hibb-20230729

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 29, 2023


☐			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, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-8159608
(State or other jurisdiction of incorporation or organization)						(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)

NONE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value Per Share	HIBB	Nasdaq Global Select Market

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

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth 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 Exchange Act).

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 31, 2023, 12,394,431 shares of common stock, par value $0.01 per share, were outstanding.

HIBBETT, INC.

INDEX


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Unaudited Condensed Consolidated Balance Sheets	2

	Unaudited Condensed Consolidated Statements of Operations	3

	Unaudited Condensed Consolidated Statements of Cash Flows	4

	Unaudited Condensed Consolidated Statements of Stockholders’ Investment	5

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	21

Item 4.	Controls and Procedures.	21

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings.	22

Item 1A.	Risk Factors.	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	22

Item 5.	Other Information.	22

Item 6.	Exhibits.	23

	Signature	24

Index

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

HIBBETT, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share information)


ASSETS	July 29, 2023		January 28, 2023		July 30, 2022
Current assets:
Cash and cash equivalents	$	33,067	$	16,015	$	28,438
Receivables, net	15,449		12,850		16,495
Inventories, net	430,819		420,839		366,218
Other current assets	23,124		23,351		25,864
Total current assets	502,459		473,055		437,015

Property and equipment, net	174,358		169,476		159,608
Operating right-of-use assets	263,334		263,391		260,932
Finance right-of-use assets, net	2,366		2,279		2,086

Tradename intangible asset	23,500		23,500		23,500
Deferred income taxes, net	2,875		3,025		2,441
Other assets, net	7,974		4,434		3,113
Total assets	$	976,866	$	939,160	$	888,695

LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable	$	133,310	$	190,648	$	140,951
Operating lease obligations	73,700		72,544		73,454
Credit facility	106,897		36,264		88,548
Finance lease obligations	802		1,132		1,015
Accrued payroll expenses	12,776		11,361		11,755
Other accrued expenses	15,977		15,803		16,631
Total current liabilities	343,462		327,752		332,354
Operating lease obligations	229,292		229,388		228,848
Finance lease obligations	1,690		1,305		1,258

Other liabilities	5,112		4,484		3,692
Total liabilities	579,556		562,929		566,152

Stockholders' investment:

Common stock - 40,131,503; 39,916,593; and 39,829,704 shares issued, respectively	401		399		398
Paid-in capital	217,986		213,182		207,678
Retained earnings	1,177,914		1,137,481		1,079,872
Treasury stock, at cost - 27,668,224; 27,166,538; and 27,000,336 shares repurchased, respectively	(998,991)		(974,831)		(965,405)
Total stockholders' investment	397,310		376,231		322,543
Total liabilities and stockholders' investment	$	976,866	$	939,160	$	888,695

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share information)


	13-Weeks Ended								26-Weeks Ended
	July 29, 2023				July 30, 2022				July 29, 2023				July 30, 2022
			% to Sales				% to Sales				% to Sales				% to Sales
Net sales	$	374,877			$	392,805			$	830,374			$	816,857
Cost of goods sold	251,954		67.2	%	257,653		65.6	%	553,832		66.7	%	524,872		64.3	%
Gross margin	122,923		32.8	%	135,152		34.4	%	276,542		33.3	%	291,985		35.7	%
Store operating, selling and administrative expenses	94,867		25.3	%	91,414		23.3	%	190,880		23.0	%	187,011		22.9	%

Depreciation and amortization	12,039		3.2	%	10,926		2.8	%	23,732		2.9	%	21,444		2.6	%
Operating income	16,017		4.3	%	32,812		8.4	%	61,930		7.5	%	83,530		10.2	%
Interest expense, net	1,891		0.5	%	361		0.1	%	3,217		0.4	%	432		0.1	%
Income before provision for income taxes	14,126		3.8	%	32,451		8.3	%	58,713		7.1	%	83,098		10.2	%
Provision for income taxes	3,224		0.9	%	7,738		2.0	%	11,936		1.4	%	19,038		2.3	%
Net income	$	10,902	2.9	%	$	24,713	6.3	%	$	46,777	5.6	%	$	64,060	7.8	%

Basic earnings per share	$	0.86			$	1.91			$	3.68			$	4.89
Diluted earnings per share	$	0.85			$	1.86			$	3.61			$	4.77

Weighted-average shares:
Basic	12,648				12,951				12,719				13,088
Diluted	12,822				13,261				12,967				13,436

Percentages may not foot due to rounding.

