☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
20-8159608
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Common Stock, $0.01 Par Value Per Share
|
NASDAQ Global Select Market
|
|
Title of Class
|
Name of each exchange on which registered
|
Securities registered pursuant to section 12(g) of the Act:
|
NONE
|
Yes
|
☒ |
No
|
☐ |
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
|
||||||
Yes
|
☐ |
No
|
☒
|
Yes
|
☒
|
No
|
☐ |
Yes
|
☒
|
No
|
☐ |
Large accelerated filer
|
☐ |
Accelerated filer
|
☒
|
|
Non-accelerated filer
|
☐ |
Smaller reporting company
|
☐ | |
Emerging growth company
|
☐ |
Yes
|
☐ |
No
|
☒
|
Page
|
||
Item 1.
|
4
|
|
Item 1A.
|
11
|
|
Item 1B.
|
22
|
|
Item 2.
|
23
|
|
Item 3.
|
23
|
|
Item 4.
|
24
|
|
Item 5.
|
25
|
|
Item 6.
|
27
|
|
Item 7.
|
29
|
|
Item 7A.
|
39
|
|
Item 8.
|
40
|
|
Item 9.
|
69
|
|
Item 9A.
|
69
|
|
Item 9B.
|
70
|
|
Item 10.
|
70
|
|
Item 11.
|
70
|
|
Item 12.
|
71
|
|
Item 13.
|
71
|
|
Item 14.
|
71
|
|
Item 15.
|
72
|
|
Item 16.
|
74
|
|
75
|
Year
|
Related Fiscal Year End
|
Weeks in
Fiscal Period
|
2020 or Fiscal 2020
|
February 1, 2020
|
52
|
2019 or Fiscal 2019
|
February 2, 2019
|
52
|
2018 or Fiscal 2018
|
February 3, 2018
|
53
|
2017 or Fiscal 2017
|
January 28, 2017
|
52
|
· |
our plans, expectations and estimates concerning the integration of City Gear, LLC (City Gear) and related costs;
|
· |
our ability to retain key personnel at Hibbett and City Gear;
|
· |
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;
|
· |
our policy of leasing rather than owning stores and our ability to renew or replace store leases satisfactorily;
|
· |
the cost of regulatory compliance, including the costs and possible outcomes of pending legal actions and other contingencies;
|
· |
our cash needs, including our ability to fund our future capital expenditures, working capital requirements and repurchases of Company common stock under our repurchase
program;
|
· |
our analysis of our risk factors and their possible effect on financial results;
|
· |
our ability and plans to renew our credit facilities;
|
· |
our expectations regarding our capital expenditures and dividend policy;
|
· |
our seasonal sales patterns and assumptions concerning customer buying behavior;
|
· |
our expectations regarding competition;
|
· |
our estimates and assumptions as they relate to the fair value of assets acquired and liabilities assumed in the purchase of City Gear, preferable tax and financial
accounting methods, accruals, inventory valuations, long-lived assets, store closure charges, carrying amount and liquidity of financial instruments, fair value of options and other stock-based compensation, economic and useful lives
of depreciable assets and leases, income tax liabilities, deferred taxes and uncertain tax positions;
|
· |
our expectations concerning future stock-based award types and the exercise of outstanding stock options;
|
· |
the possible effect of inflation, market decline and other economic changes on our costs and profitability;
|
· |
our assessment of the materiality and impact on our business of recent accounting pronouncements adopted by the Financial Accounting Standards Board;
|
· |
the possible effects of uncertainty within the capital markets, on the commercial credit environment and on levels of consumer confidence;
|
· |
our analyses of trends as related to marketing, sales and earnings performance;
|
· |
our ability to receive favorable brand name merchandise and pricing from key vendors;
|
· |
the future reliability of, and cost associated with, our sources of supply, particularly imported goods;
|
· |
our relationships with vendors and the loss of key vendor support;
|
· |
our plans, expectations and abilities relating to cybersecurity; and
|
· |
our ability to mitigate the risk of possible business interruptions.
|
· |
maintaining close relationships with vendors and other retailers;
|
· |
studying other retailers for best practices in merchandising;
|
· |
attending various trade shows, both in our industry and outside as well as reviewing industry trade publications;
|
· |
actively participating in industry associations such as the National Sporting Goods Association (NSGA);
|
· |
visiting competitor store locations;
|
· |
monitoring industry data sources and periodicals;
|
· |
monitoring product selection at competing stores and online; and
|
· |
communicating with our regional vice presidents, district managers and store managers.
|
· |
Hibbett Sports, Registration No. 2717584
|
· |
Sports Additions, Registration No. 1767761
|
· |
Hibbett, Registration No. 3275037
|
· |
City G.E.A.R, Registration No. 4398655
|
· |
City G.E.A.R., Registration No. 4413864
|
· |
CITY GEAR, Registration No. 4675462
|
· |
City GEAR, Registration No. 5008316
|
· |
DEVEROES, Registration No. 3479737
|
· |
GRINDHOUSE, Registration No. 5107399
|
· |
GRINDHOUSE DENIM, Registration No. 5107398
|
· |
we are unable to identify and respond to emerging trends, including shifts in the popularity of certain products;
|
· |
we miscalculate either the market for the merchandise in our stores or our customers’ purchasing habits; or
|
· |
consumer demand unexpectedly shifts away from athletic footwear or our more profitable apparel lines.
|
· |
materially damage our reputation and negatively affect customer satisfaction and loyalty;
|
· |
expose us to negative publicity, individual claims or consumer class actions, administrative, civil or criminal investigations or actions; and
|
· |
cause us to incur substantial costs, including but not limited to, costs associated with remediation for stolen assets or information, litigation costs, lost revenues
resulting from unauthorized use of proprietary information or the failure to retain or attract customers following an attack, and increased cyber protection costs.
|
· |
changing patterns of customer behavior from physical store locations to online shopping in the context of an evolving omni-channel retail environment;
|
· |
the appropriate number of stores in our portfolio;
|
· |
the formats, sizes and interior layouts of our stores;
|
· |
the locations of our stores, including the demographics and economic data of each store;
|
· |
the local competition in and around our stores;
|
· |
the primary lease term of each store and occupancy cost of each store relative to market rents; and
|
· |
distribution considerations for each store location.
|
· |
having to close stores and abandon the related assets while retaining the financial commitments of the leases;
|
· |
incurring costs to remodel or transform our stores;
|
· |
having stores or distribution channels that no longer meet the needs of our business; and
|
· |
bearing excessive lease or occupancy expenses.
|
· |
increases in the cost of purchasing or shipping foreign merchandise resulting from, for example:
|
· |
import tariffs, taxes or other governmental actions affecting trade, including the United States imposing antidumping or countervailing duty orders, safeguards, remedies
or compensation and retaliation due to illegal foreign trade practices;
|
· |
foreign government regulations;
|
· |
rising commodity prices;
|
· |
increased costs of oceanic shipping;
|
· |
changes in currency exchange rates or policies and local economic conditions; and
|
· |
trade restrictions, including import quotas or loss of “most favored nation” status with the United States.
|
· |
disruptions in the flow of imported goods because of factors such as:
|
· |
raw material shortages, work stoppages, labor availability and political unrest;
|
· |
problems with oceanic shipping, including blockages or labor union strikes at U.S. or foreign ports; and
|
· |
economic crises and international disputes.
|
· |
shifts in consumer tastes and fashion trends;
|
· |
calendar shifts of holiday or seasonal periods;
|
· |
the timing of income tax refunds to customers;
|
· |
increases in personal income taxes paid by our customers;
|
· |
calendar shifts or cancellations of sales tax-free holidays in certain states;
|
· |
the success or failure of college and professional sports teams within our core regions;
|
· |
changes in or lack of tenants in the shopping centers in which we are located;
|
· |
pricing, promotions or other actions taken by us or our existing or possible new competitors; and
|
· |
unseasonable weather conditions or natural disasters.
|
· |
limit our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes;
|
· |
require a substantial portion of our cash flows to be dedicated to debt service payments, instead of other purposes, thereby reducing the amount of cash flows available
for working capital, capital expenditures, acquisition or other general corporate purposes;
|
· |
limit our ability to refinance our indebtedness on terms acceptable to us or at all;
|
· |
place us at a competitive disadvantage to competitors carrying less debt or limit our ability to withstand competitive pressure; and
|
· |
make us more vulnerable to economic downturns and interest rate increases.
|
· |
actual or anticipated variations in quarterly operating results;
|
· |
changes in financial estimates by investment analysts and our inability to meet or exceed those estimates;
|
· |
additions or departures of key personnel;
|
· |
market rumors or announcements by us or by our competitors of significant acquisitions, divestitures or joint ventures, strategic partnerships, large capital commitments
or other strategic initiatives;
|
· |
changes in retail sales data that indicate consumers may spend less on discretionary purchases; and
|
· |
sales of our common stock by key personnel or large institutional holders.
|
· |
classify our Board of Directors into three classes, each of which serves for different three-year periods;
|
· |
provide that a director may be removed by stockholders only for cause by a vote of the holders of not less than two-thirds of our shares entitled to vote;
|
· |
provide that all vacancies on our Board of Directors, including any vacancies resulting from an increase in the number of directors, may be filled by a majority of the
remaining directors, even if the number is less than a quorum;
|
· |
provide that special meetings of the common stockholders may only be called by the Board of Directors, the Chairman of the Board of Directors or upon the demand of the
holders of a majority of the total voting power of all outstanding securities of the Company entitled to vote at any such special meeting; and
|
· |
call for a vote of the holders of not less than two-thirds of the shares entitled to vote in order to amend the foregoing provisions and certain other provisions of our
certificate of incorporation and bylaws.
|
· |
The California Consumer Privacy Act (CCPA) and other emerging privacy laws;
|
· |
The Telephone Consumer Protection Act (TCPA) provisions that regulate telemarketing, auto-dialed and pre-recorded calls as well as text messages and unsolicited faxes;
|
· |
Labor and employment laws that govern employment matters such as minimum wage, exempt employment status, overtime, family leave mandates and workplace safety regulations,
including the Fair Labor Standards Act proposed rules;
|
· |
Securities and exchange laws and regulations;
|
· |
New or changing laws relating to cybersecurity, privacy, cashless payments and consumer credit, protection and fraud;
|
· |
New or changing laws and regulations concerning product safety or truth in advertising;
|
· |
The Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public
accommodations and other areas;
|
· |
New or changing federal and state immigration laws and regulations;
|
· |
The Patient Protection and Affordable Care Act provisions;
|
· |
New or changing environmental regulations, including measures related to climate change and greenhouse gas emissions; and
|
· |
New or changing laws relating to state and local taxation and licensing, including sales and use tax laws, withholding taxes and property taxes.;
|
Alabama
|
105
|
Kentucky
|
58
|
Oklahoma
|
40
|
||
Arkansas
|
42
|
Louisiana
|
67
|
Pennsylvania
|
6
|
||
Arizona
|
8
|
Maryland
|
5
|
South Carolina
|
41
|
||
California
|
12
|
Minnesota
|
1
|
South Dakota
|
3
|
||
Colorado
|
6
|
Mississippi
|
74
|
Tennessee
|
78
|
||
Delaware
|
1
|
Missouri
|
39
|
Texas
|
123
|
||
Florida
|
64
|
Nebraska
|
9
|
Utah
|
4
|
||
Georgia
|
122
|
New Jersey
|
3
|
Virginia
|
22
|
||
Illinois
|
30
|
New Mexico
|
15
|
West Virginia
|
10
|
||
Indiana
|
26
|
New York
|
4
|
Wisconsin
|
4
|
||
Iowa
|
17
|
North Carolina
|
60
|
Wyoming
|
2
|
||
Kansas
|
26
|
Ohio
|
36
|
TOTAL
|
1,163
|
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Hibbett Sports, Inc., the NASDAQ Composite Index
and the NASDAQ Retail Trade Index
*$100 invested on 1/31/14 in stock or index, including reinvestment of dividends. | |
|
Fiscal year ending January 31.
|
1/14
|
1/15
|
1/16
|
1/17
|
1/18
|
1/19
|
|
Hibbett Sports, Inc.
|
100.00
|
78.39
|
53.59
|
54.99
|
37.66
|
27.23
|
NASDAQ Composite
|
100.00
|
114.30
|
115.10
|
141.84
|
189.26
|
187.97
|
NASDAQ Retail Trade
|
100.00
|
112.78
|
142.83
|
174.47
|
261.97
|
289.77
|
Period
|
Total Number
of Shares
Purchased
|
Average
Price per
Share
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Programs
|
Approximate Dollar
Value of Shares that
may yet be
Purchased Under the
Programs (in
thousands)
|
||||||||||||
November 4, 2018 to December 1, 2018
|
3,900
|
$
|
16.87
|
3,900
|
$
|
188,000
|
||||||||||
December 2, 2018 to January 5, 2019
|
-
|
-
|
$
|
188,000
|
||||||||||||
January 6, 2019 to February 2, 2019
|
-
|
-
|
$
|
188,000
|
||||||||||||
Total
|
3,900
|
$
|
16.87
|
3,900
|
$
|
188,000
|
||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||||||
Fiscal Year Ended
|
||||||||||||||||||||
February 2,
2019
(52 weeks)
|
February 3,
2018
(53 weeks)
|
January 28,
2017
(52 weeks)
|
January 30,
2016
(52 weeks)
|
January 31,
2015
(52 weeks)
|
||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||
Net sales
|
$
|
1,008,682
|
$
|
968,219
|
$
|
972,960
|
$
|
943,104
|
$
|
913,486
|
||||||||||
Cost of goods sold
|
679,947
|
655,502
|
634,364
|
610,389
|
586,702
|
|||||||||||||||
Gross margin
|
328,735
|
312,717
|
338,596
|
332,715
|
326,784
|
|||||||||||||||
Store operating, selling and administrative expenses
|
264,142
|
231,832
|
222,785
|
203,673
|
192,648
|
|||||||||||||||
Depreciation and amortization
|
27,052
|
24,207
|
19,047
|
17,038
|
15,990
|
|||||||||||||||
Operating income
|
37,541
|
56,678
|
96,764
|
112,004
|
118,146
|
|||||||||||||||
Interest (income) expense, net
|
(17
|
)
|
231
|
268
|
292
|
293
|
||||||||||||||
Income before provision for income taxes
|
37,558
|
56,447
|
96,496
|
111,712
|
117,853
|
|||||||||||||||
Provision for income taxes
|
9,137
|
21,417
|
35,421
|
41,184
|
44,269
|
|||||||||||||||
Net income
|
$
|
28,421
|
$
|
35,030
|
$
|
61,075
|
$
|
70,528
|
$
|
73,584
|
||||||||||
Basic earnings per share
|
$
|
1.52
|
$
|
1.72
|
$
|
2.75
|
$
|
2.95
|
$
|
2.90
|
||||||||||
Diluted earnings per share
|
$
|
1.51
|
$
|
1.71
|
$
|
2.72
|
$
|
2.92
|
$
|
2.87
|
||||||||||
Basic weighted average shares outstanding
|
18,644
|
20,347
|
22,240
|
23,947
|
25,369
|
|||||||||||||||
Diluted weighted average shares outstanding
|
18,826
|
20,450
|
22,427
|
24,129
|
25,620
|
Fiscal Year Ended
|
||||||||||||||||||||
February 2,
2019
(52 weeks)
|
February 3,
2018
(53 weeks)
|
January 28,
2017
(52 weeks)
|
January 30,
2016
(52 weeks)
|
January 31,
2015
(52 weeks)
|
||||||||||||||||
Other Data:
|
||||||||||||||||||||
Net sales increase (decrease)
|
4.2
|
%
|
-0.5
|
%
|
3.2
|
%
|
3.2
|
%
|
7.2
|
%
|
||||||||||
Comparable store sales
|
2.2
|
%
|
-3.8
|
%
|
0.2
|
%
|
-0.4
|
%
|
2.9
|
%
|
||||||||||
Gross margin (as a % to net sales)
|
32.6
|
%
|
32.3
|
%
|
34.8
|
%
|
35.3
|
%
|
35.8
|
%
|
||||||||||
Store operating, selling and administrative expenses (as a % to net sales)
|
26.2
|
%
|
23.9
|
%
|
22.9
|
%
|
21.6
|
%
|
21.1
|
%
|
||||||||||
Depreciation and amortization (as a % to net sales)
|
2.7
|
%
|
2.5
|
%
|
2.0
|
%
|
1.8
|
%
|
1.8
|
%
|
||||||||||
Provision for income taxes (as a % to net sales)
|
0.9
|
%
|
2.2
|
%
|
3.6
|
%
|
4.4
|
%
|
4.8
|
%
|
||||||||||
Net income (as a % to net sales)
|
2.8
|
%
|
3.6
|
%
|
6.3
|
%
|
7.5
|
%
|
8.1
|
%
|
||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
61,756
|
$
|
73,544
|
$
|
38,958
|
$
|
32,274
|
$
|
88,397
|
||||||||||
Average inventory per store
|
$
|
241
|
$
|
235
|
$
|
260
|
$
|
271
|
$
|
243
|
||||||||||
Working capital
|
$
|
194,583
|
$
|
231,207
|
$
|
242,192
|
$
|
225,178
|
$
|
253,373
|
||||||||||
Total assets
|
$
|
546,065
|
$
|
461,846
|
$
|
458,854
|
$
|
442,372
|
$
|
452,397
|
||||||||||
Long-term capital lease obligations
|
$
|
1,994
|
$
|
2,522
|
$
|
2,857
|
$
|
3,149
|
$
|
3,029
|
||||||||||
Stockholders’ investment
|
$
|
336,049
|
$
|
319,596
|
$
|
334,040
|
$
|
310,846
|
$
|
324,781
|
||||||||||
Treasury shares repurchased
|
776
|
2,843
|
1,236
|
2,236
|
1,206
|
|||||||||||||||
Cost of treasury shares purchased
|
$
|
16,540
|
$
|
54,506
|
$
|
43,058
|
$
|
91,332
|
$
|
60,971
|
||||||||||
Selected
Store Data:
|
||||||||||||||||||||
Stores open at beginning of period
|
1,079
|
1,078
|
1,044
|
988
|
927
|
|||||||||||||||
Stores acquired
|
136
|
-
|
-
|
-
|
-
|
|||||||||||||||
New stores opened
|
32
|
44
|
65
|
71
|
80
|
|||||||||||||||
Stores closed
|
(84
|
)
|
(43
|
)
|
(31
|
)
|
(15
|
)
|
(19
|
)
|
||||||||||
Stores open at end of period
|
1,163
|
1,079
|
1,078
|
1,044
|
988
|
|||||||||||||||
Stores expanded during the period
|
7
|
11
|
8
|
16
|
9
|
|||||||||||||||
Estimated square footage (in thousands)
|
6,542
|
6,140
|
6,141
|
5,974
|
5,649
|
· |
The acquisition of City Gear;
|
· |
The launch of our new mobile app as well as Buy Online, Pick Up in Store (BOPIS) and Reserve in Store (ROPIS);
|
· |
The expansion of our credit facilities to facilitate the purchase of City Gear; and
|
· |
The continuation of our Stock Repurchase Program through January 2022.
