10-Q 1 hibb-20221029.htm Q3F23 10-Q hibb-20221029
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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 October 29, 2022
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, 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
No
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
No





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).
YesNo
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Shares of common stock, par value $0.01 per share, outstanding as of December 1, 2022, were 12,727,625 shares.




HIBBETT, INC.

1

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)

ASSETSOctober 29,
2022
January 29,
2022
October 30,
2021
Current assets:
Cash and cash equivalents
$25,114 $17,054 $29,749 
Receivables, net
15,170 13,607 13,349 
Inventories, net
404,819 221,219 258,839 
Other current assets
29,577 25,134 22,401 
Total current assets
474,680 277,014 324,338 
Property and equipment, net
165,196 145,967 127,715 
Operating right-of-use assets
266,402 243,751 232,847 
Finance right-of-use assets, net
2,027 2,186 2,137 
Tradename intangible asset23,500 23,500 23,500 
Deferred income taxes, net
2,484 7,187 11,188 
Other assets, net3,081 3,612 3,517 
Total assets$937,370 $703,217 $725,242 
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable
$209,194 $85,647 $116,234 
Operating lease obligations71,649 68,521 61,643 
Credit facility51,657   
Finance lease obligations1,057 975 861 
Accrued payroll expenses
11,550 26,320 18,805 
Other accrued expenses
16,820 13,401 15,009 
Total current liabilities
361,927 194,864 212,552 
Operating lease obligations233,504 212,349 202,568 
Finance lease obligations1,143 1,427 1,505 
Unrecognized tax benefits
357 546 631 
Other liabilities
2,605 2,516 2,501 
Total liabilities
599,536 411,702 419,757 
Stockholders' investment:
Common stock, 39,847,656, 39,611,163 and 39,587,012 shares issued, respectively
398 396 396 
Paid-in capital
209,659 202,729 201,370 
Retained earnings
1,102,243 1,022,317 1,008,066 
Treasury stock, at cost; 27,161,181, 26,317,947 and 25,900,206 shares repurchased, respectively
(974,466)(933,927)(904,347)
Total stockholders' investment
337,834 291,515 305,485 
Total liabilities and stockholders' investment$937,370 $703,217 $725,242 
See notes to unaudited condensed consolidated financial statements.
2


HIBBETT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share information)

13-Weeks Ended39-Weeks Ended
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
% to Sales% to Sales% to Sales% to Sales
Net sales$433,164 $381,719 $1,250,021 $1,307,837 
Cost of goods sold284,434 65.7 %243,023 63.7 %809,306 64.7 %796,028 60.9 %
Gross margin148,730 34.3 %138,696 36.3 %440,715 35.3 %511,809 39.1 %
Store operating, selling and administrative expenses103,510 23.9 %96,324 25.2 %290,520 23.2 %281,328 21.5 %
Depreciation and amortization11,019 2.5 %8,959 2.3 %32,463 2.6 %25,418 1.9 %
Operating income34,201 7.9 %33,413 8.8 %117,732 9.4 %205,063 15.7 %
Interest expense, net467 0.1 %64  %900 0.1 %191  %
Income before provision for income taxes33,734 7.8 %33,349 8.7 %116,832 9.3 %204,872 15.7 %
Provision for income taxes8,161 1.9 %8,157 2.1 %27,199 2.2 %48,218 3.7 %
Net income$25,573 5.9 %$25,192 6.6 %$89,633 7.2 %$156,654 12.0 %
Basic earnings per share$1.99 $1.75 $6.89 $10.13 
Diluted earnings per share$1.94 $1.68 $6.71 $9.74 
Weighted-average shares:
Basic12,837 14,362 13,004 15,460 
Diluted13,202 14,975 13,358 16,082 
Percentages may not foot due to rounding.
See notes to unaudited condensed consolidated financial statements.