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	26-Weeks Ended
	July 29, 2023		July 30, 2022
Cash Flows From Operating Activities:
Net income	$	46,777	$	64,060
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	23,732		21,444
Stock-based compensation	3,382		4,044
Impairment charges	453		131

Other non-cash adjustments	367		5,521
Changes in operating assets and liabilities:
Inventories, net	(9,980)		(144,999)
Receivables, net	(4,531)		(2,888)
Accounts payable	(60,773)		51,029

Other assets and liabilities	1,209		(8,188)
Net cash provided by (used in) operating activities	636		(9,846)

Cash Flows From Investing Activities:
Capital expenditures	(25,657)		(30,495)
Other, net	1,067		758
Net cash used in investing activities	(24,590)		(29,737)

Cash Flows From Financing Activities:
Proceeds under credit facilities	417,926		450,294
Repayments under credit facilities	(347,293)		(361,746)
Stock repurchases	(21,212)		(29,409)

Cash dividends paid to stockholders	(6,339)		(6,500)
Payments of finance lease obligations	(552)		(510)
Proceeds from options exercised and purchase of shares under the employee stock purchase plan	1,424		907
Other, net	(2,948)		(2,069)
Net cash provided by financing activities	41,006		50,967

Net increase in cash and cash equivalents	17,052		11,384
Cash and cash equivalents, beginning of period	16,015		17,054
Cash and cash equivalents, end of period	$	33,067	$	28,438

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders' Investment

(in thousands)


13-Weeks Ended July 29, 2023
	Common Stock							Treasury Stock
	Shares	Amount		Paid-In Capital		Retained Earnings		Shares	Amount		Total Stockholders' Investment
Balance - April 29, 2023	40,120	$	401	$	216,309	$	1,170,180	27,373	$	(987,875)	$	399,015
Net income	—	—		—		10,902		—	—		10,902
Issuance of shares through the Company's equity plans	12	—		300		—		—	—		300
Purchase of shares under the stock repurchase program	—	—		—		—		295	(11,013)		(11,013)

Excise tax on stock repurchases	—	—		—		—		—	(103)		(103)
Cash dividends declared, $0.25 per common share	—	—		—		(3,168)		—	—		(3,168)
Stock-based compensation	—	—		1,377		—		—	—		1,377
Balance - July 29, 2023	40,132	$	401	$	217,986	$	1,177,914	27,668	$	(998,991)	$	397,310


13-Weeks Ended July 30, 2022
	Common Stock							Treasury Stock
	Shares	Amount		Paid-In Capital		Retained Earnings		Shares	Amount		Total Stockholders' Investment
Balance - April 30, 2022	39,780	$	398	$	205,720	$	1,058,383	26,855	$	(958,395)	$	306,106
Net income	—	—		—		24,713		—	—		24,713
Issuance of shares through the Company's equity plans	50	—		369		—		—	—		369

Purchase of shares under the stock repurchase program	—	—		—		—		145	(7,009)		(7,009)

Cash dividends declared, $0.25 per common share	—	—		—		(3,226)		—	—		(3,226)
Stock-based compensation	—	—		1,589		—		—	—		1,589
Balance - July 30, 2022	39,830	$	398	$	207,678	$	1,079,872	27,000	$	(965,405)	$	322,543

Columns may not foot due to rounding.