|
Fiscal 2019
(52 weeks) |
Fiscal 2018
(53 weeks) |
Fiscal 2017
(52 weeks) |
||||||||||
Net sales (in millions)
|
$
|
1,008.7
|
$
|
968.2
|
$
|
973.0
|
||||||
Operating income, percentage to net sales
|
3.7
|
%
|
5.9
|
%
|
10.0
|
%
|
||||||
Comparable store sales
|
2.2
|
%
|
-3.8
|
%
|
0.2
|
%
|
||||||
Net income (in millions)
|
$
|
28.4
|
$
|
35.0
|
$
|
61.1
|
||||||
Net income, percentage decrease
|
-18.9
|
%
|
-42.6
|
%
|
-13.4
|
%
|
||||||
Diluted earnings per share
|
$
|
1.51
|
$
|
1.71
|
$
|
2.72
|
Fiscal 2018
|
||||||||||||||||||||
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Full Year
|
|||||||||||||||
Comparable store sales increase (originally reported)
|
-4.9
|
%
|
-11.7
|
%
|
-1.3
|
%
|
1.6
|
%
|
-3.8
|
%
|
||||||||||
Comparable store sales increase (adjusted for week shift)
|
-4.8
|
%
|
-11.0
|
%
|
0.3
|
%
|
1.0
|
%
|
-3.6
|
%
|
||||||||||
Impact of week shift
|
0.1
|
%
|
0.7
|
%
|
1.6
|
%
|
-0.6
|
%
|
0.2
|
%
|
Fiscal 2018
|
||||||||||||||||||||
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Full Year
|
|||||||||||||||
Net sales (originally reported)
|
$
|
275.7
|
$
|
188.0
|
$
|
237.8
|
$
|
266.7
|
$
|
968.2
|
||||||||||
Net sales (adjusted for week shift)
|
$
|
275.2
|
$
|
206.0
|
$
|
220.6
|
$
|
265.8
|
$
|
967.6
|
||||||||||
Impact of week shift
|
$
|
(0.5
|
)
|
$
|
18.0
|
$
|
(17.2
|
)
|
$
|
(0.9
|
)
|
$
|
(0.6
|
)
|
Fiscal Year Ended
|
||||||||||||
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Net sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of goods sold
|
67.4
|
67.7
|
65.2
|
|||||||||
Gross margin
|
32.6
|
32.3
|
34.8
|
|||||||||
Store operating, selling and administrative expenses
|
26.2
|
23.9
|
22.9
|
|||||||||
Depreciation and amortization
|
2.7
|
2.5
|
2.0
|
|||||||||
Operating income
|
3.7
|
5.9
|
10.0
|
|||||||||
Interest income (expense), net
|
-
|
-
|
-
|
|||||||||
Income before provision for income taxes
|
3.7
|
5.8
|
9.9
|
|||||||||
Provision for income taxes
|
0.9
|
2.2
|
3.6
|
|||||||||
Net income
|
2.8
|
%
|
3.6
|
%
|
6.3
|
%
|
· |
We acquired 136 City Gear stores, opened 32 Hibbett Sports or City Gear stores while closing 84 underperforming Hibbett Sports stores for a net addition of 84 stores in
Fiscal 2019. We expanded 7 high performing stores.
|
· |
Comparable store net sales for Fiscal 2019 increased 2.2% compared to Fiscal 2018. Stores not in the comparable store net sales calculation accounted for $97.1 million
of net sales of which $49.1 million was attributable to the acquisition of City Gear.
|
· |
Merchandise gross margin increased 15 basis points as a percentage of net sales due to promotional markdowns resulting from lower levels of aged inventory, and an
approximate $0.9 million non-recurring charge from last year related to our Team Division. This was partially offset by a higher percentage of e-commerce sales and a non-recurring charge of approximately $1.9 million to amortize an
inventory step-up value related to the City Gear acquisition.
|
· |
Wholesale and logistics expense was relatively flat increasing two basis points as a percentage of net sales.
|
· |
Store occupancy expense decreased 16 basis points as a percentage of net sales mainly due to the closure of 84 lower volume stores and growth in e-commerce sales.
|
· |
Total salary and benefit costs increased 70 basis points as a percentage of net sales due to increased wages for store associates, increases in incentive compensation
and health care costs, and severance costs related to a workforce reduction.
|
· |
Expenses associated with our omni-channel initiative increased 98 basis points as a percentage of net sales due to increased operational and marketing costs to support
increased sales, and the development and rollout of new functionality such as BOPIS, ROPIS and a new mobile app.
|
· |
Overall expenses increased 43 basis points due to non-recurring costs associated with the City Gear acquisition and increased 30 basis points due to a $3.1 million
non-recurring gain last year from the sale of our Team Division.
|
· |
We expect overall store operating, selling and administrative expenses to increase slightly as a percentage of net sales in Fiscal 2020 mainly due to non-recurring
costs related to the integration of City Gear.
|
Fifty-Two Weeks Ended February 2, 2019
|
||||||||||||||||
Non-Recurring Costs
|
||||||||||||||||
GAAP Basis
(As Reported)
|
Acquisition
Costs
|
Severance
Costs
|
Non-GAAP Basis
February 2,
2019
|
|||||||||||||
Net sales
|
$
|
1,008,682
|
$
|
-
|
$
|
-
|
$
|
1,008,682
|
||||||||
Cost of goods sold
|
679,947
|
1,911
|
-
|
678,036
|
||||||||||||
Gross margin
|
328,735
|
1,911
|
-
|
330,646
|
||||||||||||
Store operating, selling and administrative expenses
|
264,142
|
4,299
|
289
|
259,554
|
||||||||||||
Depreciation and amortization
|
27,052
|
-
|
-
|
27,052
|
||||||||||||
Operating income
|
37,541
|
6,210
|
289
|
44,040
|
||||||||||||
Interest income, net
|
(17
|
)
|
-
|
-
|
(17
|
)
|
||||||||||
Income before provision for income taxes
|
37,558
|
6,210
|
289
|
44,057
|
||||||||||||
Provision for income taxes
|
9,137
|
(1,511
|
)
|
(70
|
)
|
10,718
|
||||||||||
Net income
|
$
|
28,421
|
$
|
4,699
|
$
|
219
|
$
|
33,339
|
||||||||
Basic earnings per share
|
$
|
1.52
|
$
|
0.25
|
$
|
0.01
|
$
|
1.79
|
||||||||
Diluted earnings per share
|
$
|
1.51
|
$
|
0.25
|
$
|
0.01
|
$
|
1.77
|
||||||||
Weighted average shares outstanding:
|
||||||||||||||||
Basic
|
18,644
|
18,644
|
18,644
|
18,644
|
||||||||||||
Diluted
|
18,826
|
18,826
|
18,826
|
18,826
|
· |
We opened 44 Hibbett Sports stores while closing 43 underperforming Hibbett Sports stores for net addition of 1 store in Fiscal 2018. We expanded 11 high performing
stores.
|
· |
Comparable store net sales for Fiscal 2018 decreased 3.8% compared to Fiscal 2017. Stores not in the comparable store net sales calculation accounted for $53.4 million
of net sales.
|
· |
Merchandise gross margin decreased 258 basis points as a percentage of net sales due to promotional markdowns, the introduction of e-commerce sales and a one-time
charge of approximately $0.9 million to establish a reserve against the inventory of our Team business.
|
· |
Wholesale and logistics expense increased eight basis points as a percentage of net sales due to increased data processing costs associated with our omni-channel
initiative and increased transportation costs.
|
· |
Store occupancy expense decreased 17 basis points as a percentage of net sales mainly due to savings realized in utility costs resulting from cost savings initiatives.
|
· |
Total salary and benefit costs increased 67 basis points as a percentage of net sales due to de-leverage associated with lower comparable store sales and hiring to
support our e-commerce business.
|
· |
Expenses associated with our omni-channel initiative increased 82 basis points as a percentage of net sales due to the launch of our e-commerce business and on-going
operational and marketing costs to support the e-commerce business.
|
· |
Overall expenses decreased 32 basis points due to a $3.1 million one-time gain resulting from the sale of the Company’s Team Division.
|
· |
Credit card fees decreased 21 basis points mainly due to the implementation of EMV chip technology in our stores.
|
Fiscal Year Ended
|
||||||||||||
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Net cash provided by operating activities
|
$
|
73,417
|
$
|
111,926
|
$
|
78,675
|
||||||
Net cash used in investing activities
|
(103,871
|
)
|
(22,900
|
)
|
(29,409
|
)
|
||||||
Net cash provided by (used in) financing activities
|
18,666
|
(54,440
|
)
|
(42,582
|
)
|
|||||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(11,788
|
)
|
$
|
34,586
|
$
|
6,684
|
· |
Net income provided cash of $28.4 million, $35.0 million and $61.1 million during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively.
|
· |
Ending inventory per store increased 2.6% at February 2, 2019 and declined 9.9% at February 3, 2018, compared to the prior year. Fiscal 2019 inventory increased on a
per store basis mainly due to the acquisition of City Gear. Fiscal 2018 inventory declined on a per store basis mainly due to vendor returns, cancellations and markdowns taken to liquidate excess inventory. The change in inventory
provided cash of $16.8 million, $27.5 million and $2.4 million during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively.
|
· |
The change in accounts payable used cash of $9.9 million in Fiscal 2019, provided cash of $16.4 million in Fiscal 2018 and used cash of $11.4 million in Fiscal 2017.
The decrease in Fiscal 2019 and increase in Fiscal 2018 resulted mainly from the timing of receipts prior to our peak selling seasons.
|
· |
Non-cash charges included depreciation and amortization expense of $27.1 million, $24.2 million and $19.0 million during Fiscal 2019, Fiscal 2018 and Fiscal 2017,
respectively, and stock-based compensation expense of $4.3 million, $3.9 million and $4.6 million during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Fluctuations in stock-based compensation generally result from the
achievement of performance-based equity awards at greater or lesser than their granted level, fluctuations in the price of our common stock and levels of forfeitures in any given period. Depreciation expense has increased in each
fiscal year due to investments in facilities and information technology systems, and due to accelerated depreciation taken in Fiscal 2019 resulting from an increase in store closures. Depreciation is expected to decline slightly in
Fiscal 2020.
|
· |
The opening of new stores, the remodeling, relocation or expansion of selected existing stores;
|
· |
Information system infrastructure, projects, upgrades and security (including City Gear integration); and
|
· |
Other departmental needs.
|
Payment due by period
|
||||||||||||||||||||
Contractual Obligations
|
Less than 1
year
|
1 - 3 years
|
3 - 5 years
|
More than
5 years
|
Total
|
|||||||||||||||
Long-term debt obligations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Credit facilities
|
35,000
|
-
|
-
|
-
|
35,000
|
|||||||||||||||
Capital lease obligations (1)
|
1,017
|
1,148
|
634
|
212
|
3,011
|
|||||||||||||||
Interest on capital lease obligations (1)
|
242
|
244
|
90
|
5
|
581
|
|||||||||||||||
Operating lease obligations (1)
|
68,002
|
105,349
|
56,437
|
40,181
|
269,969
|
|||||||||||||||
Purchase obligations (2)
|
8,920
|
7,337
|
3,041
|
-
|
19,298
|
|||||||||||||||
Other liabilities (3)
|
242
|
9,200
|
-
|
2,540
|
11,982
|
|||||||||||||||
Total
|
$
|
113,423
|
$
|
123,278
|
$
|
60,202
|
$
|
42,938
|
$
|
339,841
|
(1)
|
See “Part II, Item 8, Consolidated Financial Statements. Note 7 – Leases.”
|
(2)
|
Purchase obligations include all material legally binding contracts such as software license commitments and service contracts. The table above also includes a
stand-by letter of credit in conjunction with our self-insured workers’ compensation and general liability insurance coverage. Contractual obligations that are not binding agreements, including purchase orders for inventory,
are excluded from the table above. Store utility contracts, including waste disposal agreements, are also excluded.
|
(3)
|
Other liabilities include amounts accrued for various deferred compensation arrangements and contingent earnouts related to the City Gear acquisition. See “Part
II, Item 8, Consolidated Financial Statements. Note 8 – Defined Contribution Benefit Plans” for a discussion regarding our employee benefit plans.
|
ASSETS
|
February 2, 2019
|
February 3, 2018
|
||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
61,756
|
$
|
73,544
|
||||
Receivables, net
|
9,470
|
6,599
|
||||||
Inventories, net
|
280,287
|
253,201
|
||||||
Prepaid expenses and other
|
16,343
|
13,430
|
||||||
Total current assets
|
367,856
|
346,774
|
||||||
Property and equipment, net
|
115,394
|
109,698
|
||||||
Goodwill
|
23,133
|
-
|
||||||
Trade name intangible asset
|
32,400
|
-
|
||||||
Deferred income taxes, net
|
2,278
|
2,176
|
||||||
Other assets, net
|
5,004
|
3,198
|
||||||
Total Assets
|
$
|
546,065
|
$
|
461,846
|
||||
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$
|
107,315
|
$
|
93,435
|
||||
Credit facilities
|
35,000
|
-
|
||||||
Capital lease obligations
|
1,017
|
663
|
||||||
Accrued payroll expenses
|
13,929
|
10,424
|
||||||
Deferred rent
|
5,838
|
5,909
|
||||||
Other accrued expenses
|
10,174
|
5,136
|
||||||
Total current liabilities
|
173,273
|
115,567
|
||||||
Capital lease obligations
|
1,994
|
2,522
|
||||||
Deferred rent
|
19,522
|
20,291
|
||||||
Unrecognized tax benefits
|
1,401
|
1,294
|
||||||
Other liabilities
|
13,826
|
2,576
|
||||||
Total liabilities
|
210,016
|
142,250
|
||||||
Stockholders’ Investment:
|
||||||||
Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares issued
|
-
|
-
|
||||||
Common stock, $.01 par value, 80,000,000 shares authorized, 38,983,232 and 38,862,929 shares
issued at February 2, 2019 and February 3, 2018, respectively
|
390
|
389
|
||||||
Paid-in capital
|
185,752
|
180,536
|
||||||
Retained earnings
|
759,677
|
731,901
|
||||||
Treasury stock, at cost, 20,686,242 and 19,910,291 shares repurchased at February 2, 2019 and
February 3, 2018, respectively
|
(609,770
|
)
|
(593,230
|
)
|
||||
Total stockholders’ investment
|
336,049
|
319,596
|
||||||
Total Liabilities and Stockholders’ Investment
|
$
|
546,065
|
$
|
461,846
|
Fiscal Year Ended
|
||||||||||||
February 2, 2019
(52 weeks) |
February 3, 2018
(53 weeks) |
January 28, 2017
(52 weeks) |
||||||||||
Net sales
|
$
|
1,008,682
|
$
|
968,219
|
$
|
972,960
|
||||||
Cost of goods sold
|
679,947
|
655,502
|
634,364
|
|||||||||
Gross margin
|
328,735
|
312,717
|
338,596
|
|||||||||
Store operating, selling and administrative expenses
|
264,142
|
231,832
|
222,785
|
|||||||||
Depreciation and amortization
|
27,052
|
24,207
|
19,047
|
|||||||||
Operating income
|
37,541
|
56,678
|
96,764
|
|||||||||
Interest income
|
731
|
39
|
24
|
|||||||||
Interest expense
|
(714
|
)
|
(270
|
)
|
(292
|
)
|
||||||
Interest income (expense), net
|
17
|
(231
|
)
|
(268
|
)
|
|||||||
Income before provision for income taxes
|
37,558
|
56,447
|
96,496
|
|||||||||
Provision for income taxes
|
9,137
|
21,417
|
35,421
|
|||||||||
Net income
|
$
|
28,421
|
$
|
35,030
|
$
|
61,075
|
||||||
Basic earnings per share
|
$
|
1.52
|
$
|
1.72
|
$
|
2.75
|
||||||
Diluted earnings per share
|
$
|
1.51
|
$
|
1.71
|
$
|
2.72
|
||||||
Weighted average shares outstanding:
|
||||||||||||
Basic
|
18,644
|
20,347
|
22,240
|
|||||||||
Diluted
|
18,826
|
20,450
|
22,427
|
Fiscal Year Ended
|
||||||||||||
|
February 2,
(52 weeks)2019 |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
|||||||||
Cash Flows From Operating Activities:
|
||||||||||||
Net income
|
$
|
28,421
|
$
|
35,030
|
$
|
61,075
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
27,052
|
24,207
|
19,047
|
|||||||||
Amortization of inventory step-up
|
1,911
|
-
|
-
|
|||||||||
Deferred income taxes and unrecognized income tax benefit, net
|
244
|
3,488
|
1,418
|
|||||||||
Loss on disposal and write-down of assets, net
|
940
|
597
|
238
|
|||||||||
Stock-based compensation
|
4,316
|
3,880
|
4,592
|
|||||||||
Other non-cash adjustments
|
(104
|
)
|
-
|
(99
|
)
|
|||||||
Changes in operating assets and liabilities:
|
||||||||||||
Receivables, net
|
1,422
|
2,303
|
(1,826
|
)
|
||||||||
Inventories, net
|
16,804
|
27,500
|
2,398
|