3

HIBBETT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
39-Weeks Ended
October 29,
2022
October 30,
2021
Cash Flows From Operating Activities:
Net income$89,633 $156,654 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
32,463 25,418 
Stock-based compensation
5,407 4,373 
Impairment charges346 2,508 
Contingent earnout, net (13,761)
Other non-cash adjustments4,682 2,141 
Changes in operating assets and liabilities:
Inventories, net
(183,600)(56,801)
Receivables, net(1,510)(1,527)
Accounts payable
119,760 6,270 
Income tax payable, net2,697 (1,259)
Other assets and liabilities
(17,478)(12,028)
Net cash provided by operating activities52,400 111,988 
Cash Flows From Investing Activities:
Capital expenditures
(47,463)(43,894)
Other, net
938 913 
Net cash used in investing activities(46,525)(42,981)
Cash Flows From Financing Activities:
Proceeds under credit facilities688,665  
Repayments under credit facilities(637,008) 
Stock repurchases(38,458)(238,327)
Cash used for contingent earnout (1,239)
Cash dividends paid to stockholders(9,699)(7,533)
Payments of finance lease obligations(759)(736)
Proceeds from options exercised and purchase of shares under the employee stock purchase plan
1,525 2,465 
Other, net
(2,081)(3,178)
Net cash provided by (used in) financing activities2,185 (248,548)
Net increase (decrease) in cash and cash equivalents8,060 (179,541)
Cash and cash equivalents, beginning of period
17,054 209,290 
Cash and cash equivalents, end of period
$25,114 $29,749 
See notes to unaudited condensed consolidated financial statements.
4

HIBBETT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Stockholders' Investment
(in thousands)

13-Weeks Ended October 29, 2022
Common Stock
Treasury Stock
Shares
Amount
Paid-In
Capital
Retained
Earnings
Shares
Amount
Total
Stockholders'
Investment
Balance - July 30, 202239,830 $398 $207,678 $1,079,872 27,000 $(965,405)$322,543 
Net income— — — 25,573 — — 25,573 
Issuance of shares through the Company's equity plans18 — 617 — — — 617 
Purchase of shares under the stock repurchase program— — — — 161 (9,049)(9,049)
Settlement of net share equity awards— — — — — (12)(12)
Cash dividends declared, $0.25 per common share
— — — (3,202)— — (3,202)
Stock-based compensation— — 1,364 — — — 1,364 
Balance - October 29, 202239,848 $398 $209,659 $1,102,243 27,161 $(974,466)$337,834 



13-Weeks Ended October 30, 2021
Common Stock
Treasury Stock
Shares
Amount
Paid-In
Capital
Retained
Earnings
Shares
Amount
Total
Stockholders'
Investment
Balance - July 31, 202139,578 $396 $199,713 $986,568 24,473 $(786,498)$400,179 
Net income— — — 25,192 — — 25,192 
Issuance of shares through the Company's equity plans9 — 468 — — — 468 
Purchase of shares under the stock repurchase program— — — — 1,427 (117,850)(117,850)
Cash dividends declared, $0.25 per common share
— — — (3,694)— — (3,694)
Stock-based compensation— — 1,190 — — — 1,190 
Balance - October 30, 202139,587 $396 $201,370 $1,008,066 25,900 $(904,347)$305,485 
Columns may not foot due to rounding.
See notes to unaudited condensed consolidated financial statements.







5

HIBBETT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Stockholders' Investment
(in thousands)

39-Weeks Ended October 29, 2022
Common Stock
Treasury Stock
Number of
Shares
Amount
Paid-In
Capital
Retained
Earnings
Number of
Shares
Amount
Total
Stockholders'
Investment
Balance - January 29, 202239,611 $396 $202,729 $1,022,317 26,318 $(933,927)$291,515 
Net income— — — 89,633 — — 89,633 
Issuance of shares through the Company's equity plans236 2 1,523 — — — 1,525 
Purchase of shares under the stock repurchase program— — — — 797 (38,458)(38,458)
Settlement of net share equity awards— — — — 46 (2,081)(2,081)
Cash dividends declared, $0.75 per common share
— — — (9,707)— — (9,707)
Stock-based compensation— — 5,407 — — — 5,407 
Balance - October 29, 202239,848 $398 $209,659 $1,102,243 27,161 $(974,466)$337,834 


39-Weeks Ended October 30, 2021
Common StockTreasury Stock
Number of
Shares
AmountPaid-In
Capital
Retained
Earnings
Number of
Shares
AmountTotal
Stockholders'
Investment
Balance - January 30, 202139,380 $394 $194,534 $858,951 22,901 $(662,843)$391,036 
Net income— — — 156,654 — — 156,654 
Issuance of shares through the Company's equity plans207 2 2,463 — — — 2,465 
Purchase of shares under the stock repurchase program— — — — 2,954 (238,327)(238,327)
Settlement of net share equity awards— — — — 45 (3,177)(3,177)
Cash dividends declared, $0.50 per common share
— — — (7,540)— — (7,540)
Stock-based compensation— — 4,373 — — — 4,373 
Balance - October 30, 202139,587 $396 $201,370 $1,008,066 25,900 $(904,347)$305,485 
Columns may not foot due to rounding.