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders' Investment

(in thousands)


26-Weeks Ended July 29, 2023
	Common Stock							Treasury Stock
	Number of Shares	Amount		Paid-In Capital		Retained Earnings		Number of Shares	Amount		Total Stockholders' Investment
Balance - January 28, 2023	39,917	$	399	$	213,182	$	1,137,481	27,167	$	(974,831)	$	376,231
Net income	—	—		—		46,777		—	—		46,777
Issuance of shares through the Company's equity plans	215	2		1,422		—		—	—		1,424

Purchase of shares under the stock repurchase program	—	—		—		—		455	(21,212)		(21,212)
Settlement of net share equity awards	—	—		—		—		47	(2,833)		(2,833)
Excise tax on stock repurchase	—	—		—		—		—	(115)		(115)
Cash dividends declared, $0.50 per common share	—	—		—		(6,344)		—	—		(6,344)
Stock-based compensation	—	—		3,382		—		—	—		3,382
Balance - July 29, 2023	40,132	$	401	$	217,986	$	1,177,914	27,668	$	(998,991)	$	397,310


26-Weeks Ended July 30, 2022
	Common Stock							Treasury Stock
	Number of Shares	Amount		Paid-In Capital		Retained Earnings		Number of Shares	Amount		Total Stockholders' Investment
Balance - January 29, 2022	39,611	$	396	$	202,729	$	1,022,317	26,318	$	(933,927)	$	291,515
Net income	—	—		—		64,060		—	—		64,060
Issuance of shares through the Company's equity plans	219	2		905		—		—	—		907
Purchase of shares under the stock repurchase program	—	—		—		—		636	(29,409)		(29,409)
Settlement of net share equity awards	—	—		—		—		46	(2,069)		(2,069)
Cash dividends declared, $0.50 per common share	—	—		—		(6,505)		—	—		(6,505)
Stock-based compensation	—	—		4,044		—		—	—		4,044
Balance - July 30, 2022	39,830	$	398	$	207,678	$	1,079,872	27,000	$	(965,405)	$	322,543

Columns may not foot due to rounding.

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation and Critical Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Hibbett, Inc. and its wholly-owned subsidiaries (including the condensed consolidated balance sheet as of January 28, 2023, which has been derived from audited financial statements) have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") for interim financial information and are presented in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. References to “Hibbett,” “we,” “our,” “us,” and the “Company” refer to Hibbett, Inc. and its subsidiaries, as well as its predecessors.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023, filed on March 24, 2023 (the "2023 Annual Report"). The unaudited condensed consolidated financial statements have been prepared on a basis consistent in all material respects with the accounting policies described in the 2023 Annual Report and reflect all adjustments of a normal recurring nature that are, in management’s opinion, necessary for the fair presentation of the results of operations, financial position and cash flows for the periods presented.

Occasionally, certain reclassifications are made to conform previously reported data to the current presentation. Unless otherwise specifically noted, such reclassifications have no impact on total assets, total liabilities, net income, cash flows or stockholders’ investment in any of the periods presented.

Property and Equipment

Property and equipment are recorded at cost. Finance lease assets are shown as right-of-use ("ROU") assets and are excluded from property and equipment (see Note 3, Leases).

Property and equipment consist of the following (in thousands):


	July 29, 2023		January 28, 2023		July 30, 2022
Land	$	7,277	$	7,277	$	7,277
Buildings	22,589		22,529		22,271
Equipment	139,812		134,304		126,118
Furniture and fixtures	69,388		67,522		65,130
Leasehold improvements	185,525		170,773		154,712
Construction in progress	3,909		5,501		5,297
Total property and equipment	428,500		407,906		380,805
Less: accumulated depreciation and amortization	254,142		238,430		221,197
Total property and equipment, net	$	174,358	$	169,476	$	159,608

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers, when control of the merchandise is transferred to our customer at delivery. Sales are recorded net of expected returns at the time the customer takes possession of the merchandise. Net sales exclude sales taxes because we are a pass-through conduit for collecting and remitting these taxes.