|||||||||
Prepaid expenses and other
|
(501
|
)
|
(3,074
|
)
|
(1,712
|
)
|
||||||
Other assets
|
(162
|
)
|
185
|
351
|
||||||||
Accounts payable
|
(9,927
|
)
|
16,389
|
(11,410
|
)
|
|||||||
Deferred rent
|
(839
|
)
|
(514
|
)
|
3,623
|
|||||||
Accrued expenses and other
|
3,840
|
1,935
|
980
|
|||||||||
Net cash provided by operating activities
|
73,417
|
111,926
|
78,675
|
|||||||||
|
||||||||||||
Cash Flows From Investing Activities:
|
||||||||||||
Capital expenditures
|
(17,696
|
)
|
(23,081
|
)
|
(29,733
|
)
|
||||||
Acquisition of City Gear
|
(86,837
|
)
|
-
|
-
|
||||||||
Proceeds from sale of property and equipment
|
330
|
288
|
154
|
|||||||||
Other
|
332
|
(107
|
)
|
170
|
||||||||
Net cash used in investing activities
|
(103,871
|
)
|
(22,900
|
)
|
(29,409
|
)
|
||||||
|
||||||||||||
Cash Flows From Financing Activities:
|
||||||||||||
Cash used for stock repurchases
|
(16,124
|
)
|
(53,794
|
)
|
(42,115
|
)
|
||||||
Borrowings under credit facilities, net
|
35,000
|
-
|
-
|
|||||||||
Payments on capital lease obligations
|
(695
|
)
|
(601
|
)
|
(485
|
)
|
||||||
Excess tax benefit from stock option exercises
|
-
|
-
|
99
|
|||||||||
Cash used to settle net share equity awards
|
(416
|
)
|
(712
|
)
|
(943
|
)
|
||||||
Proceeds from options exercised and purchase of shares under the employee stock purchase plan
|
901
|
667
|
862
|
|||||||||
Net cash provided by (used in) financing activities
|
18,666
|
(54,440
|
)
|
(42,582
|
)
|
|||||||
|
||||||||||||
Net (decrease) increase in cash and cash equivalents
|
(11,788
|
)
|
34,586
|
6,684
|
||||||||
Cash and cash equivalents, beginning of year
|
73,544
|
38,958
|
32,274
|
|||||||||
Cash and cash equivalents, end of year
|
$
|
61,756
|
$
|
73,544
|
$
|
38,958
|
||||||
|
||||||||||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
723
|
$
|
261
|
$
|
285
|
||||||
Income taxes, net of refunds
|
$
|
8,261
|
$
|
15,104
|
$
|
35,057
|
||||||
|
||||||||||||
Supplemental Schedule of Non-Cash Activities:
|
||||||||||||
Property and equipment additions under capital leases
|
$
|
773
|
$
|
352
|
$
|
342
|
Common Stock
|
Treasury Stock
|
|||||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Paid-In
Capital
|
Retained
Earnings
|
Number of
Shares
|
Amount
|
Total
Stockholders’
Investment
|
||||||||||||||||||||||
Balance-January 30, 2016
|
38,628
|
$
|
386
|
$
|
169,543
|
$
|
636,583
|
15,832
|
$
|
(495,666
|
)
|
$
|
310,846
|
|||||||||||||||
Net income
|
-
|
-
|
-
|
61,075
|
-
|
-
|
61,075
|
|||||||||||||||||||||
Issuance of shares through the Company’s equity plans
|
111
|
1
|
960
|
-
|
-
|
-
|
961
|
|||||||||||||||||||||
Adjustment to income tax benefit from exercises of employee stock options
|
-
|
-
|
(376
|
)
|
-
|
-
|
-
|
(376
|
)
|
|||||||||||||||||||
Purchase of shares under the stock repurchase program
|
-
|
-
|
-
|
-
|
1,209
|
(42,115
|
)
|
(42,115
|
)
|
|||||||||||||||||||
Settlement of net share equity awards
|
-
|
-
|
-
|
-
|
26
|
(943
|
)
|
(943
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
-
|
4,592
|
-
|
-
|
-
|
4,592
|
|||||||||||||||||||||
Balance-January 28, 2017
|
38,739
|
387
|
174,719
|
697,658
|
17,067
|
(538,724
|
)
|
334,040
|
||||||||||||||||||||
Net income
|
-
|
-
|
-
|
35,030
|
-
|
-
|
35,030
|
|||||||||||||||||||||
Issuance of shares through the Company’s equity plans
|
124
|
2
|
665
|
-
|
-
|
-
|
667
|
|||||||||||||||||||||
Adjustment for adoption of accounting standard
|
-
|
-
|
1,272
|
(787
|
)
|
-
|
-
|
485
|
||||||||||||||||||||
Purchase of shares under the stock repurchase program
|
-
|
-
|
-
|
-
|
2,818
|
(53,794
|
)
|
(53,794
|
)
|
|||||||||||||||||||
Settlement of net share equity awards
|
-
|
-
|
-
|
-
|
25
|
(712
|
)
|
(712
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
-
|
3,880
|
-
|
-
|
-
|
3,880
|
|||||||||||||||||||||
Balance-February 3, 2018
|
38,863
|
389
|
180,536
|
731,901
|
19,910
|
(593,230
|
)
|
319,596
|
||||||||||||||||||||
Net income
|
-
|
-
|
-
|
28,421
|
-
|
-
|
28,421
|
|||||||||||||||||||||
Issuance of shares through the Company’s equity plans
|
120
|
1
|
900
|
-
|
-
|
-
|
901
|
|||||||||||||||||||||
Adjustment for adoption of accounting standard
|
-
|
-
|
-
|
(645
|
)
|
-
|
-
|
(645
|
)
|
|||||||||||||||||||
Purchase of shares under the stock repurchase program
|
-
|
-
|
-
|
-
|
757
|
(16,124
|
)
|
(16,124
|
)
|
|||||||||||||||||||
Settlement of net share equity awards
|
-
|
-
|
-
|
-
|
19
|
(416
|
)
|
(416
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
-
|
4,316
|
-
|
-
|
-
|
4,316
|
|||||||||||||||||||||
Balance-February 2, 2019
|
38,983
|
$
|
390
|
$
|
185,752
|
$
|
759,677
|
20,686
|
$
|
(609,770
|
)
|
$
|
336,049
|
Fiscal Year Ended
|
||||||||||||
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Gross marketing costs
|
$
|
17,608
|
$
|
13,356
|
$
|
10,382
|
||||||
Marketing reimbursements
|
(2,850
|
)
|
(3,010
|
)
|
(3,319
|
)
|
||||||
Net marketing costs
|
$
|
14,758
|
$
|
10,346
|
$
|
7,063
|
Account
|
Balance Sheet Presentation
|
Balance
2/2/2019
|
||||||
Short-term below-market lease intangible
|
Current asset
|
Prepaid expenses and other
|
$
|
320
|
||||
Long-term below-market lease intangible
|
Non-current asset
|
Other assets, net
|
$
|
1,201
|
||||
Short-term above-market lease intangible
|
Current liability
|
Other accrued expenses
|
$
|
605
|
||||
Long-term above-market lease intangible
|
Non-current liability
|
Other liabilities
|
$
|
1,966
|
February 2,
2019
|
February 3,
2018
|
|||||||
Land
|
$
|
7,277
|
$
|
7,277
|
||||
Buildings
|
21,311
|
21,311
|
||||||
Buildings under capital lease
|
3,363
|
3,652
|
||||||
Equipment
|
96,402
|
93,163
|
||||||
Equipment under capital lease
|
678
|
-
|
||||||
Automobiles under capital lease
|
1,829
|
1,702
|
||||||
Furniture and fixtures
|
36,980
|
34,892
|
||||||
Leasehold improvements
|
101,572
|
91,218
|
||||||
Construction in progress
|
2,080
|
4,795
|
||||||
Total property and equipment
|
271,492
|
258,010
|
||||||
Less: accumulated depreciation and amortization
|
156,098
|
148,312
|
||||||
Total property and equipment, net
|
$
|
115,394
|
$
|
109,698
|
Buildings
|
39 years
|
Leasehold improvements
|
3 – 10 years
|
Furniture and fixtures
|
7 years
|
Equipment
|
3 – 7 years
|
Fiscal 2019
(52 weeks)
|
Fiscal 2018
(53 weeks)
|
Fiscal 2017
(52 weeks)
|
||||||||||
Footwear
|
$
|
579,766
|
$
|
531,552
|
$
|
505,939
|
||||||
Apparel
|
276,731
|
269,512
|
282,158
|
|||||||||
Equipment
|
152,185
|
167,155
|
184,862
|
|||||||||
$
|
1,008,682
|
$
|
968,219
|
$
|
972,960
|
Note 2.
|
Recent Accounting Pronouncements
|
·
|
The stand-alone benefit received by customers through the Hibbett Rewards customer loyalty program recorded as a separate performance
obligation,
|
·
|
Gift card breakage income recognized in net sales in proportion to the customer redemption pattern, and
|
·
|
The liability for net sales returns recognized on a gross basis including a right to recover asset measured at the former carrying value of
the inventory less any expected recovery costs.
|
As Reported
|
ASU 2014-09
Effect (1)
|
Excluding ASU
2014-09 Effect
|
||||||||||
Inventories, net
|
$
|
280,287
|
$
|
(130
|
)
|
$
|
280,417
|
|||||
Prepaid expenses and other
|
$
|
16,343
|
$
|
(252
|
)
|
$
|
16,595
|
|||||
Accounts payable
|
$
|
107,315
|
$
|
693
|
$
|
106,622
|
||||||
Other accrued expenses
|
$
|
10,174
|
$
|
(49
|
)
|
$
|
10,223
|
As Reported
|
ASU 2014-09
Effect
|
Excluding ASU
2014-09 Effect
|
||||||||||
Net sales
|
$
|
1,008,682
|
$
|
(977
|
)
|
$
|
1,009,659
|
|||||
Cost of goods sold
|
$
|
679,947
|
$
|
(110
|
)
|
$
|
680,057
|
|||||
Gross margin
|
$
|
328,735
|
$
|
(867
|
)
|
$
|
329,602
|
|||||
Store operating, selling and administrative expenses
|
$
|
264,142
|
$
|
(68
|
)
|
$
|
264,210
|
|||||
Income before provision for income taxes
|
$
|
37,558
|
$
|
(800
|
)
|
$
|
38,358
|
|||||
Provision for income taxes
|
$
|
9,137
|
$
|
(194
|
)
|
$
|
9,331
|
|||||
Net income
|
$
|
28,421
|
$
|
(606
|
)
|
$
|
29,027
|
|||||
Diluted earnings per share
|
$
|
1.51
|
$
|
(0.03
|
)
|
$
|
1.54
|
Note 3.
|
Acquisition
|
Assets Acquired:
|
||||
Current assets:
|
||||
Receivables
|
3,168
|
|||
Inventories
|
44,807
|
|||
Prepaid expense, other current and intangible assets
|
2,716
|
|||
Total current assets
|
50,691
|
|||
Goodwill
|
23,133
|
|||
Property and equipment
|
16,530
|
|||
Long-term intangible assets
|
33,601
|
|||
Deposits and other assets
|
567
|
|||
Deferred tax asset
|
24
|
|||
Total assets
|
$
|
124,546
|
||
Liabilities Assumed:
|
||||
Current liabilities:
|
||||
Accounts payable
|
$
|
23,615
|
||
Other accrued expenses and intangible liabilities
|
3,366
|
|||
Total current liabilities
|
26,981
|
|||
Other long-term liabilities and intangible liabilities
|
2,613
|
|||
Total liabilities
|
29,594
|
|||
Total purchase price
|
$
|
94,952
|
||
Cash paid at closing
|
$
|
86,837
|
||
Fair value of contingent earnout
|
9,200
|
|||
Net working capital and debt-like items adjustment
|
(1,085
|
)
|
||
$
|
94,952
|
Pro Forma - Unaudited
Fiscal Year Ended |
||||||||
(in thousands, except per share data)
|
February 2,
2019
|
February 3,
2018
|
||||||
Net sales
|
$
|
1,152,628
|
$
|
1,158,701
|
||||
Net income
|
$
|
27,265
|
$
|
31,673
|
||||
Basic earnings per share
|
$
|
1.46
|
$
|
1.56
|
||||
Diluted earnings per share
|
$
|
1.45
|
$
|
1.55
|
·
|
the pro forma impact of amortization of intangible assets;
|
·
|
the depreciation of property and equipment, based on purchase price allocations;
|
·
|
the pro forma impact of additional interest expense relating to the acquisition;
|
·
|
the pro forma impact of acquisition-related costs incurred by the Company directly attributable to the transaction; and
|
·
|
the pro forma tax effect of income taxes on the above adjustments.
|
Note 4.
|
Stock-Based Compensation
|
(a) |
The 2015 Equity Incentive Plan (EIP) provides that the Board of Directors (Board) may grant equity awards to certain employees of the Company at its discretion.
The EIP was adopted effective July 1, 2015 and authorizes grants of equity awards of up to 1,000,000 authorized but unissued shares of common stock. At February 2, 2019, there were 534,918 shares available for grant under the
EIP.
|
(b) |
The 2015 Employee Stock Purchase Plan (ESPP) allows for qualified employees to participate in the purchase of up to 300,000 shares of our common stock at a price
equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period. The ESPP was adopted effective July 1, 2015. At February 2, 2019, there were 228,718 shares available for purchase
under the ESPP.
|
(c) |
The 2015 Director Deferred Compensation Plan (Deferred Plan) allows non-employee directors an election to defer all or a portion of their fees into stock units or
stock options. The Deferred Plan was adopted effective July 1, 2015 and authorizes grants up to 150,000 authorized but unissued shares of common stock. At February 2, 2019, there were 130,465 shares available for grant under
the Deferred Plan.
|
(d) |
The 2012 Non-Employee Director Equity Plan (DEP) provides for grants of equity awards to non-employee directors. The DEP was adopted effective May 24, 2012 and
authorizes grants of equity awards of up to 500,000 authorized but unissued shares of common stock. At February 2, 2019, there were 262,315 shares available for grant under the DEP.
|
Fiscal Year Ended
|
||||||||||||
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Stock-based compensation expense by type:
|
||||||||||||
Stock options
|
$
|
185
|
$
|
224
|
$
|
384
|
||||||
Restricted stock units
|
3,932
|
3,536
|
4,010
|
|||||||||
Employee stock purchases
|
105
|
96
|
104
|
|||||||||
Director deferred compensation
|
94
|
24
|
94
|
|||||||||
Total stock-based compensation expense
|
4,316
|
3,880
|
4,592
|
|||||||||
Income tax benefit recognized
|
958
|
1,363
|
1,655
|
|||||||||
Stock-based compensation expense, net of income tax
|
$
|
3,358
|
$
|
2,517
|
$
|
2,937
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
(Years)
|
Aggregate
Intrinsic
Value
($000’s)
|
|||||||||||||
Options outstanding at February 3, 2018
|
288,150
|
$
|
36.15
|
5.12
|
$
|
324
|
||||||||||
Granted
|
19,994
|
22.55
|
||||||||||||||
Exercised
|
(27,625
|
)
|
17.46
|
|||||||||||||
Forfeited, cancelled or expired
|
(1,097
|
)
|
20.02
|
|||||||||||||
Options outstanding at February 2, 2019
|
279,422
|
$
|
37.08
|
4.91
|
$
|
55
|
||||||||||
Exercisable at February 2, 2019
|
279,422
|
$
|
37.08
|
4.91
|
$
|
55
|
RSUs
|
PSUs
|
Totals
|
||||||||||||||||||||||
Number of
Awards
|
Weighted
Average
Grant-Date
Fair Value
|
Number of
Awards
|
Weighted
Average
Grant-Date
Fair Value
|
Number of
Awards
|
Weighted
Average
Grant-Date
Fair Value
|
|||||||||||||||||||
Restricted stock unit awards outstanding at February 3, 2018
|
313,611
|
$
|
40.10
|
132,370
|
$
|
37.55
|
445,981
|
$
|
39.34
|
|||||||||||||||
Granted
|
174,007
|
22.55
|
44,700
|
22.55
|
218,707
|
22.55
|
||||||||||||||||||
PSU adjustment (1)
|
-
|
-
|
(13,725
|
)
|
29.30
|
(13,725
|
)
|
40.24
|
||||||||||||||||
Vested
|
(60,658
|
)
|
51.47
|
(5,025
|
)
|
54.06
|
(65,683
|
)
|
51.67
|
|||||||||||||||
Forfeited, cancelled or expired
|
(22,583
|
)
|
33.31
|
(14,650
|
)
|
50.48
|
(37,233
|
)
|
40.07
|
|||||||||||||||
Restricted stock unit awards outstanding at February 2, 2019
|
404,377
|
$
|
31.22
|
143,670
|
$
|
31.78
|
548,047
|
$
|
31.37
|
Fiscal Year Ended
|
Shares
Purchased
|
Average Price
Per Share
|
||||||
February 2, 2019
|
26,077
|
$
|
15.96
|
|||||
February 3, 2018
|
23,555
|
$
|
16.36
|
|||||
January 28, 2017
|
14,890
|
$
|
28.48
|
Fiscal Year Ended
|
|||||||||
February 2,
2019
|
February 3,
2018
|
January 28,
2017
|
|||||||
Weighted average fair value at date of grant
|
$4.75
|
$4.06
|
$6.98
|
||||||
Expected life (years)
|
0.25
|
0.25
|
0.25
|
||||||
Expected volatility
|
34.8% - 36.1%
|
|
30.2% - 36.2%
|
|
30.1% - 32.0%
|
|
|||
Risk-free interest rate
|
3.26% - 5.21%
|
|
1.19% - 2.48%
|
|
0.37% - 0.68%
|
|
|||
Dividend yield
|
None
|
None
|
None
|
Note 5.
|
Earnings Per Share
|
Fiscal Year Ended
|
||||||||||||
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Net income
|
$
|
28,421
|
$
|
35,030
|
$
|
61,075
|
||||||
Weighted average number of common shares outstanding
|
18,644
|
20,347
|
22,240
|
|||||||||
Dilutive stock options
|
3
|
5
|
40
|
|||||||||
Dilutive restricted stock units
|
179
|
98
|
147
|
|||||||||
Weighted average number of common shares outstanding and dilutive shares
|
18,826
|
20,450
|
22,427
|
|||||||||
Basic earnings per share
|
$
|
1.52
|
$
|
1.72
|
$
|
2.75
|
||||||
Diluted earnings per share
|
$
|
1.51
|
$
|
1.71
|
$
|
2.72
|
NOTE 6.
|
DEBT
|
NOTE 7.
|
LEASES
|
Capital
|
Operating
|
Total
|
||||||||||
Fiscal 2020
|
$
|
1,259
|
$
|
68,002
|
$
|
69,261
|
||||||
Fiscal 2021
|
951
|
58,666
|
59,617
|
|||||||||
Fiscal 2022
|
451
|
46,683
|
47,134
|
|||||||||
Fiscal 2023
|
408
|
34,011
|
34,419
|
|||||||||
Fiscal 2024
|
306
|
22,426
|
22,732
|
|||||||||
Thereafter
|
217
|
40,181
|
40,398
|
|||||||||
Total minimum lease payments
|
3,592
|
269,969
|
273,561
|
|||||||||
Less amount representing interest
|
581
|
-
|
581
|
|||||||||
$
|
3,011
|
$
|
269,969
|
$
|
272,980
|
Fiscal Year Ended
|
||||||||||||
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Minimum rentals
|
$
|
55,755
|
$
|
54,337
|
$
|
54,910
|
||||||
Contingent rentals
|
4,397
|
4,931
|
4,744
|
|||||||||
$
|
60,152
|
$
|
59,268
|
$
|
59,654
|
NOTE 8.
|
DEFINED CONTRIBUTION BENEFIT PLANS
|
NOTE 9.
|
RELATED‑PARTY TRANSACTIONS
|
NOTE 10.