See notes to unaudited condensed consolidated financial statements.

6

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 29, 2022, 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 29, 2022, filed on March 25, 2022 (the "2022 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 2022 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. 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). The fixed asset component of asset group impairment charges was not material in any period presented.

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

October 29,
2022
January 29,
2022
October 30,
2021
Land$7,277 $7,277 $7,277 
Buildings22,395 22,247 22,132 
Equipment128,537 119,505 114,295 
Furniture and fixtures66,564 59,137 47,234 
Leasehold improvements162,747 137,279 127,501 
Construction in progress7,579 4,086 4,518 
Total property and equipment395,099 349,531 322,957 
Less: accumulated depreciation and amortization229,903 203,564 195,242 
Total property and equipment, net$165,196 $145,967 $127,715 

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 which is 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 October 29, 2022, January 29, 2022, and October 30, 2021 was $9.9 million, $9.6 million, and $9.2 million, respectively, recognized in accounts payable on our unaudited condensed consolidated balance sheets. 

During the 13-weeks and 39-weeks ended October 29, 2022 and October 30, 2021, gift card deferred revenue realized from prior periods was immaterial.
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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 $3.8 million, $3.7 million, and $3.6 million at October 29, 2022, January 29, 2022, and October 30, 2021, respectively.

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

13-Weeks Ended39-Weeks Ended
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Footwear$294,133 $231,365 $818,706 $824,088 
Apparel93,125 104,598 298,405 346,130 
Equipment45,906 45,756 132,910 137,619 
Total$433,164 $381,719 $1,250,021 $1,307,837 

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 or 39-weeks ended October 29, 2022 and October 30, 2021.

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. As of October 29, 2022, 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. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to test ROU assets (or asset groups that contain one or more ROU assets for impairment), whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize. Asset group impairment charges in the 13-weeks and 39-weeks ended October 29, 2022 and October 30, 2021, were immaterial.

Lease costs are as follows (in thousands):

13-Weeks Ended39-Weeks Ended
October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Operating lease cost$19,285 $16,796 $56,606 $47,357 
Finance lease cost:
Amortization of assets235 224 716 638 
Interest on lease liabilities27 30 84 109 
Variable lease cost4,771 4,264 13,536 15,186 
$24,318 $21,314 $70,942 $63,290 

Finance ROU assets on the unaudited condensed consolidated balance sheets at October 29, 2022, January 29, 2022, and October 30, 2021 are shown net of accumulated amortization of $3.1 million, $2.5 million, and $2.3 million, respectively.

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

39-Weeks Ended
October 29, 2022October 30, 2021
ROU assets obtained in exchange for lease obligations, net:
  Operating leases $73,797 $63,827 
  Finance leases$571 $(452)

As of October 29, 2022, we have entered into approximately $7.6 million of operating lease obligations related to future store locations that have not yet commenced.

4.    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 following table segregates all financial assets and financial 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):

October 29, 2022January 29, 2022October 30, 2021
LevelLevelLevel
IIIIIIIIIIIIIIIIII
Short-term investments$34 $ $ $129 $ $ $129 $ $ 
Long-term investments
1,757   2,352   2,265   
Total investments$1,791 $ $ $2,481 $ $ $2,394 $ $ 

Short-term investments are reported in other current assets on our unaudited condensed consolidated balance sheets. Long-term investments are reported in other assets on our unaudited condensed consolidated balance sheets.

5.    Debt

On July 9, 2021, we executed an unsecured Credit Agreement (the "2021 Credit Facility") between the Company and its subsidiaries and Regions Bank. The 2021 Credit Facility provided an unsecured line of credit of up to $100.0 million. The 2021 Credit Facility is effective through July 9, 2026 with an interest rate of one-month LIBOR plus 1.0% to 1.8% depending on specified leverage levels.