Gift Cards and Customer Orders: The net deferred revenue liability for gift cards and customer orders at July 29, 2023, January 28, 2023, and July 30, 2022 was $11.8 million, $9.8 million, and $11.0 million, respectively, recognized in accounts payable on our unaudited condensed consolidated balance sheets.

During the 13-weeks and 26-weeks ended July 29, 2023 and July 30, 2022, gift card deferred revenue realized from prior periods was immaterial.

Index

Loyalty Program: We offer the Hibbett/City Gear Rewards program whereby upon registration and in accordance with the terms of the program, customers earn points on certain purchases. Points convert into rewards at defined thresholds. The short-term future performance obligation liability is estimated at each reporting period based on historical conversion and redemption patterns. The liability is included in other accrued expenses on our unaudited condensed consolidated balance sheets and was $4.1 million, $4.1 million, and $3.7 million at July 29, 2023, January 28, 2023, and July 30, 2022, respectively.

Revenues disaggregated by major product categories are as follows (in thousands):


	13-Weeks Ended				26-Weeks Ended
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Footwear	$	256,828	$	260,924	$	577,362	$	524,577
Apparel	70,066		94,099		158,900		205,280
Equipment	47,983		37,782		94,112		87,000
Total	$	374,877	$	392,805	$	830,374	$	816,857

Indefinite-Lived Intangible Assets

The City Gear tradename is an indefinite-lived asset which is not amortized, but rather tested for impairment at least annually, or on an interim basis if events and circumstances have occurred that indicate that it is more likely than not that an asset is impaired. No impairment related to the tradename intangible was recognized during the 13-weeks and 26-weeks ended July 29, 2023 and July 30, 2022.

2. Recent Accounting Pronouncements

We continuously monitor and review all current accounting pronouncements and standards from the Financial Accounting Standards Board of U.S. GAAP for applicability to our operations and financial reporting. As of July 29, 2023, there were no new pronouncements or interpretations that had or were expected to have a significant impact on our financial reporting.

3. Leases

ROU lease assets are periodically reviewed for impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to evaluate assets and asset groups, including ROU assets, for impairment and to calculate any impairment loss to be recognized. Asset group impairment charges in the 13-weeks and 26-weeks ended July 29, 2023 and July 30, 2022, were immaterial.

Lease costs are as follows (in thousands):


	13-Weeks Ended				26-Weeks Ended
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Operating lease cost	$	20,219	$	19,062	$	40,258	$	37,321
Finance lease cost:
Amortization of assets	265		245		520		481
Interest on lease liabilities	27		29		54		57
Variable lease cost	4,624		4,306		9,692		8,765
	$	25,135	$	23,642	$	50,524	$	46,624

Finance ROU assets on the unaudited condensed consolidated balance sheets at July 29, 2023, January 28, 2023, and July 30, 2022 are shown net of accumulated amortization of $3.8 million, $3.3 million, and $2.8 million, respectively.

Index

The following table provides ROU assets obtained in exchange for lease obligations (in thousands):


	26-Weeks Ended
	July 29, 2023		July 30, 2022




ROU assets obtained in exchange for lease obligations, net:
Operating leases	$	38,696	$	50,939
Finance leases	$	718	$	395

As of July 29, 2023, we have entered into approximately $8.6 million of operating lease obligations related to future store locations that have not yet commenced.

4. Debt

On July 9, 2021, we executed an unsecured Credit Agreement (the "2021 Credit Facility") between the Company and its subsidiaries and Regions Bank, which provided for an unsecured line of credit of up to $100 million. The 2021 Credit Facility was amended on April 7, 2022, to increase the unsecured line of credit to $125 million and replace the original benchmark interest rate of one-month LIBOR plus 1.0% to 1.8% with the Bloomberg Short-Term Bank Yield Index Rate (the “BSBY Rate”) plus 1.0% to 1.8% (depending on specified leverage levels).