|
INCOME TAXES
|
Fiscal Year Ended
|
||||||||||||
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Federal:
|
||||||||||||
Current
|
$
|
7,375
|
$
|
16,154
|
$
|
31,007
|
||||||
Deferred
|
339
|
3,257
|
1,359
|
|||||||||
7,714
|
19,411
|
32,366
|
||||||||||
State:
|
||||||||||||
Current
|
1,625
|
1,668
|
3,042
|
|||||||||
Deferred
|
(202
|
)
|
338
|
13
|
||||||||
1,423
|
2,006
|
3,055
|
||||||||||
Provision for income taxes
|
$
|
9,137
|
$
|
21,417
|
$
|
35,421
|
Fiscal Year Ended
|
||||||||||||
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Tax provision computed at the federal statutory rate
|
21.00
|
%
|
33.72
|
%
|
35.00
|
%
|
||||||
Effect of state income taxes, net of federal benefits
|
2.86
|
2.50
|
2.22
|
|||||||||
Enactment of the Tax Cuts and Jobs Act
|
-
|
1.39
|
-
|
|||||||||
Federal income tax credits
|
(1.36
|
)
|
(0.32
|
)
|
(0.45
|
)
|
||||||
Equity compensation tax deficiencies
|
1.30
|
1.23
|
-
|
|||||||||
Other, net
|
0.53
|
(0.58
|
)
|
(0.06
|
)
|
|||||||
24.33
|
%
|
37.94
|
%
|
36.71
|
%
|
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
|||||||
Deferred rent
|
$
|
6,333
|
$
|
6,971
|
||||
Inventories
|
3,442
|
3,209
|
||||||
Accruals
|
5,080
|
3,616
|
||||||
Stock-based compensation
|
3,681
|
3,714
|
||||||
Other
|
328
|
49
|
||||||
Total deferred tax assets
|
18,864
|
17,559
|
||||||
Accumulated depreciation and amortization
|
(15,089
|
)
|
(14,395
|
)
|
||||
Prepaid expenses
|
(1,420
|
)
|
(644
|
)
|
||||
Other
|
-
|
(224
|
)
|
|||||
State taxes
|
(77
|
)
|
(120
|
)
|
||||
Total deferred tax liabilities
|
(16,586
|
)
|
(15,383
|
)
|
||||
Deferred income taxes, net
|
$
|
2,278
|
$
|
2,176
|
February 2,
2019
(52 weeks) |
February 3,
2018
(53 weeks) |
January 28,
2017
(52 weeks) |
||||||||||
Unrecognized tax benefits - beginning of year
|
$
|
1,156
|
$
|
1,267
|
$
|
1,242
|
||||||
Gross increases - tax positions in prior period
|
246
|
140
|
158
|
|||||||||
Gross decreases - tax positions in prior period
|
(10
|
)
|
(7
|
)
|
(26
|
)
|
||||||
Gross increases - tax positions in current period
|
107
|
70
|
121
|
|||||||||
Settlements
|
-
|
-
|
-
|
|||||||||
Lapse of statute of limitations
|
(254
|
)
|
(314
|
)
|
(228
|
)
|
||||||
Unrecognized tax benefits - end of year
|
$
|
1,245
|
$
|
1,156
|
$
|
1,267
|
NOTE 11.
|
COMMITMENTS AND CONTINGENCIES
|
NOTE 12.
|
QUARTERLY FINANCIAL DATA (UNAUDITED)
|
Fiscal Year Ended February 2, 2019
|
||||||||||||||||
First
(13 weeks)
|
Second
(13 weeks)
|
Third
(13 weeks)
|
Fourth
(13 weeks)
|
|||||||||||||
Net sales
|
$
|
274,707
|
$
|
211,123
|
$
|
216,888
|
$
|
305,964
|
||||||||
Gross margin
|
$
|
96,773
|
$
|
66,351
|
$
|
70,512
|
$
|
95,099
|
||||||||
Operating income (loss)
|
$
|
28,621
|
$
|
(1,885
|
)
|
$
|
1,842
|
$
|
8,963
|
|||||||
Net income (loss)
|
$
|
21,509
|
$
|
(1,222
|
)
|
$
|
1,499
|
$
|
6,634
|
|||||||
Basic earnings (loss) per share
|
$
|
1.13
|
$
|
(0.06
|
)
|
$
|
0.08
|
$
|
0.36
|
|||||||
Diluted earnings (loss) per share
|
$
|
1.12
|
$
|
(0.06
|
)
|
$
|
0.08
|
$
|
0.36
|
Fiscal Year Ended February 3, 2018
|
||||||||||||||||
First
(13 weeks)
|
Second
(13 weeks)
|
Third
(13 weeks)
|
Fourth
(14 weeks)
|
|||||||||||||
Net sales
|
$
|
275,688
|
$
|
187,958
|
$
|
237,834
|
$
|
266,738
|
||||||||
Gross margin
|
$
|
98,218
|
$
|
54,408
|
$
|
76,113
|
$
|
83,977
|
||||||||
Operating income (loss)
|
$
|
34,168
|
$
|
(5,162
|
)
|
$
|
11,787
|
$
|
15,884
|
|||||||
Net income (loss)
|
$
|
20,910
|
$
|
(3,176
|
)
|
$
|
7,564
|
$
|
9,733
|
|||||||
Basic earnings (loss) per share
|
$
|
0.98
|
$
|
(0.15
|
)
|
$
|
0.37
|
$
|
0.51
|
|||||||
Diluted earnings (loss) per share
|
$
|
0.97
|
$
|
(0.15
|
)
|
$
|
0.37
|
$
|
0.51
|
NOTE 13.
|
FAIR VALUE MEASUREMENTS
|
· |
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.
|
February 2, 2019
|
February 3, 2018
|
|||||||||||||||||||||||
Level I
|
Level II
|
Level III
|
Level I
|
Level II
|
Level III
|
|||||||||||||||||||
Short-term investments
|
$
|
158
|
$
|
-
|
$
|
-
|
$
|
463
|
$
|
-
|
$
|
-
|
||||||||||||
Long-term investments
|
2,377
|
-
|
-
|
2,418
|
-
|
-
|
||||||||||||||||||
Long-term contingent earnout
|
-
|
-
|
9,200
|
-
|
-
|
-
|
||||||||||||||||||
Total investments
|
$
|
2,535
|
$
|
-
|
$
|
9,200
|
$
|
2,881
|
$
|
-
|
$
|
-
|
(a)
|
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
|
(b)
|
Management’s Report on Internal Control Over Financial Reporting
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
(a)
|
(b)
|
(c)
|
||||||||||
Plan Category
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(1)
|
Weighted
average
exercise price
of outstanding
options
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a)) (2)
|
|||||||||
Equity compensation plans approved by security holders
|
837,486
|
$
|
37.11
|
1,156,416
|
||||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||||
TOTAL
|
837,486
|
$
|
37.11
|
1,156,416
|
(1) |
Includes 404,377 RSUs and 148,200 PSUs that may be awarded if specified targets and/or service periods are met. It also includes 5,487 DSUs. The weighted average
exercise price of outstanding options does not include these awards.
|
(2) |
Includes 228,718 shares remaining under our ESPP and 130,465 shares remaining under our Deferred Plan without consideration of shares subject to purchase in the
purchasing period ending March 31, 2019.
|
(a)
|
Documents filed as part of this report:
|
Number
|
Description
|
Page
|
|
1.
|
Financial Statements.
|
||
The following Consolidated Financial Statements and Supplementary Data of the Company and Independent Registered Public Accounting Firm’s
Report on such Consolidated Financial Statements are included in Part II, Item 8 of this report:
|
|||
41
|
|||
43
|
|||
44
|
|||
45
|
|||
46
|
|||
47
|
|||
2.
|
Financial Statement Schedules.
|
||
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required
under the related instructions or are not applicable, and therefore have been omitted.
|
|||
3.
|
Exhibits.
|
||
The Exhibits listed below are the exhibits of Hibbett Sports, Inc. and its wholly owned subsidiaries and are filed as part of, or incorporated
by reference into, this report.
|
|||
Certificates of Incorporation and By-Laws
|
|||
3.1
|
Certificate of Incorporation of the Registrant; incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 31, 2012.
|
||
3.2
|
Bylaws of the Registrant, as amended; incorporated herein by reference to Exhibit 3.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 31, 2012.
|
||
Form of Stock Certificate
|
|||
4.1
|
Form of Stock Certificate; attached as Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on September 26, 2007.
|
||
Material Contracts
|
|||
10.1
|
Membership Interest and Warrant Purchase Agreement; incorporated herein by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October
30, 2018.
|
Number
|
Description
|
Page
|
|
10.2
|
Second Amended and Restated Demand Note with Bank of America, N.A.; incorporated herein by reference to Exhibit 10.1 of the
Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2018.
|
||
10.3
|
Amended and Restated Demand Note with Regions Bank; incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on
Form 8-K filed with the Securities and Exchange Commission on October 30, 2018.
|
||
10.4
|
Hibbett Sports, Inc. 2012 Non-Employee Director Equity Plan; incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission
on May 31, 2012.
|
||
10.5
|
Hibbett Sports, Inc. Non-Employee Director Non-Qualified Option Agreement (Initial Grant, Service Requirement); incorporated herein by reference to Exhibit 10.2 to the Registrant’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2012.
|
||
10.6
|
Hibbett Sports, Inc. Non-Employee Director Restricted Stock Unit Award Agreement (Initial Grant, Service Requirement); incorporated herein by reference to Exhibit 10.3 to the
Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2012.
|
||
10.7
|
Hibbett Sports, Inc. Non-Employee Director Non-Qualified Option Agreement (Annual Grant; Fully Vested); incorporated herein by reference to Exhibit 10.4 to the Registrant’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2012.
|
||
10.8
|
Hibbett Sports, Inc. Non-Employee Director Restricted Stock Unit Award Agreement (Annual Grant; Fully Vested); incorporated herein by reference to Exhibit 10.5 to the Registrant’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2012.
|
||
10.9
|
Amended and Restated Agreement of Lease between Hibbett Sporting Goods, Inc. and AL Florence Realty Holdings 2010, LLC, dated October 3, 2011; incorporated herein by reference to Exhibit 10.1 to the
Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 26, 2012.
|
||
10.10
|
Change in Control Severance Agreement; incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2008.
|
||
10.11
|
Executive Restricted Stock Unit Award Agreement; incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11,
2008.
|
||
10.12
|
Hibbett Sports, Inc. 2015 Equity Incentive Plan; incorporated herein by reference to Appendix A to the Registrant’s Definitive Proxy Statement filed with the Securities and Exchange Commission of
April 23, 2015.
|
||
10.13
|
Hibbett Sports, Inc. 2016 Executive Officer Cash Bonus Plan; incorporated herein by reference to Appendix A to the Registrant’s Definitive Proxy Statement for the 2016 Annual Meeting of Stockholders filed
with the Securities and Exchange Commission on April 21, 2016.
|
||
10.14
|
Hibbett Sports, Inc. Executive Voluntary Deferral Plan; incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on
November 20, 2009.
|
||
10.15
|
Hibbett Sports, Inc. 2015 Employee Stock Purchase Plan; incorporated herein by reference to Appendix B to the Registrant’s Definitive Proxy Statement filed with the Securities and Exchange
Commission on April 23, 2015.
|
||
10.16
|
Hibbett Sports, Inc. 2015 Director Deferred Compensation Plan; incorporated herein by reference to Appendix C to the Registrant’s Definitive Proxy Statement filed with the Securities and Exchange
Commission on April 23, 2015.
|
Number
|
Description
|
Page
|
|
10.17
|
Standard Restricted Stock Unit Award Agreement; incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December
7, 2016.
|
||
10.18
|
Executive Restricted Stock Unit Award Agreement; incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June
13, 2018.
|
||
Subsidiaries of the Registrant
|
|||
21
|
List of Company’s Subsidiaries:
1) Hibbett Sporting Goods,
Inc., a Delaware Corporation
2) City Gear, LLC, a
Tennessee Limited Liability Company
3) Hibbett Digital
Management, LLC, an Alabama Limited Liability Company
4) Gift Card Services,
LLC., a Virginia Limited Liability Company
5) Hibbett Wholesale, Inc.,
an Alabama Corporation
6) Hibbett Holdings, LLC,
an Alabama Limited Liability Company
|
||
Consents of Experts and Counsel
|
|||
Consent of Independent Registered Public Accounting Firm (filed herewith)
|
76
|
||
Certifications
|
|||
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer (filed herewith)
|
77 | ||
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer (filed herewith)
|
78 | ||
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith)
|
79 | ||
Interactive Data Files
|
|||
The following financial information from the Annual Report on Form 10-K for the fiscal year ended February 2, 2019, formatted in XBRL
(eXtensible Business Reporting Language) and submitted electronically herewith: (i) the Audited Consolidated Balance Sheets at February 2, 2019 and February 3, 2018; (ii) the Audited Consolidated Statements of Operations for the
fiscal years ended February 2, 2019, February 3, 2018 and January 28, 2017; (iii) the Audited Consolidated Statements of Cash Flows for the fiscal years ended February 2, 2019, February 3, 2018 and January 28, 2017; (vi) the Audited
Statements of Stockholders’ Investment for the fiscal years ended February 2, 2019, February 3, 2018 and January 28, 2017; (v) the Notes to Audited Consolidated Financial Statements.
|
|||
101.INS
|
* |
XBRL Instance Document
|
|
101.SCH
|
* |
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
* |
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
* |
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
* |
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
* |
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
* |
Filed Within
|
HIBBETT SPORTS, INC.
|
||
Date: April 18, 2019
|
By:
|
/s/ Scott J. Bowman
|
Scott J. Bowman
Senior Vice President and Chief Financial Officer (Principal
Financial and Accounting Officer)
|
Signature
|
Title
|
Date
|
||
/s/ Jeffry O. Rosenthal
|
Chief Executive Officer, President and Director (Principal
Executive Officer)
|
April 18, 2019
|
||
Jeffry O. Rosenthal
|
||||
/s/ Scott J. Bowman
|
Senior Vice President and Chief Financial Officer (Principal
Financial and Accounting Officer)
|
April 18, 2019
|
||
Scott J. Bowman
|
||||
/s/ Michael J. Newsome
|
Chairman of the Board
|
April 18, 2019
|
||
Michael J. Newsome
|
||||
/s/ Anthony F. Crudele
|
Lead Director
|
April 18, 2019
|
||
Anthony F. Crudele
|
||||
/s/ Jane F. Aggers
|
Director
|
April 18, 2019
|
||
Jane F. Aggers
|
||||
/s/ Karen S. Etzkorn
|
Director
|
April 18, 2019
|
||
Karen S. Etzkorn
|
||||
/s/ Terrance G. Finley
|
Director
|
April 18, 2019
|
||
Terrance G. Finley
|
||||
/s/ James A. Hilt
|
Director
|
April 18, 2019
|
||
James A. Hilt
|
||||
/s/ Ralph T. Parks
|
Director
|
April 18, 2019
|
||
Ralph T. Parks
|
||||
/s/ Alton E. Yother
|
Director
|
April 18, 2019
|
||
Alton E. Yother
|
Date: April 18, 2019
|
/s/ Jeffry O. Rosenthal
|
Jeffry O. Rosenthal
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: April 18, 2019
|
/s/ Scott J. Bowman
|
Scott J. Bowman
|
|
Senior Vice President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
(1) |
the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934 as amended; and
|
(2) |
the information contained in the Report fairly presents in all material respects, the financial condition and results of operations of the Company.