The 2021 Credit Facility includes an annual commitment fee, payable quarterly in arrears, in an amount between 15 and 20 basis points of the unused portion of the line of credit as determined on a daily basis, dependent on the amount of debt outstanding. In addition, the Company is 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.
On April 7, 2022, we executed a First Note Modification Agreement (the "Modification Agreement") between the Company and its subsidiaries and Regions Bank. The Modification Agreement increases the line of credit specified in the 2021 Credit Facility to $125.0 million. The expiration date of July 9, 2026 remained unchanged. The financial covenants included in the 2021 Credit Facility also remained unchanged.
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As of October 29, 2022, we were in compliance with these covenants.
In addition, on April 7, 2022, the Company executed a First Amendment to the 2021 Credit Facility (the “First
Amendment”) and to the Modification Agreement, between the Company and its subsidiaries and Regions Bank. The First Amendment replaces LIBOR as the benchmark rate with the Bloomberg Short-Term Bank Yield (“BSBY”) Index Rate. Pursuant to the First Amendment, the 2021 Credit Facility carries an interest rate of BSBY plus 1.0% to 1.8% depending on specified leverage levels.

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

October 29, 2022January 29, 2022October 30, 2021
13-Weeks Ended39-Weeks Ended52-Weeks Ended13-Weeks Ended39-Weeks Ended
Number of days borrowings incurred9123621NoneNone
Average borrowing$50.6$39.3$2.0$$
Maximum borrowing$94.8$110.0$18.7$$
Average interest rate3.57%2.54%1.35%%%
At October 29, 2022, we had net borrowings of $51.7 million and a total of $73.3 million available to us under the Credit Facility.

6.    Stock-Based Compensation

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

13-Weeks Ended39-Weeks Ended
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Stock-based compensation expense by type:
Stock options
$ $ $155 $174 
Restricted stock units1,269 1,126 4,881 4,005 
Employee stock purchases
69 47 304 156 
Director deferred compensation26 17 67 38 
  Total stock-based compensation expense1,364 1,190 5,407 4,373 
Income tax benefit recognized321 284 1,247 1,047 
  Stock-based compensation expense, net of income tax$1,043 $906 $4,160 $3,326 

Expense for restricted stock units is shown net of forfeitures which were immaterial for the 13-weeks and 39-weeks ended October 29, 2022 and October 30, 2021.
We granted the following equity awards:
13-Weeks Ended39-Weeks Ended
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Stock options
  7,212 4,384 
Restricted stock unit awards
1,469  110,990 62,031 
Performance-based restricted stock unit awards
  49,978 22,492 
Deferred stock units
510 228 1,447 486 

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At October 29, 2022, the total compensation cost not yet recognized related to unvested restricted stock unit awards was $8.8 million and the weighted-average period over which such awards are expected to be recognized was 1.9 years. There were no unrecognized compensation costs related to unvested stock options at October 29, 2022.

No stock options were granted during the 13-weeks ended October 29, 2022 or October 30, 2021. The weighted-average grant date fair value of stock options granted during the 39-weeks ended October 29, 2022 and October 30, 2021 was $21.46 and $39.73 per share, respectively.
Under the Hibbett, Inc. Amended and Restated Non-Employee Director Equity Plan, no shares of our common stock were awarded during the 13-weeks ended October 29, 2022 and 6,388 shares of our common stock were awarded during the 39-weeks ended October 29, 2022. No shares of our common stock were awarded during the 13-weeks or 39-weeks ended October 30, 2021.
The number of shares purchased, the average price per share and the weighted-average grant date fair value of shares purchased through our employee stock purchase plan were as follows:
13-Weeks Ended39-Weeks Ended
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Shares purchased6,408 2,495 28,033 12,003 
Average price per share$38.11 $65.11 $49.30 $47.95 
Weighted-average fair value at grant date$11.41 $22.22 $14.58 $13.68 

7.    Earnings Per Share
The computation of basic earnings per share ("EPS") is based on the weighted-average number of 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 weighted-average number of common shares outstanding (in thousands):
13-Weeks Ended39-Weeks Ended
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Weighted-average shares used in basic computations12,837 14,362 13,004 15,460 
Dilutive equity awards
365 613 354 622 
Weighted-average shares used in diluted computations13,202 14,975 13,358 16,082 
For the 13-weeks ended October 29, 2022, we excluded 21,819 options from the computations of diluted weighted-average common shares or common stock equivalents outstanding because of their anti-dilutive effect. For the 13-weeks ended October 30, 2021, no options were excluded from the computation of diluted weighted-average common shares or common share equivalents.