On February 28, 2023, we entered into a new unsecured Credit Agreement (the "2023 Credit Facility") with Regions Bank, as administrative agent for the lenders, swingline leader and issuing bank. The 2023 Credit Facility matures on February 28, 2028, and replaced the 2021 Credit Facility and amended certain of its terms and conditions, including the following:

•increases the aggregate principal amount of commitments by $35 million, from $125 million to $160 million, which includes a $25 million sublimit for the issuance of standby letters of credit and $25 million sublimit for swingline loans;

•permits us to increase the aggregate principal amount of commitments by up to an additional $50 million, subject to certain terms and conditions;

•provides that borrowings bear interest at either (i) an annual rate equal to the BSBY Rate, plus an applicable margin ranging from 1.0% to 2.0% depending on specified leverage levels (the "Applicable Margin"), or (ii) at the Company's option, (x) a base rate as set forth in the 2023 Credit Facility plus the Applicable Margin or (y) the BSBY Rate plus the Applicable Margin; and

•adjusts the annual commitment fee to an amount, dependent on the amount of debt outstanding, between 12.5 and 25 basis points of the unused portion of the 2023 Credit Facility, from an amount between 15 and 20 basis points of the unused portion of the 2021 Credit Facility.

Except as described above, the 2023 Credit Facility did not make any material changes to the principal terms of the 2021 Credit Facility, including with respect to financial covenants. As a result, we are subject to certain financial covenants, which include:

•advance limitation of 55% of the net book value of the Company's inventory;

•a Consolidated Lease-Adjusted Leverage Ratio comparing lease-adjusted funded debt (funded debt plus all lease

liabilities) to EBITDAR (as defined in the 2021 Credit Facility) with a maximum of 3.5x; and

•a Consolidated Fixed Coverage Charge Ratio comparing EBITDAR to fixed charges and certain current liabilities (as defined in the 2021 Credit Facility) with a minimum of 1.2x.

As of July 29, 2023, we were in compliance with these covenants.

Activity against our credit facilities during the periods indicated are as follows (dollars in millions):


	July 29, 2023		January 28, 2023	July 30, 2022
	13-Weeks Ended	26-Weeks Ended	52-Weeks Ended	13-Weeks Ended	26-Weeks Ended
Number of days borrowings incurred	91	182	307	91	145
Average borrowings	$117.6	$107.2	$40.8	$59.6	$33.7
Maximum borrowings	$134.1	$134.1	$110.5	$110.0	$110.0
Average interest rate	6.35%	6.08%	3.21%	2.11%	1.89%

Index

At July 29, 2023, we had a balance of $106.9 million and a total of $53.1 million available to us under the 2023 Credit Facility.

5. Stock-Based Compensation

The stock-based compensation costs that have been charged against income were as follows (in thousands):


	13-Weeks Ended				26-Weeks Ended
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Stock-based compensation expense by type:
Stock options	$	—	$	—	$	220	$	155
Restricted stock units	1,268		1,488		2,921		3,613
Employee stock purchases	83		77		189		235
Director deferred compensation	26		24		52		41
Total stock-based compensation expense	1,377		1,589		3,382		4,044
Income tax benefit recognized	263		369		649		926
Stock-based compensation expense, net of income tax	$	1,114	$	1,220	$	2,733	$	3,118

Expense for restricted stock units is shown net of forfeitures, which were immaterial for the 13-weeks and 26-weeks ended July 29, 2023 and July 30, 2022.

We granted the following equity awards:


	13-Weeks Ended		26-Weeks Ended
	July 29, 2023	July 30, 2022	July 29, 2023	July 30, 2022
Stock options	—	—	8,188	7,212
Restricted stock unit awards	—	1,673	78,515	109,521
Performance-based restricted stock unit awards	—	—	39,567	49,978
Deferred stock units	705

SEC Form 10-Q filed by Hibbett Inc.