|
Date: April 18, 2019
|
/s/ Jeffry O. Rosenthal
|
Jeffry O. Rosenthal
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: April 18, 2019
|
/s/ Scott J. Bowman
|
Scott J. Bowman
|
|
Senior Vice President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
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Document and Entity Information - USD ($) |
12 Months Ended | ||
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Feb. 02, 2019 |
Apr. 02, 2019 |
Aug. 04, 2018 |
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Document and Entity Information [Abstract] | |||
Entity Registrant Name | HIBBETT SPORTS INC | ||
Entity Central Index Key | 0001017480 | ||
Current Fiscal Year End Date | --02-02 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Public Float | $ 444,759,513 | ||
Entity Common Stock, Shares Outstanding | 18,384,835 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Feb. 02, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Feb. 02, 2019 |
Feb. 03, 2018 |
---|---|---|
Stockholder's Investment: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 80,000,000 | 80,000,000 |
Common stock, shares issued (in shares) | 38,983,232 | 38,862,929 |
Treasury stock, shares (in shares) | 20,686,242 | 19,910,291 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
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Consolidated Statements of Operations [Abstract] | |||
Net sales | $ 1,008,682 | $ 968,219 | $ 972,960 |
Cost of goods sold | 679,947 | 655,502 | 634,364 |
Gross margin | 328,735 | 312,717 | 338,596 |
Store operating, selling and administrative expenses | 264,142 | 231,832 | 222,785 |
Depreciation and amortization | 27,052 | 24,207 | 19,047 |
Operating income | 37,541 | 56,678 | 96,764 |
Interest income | 731 | 39 | 24 |
Interest expense | (714) | (270) | (292) |
Interest income (expense), net | 17 | (231) | (268) |
Income before provision for income taxes | 37,558 | 56,447 | 96,496 |
Provision for income taxes | 9,137 | 21,417 | 35,421 |
Net income | $ 28,421 | $ 35,030 | $ 61,075 |
Basic earnings per share (in dollars per share) | $ 1.52 | $ 1.72 | $ 2.75 |
Diluted earnings per share (in dollars per share) | $ 1.51 | $ 1.71 | $ 2.72 |
Weighted average shares outstanding: | |||
Basic (in shares) | 18,644 | 20,347 | 22,240 |
Diluted (in shares) | 18,826 | 20,450 | 22,427 |
Basis of Presentation and Summary of Critical and Significant Accounting Policies |
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Basis of Presentation and Summary of Critical and Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Critical and Significant Accounting Policies | Note 1. Basis of Presentation and Summary of Critical and Significant Accounting Policies Business Hibbett Sports, Inc. is a leading athletic-inspired fashion retailer primarily located in small and mid-sized communities across the country. References to “we,” “our,” “us”, “Hibbett” and the “Company” refer to Hibbett Sports, Inc. and its subsidiaries as well as its predecessors. Our fiscal year ends on the Saturday closest to January 31 of each year. The consolidated statements of operations for Fiscal 2019, Fiscal 2018 and Fiscal 2017 include 52 weeks, 53 week and 52 weeks of operations, respectively. Our merchandise assortment features a core selection of brand name merchandise emphasizing athletic footwear, athletic and fashion apparel, team sports equipment and related accessories. We complement this core assortment with a selection of localized footwear, apparel and accessories designed to appeal to a wide range of customers within each market. Acquisition We acquired City Gear, LLC (City Gear) on November 5, 2018 with an effective date of November 4, 2018 for approximately $88.0 million, including $86.8 million of cash paid. (See Note 3 – Acquisition) Principles of Consolidation The consolidated financial statements of our Company include its accounts and the accounts of all wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Occasionally, certain reclassifications are made to conform previously reported data to the current presentation. Such reclassifications have no impact on total assets, total liabilities, net income or stockholders’ investment in any of the years presented. Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (U.S. GAAP) requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses, and the disclosure of intangible assets and intangible and contingent liabilities at the date of the financial statements. We believe our estimates are reasonable; however, the assumptions used by management could change significantly in future estimates due to changes in circumstances and actual results could differ materially from those estimates. Reportable Segments Hibbett Sports, Inc., through its subsidiaries, is a leading athletic-inspired fashion retailer with more than 1,100 stores operating under the Hibbett Sporting Goods and City Gear banners and an omni-channel platform. We identify our operating segments according to how our business activities are managed and evaluated by our chief executive officer who is our chief operating decision maker. Our shopping channels primarily include store locations and websites or apps. Store sales are primarily filled from the store’s inventory but may also be shipped from a different store location or our logistics network if an item is not available at the original store. Direct-to-consumer orders are generally shipped to our customers from a store, our logistics network or some combination thereof depending on the availability of the desired item. Given the economic similarity of the store formats, the products offered for sale, the type of customers, the methods of distribution and how our Company is managed, our operations constitute only one reportable segment. Vendor Arrangements We enter into arrangements with some of our vendors that entitle us to a partial refund of the cost of merchandise purchased during the year or reimbursement of certain costs we incur to advertise or otherwise promote their product. Volume-based rebates, supported by vendor agreements, are estimated throughout the year and reduce the cost of inventories and cost of goods sold during the year. This estimate is regularly monitored and adjusted for current or anticipated changes in purchase levels and for sales activity. We also receive consideration from vendors through a variety of other programs, including markdown reimbursements, vendor compliance charges and defective merchandise credits. If the payment is a reimbursement for costs incurred, it is recognized as an offset against those related costs; otherwise, it is treated as a reduction to the cost of merchandise. Markdown reimbursements related to merchandise that has been sold are negotiated by our merchandising teams and are credited directly to cost of goods sold in the period received. If vendor funds are received prior to merchandise being sold, they are recorded as a reduction of merchandise cost. Vendor compliance charges and defective merchandise credits reduce the cost of inventories. Marketing We expense marketing costs when incurred. We participate in various marketing cooperative programs with our vendors, who, under these programs, reimburse us for certain costs incurred. A receivable for cooperative marketing to be reimbursed is recorded as a decrease to expense as advertisements are run. The following table presents the components of our marketing expense (in thousands):
Cost of Goods Sold We include merchandise costs, store occupancy costs, logistics-related occupancy and operating costs and ship-to-home freight in cost of goods sold. Stock Repurchase Program In November 2018, our Board authorized the continuation of our existing Stock Repurchase Program (2018 Program) established in November 2015 (2015 Program) until January 29, 2022. The Program authorizes repurchases of our common stock in open market or negotiated transactions, with the amount and timing of repurchases dependent on market conditions and at the discretion of our management. In addition to the 2018 Program, we also acquire shares of our common stock from holders of restricted stock unit awards to satisfy tax withholding requirements due at vesting. Under the 2015 Program, the Board of Directors authorized up to $300.0 million to repurchase our common stock through February 2, 2019. The 2015 Program replaced an existing plan that was adopted in November 2012 (2012 Program). Under the 2018 Program and 2015 Program, we repurchased 0.8 million shares of our common stock during Fiscal 2019 at a cost of $16.5 million, including 18,765 shares acquired from holders of restricted stock to satisfy tax withholding requirements of $0.4 million. Under the 2015 Program, we repurchased 2.8 million shares of our common stock during Fiscal 2018 at a cost of $54.5 million, including 24,432 shares acquired from holders of restricted stock to satisfy tax withholding requirements of $0.7 million. Historically, under all stock repurchase authorizations, we have repurchased a total of 20.7 million shares of our common stock at an approximate cost of $609.8 million as of February 2, 2019 and had approximately $188.0 million remaining under the 2018 Program for stock repurchases. Shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements do not reduce the authorization. Cash and Cash Equivalents We consider all short-term, highly liquid investments with original maturities of 90 days or less, including commercial paper and money market funds, to be cash equivalents. Amounts due from third-party credit card processors for the settlement of debit and credit card transactions are included as cash equivalents as they are generally collected within three business days. Cash equivalents related to credit and debit card transactions at February 2, 2019 and February 3, 2018 were $5.5 million and $3.9 million, respectively. Investments We hold certain trading securities as investments in trust for the Hibbett Sports, Inc. Supplemental 401(k) Plan (Supplemental Plan) and the Hibbett Sports, Inc. Executive Voluntary Deferral Plan (Deferral Plan). At February 2, 2019, we had $2.5 million of investments of which $0.1 million was included in prepaid expenses and other and $2.4 million was included in other assets, net. At February 3, 2018, we had $2.9 million of investments of which $0.5 million was included in prepaid expenses and other and $2.4 million was included in other assets, net. Net unrealized holding losses for Fiscal 2019 were $0.3 million and net unrealized holding gains for Fiscal 2018 were $0.3 million. Purchase Price Allocation For the City Gear acquisition, we allocated the purchase price to the various tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values, which are preliminary as of February 2, 2019. Determining the fair value of certain assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, which are inherently uncertain. We engaged third party experts to assist in the determination of fair value for complex assets and liabilities. Many of these estimates and assumptions used to determine fair value, such as those used for intangible assets are made based on forecasted information and discount rates. In addition, the judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations. The final purchase price allocation will be completed after asset and liability valuations are finalized. This final valuation will be based on the actual assets and liabilities of City Gear that exist as of the acquisition date and goodwill may be different than the balance reflected in the consolidated balance sheet. Any final adjustments may change the allocation of the purchase price, which could affect the fair value assigned to the assets and liabilities and could result in significant changes to the consolidated financial data. Goodwill represents the excess of the actual purchase price of City Gear over the estimated fair value of City Gear’s net assets as of the date of acquisition. The computations require management to make estimates and assumptions. Intangible assets consist of trademarks and below-market leases resulting from the acquisition of City Gear. The fair value of trademarks was determined using the “income approach”, which requires a forecast of all expected future cash flows. The fair value of the below-market lease intangible was measured based on the present value of the difference between the contractual amounts to be paid pursuant to the lease and an estimate of current fair market lease rates measured over the non-cancelable remaining term of the lease. Amortization of the acquired below-market lease intangible is recognized as amortization expense within the consolidated statement of operations. Intangible liabilities consist of above-market leases resulting from the acquisition of City Gear. The fair value of the above-market lease intangible was measured based on the present value of the difference between the contractual amounts to be paid pursuant to the lease and an estimate of current fair market lease rates measured over the non-cancelable remaining term of the lease. Amortization of the acquired above-market lease intangible is recognized as amortization expense within the consolidated statement of operations. The below-market and above-market lease intangibles consist of short-term and long-term portions. Their presentation on the consolidated balance sheet and balance (in thousands) as of February 2, 2019 are as follows:
The net amortization recognized in Fiscal 2019 was immaterial. Receivables Receivables consist primarily of tenant allowances due from landlords and cooperative marketing and other amounts due from vendors. We analyze receivables for collectability based on aging of individual components, underlying contractual terms and economic conditions. Recorded amounts are deemed to be collectible. Inventories Inventories are valued using the lower of weighted average cost or net realizable value method. Items are removed from inventory using the weighted average cost method. Lower of Cost and Net Realizable Value: We regularly review inventories to determine if the carrying value exceeds net realizable value, and we record an accrual to reduce the carrying value to net realizable value as necessary. We account for obsolescence as part of our lower of cost and net realizable value accrual based on historical trends and specific identification. As of February 2, 2019 and February 3, 2018, the accrual was $4.5 million and $5.2 million, respectively. A determination of net realizable value requires significant judgment. Shrink Reserves: We accrue for inventory shrinkage based on the actual historical results of our physical inventory counts. These estimates are compared to actual results as physical inventory counts are performed and reconciled to the general ledger. Physical inventory counts are performed on a cyclical basis. As of February 2, 2019 and February 3, 2018, the accrual was $1.6 million and $1.4 million, respectively. Inventory Purchase Concentration: Our business is dependent to a significant degree upon close relationships with our vendors. Our largest vendor, Nike, represented 65.4%, 57.9% and 57.0% of our purchases for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Our second largest vendor, adidas, represented 10.0%, 11.0% and 5.5% of our purchases for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Our third largest vendor, Under Armour, represented 5.7%, 10.8% and 16.4% of our purchases for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Property and Equipment Property and equipment are recorded at cost and include assets acquired through capital leases. Property and equipment as of February 2, 2019 and February 3, 2018 consists of the following (in thousands):
Depreciation on property and equipment is principally provided using the straight-line method over the following estimated service lives:
In the case of leasehold improvements, we calculate depreciation using the shorter of the term of the underlying leases or the estimated economic lives of the improvements. The term of the lease includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured and failure to exercise such option would result in an economic penalty. We continually reassess the remaining useful life of leasehold improvements in light of store closing plans. Construction in progress has historically been comprised primarily of property and equipment related to unopened stores and amounts associated with technology upgrades at period-end. At February 2, 2019, approximately 69% of the construction in progress balance was comprised of costs associated with stores. The remaining balance consisted of costs associated with our technology initiatives. Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold, retired or otherwise disposed of are removed from property and equipment and the related gain or loss is credited or charged to net income, net of proceeds received. Goodwill and Indefinite-Lived Intangible Assets Goodwill and the City Gear tradename are indefinite-lived assets which are not amortized but rather tested for impairment at least annually, or on an interim basis if events and circumstances have occurred that indicate that is more likely than not that an asset is impaired. Such events or circumstances could include, but are not limited to, significant negative industry or economic trends, unanticipated changes in the competitive environment and a significant sustained decline in the market price of our stock. If it is more likely than not that an asset is impaired, the amount that the carrying value exceeds the fair value is recorded as an impairment charge to current income. No impairment of these assets existed as of February 2, 2019. Long-Lived Assets We continually evaluate whether events and circumstances have occurred that indicate the carrying amount of long-lived assets may be may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, our policy is to first compare undiscounted cash flows expected to be generated by that asset or asset group over its remaining life to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized as a charge to current income to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Assets or asset groups to be disposed of are reported at the lower of their carrying value or fair value less any costs of disposition. Evaluation of asset impairment requires significant judgment. Capitalized Interest We capitalize interest on borrowed funds during the construction of certain property and equipment. No interest costs were capitalized in Fiscal 2019, Fiscal 2018 or Fiscal 2017. Deferred Rent Deferred rent primarily consists of step rent and allowances from landlords related to our leased properties. Step rent represents the difference between actual operating lease payments due and straight-line rent expense, which we record over the term of the lease, including the build-out period. This amount is recorded as deferred rent in the early years of the lease, when cash payments are generally lower than straight-line rent expense, and reduced in the later years of the lease when payments begin to exceed the straight-line rent expense. Landlord allowances are generally comprised of amounts received and/or promised to us by landlords and may be received in the form of cash or free rent. For the cash component, we record a receivable from the landlord in accordance with the terms of the lease and a deferred rent liability. This deferred rent is amortized into net income (through lower rent expense) over the term (including the pre-opening build-out period) of the applicable lease, and the receivable is reduced as amounts are realized from the landlord. In our consolidated statements of cash flows, the current and long-term portions of landlord allowances are included as changes in cash flows from operations. The liability for the current portion of unamortized landlord allowances was $4.9 million and $5.1 million at February 2, 2019 and February 3, 2018, respectively. The liability for the long-term portion of unamortized landlord allowances was $14.8 million and $15.1 million at February 2, 2019 and February 3, 2018, respectively. We estimate the non-cash portion of landlord allowances was $0.1 million and $1.2 million at February 2, 2019 and February 3, 2018, respectively. Revenue Recognition In Fiscal 2019, 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. 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. Retail Store Sales: For merchandise sold in our stores, revenue is recognized at the point of sale when tender is accepted and the customer takes possession of the merchandise. Retail Store Orders: Retail store customers may order merchandise available in other retail store locations for pickup in the selling store at a later date. Customers make a deposit with the remaining balance due at pickup. These deposits are recorded as deferred revenue until the transaction is completed and the customer takes possession of the merchandise. Retail store customers may also order merchandise to be shipped to home. Payment is received in full at the time of order and recorded as deferred revenue until delivery. Layaways: We offer a retail store program giving customers the option of paying a deposit and placing merchandise on layaway. The customer may make further payments in installments, but the full purchase price must be received by us within 30 days. The payments are recorded as deferred revenue until the transaction is completed and the customer takes possession of the merchandise. Digital Channel Sales: For merchandise shipped to home, customer payment is received when the order ships. Revenue is deferred until control passes to the customer at delivery. Shipping and handling costs billed to customers are included in net sales. Customer Loyalty Programs: We offer two customer loyalty programs; the Hibbett Rewards program and the City Gear Reward Points program. Upon registration and in accordance with the terms of the programs, 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 consolidated balance sheets and was $2.2 million and $0.2 million at February 2, 2019 and February 3, 2018, respectively. Gift Cards: Proceeds received from the issuance of our non-expiring gift cards are initially recorded as deferred revenue. Revenue is subsequently recognized at the time the customer redeems the gift cards and takes possession of the merchandise. Unredeemed gift cards are recorded in accounts payable on our consolidated balance sheet. The net deferred revenue liability for gift cards, customer orders and layaways at February 2, 2019 and February 3, 2018 was $7.5 million and $6.2 million, respectively, recognized in accounts payable on our consolidated balance sheets. In Fiscal 2019, gift card breakage income was recognized in net sales in proportion to the redemption pattern of rights exercised by the customer and was $0.6 million. During Fiscal 2018 and Fiscal 2017, income from unredeemed gift cards was recognized on our consolidated statements of operations as a reduction to store operating, selling and administrative expenses when the likelihood of redemption was deemed remote. Gift card breakage was not material in Fiscal 2018 or Fiscal 2017. During the fiscal year ended February 2, 2019, $2.1 million of gift card deferred revenue from prior periods was realized. Return Sales: The liability for return sales is estimated at each reporting period based on historical return patterns and is recognized at the transaction price. The liability is included in accounts payable on our consolidated balance sheets. We also recognize a return asset and a corresponding adjustment to cost of goods sold for our right to recover the merchandise returned by the customer. This right to recover the asset is included in net inventory on our consolidated balance sheet at the former carrying value of the merchandise less any expected recovery costs which was $0.8 million at February 2, 2019. Revenues disaggregated by major product categories are as follows (in thousands):
Store Opening and Closing Costs New store opening costs, including pre-opening costs, are charged to expense as incurred. Store opening costs primarily include payroll expenses, training costs and straight-line rent expenses. All pre-opening costs are included in store operating, selling and administrative expenses as a part of operating expenses. We consider individual store closings to be a normal part of operations and regularly review store performance against expectations. Costs associated with store closings are recognized at the time of closing or when a liability has been incurred. These costs were not significant in Fiscal 2018, Fiscal 2017 or Fiscal 2016. Insurance Accrual We are self-insured for a significant portion of our health, workers’ compensation and other business insurance. Liabilities associated with the risks that are retained by us are estimated, in part, by considering our historical claims experience. The estimated accruals for these liabilities could be affected if future occurrences and claims differ from our assumptions. To minimize our potential exposure, we carry stop-loss insurance that reimburses us for losses over prescribed amounts per covered person per year. As of February 2, 2019 and February 3, 2018, the accrual for these liabilities was not material. Sales Returns Net sales returns were $47.7 million for Fiscal 2019, $43.8 million for Fiscal 2018 and $37.8 million for Fiscal 2017 and. The accrual for the effect of estimated returns was not material as of February 2, 2019 and February 3, 2018. |
Recent Accounting Pronouncements |
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Recent Accounting Pronouncements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements |
Standards that were adopted In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard related to revenue recognition. Under ASU 2014-09, Revenue from Contracts with Customers (Topic 606), revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive for those goods or services. The standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On February 4, 2018, we adopted ASU 2014-09 using the modified retrospective transition method. Results for reporting periods beginning after February 3, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. In preparation for implementation of the standard, we identified the revenue streams that would be affected. We then designed and implemented processes and internal controls to appropriately recognize and present the associated financial information. Based on these efforts, we determined that the adoption of ASU 2014-09 changed the recognition and presentation of:
We applied ASU 2014-09 only to contracts that were not completed prior to Fiscal 2019. The cumulative effect of initially applying ASU 2014-09 was a $0.6 million decrease to the opening balance of retained earnings as of February 4, 2018. We expect the adoption to be immaterial to our financial position, results of operations and cash flows on an ongoing basis. The effect of the adoption of ASU 2014-09 on our consolidated balance sheet as of February 2, 2019 was (in thousands):
(1) Does not include the cumulative effect of initially adopting ASU 2014-09 to our consolidated balance sheet as adjusted as of February 4, 2018. The effect of the adoption of ASU 2014-09 on our consolidated statement of operations for the fifty-two weeks ended February 2, 2019 was (in thousands, except per share amounts):
Standards that are not yet adopted In February 2016, the FASB established Topic 842, Leases, by issuing ASU 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; and ASU 2018-11, Targeted Improvements. The new standard establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective for us on February 3, 2019, and we will adopt it as of that date. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We will to use the effective date as our date of initial application. Consequently, financial information will not be restated, and the disclosures required under the new standard will not be provided for dates and periods prior to February 3, 2019. We have completed the upgrade of our existing lease accounting system to facilitate the adoption. The new standard provided for optional practical expedients in transition. We expect to elect the “package of practical expedients”, which permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs under the new standard. We will not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. On adoption, we will recognize additional operating liabilities of approximately $230.0 million, with corresponding ROU assets of approximately $210.0 million. The new standard provides practical expedients for an entity’s ongoing accounting. We will elect the short-term lease recognition exemption for certain classes of underlying assets. In doing so, for those leases that qualify, we will not recognize ROU assets or lease liabilities, including not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We will elect to combine lease and non-lease components for certain classes of underlying assets. Adoption will result in the elimination of the below-market and above-market lease intangible balances acquired during Fiscal 2019, as these amounts will be included in the ROU assets balance at implementation date. We continuously monitor and review all current accounting pronouncements and standards from the FASB of U.S. GAAP for applicability to our operations. As of February 2, 2019, there were no other new pronouncements or interpretations that had or were expected to have a significant impact on our operations. |
Acquisition |
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Acquisition |
On November 5, 2018, through our wholly-owned subsidiary, Hibbett Sporting Goods, Inc., we acquired City Gear, a Tennessee limited liability company. Under the Purchase Agreement, which was unanimously approved by our Board of Directors, we agreed to acquire all the outstanding warrants and equity interests, other than certain preferred membership interests, of City Gear, a privately held city specialty retailer. The purchase price was $88.0 million (Purchase Price) in cash payable at the closing of the transaction (Closing), subject to customary adjustments for City Gear’s cash on hand and net working capital as of the Closing date. The Purchase Agreement provided that a portion of the Purchase Price be used at Closing to pay off and redeem the outstanding preferred membership interests in City Gear as well as certain other outstanding indebtedness. In addition, the aggregate consideration payable to the Sellers in connection with the transaction includes two contingent payments (Earnout) based on City Gear’s achievement of certain EBITDA thresholds (as defined in the Purchase Agreement) for the 52-week periods ended February 1, 2020 and January 30, 2021, respectively. The aggregate amount of the Earnout, if any, will not exceed $25.0 million. The preliminary fair value of the Earnout is recorded in other liabilities on our consolidated balance sheet. With over 130 stores, the acquisition provides us with substantially greater scale in the athletic specialty market and is an extension of our strategy to provide high demand, branded products to underserved markets. We incurred $4.3 million in acquisition-related expenses through Fiscal 2019, excluding acquisition-related interest expense, recorded in store operating, selling and administrative expenses. The following table summarizes the preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date of November 4, 2018. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are based on estimates and assumptions and are subject to revisions, which may result in adjustments to the preliminary values presented below, when management’s estimates are finalized (in thousands):
We are still in the process of completing our fair market valuations and the purchase price allocation. As such, the amounts above are preliminary, pending the completion of procedures related to intangible assets and liabilities, inventory, property and equipment, contingent earnout payments, lease-related matters and the tax effect of any identified changes. Goodwill is calculated as the excess of the purchase price over the net assets acquired and represents the value of City Gear’s brand, our expansion in the city specialty market and expected synergies resulting from the acquisition. Goodwill is amortized for tax purposes. Intangible assets and liabilities represent two separately identified assets and one liability. First, we identified the City Gear tradename as an indefinite-lived intangible asset with a fair value of $32.4 million. The tradename is not subject to amortization but will be evaluated at least annually for impairment. Second, we recognized an intangible asset of $1.5 million for favorable City Gear leases and a liability of $2.6 million for unfavorable City Gear leases (as compared to prevailing markets). Under ASU Topic 842, these intangible assets and liabilities will become a component of the ROU asset (See Note 2, Recent Accounting Pronouncements). Net amortization of $0.1 million was recognized in Fiscal 2019. The results of operations of City Gear are included in our results of operations beginning on November 5, 2018. From November 5, 2018 through February 2, 2019, City Gear generated net sales of $49.1 million and net loss of $0.4 million. These results included $1.9 million related to the amortization of the step-up of the inventory value related to purchase accounting. The following unaudited consolidated pro forma summary has been prepared by adjusting the Company’s historical data to give effect to the City Gear acquisition as if it had occurred on January 29, 2017 (the beginning of Hibbett’s fiscal year ended February 3, 2018). Both Hibbett and City Gear’s fiscal year statements of operations for the fiscal years ended February 2, 2019 and February 3, 2018 contained 52 weeks and 53 weeks of operations, respectively.