For the 13-weeks ended October 29, 2022 and October 30, 2021, we also excluded 72,472 and 55,084 unvested stock awards granted to certain employees from the computations of diluted weighted-average common shares and common share equivalents outstanding because they are subject to certain performance-based annual vesting conditions which had not been achieved by October 29, 2022 and October 30, 2021, respectively. Assuming the performance-criteria had been achieved as of October 29, 2022 and October 30, 2021, the incremental impact would have been 14,411 shares and 19,917 shares, respectively.

8.    Stock Repurchase Program
On May 26, 2021, the Board of Directors (the "Board") authorized the expansion and extension of our existing Stock Repurchase Program (the "Repurchase Program") by $500.0 million to a total of $800.0 million to repurchase our common stock through February 1, 2025. The Repurchase Program's original authorization was approved in November 2015 in the amount of $300.0 million and, prior to the Board's action, was scheduled to expire on January 29, 2022.
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The number of shares repurchased under the Repurchase Program and acquired from holders of restricted stock unit awards to satisfy tax withholding requirements were as follows (dollars in thousands):
13-Weeks Ended39-Weeks Ended
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Common stock repurchased under the Repurchase Program160,637 1,427,314 797,033 2,953,860 
Aggregate cost of repurchases under the Repurchase Program$9,049 $117,850 $38,458 $238,327 
Shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements208  46,201 45,245 
Tax withholding requirement from holders of restricted stock unit awards$12 $ $2,081 $3,177 

As of October 29, 2022, we had approximately $330.1 million remaining under the Repurchase Program for stock repurchases.
9.    Dividends

In June 2021, the Board instituted a recurring quarterly cash dividend with the first cash dividend made on July 20, 2021. During the 13-weeks ended October 29, 2022, we paid cash dividends of $3.2 million under one declaration of $0.25 per share of common stock outstanding as of the record date. During the 39-weeks ended October 29, 2022, we paid cash dividends of $9.7 million under three declarations for a total of $0.75 per share of common stock outstanding as of the record dates.

During the 13-weeks ended October 30, 2021, we paid cash dividends of $3.7 million under one declaration of $0.25 per share of common stock outstanding as of the record date. During the 39-weeks ended October 30, 2021, we paid cash dividends of $7.5 million under two declarations for a total of $0.50 per share of common stock outstanding as of the record date.

While we currently pay a quarterly dividend of $0.25 per share and expect to pay comparable cash dividends in the future, the declaration of dividends and the establishment of the per share amount, record dates and payment dates for any future dividends are subject to the final determination of our Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as our Board deems relevant. There can be no assurance that we will continue to declare dividends in any particular amounts or at all, and changes in our dividend policy could adversely affect the market price of our common stock.

Subsequent to October 29, 2022, on November 22, 2022, the Board declared a cash dividend of $0.25 per common share, payable on December 20, 2022, to stockholders of record at the close of business on December 8, 2022. The estimated payment is expected to be $3.2 million.

10.    Commitments and Contingencies
Legal Proceedings and Contingencies.

From time to time, the Company is a party to various legal matters in the ordinary course of its business, including actions by employees, consumers, suppliers, government agencies or others. The Company has recorded accruals with respect to these matters, where appropriate, which are reflected in the Company's unaudited condensed consolidated financial statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made.

The Company believes that its pending legal matters, both individually and in the aggregate, will be resolved without a material adverse effect on the Company's consolidated financial statements as a whole. However, litigation and other legal matters involve an element of uncertainty. Adverse decisions and settlements, including any required changes to the Company's business, or other developments in such matters could affect our operating results in future periods or result in a liability or other amounts material to the Company's annual consolidated financial statements. No material amounts were accrued at October 29, 2022, January 29, 2022, or October 30, 2021 pertaining to legal proceedings or other contingencies.

11.    Income Taxes
Our effective tax rate is based on expected annual income, statutory tax rates, and tax planning opportunities available in the various jurisdictions in which we operate. For interim financial reporting, we estimate the annual effective tax rate based on
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expected taxable income or loss for the full year and record a quarterly income tax provision (benefit) in accordance with the anticipated annual effective rate and adjust for discrete items. We update the estimates of the taxable income or loss throughout the year as new information becomes available, including year-to-date financial results. This process often results in a change to our expected effective tax rate for the year. When this occurs, we adjust the income tax provision (benefit) during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual effective tax rate.
We apply the provisions of ASC Subtopic 740-10 in accounting for uncertainty in income taxes. We recognize a tax benefit associated with an uncertain tax position when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. 
At October 29, 2022, January 29, 2022, and October 30, 2021, the liability associated with unrecognized tax benefits was immaterial. We file income tax returns in U.S. federal and various state jurisdictions. Generally, we are not subject to changes in income taxes by the U.S. federal taxing jurisdiction for years prior to Fiscal 2020 or by most state taxing jurisdictions for years prior to Fiscal 2019.

