Hibbett Sports Management Discusses Q2 2013 Results - Earnings Call Transcript

Hibbett Sports (HIBB)

Q2 2013 Earnings Call

August 17, 2012 10:00 am ET

Executives

Michael J. Newsome - Executive Chairman

Scott Justin Bowman - Chief Financial Officer and Senior Vice President

Jeffry O. Rosenthal - Chief Executive Officer and President

Rebecca A. Jones - Senior Vice President of Merchandising & Marketing

Analysts

Sean P. Naughton - Piper Jaffray Companies, Research Division

Seth Sigman - Crédit Suisse AG, Research Division

N. Richard Nelson - Stephens Inc., Research Division

Daniel R. Wewer - Raymond James & Associates, Inc., Research Division

Sam Poser - Sterne Agee & Leach Inc., Research Division

David G. Magee - SunTrust Robinson Humphrey, Inc., Research Division

Peter S. Benedict - Robert W. Baird & Co. Incorporated, Research Division

Anthony C. Lebiedzinski - Sidoti & Company, LLC

Camilo R. Lyon - Canaccord Genuity, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Hibbett Sports Second Quarter 2013 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Friday, August 17, 2012.

I would now like to turn the conference over to Mr. Mickey Newsome, Executive Chairman. Please go ahead, sir.

Michael J. Newsome

Thank you. My name is Mickey Newsome. Our CEO and President, Jeff Rosenthal, is with us; our new Senior VP of Finance and CFO, Scott Bowman, is with us; Senior VP of Merchandise and Marketing, Becky Jones; Senior VP of Store Operations, Cathy Pryor.

We appreciate you being on our call today, and we appreciate your interest in Hibbett Sporting Goods.

Before we start, Scott Bowman will cover the Safe Harbor language.

Scott Justin Bowman

Thank you, and good morning. In order for us to take advantage of Safe Harbor rules, I would like to remind you that any projections or statements made today reflect our current views with respect to future events and our financial performance. There is no assurance that such events will occur or that any projections will be achieved. Our actual results could differ materially from any projections due to various risk factors, which are described from time to time in our periodic reports with the SEC.

Michael J. Newsome

Thank you. Now our President and CEO, Jeff Rosenthal, will speak with you.

Jeffry O. Rosenthal

Good morning. As you know from our press release this morning, our second quarter earnings per share were up $0.30 versus $0.21 a year ago, a 43% increase. Overall sales for the second quarter increased 8% to $165.4 million compared to $153.1 million a year ago. Comparable sales increased 4.8%. Comps by month are as follows: May, up 9.21%; June, up 1.91%; July, up 4.09%.

From a real estate perspective, we opened 7 new stores, expanded 3 high-performing stores and closed 5 underperforming stores, bringing the store base to 837 stores in 26 states. We continue to have 400 additional markets identified in our existing 26-state area and can still easily grow to over 1,300 stores. We are on pace to open 55 to 60 new stores and expand approximately 15 high-performing stores. There is no reason that we cannot operate in all states over time.

We have started very strong in comparable sales through yesterday, with sales up mid-single range. With back-to-school pushed back in our 5 largest store states, Alabama, Texas, Arkansas, South Carolina and Oklahoma, we expect even a better result. Our comps have excelled, being up double digits the last 3 days, and we expect more to come. Our company is confident moving forward in the back half of the year by moving our fiscal 2013 guidance to a range of $2.57 to $2.67 per share.

The Hibbett strategy has continued its success, as evidenced by achieving 11 consecutive quarters of comparable store increases. With our investments in our future and the dedication of our employees, we expect to grow for years to come.

Michael J. Newsome

Thank you, Jeff. Next, our Senior Vice President of Merchandise and Marketing will speak with you, Becky Jones.

Rebecca A. Jones

Good morning. Sales trends in the second quarter were driven by double-digit comps in accessories and high-single digit comps in branded and licensed apparel. Our footwear categories performed at a healthy mid-single digit comp, while equipment categories were flat to down slightly.

In branded apparel, bright colored tees and shorts drove top line results in all genders. Under Armour performed very well in all genders and categories. Nike also had a good quarter, with Nike Compression being particularly good. Adidas is experiencing strong growth in the men's and boys' apparel categories. Fashion men's product has been good all year, with Jordan and Adidas Originals driving results. The NBA championship series with Oklahoma City and the Miami Heat contributed to the overall performance of licensed apparel. Our headwear continues to be on a strong trend as well.

The accessory business continues to perform, with sunglasses and socks being the items of choice. We continue to experience high demand for the Elite sock in Nike. Under Armour accessories have been good, and that trend has continued into the third quarter, with backpacks doing quite well.

The running categories across all genders and sizes was the highlight in the footwear area. Nike Free was the top performer. We were quite pleased with the performance of the Under Armour product that landed late in the second quarter. And our sandal business continued to do well on the second quarter, too. Jordan is in high demand, and Retro Jordans are driving traffic. Adidas Originals continues to also pick up market share in our stores.

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