The results for Fiscal 2019 and Fiscal 2018 have been primarily adjusted to include;
For Fiscal 2019, results have been adjusted to exclude the impact of acquisition-related expenses and purchase accounting adjustments incurred by the Company that are directly attributable to the transaction. The pro forma financial information has been prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are based on estimates based on currently available information and actual amounts may differ materially from these estimates. They do not reflect the effect of costs or synergies that would have been expected to result from the integration of the City Gear acquisition. |
Stock-Based Compensation |
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Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
At February 3, 2018, we had four stock-based compensation plans:
Our plans allow for a variety of equity awards including stock options, restricted stock awards, stock appreciation rights and performance awards. As of February 2, 2019, we had only granted awards in the form of stock options, restricted stock units (RSUs) and performance-based units (PSUs) to our employees. The annual grants made for Fiscal 2019, Fiscal 2018 and Fiscal 2017 to employees consisted solely of RSUs. We have also awarded PSUs to our Named Executive Officers (NEOs) and expect the Compensation Committee of the Board will continue to grant PSUs to our NEOs in the future. As of February 2, 2019, we had only granted awards in the form of stock, stock options and deferred stock units (DSUs) to our Board members. Under the DEP, Board members currently receive an annual value of $75,000 worth of equity in the form of stock options or RSUs upon election to the Board and a value of $100,000 worth of equity in any form allowed within the DEP, for each full year of service, pro-rated for Directors who serve less than one full year. The Chairman of the Board receives an annual value of $150,000 of equity in any form allowed within the DEP. The terms and vesting schedules for stock-based awards vary by type of grant and generally vest upon time-based conditions. Under the DEP, Directors have the option with certain equity forms to set vesting dates. Upon exercise, stock-based compensation awards are settled with authorized but unissued company stock. All of our awards are classified as equity awards. The compensation cost for these plans was as follows (in thousands):
Stock-based and deferred stock compensation expenses are included in store operating, selling and administrative expenses. There is no capitalized stock-based compensation cost. The income tax benefit recognized in our consolidated financial statements, as disclosed above, is based on the amount of compensation expense recorded for book purposes. The actual income tax benefit realized in our income tax return is based on the intrinsic value, or the excess of the market value over the exercise or purchase price, of stock options exercised and restricted stock unit awards vested during the period. The actual income tax benefit realized for the deductions considered on our income tax returns for Fiscal 2019, Fiscal 2018 and Fiscal 2017 was from option exercises and restricted stock unit releases and totaled $0.4 million, $0.9 million and $1.2 million, respectively. Stock Options Stock options are granted with an exercise price equal to the closing market price of our common stock on the date of grant. Vesting and expiration provisions vary between equity plans, but options granted to employees under the EIP typically vest over a four or five-year period in equal installments beginning on the first anniversary of the grant date and typically expire on the eighth or tenth anniversary of the date of grant. Grants awarded to outside directors under the DEP and Deferred Plan vest immediately upon grant and expire on the tenth anniversary of the date of grant. During Fiscal 2019, we had two stock option grants dated March 27, 2018 to directors. A total of 19,994 stock options was granted at an exercise price of $22.55. The fair value of the grants was $7.15 which was estimated on the date of grant using the Black-Scholes pricing model assuming an expected life of 3.98 years, expected volatility of 36.09%, a risk-free interest rate of 2.45% with no dividend yield. We calculate the expected term for our stock options based on the historical exercise behavior of our participants. The volatility used to value stock options is based on historical volatility. We calculate historical volatility using an average calculation methodology based on daily price intervals as measured over the expected term of the option. We have consistently applied this methodology since our adoption of the provisions of ASC Topic 718, Stock Compensation. In accordance with ASC Topic 718, we base the risk-free interest rate on the annual continuously compounded risk-free rate with a term equal to the option’s expected term. The dividend yield is assumed to be zero since we have no current plan to declare dividends. Activity for our option plans during Fiscal 2019 was as follows:
The weighted average grant-date fair value of options granted during Fiscal 2019, Fiscal 2018 and Fiscal 2017 was $7.15, $6.42 and $10.56, respectively. The total intrinsic value of stock options exercised during Fiscal 2019, Fiscal 2018 and Fiscal 2017 was $0.2 million, $0.1 million and $0.6 million, respectively. The total cash received from these stock option exercises during Fiscal 2019, Fiscal 2018 and Fiscal 2017 was $0.5 million, $0.3 million and $0.4 million, respectively. For Fiscal 2017, excess income tax benefits from the exercise of stock option are included in cash flows from financing activities as required by ASC Topic 230, Statement of Cash Flows. Beginning in Fiscal 2018, with the adoption of ASU 2016-09, excess tax benefits are included in earnings. As of February 2, 2019, there was no unamortized unrecognized compensation cost related to stock options. Restricted Stock and Performance-Based Units RSUs and PSUs are granted with a fair value equal to the closing market price of our common stock on the date of grant. All PSUs have been awarded in the form of restricted stock units. Compensation expense is recorded straight-line over the vesting period and, in the case of PSUs, at the estimated percentage of achievement. Restricted stock unit awards to our employees generally cliff vest in four years from the date of grant for those awards that are not performance-based. If a Director chooses to receive their annual equity award in stock and defers the vesting date, then the form of stock is a DSU. PSUs provide for awards based on achievement of certain predetermined corporate performance goals and cliff vest in three to five years from the date of grant after achievement of stated performance criterion and upon meeting stated service conditions. The following table summarizes the restricted stock unit awards activity under all our plans during Fiscal 2019:
(1) PSU adjustment represents the net RSUs awarded to our NEOs above and below their target grants resulting from the achievement of performance goals above or below the performance targets established at grant. One grant goal was achieved at 50% and another grant goal was forfeited for performance equity awards whose final achievement was based on Fiscal 2017 through Fiscal 2019 financial results; therefore, the adjustment was negative. The weighted average grant date fair value of our RSUs granted was $22.55, $29.60 and $35.12 for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. There were 218,707, 166,690 and 163,643 RSUs awarded during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. During Fiscal 2019, 65,683 RSU awards, including 5,025 PSU awards, vested with an intrinsic value of $1.4 million. The total intrinsic value of our RSU awards outstanding and unvested at February 2, 2019, February 3, 2018 and January 28, 2017 was $8.9 million, $9.9 million and $12.9 million, respectively. As of February 2, 2019, there was approximately $5.0 million of total unamortized unrecognized compensation cost related to RSU awards. This cost is expected to be recognized over a weighted average period of 2.8 years. Employee Stock Purchase Plan The Company’s ESPP allows eligible employees the right to purchase shares of our common stock, subject to certain limitations, at 85% of the lesser of the market value at the end of each calendar quarter (purchase date) or the beginning of each calendar quarter. Our employee purchases of common stock and the average price per share through the ESPP were as follows:
The assumptions used in the option pricing model were as follows:
The expense related to the ESPP was determined using the Black-Scholes option pricing model and the provisions of ASC Topic 718 as it relates to accounting for certain employee stock purchase plans with a look-back option. The compensation expense included in store operating, selling and administrative expenses and recognized during each of Fiscal 2019, Fiscal 2018 and Fiscal 2017 was $0.1 million. Director Deferred Compensation Under the Deferred Plan, non-employee directors can elect to defer all or a portion of their Board and Board Committee fees into cash, stock options or deferred stock units. Those fees deferred into stock options are subject to the same provisions as provided for in the DEP and are expensed and accounted for accordingly. Director fees deferred into stock units are calculated and expensed each calendar quarter by taking deferred fees earned during the calendar quarter and dividing by the closing price of our common stock on the last day of the calendar quarter, rounded to the nearest whole share. The total annual retainer, Board and Board Committee fees for non-employee directors that are not deferred into stock options, but which includes amounts deferred into stock units under the Deferred Plan, are expensed as incurred in all periods presented. A total of 4,888, 1,195 and 2,542 stock units were deferred under this plan in Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Two directors have elected to defer all or a portion of their compensation into stock units in calendar 2019. |
Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
The computation of basic earnings per share (EPS) is based on the number of weighted average common shares outstanding during the period. The computation of diluted EPS is based on the weighted average number of shares outstanding plus the incremental shares that would be outstanding assuming exercise of dilutive stock options and issuance of restricted stock. The number of incremental shares is calculated by applying the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share in thousands:
In calculating diluted earnings per share 260,845, 235,232 and 104,091 options to purchase shares of common stock outstanding as of the end of the period were excluded in the computations of diluted earnings per share due to their anti-dilutive effect in Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. We excluded 49,800 nonvested stock awards granted to certain employees from the computation of diluted weighted average common shares and common share equivalents outstanding, because they are subject to performance-based annual vesting conditions which had not been achieved by the end of Fiscal 2019. Assuming the performance criteria had been achieved at target as of February 2, 2019, the incremental dilutive impact would have been 39,190 shares. |
DEBT |
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Feb. 02, 2019 | |||
DEBT [Abstract] | |||
DEBT |
In October 2018, we entered into amended agreements with Bank of America, N.A. and Regions Bank providing for an increase in the aggregate amount of credit available to us under each line of credit from $30.0 million to $50.0 million for the purpose of financing a portion of the cash purchase price payable in the acquisition of City Gear. The terms of the Bank of America facility allow for borrowings up to $50.0 million with an interest rate agreed upon between the lender and us at the time a loan is made. The terms of the Regions Bank facility allow for borrowings up to $50.0 million with an interest rate at one-month LIBOR plus 1.5%. Both facilities are unsecured, due on demand and expire in October 2021. Under the provisions of both facilities, we do not pay commitment fees. However, both are subject to negative pledge agreements that, among other things, restrict liens or transfers of assets including inventory, tangible or intangible personal property and land and land improvements. There were 95 days during the 52 weeks ended February 2, 2019, where we incurred borrowings against our credit facilities for an average and maximum borrowing of $45.4 million and $75.0 million, respectively, and an average interest rate of 3.70%. At February 2, 2019, a total of $65.0 million was available to us from these facilities. At February 3, 2018, we had two unsecured credit facilities, which were renewable in March and April 2018. The March facility allowed for borrowings up to $30.0 million with an interest rate agreed upon between lender and borrower at the time a loan was made. The April facility allowed for borrowings up to $30.0 million at a rate of one-month LIBOR plus 2.5%. Under the provisions of both facilities, we did not pay commitment fees and were not subject to covenant requirements. There were seven days during the 53 weeks ended February 3, 2018, where we incurred borrowings against our credit facilities for an average and maximum borrowing of $4.1 million and $4.9 million, respectively, and an average interest rate of 2.78%. At February 3, 2018, a total of $60.0 million was available to us from these facilities. |
LEASES |
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LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
We have entered into capital leases for certain property and transportation equipment. At February 2, 2019, total capital lease obligations were $3.0 million, of which $1.0 million was classified as a short-term liability and included in capital lease obligations and $2.0 million was classified as a long-term liability and included in capital lease obligations in our consolidated balance sheet. At February 3, 2018, total capital lease obligations were $3.2 million, of which $0.7 million was classified as a short-term liability and included in capital lease obligations and $2.5 million was classified as a long-term liability and included in capital lease obligations in our consolidated balance sheet. The cost basis of total assets under capital leases at February 2, 2019 and February 3, 2018 was $5.9 million and $5.4 million, respectively, with accumulated amortization at February 2, 2019 and February 3, 2018 of $3.3 million and $2.7 million, respectively. Amortization expense related to assets under capital leases was $0.7 million, $0.6 million and $0.6 million in Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. We lease the majority of our stores under operating leases. The leases typically provide for terms of five to ten years with options to extend at our discretion. Many of our leases contain scheduled increases in annual rent payments and the majority of our leases also require us to pay maintenance, insurance and real estate taxes. Additionally, many of the lease agreements contain tenant improvement allowances, rent holidays and/or rent escalation clauses (contingent rentals) based on net sales for the location. For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, we use the date of initial possession to begin amortization, which is generally when we enter the space and begin to make improvements in preparation of our intended use. Most of our store leases contain provisions that allow for early termination of the lease if certain pre-determined annual sales levels are not met. Generally, these provisions allow the lease to be terminated between the third and fifth year of the lease. Should the lease be terminated under these provisions, in some cases, the unamortized portion of any landlord allowances related to that property would be payable to the landlord. We also lease certain office equipment and transportation equipment under operating leases having initial terms of more than one year. During Fiscal 2019, we acquired 136 stores, opened 32 new stores and increased our lease commitments by a net of 84 stores and one administrative office lease. Of the new lease commitments, the initial lease termination dates were between May 2023 and March 2029. At February 2, 2019, the future minimum lease payments under capital leases and the present value of such payments, and the future minimum lease payments under our operating leases, excluding maintenance, insurance and real estate taxes, were as follows (in thousands):
Rental expense for all operating leases consisted of the following (in thousands):
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DEFINED CONTRIBUTION BENEFIT PLANS |
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DEFINED CONTRIBUTION BENEFIT PLANS [Abstract] | |||
DEFINED CONTRIBUTION BENEFIT PLANS |
We maintain the Hibbett Sports, Inc. 401(k) Plan (401(k) Plan) for the benefit of our employees. The 401(k) Plan covers all employees who have completed one year of service. Participants of the 401(k) Plan may voluntarily contribute from 1% to 100% of their compensation subject to certain yearly dollar limitations as allowed by law. These elective contributions are made under the provisions of Section 401(k) of the Internal Revenue Code which allows deferral of income taxes on the amount contributed to the 401(k) Plan. Effective Fiscal 2016, the Board adopted the Safe Harbor provisions for our 401(k) Plan. For Fiscal 2019, Fiscal 2018 and Fiscal 2017, we matched 100% of the first 3% of eligible compensation and 50% of the next 3% of eligible compensation for a total possible match of 4.5% of the first 6% of eligible compensation. Contribution expense incurred under the 401(k) Plan for Fiscal 2019, Fiscal 2018 and Fiscal 2017 was $1.3 million, $1.4 million and $1.4 million, respectively. We maintain the Hibbett Sports, Inc. Supplemental 401(k) Plan (Supplemental Plan) for the purpose of supplementing the employer matching contribution and salary deferral opportunity available to highly compensated employees whose ability to receive Company matching contributions and defer salary under the 401(k) Plan was limited because of certain restrictions applicable to qualified plans. The non-qualified deferred compensation Supplemental Plan allows participants to defer up to 40% of their compensation. Contributions to the Supplemental Plan are not subject to matching provisions, therefore no contribution expense was incurred under the Supplemental Plan for Fiscal 2019, Fiscal 2018 and Fiscal 2017. The Supplemental Plan is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended. We maintain the Hibbett Sports, Inc. Executive Voluntary Deferral Plan (Voluntary Plan) that provides key executives of the Company an opportunity to defer, on a pre-tax basis, up to 50% of their base salary and up to 100% of any bonus earned. Participants, at election, determine the date payout is to be made with payout options as either a lump-sum payout or installment payments over 2 to 10 years. The Voluntary Plan is subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA) and was effective February 1, 2010 and is also intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended. We maintain a Flexible Spending Account Plan (FSA) that allows employees to set aside pre-tax amounts for out-of-pocket health care and dependent care expenses. The health care FSA is subject to ERISA, whereas the dependent care FSA is not. Employees are eligible to participate in the FSA upon meeting eligibility requirements or upon a defined qualifying event, and may enroll annually during an open enrollment period. Plan amounts are determined annually by the employee in advance and are subject to IRS dollar limitations. Employee elections, in general, cannot be increased, decreased or discontinued during the election period. Under the health care FSA, participants can rollover up to $500 of unused amounts at the end of the plan year. Under the dependent care FSA, unused amounts at the end of the plan year are subject to forfeiture and such forfeitures can be used to offset administrative expenses. |
RELATED-PARTY TRANSACTIONS |
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RELATED-PARTY TRANSACTIONS [Abstract] | |||
RELATED-PARTY TRANSACTIONS |
The Company leases one store under a lease arrangement with AL Florence Realty Holdings 2010, LLC, a wholly-owned subsidiary of Books-A-Million, Inc., (BAMM). One of our Directors, Terrance G. Finley is an executive officer of BAMM. Minimum annual lease payments are $0.1 million, if not in co-tenancy, and the lease termination date is February 2022. In Fiscal 2019, Fiscal 2018 and Fiscal 2017, minimum lease payments were $0.1 million. Minimum lease payments remaining under this lease at February 2, 2019 were $0.3 million. |
INCOME TAXES |
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INCOME TAXES |
A summary of the components of the provision/(benefit) for income taxes is as follows (in thousands):
A reconciliation of the statutory federal income tax rate to the effective tax rate as a percentage of income before provision for income taxes follows:
The Tax Cuts and Jobs Act (the Act) was enacted on December 22, 2017. The Act reduced the federal corporate income tax rate to 21% from 35%. As of the enactment date, we remeasured our deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21% for federal income tax purposes). Deferred income taxes on the consolidated balance sheets result from temporary differences between the amount of assets and liabilities recognized for financial reporting and income tax purposes. The components of the deferred income taxes, net, are as follows (in thousands):
Deferred tax assets represent items that will be used as a tax deduction or credit in future tax returns or are items of income that have not been recognized for financial statement purposes but were included in the current or prior tax returns for which we have already properly recorded the tax benefit in the consolidated statements of operations. At least quarterly, we assess the likelihood that the deferred tax assets balance will be recovered. We take into account such factors as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of a realization of a deferred tax asset. To the extent recovery is not more likely than not, a valuation allowance is established against the deferred tax asset, increasing our income tax expense in the year such determination is made. We have determined that no such allowance is required. We apply the provisions of ASC Subtopic 740-10 in accounting for uncertainty in income taxes. In accordance with ASC Subtopic 740-10, we recognize a tax benefit associated with an uncertain tax position when, in our judgment based on technical merits, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we initially and subsequently measure the tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. Our liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. Our effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management. We file income tax returns in the U.S. federal and various state jurisdictions. A number of years may elapse before a particular matter for which we have recorded a liability related to an unrecognized tax benefit is audited and finally resolved. Generally, we are not subject to changes in income taxes by the U.S. federal taxing jurisdiction for years prior to Fiscal 2016 or by most state taxing jurisdictions for years prior to Fiscal 2015. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe our liability for unrecognized tax benefits is adequate. Favorable settlement of an unrecognized tax benefit could be recognized as a reduction in our effective tax rate in the period of resolution. Unfavorable settlement of an unrecognized tax benefit could increase the effective tax rate and may require the use of cash in the period of resolution. Our liability for unrecognized tax benefits is generally presented as non-current. However, if we anticipate paying cash within one year to settle an uncertain tax position, the liability is presented as current. A reconciliation of the unrecognized tax benefit, excluding estimated interest and penalties, under ASC Subtopic 740-10 follows (in thousands):
We classify interest and penalties recognized on unrecognized tax benefits as income tax expense. We have accrued interest and penalties in the amount of $0.2 million, $0.1 million and $0.1 million as of February 2, 2019, February 3, 2018 and January 28, 2017, respectively. During Fiscal 2019, Fiscal 2018 and Fiscal 2017, we recorded $18,000, $4,000 and $21,000, respectively, for the accrual of interest and penalties in the consolidated statement of operations. Of the unrecognized tax benefits as of February 2, 2019, February 3, 2018 and January 28, 2017, $1.0 million, $1.0 million and $0.9 million, respectively, if recognized, would affect our effective income tax rate. |
COMMITMENTS AND CONTINGENCIES |
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COMMITMENTS AND CONTINGENCIES [Abstract] | |||
COMMITMENTS AND CONTINGENCIES |
Annual Bonuses and Equity Incentive Awards Specified officers and corporate employees of our Company are entitled to annual bonuses, primarily based on measures of Company operating performance. At February 2, 2019 and February 3, 2018, there was $3.9 million and $1.9 million, respectively, of annual bonus-related expense included in accrued payroll expenses. In addition, the Compensation Committee (Committee) of the Board of Directors places performance criteria on awards of PSUs made in the form of RSUs to our NEOs under the EIP. The performance criteria are tied to performance targets with respect to future sales and operating income over a specified period of time. These PSUs are expensed under the provisions of ASC Topic 718 and are evaluated each quarter to determine the probability that the performance conditions set within will be met. We expect the Committee to continue to place performance criteria on awards of RSUs to our NEOs in the future. Legal Proceedings and Other Contingencies We are a party to various legal proceedings incidental to our business. Where we are able to reasonably estimate an amount of probable loss in these matters based on known facts, we have accrued that amount as a current liability on our balance sheet. We are not able to reasonably estimate the possible loss or range of loss in excess of the amount accrued for these proceedings based on the information currently available to us, including, among others, (i) uncertainties as to the outcome of pending proceedings (including motions and appeals) and (ii) uncertainties as to the likelihood of settlement and the outcome of any negotiations with respect thereto. We do not believe that any of these matters will, individually or in the aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that one or more of these proceedings will not have a material effect on our results of operations for the period in which they are resolved. At February 2, 2019 and February 3, 2018, the estimated liability is immaterial. The estimates of our liability for pending and unasserted potential claims do not include litigation costs. It is our policy to accrue legal fees when it is probable that we will have to defend against known claims or allegations and we can reasonably estimate the amount of the anticipated expense. From time to time, we enter into certain types of agreements that require us to indemnify parties against third-party claims under certain circumstances. Generally, these agreements relate to: (a) agreements with vendors and suppliers under which we may provide customary indemnification to our vendors and suppliers in respect to actions they take at our request or otherwise on our behalf; (b) agreements to indemnify vendors against trademark and copyright infringement claims concerning merchandise manufactured specifically for or on behalf of the Company; (c) real estate leases, under which we may agree to indemnify the lessors from claims arising from our use of the property; and (d) agreements with our directors, officers and employees, under which we may agree to indemnify such persons for liabilities arising out of their relationship with us. We have director and officer liability insurance, which, subject to the policy’s conditions, provides coverage for indemnification amounts payable by us with respect to our directors and officers up to specified limits and subject to certain deductibles. If we believe that a loss is both probable and estimable for a particular matter, the loss is accrued in accordance with the requirements of ASC Topic 450, Contingencies. With respect to any matter, we could change our belief as to whether a loss is probable or estimable, or its estimate of loss, at any time. |