12.    Related-Party Transactions
The Company leases one store under a lease arrangement with Preferred Growth Properties, LLC, a wholly owned subsidiary of Books-A-Million, Inc. ("BAMM"). One of our Directors 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 28, 2027. Minimum lease payments remaining under the lease at October 29, 2022 and October 30, 2021 were immaterial.
T.I.G. Management, LLC ("TIG")

TIG performs certain new store and store remodel construction for the Company and is owned by a close relative of the Company's President and CEO. For the 13-weeks ended October 29, 2022 and October 30, 2021, payments to TIG for its services were $3.1 million and $1.8 million, respectively. For the 39-weeks ended October 29, 2022 and October 30, 2021, payments to TIG for its services were $8.3 million and $4.4 million, respectively. The amount outstanding to TIG, included in accounts payable on our unaudited condensed consolidated balance sheets at October 29, 2022, January 29, 2022, and October 30, 2021, was immaterial.

Retail Security Gates, LLC ("RSG")

RSG provides specially manufactured store front security gates and is 50% owned by a close relative of the Company's President and CEO. For the 13-weeks ended October 29, 2022 and October 30, 2021, payments to RSG were $0.3 million and $0.1 million, respectively. For the 39-weeks ended October 29, 2022 and October 30, 2021, payments to RSG were $0.8 million and $0.2 million, respectively. The amount outstanding to RSG, included in accounts payable on our unaudited condensed consolidated balance sheets at October 29, 2022, January 29, 2022 and October 30, 2021, was immaterial.

Our President and CEO also had a membership interest in a contingent earnout (the "Earnout") related to the acquisition of City Gear based on City Gear's achievement of an EBITDA threshold for the 52-weeks ended January 30, 2021. The Earnout was in addition to the aggregate consideration payable to the sellers of City Gear, LLC in November 2018. Pursuant to the Membership Interest and Warrant Purchase Agreement dated October 29, 2018, and based on Fiscal 2021 financial results, the former members and warrant holders of City Gear were entitled to and were paid the Earnout payment of $15.0 million in April 2021. The share of the Earnout payment made to our President and CEO was approximately 22.8% or approximately $3.4 million.
ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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 and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. They include statements preceded by, followed by or including words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “forecast,” “guidance,” “outlook,” “estimate” “will,” “may,” “could,” “possible,” “potential,” or other similar words, phrases or expressions. For example, our forward-looking statements include statements regarding:
the potential impact of COVID-19 on our business, operations and financial results;
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the uncertainty of future stimulus payments and extended unemployment benefits, if any, and the related effects on consumer demand for our products and our overall business;
the potential impact of new trade, tariff, and tax regulations on our profitability;
our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands;
our cash needs, including our ability to fund our future capital expenditures, working capital requirements, recurring quarterly dividends and repurchases of Company common stock under our stock repurchase program (the "Repurchase Program");
our relationships with vendors, including their ability to provide us with sufficient quantities of in-demand product, and the loss of key vendor support;
the possible effects of inflation, market decline and other economic changes on our costs and profitability;
our ability to retain key personnel and other employees at Hibbett and City Gear due to current labor challenges, wage inflation or otherwise;
our anticipated net sales, comparable store net sales changes, net sales growth, gross margins, expenses and earnings;
our business strategy, omni-channel platform, logistics structure, target market presence and the expected impact of such factors on our net sales growth;
our store growth, including our plans to add, expand, relocate or close stores, our markets' ability to support such growth, expected changes in total square footage, our ability to secure suitable locations for new stores and the suitability of our wholesale and logistics facility;
our expectations regarding the growth of our online business and the role of technology in supporting such growth;
the future reliability of, and cost associated with, disruptions in the global supply chain, including increased freight, fuel and other transportation costs, and the potential impacts on our domestic and international sources of product, including the actual and potential effect of tariffs on international goods imposed by the United States and other potential impediments to imports;
our policy of leasing rather than owning stores and our ability to renew or replace store leases satisfactorily;
the cost of regulatory compliance, including the costs and possible outcomes of pending legal actions and other contingencies, and new or additional legal, legislative and regulatory requirements to reduce or mitigate the effects of climate change;
our analysis of our risk factors and their possible effect on financial results;
our seasonal sales patterns, expectations and assumptions concerning customer buying behavior;
our ability to retain new customers;
our expectations regarding competition;
our estimates and assumptions as they relate to preferable tax and financial accounting methods, accruals, inventory valuations, long-lived assets, carrying amount and liquidity of financial instruments, fair value of options and other stock-based compensation, economic and useful lives of depreciable assets and leases, income tax liabilities, deferred taxes and uncertain tax positions;
our expectations concerning future stock-based award types and the exercise of outstanding stock options;
our assessment of the materiality and impact on our business of adopting recent accounting pronouncements issued by the Financial Accounting Standards Board and rules issued by the U.S. Securities and Exchange Commission (the "SEC";
the possible effects of uncertainty within the capital markets, on the commercial credit environment and on levels of consumer confidence;
our analyses of trends as related to marketing, sales and earnings performance;
our ability to receive favorable brand name merchandise and pricing from key vendors;
the impact of technology on our operations and business, including cyberattacks, cyber liability or potential liability for breaches of our privacy or information security systems; and
our ability to mitigate the risk of possible business interruptions, including, without limitation, from political or social unrest and armed conflicts.

