 10,542 $ 17,250 $ $ 0.41 0.40 $ $ 0.67 0.66 Net sales Gross profit Operating income Net income Basic earnings per share Diluted earnings per share First (13 weeks) $ 239...

  • Page 63
    ... 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...

  • Page 64
    ... reporting. Item 9B. Other Information. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. We have adopted a Code of Business Conduct and Ethics (Code) for all Company employees, including our Named Executive Officers as determined for our Proxy Statement for the 2014...

  • Page 65
    ... of Certain Beneficial Owners," "Compensation of Non-Employee Directors," "Annual Compensation of Executive Officers" and "Directors and Executive Officers" in the Proxy Statement. Equity Compensation Plan Information (1) (a) Number of securities to be issued upon exercise of outstanding options...

  • Page 66
    ... 15, 2013. Executive Transition Agreement and General Release between Michael J. Newsome and Hibbett Sporting Goods, Inc.; attached as Exhibit 10.3 to this Annual Report on Form 10K. Hibbett Sports, Inc. Non-Employee Director Equity Plan; incorporated by reference as Exhibit 10.2 to the Registrant...

  • Page 67
    ... Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2012. 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...

  • Page 68
    ... following financial information from the Annual Report on Form 10-K for the fiscal year ended February 1, 2014, formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) the Audited Consolidated Balance Sheets at February 1, 2014 and February 2, 2013; (ii...

  • Page 69
    ... Bowman /s/ Michael J. Newsome Michael J. Newsome Title Chief Executive Officer, President and Director (Principal Executive Officer) Date March 31, 2014 Senior Vice President and Chief Financial Officer (Principal Financial Officer) Chairman of the Board March 31, 2014 March 31, 2014 /s/ Alton...

  • Page 70
    ... in the three-year period ended February 1, 2014 and (ii) the effectiveness of internal control over financial reporting as of February 1, 2014, which report appears in the February 1, 2014, Annual Report on Form 10-K of Hibbett Sports, Inc. /s/ KPMG LLP Birmingham, Alabama March 31, 2014 End of...

  • Page 71
    ... information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 31, 2014 /s/ Jeffry O. Rosenthal Jeffry O. Rosenthal President and Chief Executive Officer...

  • Page 72
    ... information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 31, 2014 /s/ Scott J. Bowman Scott J. Bowman Senior Vice President and Chief Financial Officer...

  • Page 73
    ... with the Annual Report on Form 10-K of Hibbett Sports, Inc. and Subsidiaries (the "Company") for the period ended February 1, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Jeffry O. Rosenthal, President and Chief Executive Officer, and Scott...

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  • Page 77
    ... Company's Investor Relations department. Annual Meeting The 2014 Annual Meeting of Stockholders will be held at the principal executive offices of Hibbett Sports, Inc., 2700 Milan Court, Birmingham, Alabama, on Thursday, May 29, 2014, at 11:00 A.M., local time. Stock Market Information The Company...

  • Page 78
    H I B B E T T S P O R T S 2700 Milan Court Birmingham, Alabama 35211 205.942.4292 w w w. h i b b e t t . c o m