QUARTERLY FINANCIAL DATA (UNAUDITED) |
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QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) |
The following tables set forth certain unaudited consolidated financial data for the quarters indicated (dollar amounts in thousands, except per share amounts):
In the opinion of our management, this unaudited information has been prepared on the same basis as the audited information. The operating results from any quarter are not necessarily indicative of the results to be expected for any future period. |
FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
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:
The table below segregates all financial assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value (in thousands):
Short-term investments are reported in prepaid expenses and other while long-term investments are reported in other assets, net, in our consolidated balance sheets. The long-term contingent Earnout represents the fair value of potential additional payments outlined in the Purchase Agreement to the members and warrant holders of City Gear if certain financial goals are achieved over the next two fiscal years (Fiscal 2020 and Fiscal 2021). The Earnout was valued using a Monte Carlo simulation analysis in a risk-neutral framework with assumptions for volatility, risk-free rate and dividend yield. The Earnout will be re-valued each quarter and any change in valuation will flow through our statements of operations. |
Basis of Presentation and Summary of Critical and Significant Accounting Policies (Policies) |
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Basis of Presentation and Summary of Critical and Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisition We acquired City Gear, LLC (City Gear) on November 5, 2018 with an effective date of November 4, 2018 for approximately $88.0 million, including $86.8 million of cash paid. (See Note 3 – Acquisition) |
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Principles of Consolidation | Principles of Consolidation The consolidated financial statements of our Company include its accounts and the accounts of all wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Occasionally, certain reclassifications are made to conform previously reported data to the current presentation. Such reclassifications have no impact on total assets, total liabilities, net income or stockholders’ investment in any of the years presented. |
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Use of Estimates in the Preparation of Consolidated Financial Statements | Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (U.S. GAAP) requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses, and the disclosure of intangible assets and intangible and contingent liabilities at the date of the financial statements. We believe our estimates are reasonable; however, the assumptions used by management could change significantly in future estimates due to changes in circumstances and actual results could differ materially from those estimates. |
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Reportable Segments | Reportable Segments Hibbett Sports, Inc., through its subsidiaries, is a leading athletic-inspired fashion retailer with more than 1,100 stores operating under the Hibbett Sporting Goods and City Gear banners and an omni-channel platform. We identify our operating segments according to how our business activities are managed and evaluated by our chief executive officer who is our chief operating decision maker. Our shopping channels primarily include store locations and websites or apps. Store sales are primarily filled from the store’s inventory but may also be shipped from a different store location or our logistics network if an item is not available at the original store. Direct-to-consumer orders are generally shipped to our customers from a store, our logistics network or some combination thereof depending on the availability of the desired item. Given the economic similarity of the store formats, the products offered for sale, the type of customers, the methods of distribution and how our Company is managed, our operations constitute only one reportable segment. |
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Vendor Arrangements | Vendor Arrangements We enter into arrangements with some of our vendors that entitle us to a partial refund of the cost of merchandise purchased during the year or reimbursement of certain costs we incur to advertise or otherwise promote their product. Volume-based rebates, supported by vendor agreements, are estimated throughout the year and reduce the cost of inventories and cost of goods sold during the year. This estimate is regularly monitored and adjusted for current or anticipated changes in purchase levels and for sales activity. We also receive consideration from vendors through a variety of other programs, including markdown reimbursements, vendor compliance charges and defective merchandise credits. If the payment is a reimbursement for costs incurred, it is recognized as an offset against those related costs; otherwise, it is treated as a reduction to the cost of merchandise. Markdown reimbursements related to merchandise that has been sold are negotiated by our merchandising teams and are credited directly to cost of goods sold in the period received. If vendor funds are received prior to merchandise being sold, they are recorded as a reduction of merchandise cost. Vendor compliance charges and defective merchandise credits reduce the cost of inventories. |
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Marketing | Marketing We expense marketing costs when incurred. We participate in various marketing cooperative programs with our vendors, who, under these programs, reimburse us for certain costs incurred. A receivable for cooperative marketing to be reimbursed is recorded as a decrease to expense as advertisements are run. The following table presents the components of our marketing expense (in thousands):
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Cost of Goods Sold | Cost of Goods Sold We include merchandise costs, store occupancy costs, logistics-related occupancy and operating costs and ship-to-home freight in cost of goods sold. |
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Stock Repurchase Program | Stock Repurchase Program In November 2018, our Board authorized the continuation of our existing Stock Repurchase Program (2018 Program) established in November 2015 (2015 Program) until January 29, 2022. The Program authorizes repurchases of our common stock in open market or negotiated transactions, with the amount and timing of repurchases dependent on market conditions and at the discretion of our management. In addition to the 2018 Program, we also acquire shares of our common stock from holders of restricted stock unit awards to satisfy tax withholding requirements due at vesting. Under the 2015 Program, the Board of Directors authorized up to $300.0 million to repurchase our common stock through February 2, 2019. The 2015 Program replaced an existing plan that was adopted in November 2012 (2012 Program). Under the 2018 Program and 2015 Program, we repurchased 0.8 million shares of our common stock during Fiscal 2019 at a cost of $16.5 million, including 18,765 shares acquired from holders of restricted stock to satisfy tax withholding requirements of $0.4 million. Under the 2015 Program, we repurchased 2.8 million shares of our common stock during Fiscal 2018 at a cost of $54.5 million, including 24,432 shares acquired from holders of restricted stock to satisfy tax withholding requirements of $0.7 million. Historically, under all stock repurchase authorizations, we have repurchased a total of 20.7 million shares of our common stock at an approximate cost of $609.8 million as of February 2, 2019 and had approximately $188.0 million remaining under the 2018 Program for stock repurchases. Shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements do not reduce the authorization. |
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Cash and Cash Equivalents | Cash and Cash Equivalents We consider all short-term, highly liquid investments with original maturities of 90 days or less, including commercial paper and money market funds, to be cash equivalents. Amounts due from third-party credit card processors for the settlement of debit and credit card transactions are included as cash equivalents as they are generally collected within three business days. Cash equivalents related to credit and debit card transactions at February 2, 2019 and February 3, 2018 were $5.5 million and $3.9 million, respectively. |
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Investments | Investments We hold certain trading securities as investments in trust for the Hibbett Sports, Inc. Supplemental 401(k) Plan (Supplemental Plan) and the Hibbett Sports, Inc. Executive Voluntary Deferral Plan (Deferral Plan). At February 2, 2019, we had $2.5 million of investments of which $0.1 million was included in prepaid expenses and other and $2.4 million was included in other assets, net. At February 3, 2018, we had $2.9 million of investments of which $0.5 million was included in prepaid expenses and other and $2.4 million was included in other assets, net. Net unrealized holding losses for Fiscal 2019 were $0.3 million and net unrealized holding gains for Fiscal 2018 were $0.3 million. |
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Purchase Price Allocation | Purchase Price Allocation For the City Gear acquisition, we allocated the purchase price to the various tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values, which are preliminary as of February 2, 2019. Determining the fair value of certain assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, which are inherently uncertain. We engaged third party experts to assist in the determination of fair value for complex assets and liabilities. Many of these estimates and assumptions used to determine fair value, such as those used for intangible assets are made based on forecasted information and discount rates. In addition, the judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations. The final purchase price allocation will be completed after asset and liability valuations are finalized. This final valuation will be based on the actual assets and liabilities of City Gear that exist as of the acquisition date and goodwill may be different than the balance reflected in the consolidated balance sheet. Any final adjustments may change the allocation of the purchase price, which could affect the fair value assigned to the assets and liabilities and could result in significant changes to the consolidated financial data. Goodwill represents the excess of the actual purchase price of City Gear over the estimated fair value of City Gear’s net assets as of the date of acquisition. The computations require management to make estimates and assumptions. Intangible assets consist of trademarks and below-market leases resulting from the acquisition of City Gear. The fair value of trademarks was determined using the “income approach”, which requires a forecast of all expected future cash flows. The fair value of the below-market lease intangible was measured based on the present value of the difference between the contractual amounts to be paid pursuant to the lease and an estimate of current fair market lease rates measured over the non-cancelable remaining term of the lease. Amortization of the acquired below-market lease intangible is recognized as amortization expense within the consolidated statement of operations. Intangible liabilities consist of above-market leases resulting from the acquisition of City Gear. The fair value of the above-market lease intangible was measured based on the present value of the difference between the contractual amounts to be paid pursuant to the lease and an estimate of current fair market lease rates measured over the non-cancelable remaining term of the lease. Amortization of the acquired above-market lease intangible is recognized as amortization expense within the consolidated statement of operations. The below-market and above-market lease intangibles consist of short-term and long-term portions. Their presentation on the consolidated balance sheet and balance (in thousands) as of February 2, 2019 are as follows:
The net amortization recognized in Fiscal 2019 was immaterial. |
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Receivables | Receivables Receivables consist primarily of tenant allowances due from landlords and cooperative marketing and other amounts due from vendors. We analyze receivables for collectability based on aging of individual components, underlying contractual terms and economic conditions. Recorded amounts are deemed to be collectible. |
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Inventories | Inventories Inventories are valued using the lower of weighted average cost or net realizable value method. Items are removed from inventory using the weighted average cost method. Lower of Cost and Net Realizable Value: We regularly review inventories to determine if the carrying value exceeds net realizable value, and we record an accrual to reduce the carrying value to net realizable value as necessary. We account for obsolescence as part of our lower of cost and net realizable value accrual based on historical trends and specific identification. As of February 2, 2019 and February 3, 2018, the accrual was $4.5 million and $5.2 million, respectively. A determination of net realizable value requires significant judgment. Shrink Reserves: We accrue for inventory shrinkage based on the actual historical results of our physical inventory counts. These estimates are compared to actual results as physical inventory counts are performed and reconciled to the general ledger. Physical inventory counts are performed on a cyclical basis. As of February 2, 2019 and February 3, 2018, the accrual was $1.6 million and $1.4 million, respectively. Inventory Purchase Concentration: Our business is dependent to a significant degree upon close relationships with our vendors. Our largest vendor, Nike, represented 65.4%, 57.9% and 57.0% of our purchases for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Our second largest vendor, adidas, represented 10.0%, 11.0% and 5.5% of our purchases for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Our third largest vendor, Under Armour, represented 5.7%, 10.8% and 16.4% of our purchases for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. |
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Property and Equipment | Property and Equipment Property and equipment are recorded at cost and include assets acquired through capital leases. Property and equipment as of February 2, 2019 and February 3, 2018 consists of the following (in thousands):
Depreciation on property and equipment is principally provided using the straight-line method over the following estimated service lives:
In the case of leasehold improvements, we calculate depreciation using the shorter of the term of the underlying leases or the estimated economic lives of the improvements. The term of the lease includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured and failure to exercise such option would result in an economic penalty. We continually reassess the remaining useful life of leasehold improvements in light of store closing plans. Construction in progress has historically been comprised primarily of property and equipment related to unopened stores and amounts associated with technology upgrades at period-end. At February 2, 2019, approximately 69% of the construction in progress balance was comprised of costs associated with stores. The remaining balance consisted of costs associated with our technology initiatives. Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold, retired or otherwise disposed of are removed from property and equipment and the related gain or loss is credited or charged to net income, net of proceeds received. |
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Goodwill and Indefinite-Lived Intangible Assets | Goodwill and Indefinite-Lived Intangible Assets Goodwill and the City Gear tradename are indefinite-lived assets which are not amortized but rather tested for impairment at least annually, or on an interim basis if events and circumstances have occurred that indicate that is more likely than not that an asset is impaired. Such events or circumstances could include, but are not limited to, significant negative industry or economic trends, unanticipated changes in the competitive environment and a significant sustained decline in the market price of our stock. If it is more likely than not that an asset is impaired, the amount that the carrying value exceeds the fair value is recorded as an impairment charge to current income. No impairment of these assets existed as of February 2, 2019. |
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Long-Lived Assets | Long-Lived Assets We continually evaluate whether events and circumstances have occurred that indicate the carrying amount of long-lived assets may be may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, our policy is to first compare undiscounted cash flows expected to be generated by that asset or asset group over its remaining life to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized as a charge to current income to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Assets or asset groups to be disposed of are reported at the lower of their carrying value or fair value less any costs of disposition. Evaluation of asset impairment requires significant judgment. |
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Capitalized Interest | Capitalized Interest We capitalize interest on borrowed funds during the construction of certain property and equipment. No interest costs were capitalized in Fiscal 2019, Fiscal 2018 or Fiscal 2017. |
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Deferred Rent | Deferred Rent Deferred rent primarily consists of step rent and allowances from landlords related to our leased properties. Step rent represents the difference between actual operating lease payments due and straight-line rent expense, which we record over the term of the lease, including the build-out period. This amount is recorded as deferred rent in the early years of the lease, when cash payments are generally lower than straight-line rent expense, and reduced in the later years of the lease when payments begin to exceed the straight-line rent expense. Landlord allowances are generally comprised of amounts received and/or promised to us by landlords and may be received in the form of cash or free rent. For the cash component, we record a receivable from the landlord in accordance with the terms of the lease and a deferred rent liability. This deferred rent is amortized into net income (through lower rent expense) over the term (including the pre-opening build-out period) of the applicable lease, and the receivable is reduced as amounts are realized from the landlord. In our consolidated statements of cash flows, the current and long-term portions of landlord allowances are included as changes in cash flows from operations. The liability for the current portion of unamortized landlord allowances was $4.9 million and $5.1 million at February 2, 2019 and February 3, 2018, respectively. The liability for the long-term portion of unamortized landlord allowances was $14.8 million and $15.1 million at February 2, 2019 and February 3, 2018, respectively. We estimate the non-cash portion of landlord allowances was $0.1 million and $1.2 million at February 2, 2019 and February 3, 2018, respectively. |
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Revenue Recognition | Revenue Recognition In Fiscal 2019, 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. 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. Retail Store Sales: For merchandise sold in our stores, revenue is recognized at the point of sale when tender is accepted and the customer takes possession of the merchandise. Retail Store Orders: Retail store customers may order merchandise available in other retail store locations for pickup in the selling store at a later date. Customers make a deposit with the remaining balance due at pickup. These deposits are recorded as deferred revenue until the transaction is completed and the customer takes possession of the merchandise. Retail store customers may also order merchandise to be shipped to home. Payment is received in full at the time of order and recorded as deferred revenue until delivery. Layaways: We offer a retail store program giving customers the option of paying a deposit and placing merchandise on layaway. The customer may make further payments in installments, but the full purchase price must be received by us within 30 days. The payments are recorded as deferred revenue until the transaction is completed and the customer takes possession of the merchandise. Digital Channel Sales: For merchandise shipped to home, customer payment is received when the order ships. Revenue is deferred until control passes to the customer at delivery. Shipping and handling costs billed to customers are included in net sales. Customer Loyalty Programs: We offer two customer loyalty programs; the Hibbett Rewards program and the City Gear Reward Points program. Upon registration and in accordance with the terms of the programs, 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 consolidated balance sheets and was $2.2 million and $0.2 million at February 2, 2019 and February 3, 2018, respectively. Gift Cards: Proceeds received from the issuance of our non-expiring gift cards are initially recorded as deferred revenue. Revenue is subsequently recognized at the time the customer redeems the gift cards and takes possession of the merchandise. Unredeemed gift cards are recorded in accounts payable on our consolidated balance sheet. The net deferred revenue liability for gift cards, customer orders and layaways at February 2, 2019 and February 3, 2018 was $7.5 million and $6.2 million, respectively, recognized in accounts payable on our consolidated balance sheets. In Fiscal 2019, gift card breakage income was recognized in net sales in proportion to the redemption pattern of rights exercised by the customer and was $0.6 million. During Fiscal 2018 and Fiscal 2017, income from unredeemed gift cards was recognized on our consolidated statements of operations as a reduction to store operating, selling and administrative expenses when the likelihood of redemption was deemed remote. Gift card breakage was not material in Fiscal 2018 or Fiscal 2017. During the fiscal year ended February 2, 2019, $2.1 million of gift card deferred revenue from prior periods was realized. Return Sales: The liability for return sales is estimated at each reporting period based on historical return patterns and is recognized at the transaction price. The liability is included in accounts payable on our consolidated balance sheets. We also recognize a return asset and a corresponding adjustment to cost of goods sold for our right to recover the merchandise returned by the customer. This right to recover the asset is included in net inventory on our consolidated balance sheet at the former carrying value of the merchandise less any expected recovery costs which was $0.8 million at February 2, 2019. Revenues disaggregated by major product categories are as follows (in thousands):
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Store Opening and Closing Costs | Store Opening and Closing Costs New store opening costs, including pre-opening costs, are charged to expense as incurred. Store opening costs primarily include payroll expenses, training costs and straight-line rent expenses. All pre-opening costs are included in store operating, selling and administrative expenses as a part of operating expenses. We consider individual store closings to be a normal part of operations and regularly review store performance against expectations. Costs associated with store closings are recognized at the time of closing or when a liability has been incurred. These costs were not significant in Fiscal 2018, Fiscal 2017 or Fiscal 2016. |
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Insurance Accrual | Insurance Accrual We are self-insured for a significant portion of our health, workers’ compensation and other business insurance. Liabilities associated with the risks that are retained by us are estimated, in part, by considering our historical claims experience. The estimated accruals for these liabilities could be affected if future occurrences and claims differ from our assumptions. To minimize our potential exposure, we carry stop-loss insurance that reimburses us for losses over prescribed amounts per covered person per year. As of February 2, 2019 and February 3, 2018, the accrual for these liabilities was not material. |
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Sales Returns | Sales Returns Net sales returns were $47.7 million for Fiscal 2019, $43.8 million for Fiscal 2018 and $37.8 million for Fiscal 2017 and. The accrual for the effect of estimated returns was not material as of February 2, 2019 and February 3, 2018. |
Basis of Presentation and Summary of Critical and Significant Accounting Policies (Tables) |
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Basis of Presentation and Summary of Critical and Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketing Expense | The following table presents the components of our marketing expense (in thousands):
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Market Lease Intangibles | The below-market and above-market lease intangibles consist of short-term and long-term portions. Their presentation on the consolidated balance sheet and balance (in thousands) as of February 2, 2019 are as follows:
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Property and Equipment | Property and equipment are recorded at cost and include assets acquired through capital leases. Property and equipment as of February 2, 2019 and February 3, 2018 consists of the following (in thousands):
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Estimated Useful Lives of Depreciable Assets | Depreciation on property and equipment is principally provided using the straight-line method over the following estimated service lives:
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Disaggregation of Revenue | Revenues disaggregated by major product categories are as follows (in thousands):
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Recent Accounting Pronouncements (Tables) |
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Recent Accounting Pronouncements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements and Changes in Accounting Principles | The effect of the adoption of ASU 2014-09 on our consolidated balance sheet as of February 2, 2019 was (in thousands):
(1) Does not include the cumulative effect of initially adopting ASU 2014-09 to our consolidated balance sheet as adjusted as of February 4, 2018. The effect of the adoption of ASU 2014-09 on our consolidated statement of operations for the fifty-two weeks ended February 2, 2019 was (in thousands, except per share amounts):
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Acquisition (Tables) |
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Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Identifiable Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date of November 4, 2018. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are based on estimates and assumptions and are subject to revisions, which may result in adjustments to the preliminary values presented below, when management’s estimates are finalized (in thousands):
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Unaudited Consolidated Pro Forma Summary | The following unaudited consolidated pro forma summary has been prepared by adjusting the Company’s historical data to give effect to the City Gear acquisition as if it had occurred on January 29, 2017 (the beginning of Hibbett’s fiscal year ended February 3, 2018). Both Hibbett and City Gear’s fiscal year statements of operations for the fiscal years ended February 2, 2019 and February 3, 2018 contained 52 weeks and 53 weeks of operations, respectively.