A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should not place undue reliance on forward-looking statements. Our forward-looking statements are based on currently available operational, financial and business information and speak only as of the date of this report. Our business, financial condition, results of operations and prospects may have changed since that date. For a discussion of the risks, uncertainties and assumptions that could affect our future events, developments or results, you should carefully consider the risk factors described from time to time in our other documents and reports, including the factors described under “Risk Factors” in our Form 10-K for the fiscal year ended January 29, 2022, filed with the SEC on March 25, 2022 (the "2022 Annual Report"). You should also read such information in conjunction with our unaudited condensed consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.
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We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Moreover, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on our forward-looking statements.

We do not undertake to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise, and you should not 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 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.

Investor Access to Company Filings

The Company periodically provides certain information for investors on its corporate website www.hibbett.com, and its investor relations website www.investors.hibbett.com. This includes press releases and other information about financial performance, information on environmental, social and corporate governance matters, and details related to the Company's annual meeting of stockholders. The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing. Further, the Company's references to website URLs are intended to be inactive textual references only.

General Overview

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

As of October 29, 2022, we operated a total of 1,126 retail stores under the Hibbett, City Gear and Sports Additions banners in 36 states:

Location
BrandAverage
Square Footage
Strip Center(1)
MallTotal
Hibbett5,800745180925
City Gear5,20014837185
Sports Additions(2)
2,90031316
(1) Strip centers include free-standing stores and, for our Hibbett locations, are usually near a major chain retailer.
(2) Approximately 90% of the merchandise carried in our Sports Additions stores is athletic footwear.

Our merchandising emphasizes a TOE-TO-HEADTM approach. We provide a broad assortment of premium brand name footwear, apparel, accessories and team sports equipment at competitive prices in a full service omni-channel environment. We believe that the assortment of brand name merchandise we offer consistently exceeds the merchandise selection carried by most of our competitors, particularly in our underserved markets and neighborhood centers. 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 our sales staff at the store level on new products and trends.

Comparable Store Sales - Stores deemed as comparable stores include our Hibbett, City Gear and Sports Additions stores open throughout the reporting period and the corresponding fiscal period referenced, and e-commerce sales. We consider comparable store sales to be a key indicator of our current performance; measuring the growth in sales and sales productivity of existing stores. Management believes that positive comparable store sales contribute to greater leveraging of operating costs, particularly payroll and occupancy costs, while negative comparable store sales contribute to deleveraging of costs. Comparable store sales also have a direct impact on our total net sales and the level of cash flow.

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If a store remodel, relocation or expansion results in the store being closed for a significant period, its sales are removed from the comparable store sales base until it has been open a full 12 months. In addition, rebranded stores are treated as new stores and are not presented in comparable store sales until they have been open a full 12 months under the new brand.

In addition to e-commerce sales, we included the following number of stores in comparable store sales:

October 29, 2022October 30, 2021
13-weeks ended1,074
1,047
39-weeks ended1,0571,035

Executive Summary

Sales performance for the current quarter and year-to-date periods is being compared to both Fiscal 2022 (13-weeks and 39-weeks ended October 30, 2021) and Fiscal 2020 (13-weeks and 39-weeks ended November 2, 2019). We believe that stimulus funds in the first half of Fiscal 2022 provided a significant boost to sales. In addition, the onset of the COVID-19 pandemic had a substantial negative impact on the first quarter of Fiscal 2021 and was followed by stimulus payments in the second quarter of Fiscal 2021 that drove a sharp increase in sales. Due to the unusual impact of these events on both Fiscal 2022 and Fiscal 2021 sales results, we believe sales performance in relation to Fiscal 2020 provides the most relevant comparison prior to the effects of the pandemic.

Net sales for the 13-weeks ended October 29, 2022, increased 13.5% to $433.2 million compared with $381.7 million for the 13-weeks ended October 30, 2021. A significant improvement in footwear inventory was a primary driver of the year-over-year increase and the mix shift between footwear and apparel. Comparable store sales increased 9.9% versus the prior year and increased 51.7% compared to the 13-weeks ended November 2, 2019. Brick and mortar comparable store sales were up 7.9% while e-commerce sales increased 22.0% on a year-over-year basis. In relation to the 13-weeks ended November 2, 2019, brick and mortar comparable sales increased 42.5% and e-commerce sales grew 124.7%. E-commerce represented 15.0% of total net sales for the 13-weeks ended October 29, 2022, compared to 14.0% in the prior year 13-weeks ended October 30, 2021, and 10.5% of total net sales for the 13-weeks ended November 2, 2019.

Net sales for the 39-weeks ended October 29, 2022, decreased 4.4% to $1.25 billion compared with $1.31 billion for the 39-weeks ended October 30, 2021. Comparable store sales decreased 7.4% versus the 39-weeks ended October 30, 2021, but increased by 41.3% compared to the 39-weeks ended November 2, 2019. Brick and mortar comparable store sales declined 10.2% while e-commerce sales increased 11.2% compared to the 39-weeks ended October 30, 2021. In relation to the 39-weeks ended November 2, 2019, brick and mortar sales increased 31.0% and e-commerce sales grew 135.5% over the three-year period. E-commerce represented 14.9% of total net sales for the 39-weeks ended October 29, 2022, compared to 12.8% in the 39-weeks ended October 30, 2021, and 9.1% of total net sales for the 39-weeks ended November 2, 2019.

Store operating, selling, and administrative ("SG&A") expenses were 23.9% of net sales for the 13-weeks ended October 29, 2022, compared with 25.2% of net sales for the 13-weeks ended October 30, 2021. The decrease is primarily the result of leverage resulting from year-over-year sales increase. SG&A expenses were 23.2% of net sales for the 39-weeks ended October 29, 2022, compared with 21.5% of net sales for the 39-weeks ended October 30, 2021. This deleverage was primarily the result of the year-over-year sales decline.

During the 13-weeks ended October 29, 2022, we opened 11 new stores and closed two underperforming stores. This brings the store base to 1,126 in 36 states as of October 29, 2022. We closed the 13-weeks ended October 29, 2022, with $25.1 million of available cash and cash equivalents and $73.3 million available under our Credit Facility. Net inventory was $404.8 million at October 29, 2022, a 56.4% increase compared to October 30, 2021 and up 83.0% from the beginning of the year.

The improved inventory position, in addition to investments that elevate the customer experience and our ability to stay connected with and relevant to our underserved customers and communities, continues to strengthen and broaden our relationships with key vendor partners.

Critical Accounting Policies and Estimates

Our critical accounting policies are described in Item 1, Note 1 - Basis of Presentation and Critical Accounting Policies.
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The unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our critical and significant accounting policies and estimates are described more fully in our 2022 Annual Report. There have been no changes in our accounting policies in the current period ended October 29, 2022, that had a material impact on our unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements

See Note 2, Recent Accounting Pronouncements, to the unaudited condensed consolidated financial statements included in this Form 10-Q for the period ended October 29, 2022, for information regarding recent accounting pronouncements.

Results of Operations
Summarized Unaudited Information
13-Weeks Ended39-Weeks Ended
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Statements of Operations