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Stock-Based Compensation (Tables) |
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Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense | The compensation cost for these plans was as follows (in thousands):
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Stock Option Activity | Activity for our option plans during Fiscal 2019 was as follows:
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Restricted Stock Unit Awards Activity | The following table summarizes the restricted stock unit awards activity under all our plans during Fiscal 2019:
(1) PSU adjustment represents the net RSUs awarded to our NEOs above and below their target grants resulting from the achievement of performance goals above or below the performance targets established at grant. One grant goal was achieved at 50% and another grant goal was forfeited for performance equity awards whose final achievement was based on Fiscal 2017 through Fiscal 2019 financial results; therefore, the adjustment was negative. |
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Employee Stock Purchases During The Period | The Company’s ESPP allows eligible employees the right to purchase shares of our common stock, subject to certain limitations, at 85% of the lesser of the market value at the end of each calendar quarter (purchase date) or the beginning of each calendar quarter. Our employee purchases of common stock and the average price per share through the ESPP were as follows:
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Fair Value Weighted Average Assumptions | The assumptions used in the option pricing model were as follows:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | The computation of basic earnings per share (EPS) is based on the number of weighted average common shares outstanding during the period. The computation of diluted EPS is based on the weighted average number of shares outstanding plus the incremental shares that would be outstanding assuming exercise of dilutive stock options and issuance of restricted stock. The number of incremental shares is calculated by applying the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share in thousands:
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LEASES (Tables) |
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LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Lease Payments Under Non-Cancelable Leases | During Fiscal 2019, we acquired 136 stores, opened 32 new stores and increased our lease commitments by a net of 84 stores and one administrative office lease. Of the new lease commitments, the initial lease termination dates were between May 2023 and March 2029. At February 2, 2019, the future minimum lease payments under capital leases and the present value of such payments, and the future minimum lease payments under our operating leases, excluding maintenance, insurance and real estate taxes, were as follows (in thousands):
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Rental Expense for All Operating Leases | Rental expense for all operating leases consisted of the following (in thousands):
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INCOME TAXES (Tables) |
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INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision (Benefit) for Income Taxes | A summary of the components of the provision/(benefit) for income taxes is as follows (in thousands):
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Reconciliation of Statutory Federal Income Tax Rate | A reconciliation of the statutory federal income tax rate to the effective tax rate as a percentage of income before provision for income taxes follows:
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Deferred Income Tax Assets, Net | Deferred income taxes on the consolidated balance sheets result from temporary differences between the amount of assets and liabilities recognized for financial reporting and income tax purposes. The components of the deferred income taxes, net, are as follows (in thousands):
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Reconciliation of Unrecognized Tax Benefit | A reconciliation of the unrecognized tax benefit, excluding estimated interest and penalties, under ASC Subtopic 740-10 follows (in thousands):
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QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) |
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QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Information | The following tables set forth certain unaudited consolidated financial data for the quarters indicated (dollar amounts in thousands, except per share amounts):
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FAIR VALUE MEASUREMENTS (Tables) |
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FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Assets Measured on Recurring Basis | The table below segregates all financial assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value (in thousands):
|
Acquisition (Details) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 05, 2018
USD ($)
Store
Payments
|
Feb. 02, 2019
USD ($)
|
Feb. 02, 2019
USD ($)
|
Nov. 03, 2018
USD ($)
|
Aug. 04, 2018
USD ($)
|
May 05, 2018
USD ($)
|
Feb. 03, 2018
USD ($)
|
Oct. 28, 2017
USD ($)
|
Jul. 29, 2017
USD ($)
|
Apr. 29, 2017
USD ($)
|
Feb. 02, 2019
USD ($)
Store
$ / shares
|
Feb. 03, 2018
USD ($)
$ / shares
|
Jan. 28, 2017
USD ($)
|
|
Acquisition [Abstract] | |||||||||||||
Number of stores acquired | Store | 136 | ||||||||||||
Net sales | $ 305,964 | $ 216,888 | $ 211,123 | $ 274,707 | $ 266,738 | $ 237,834 | $ 187,958 | $ 275,688 | $ 1,008,682 | $ 968,219 | $ 972,960 | ||
Net loss | 6,634 | $ 1,499 | $ (1,222) | $ 21,509 | 9,733 | $ 7,564 | $ (3,176) | $ 20,910 | 28,421 | 35,030 | 61,075 | ||
Current assets: | |||||||||||||
Goodwill | $ 23,133 | $ 23,133 | $ 0 | 23,133 | 0 | ||||||||
Current liabilities: | |||||||||||||
Cash paid at closing | 86,837 | 0 | $ 0 | ||||||||||
City Gear [Member] | |||||||||||||
Acquisition [Abstract] | |||||||||||||
Purchase price, cash payable | $ 88,000 | ||||||||||||
Number of contingent payments | Payments | 2 | ||||||||||||
Maximum amount of contingent payments | $ 25,000 | ||||||||||||
Number of stores acquired | Store | 130 | ||||||||||||
Acquisition related expenses | 4,300 | ||||||||||||
Intangible asset for favorable leases | $ 1,500 | ||||||||||||
Liability for unfavorable leases | 2,600 | ||||||||||||
Net amortization | 100 | ||||||||||||
Net sales | 49,100 | ||||||||||||
Net loss | 400 | ||||||||||||
Amortization of step-up inventory | $ 1,900 | ||||||||||||
Current assets: | |||||||||||||
Receivables | 3,168 | ||||||||||||
Inventories | 44,807 | ||||||||||||
Prepaid expense, other current and intangible assets | 2,716 | ||||||||||||
Total current assets | 50,691 | ||||||||||||
Goodwill | 23,133 | ||||||||||||
Property and equipment | 16,530 | ||||||||||||
Long-term intangible assets | 33,601 | ||||||||||||
Deposits and other assets | 567 | ||||||||||||
Deferred tax asset | 24 | ||||||||||||
Total assets | 124,546 | ||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | 23,615 | ||||||||||||
Other accrued expenses and intangible liabilities | 3,366 | ||||||||||||
Total current liabilities | 26,981 | ||||||||||||
Other long-term liabilities and intangible liabilities | 2,613 | ||||||||||||
Total liabilities | 29,594 | ||||||||||||
Total purchase price | 94,952 | ||||||||||||
Cash paid at closing | 86,837 | ||||||||||||
Fair value of contingent earnout | 9,200 | ||||||||||||
Net working capital and debt-like items adjustment | (1,085) | ||||||||||||
Pro Forma - Unaudited [Abstract] | |||||||||||||
Net sales | 1,152,628 | 1,158,701 | |||||||||||
Net income | $ 27,265 | $ 31,673 | |||||||||||
Basic earnings per share (in dollars per share) | $ / shares | $ 1.46 | $ 1.56 | |||||||||||
Diluted earnings per share (in dollars per share) | $ / shares | $ 1.45 | $ 1.55 | |||||||||||
City Gear [Member] | Trade Names [Member] | |||||||||||||
Acquisition [Abstract] | |||||||||||||
Indefinite-lived intangible asset fair value | $ 32,400 |
Stock-Based Compensation, Plans (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019
USD ($)
Plan
shares
|
Feb. 03, 2018
USD ($)
|
Jan. 28, 2017
USD ($)
|
|
Stock-Based Compensation [Abstract] | |||
Number of stock-based compensation plans | Plan | 4 | ||
Stock-based compensation expense by type [Abstract] | |||
Stock options | $ 185 | $ 224 | $ 384 |
Restricted stock units | 3,932 | 3,536 | 4,010 |
Employee stock purchases | 105 | 96 | 104 |
Director deferred compensation | 94 | 24 | 94 |
Total stock-based compensation expense | 4,316 | 3,880 | 4,592 |
Income tax benefit recognized | 958 | 1,363 | 1,655 |
Stock-based compensation expense, net of income tax | 3,358 | 2,517 | 2,937 |
Actual income tax benefit realized for the deductions considered on our income tax returns | $ 400 | $ 900 | $ 1,200 |
Equity Incentive Plan [Member] | |||
Stock-based compensation plans [Abstract] | |||
Authorized but unissued shares of common stock (in shares) | shares | 1,000,000 | ||
Shares available for grant under the Plan (in shares) | shares | 534,918 | ||
Employee Stock Purchase Plan [Member] | |||
Stock-based compensation plans [Abstract] | |||
Authorized but unissued shares of common stock (in shares) | shares | 300,000 | ||
Shares available for grant under the Plan (in shares) | shares | 228,718 | ||
Percentage of quarterly closing price employees pay for shares | 85.00% | ||
Director Deferred Compensation Plan [Member] | |||
Stock-based compensation plans [Abstract] | |||
Authorized but unissued shares of common stock (in shares) | shares | 150,000 | ||
Shares available for grant under the Plan (in shares) | shares | 130,465 | ||
Non-Employee Director Equity Plan [Member] | |||
Stock-based compensation plans [Abstract] | |||
Authorized but unissued shares of common stock (in shares) | shares | 500,000 | ||
Shares available for grant under the Plan (in shares) | shares | 262,315 | ||
Non-Employee Director Equity Plan [Member] | Board of Directors Chairman [Member] | |||
Stock-based compensation plans [Abstract] | |||
Annual value of stock grant | $ 150 | ||
Non-Employee Director Equity Plan [Member] | Stock Options [Member] | |||
Stock-based compensation plans [Abstract] | |||
Annual value of stock grant | 75 | ||
Non-Employee Director Equity Plan [Member] | RSUs [Member] | |||
Stock-based compensation plans [Abstract] | |||
Annual value of stock grant | $ 100 |
Stock-Based Compensation, Stock Options (Details) - Stock Options [Member] |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019
USD ($)
Option
$ / shares
shares
|
Feb. 03, 2018
USD ($)
$ / shares
shares
|
Jan. 28, 2017
USD ($)
$ / shares
|
|
Fair value and valuation assumptions [Abstract] | |||
Number of option grant | Option | 2 | ||
Weighted average fair value at grant date (in dollars per share) | $ 7.15 | $ 6.42 | $ 10.56 |
Expected life | 3 years 11 months 23 days | ||
Expected volatility | 36.09% | ||
Risk-free interest rate | 2.45% | ||
Dividend yield | 0.00% | ||
Number of Options [Roll Forward] | |||
Outstanding at beginning of period (in shares) | shares | 288,150 | ||
Granted (in shares) | shares | 19,994 | ||
Exercised (in shares) | shares | (27,625) | ||
Forfeited, cancelled or expired (in shares) | shares | (1,097) | ||
Outstanding at end of period (in shares) | shares | 279,422 | 288,150 | |
Exercisable at end of period (in shares) | shares | 279,422 | ||
Weighted Average Exercise Price [Abstract] | |||
Outstanding at beginning of period (in dollars per share) | $ 36.15 | ||
Granted (in dollars per share) | 22.55 | ||
Exercised (in dollars per share) | 17.46 | ||
Forfeited, cancelled or expired (in dollars per share) | 20.02 | ||
Outstanding at end of period (in dollars per share) | 37.08 | $ 36.15 | |
Exercisable at end of period (in dollars per share) | $ 37.08 | ||
Options, Additional Disclosures [Abstract] | |||
Weighted Average Remaining Contractual Term, Options outstanding | 4 years 10 months 28 days | 5 years 1 month 13 days | |
Weighted Average Remaining Contractual Term, Options exercisable at end of period | 4 years 10 months 28 days | ||
Aggregate Intrinsic Value, Options outstanding at beginning of period | $ | $ 324,000 | ||
Aggregate Intrinsic Value, Options outstanding at end of period | $ | 55,000 | $ 324,000 | |
Aggregate Intrinsic Value, Options exercisable at end of period | $ | 55,000 | ||
Intrinsic value of stock options exercised | $ | 200,000 | 100,000 | $ 600,000 |
Cash received from stock option exercises | $ | 500,000 | $ 300,000 | $ 400,000 |
Unrecognized compensation cost related to stock options | $ | $ 0 | ||
Equity Incentive Plan [Member] | Minimum [Member] | |||
Fair value and valuation assumptions [Abstract] | |||
Vesting period | 4 years | ||
Expiration period | 8 years | ||
Equity Incentive Plan [Member] | Maximum [Member] | |||
Fair value and valuation assumptions [Abstract] | |||
Vesting period | 5 years | ||
Expiration period | 10 years | ||
Director Deferred Compensation Plan [Member] | |||
Fair value and valuation assumptions [Abstract] | |||
Expiration period | 10 years |
Stock-Based Compensation, Restricted Stock and Performance-Based Units (Details) $ / shares in Units, $ in Millions |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Feb. 02, 2019
USD ($)
Goal
$ / shares
shares
|
Feb. 03, 2018
USD ($)
$ / shares
shares
|
Jan. 28, 2017
USD ($)
$ / shares
shares
|
||||
Number of Restricted Stock Unit Awards [Roll Forward] | ||||||
Outstanding at beginning of period (in shares) | shares | 445,981 | |||||
Granted (in shares) | shares | 218,707 | |||||
PSU Adjustment (in shares) | shares | (13,725) | |||||
Vested (in shares) | shares | (65,683) | |||||
Forfeited, cancelled or expired (in shares) | shares | (37,233) | |||||
Outstanding at end of period (in shares) | shares | 548,047 | 445,981 | ||||
Weighted Average Grant Date Fair Value [Abstract] | ||||||
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 39.34 | |||||
Granted (in dollars per share) | $ / shares | 22.55 | |||||
PSU Adjustment (in dollars per share) | $ / shares | 40.24 | |||||
Vested (in dollars per share) | $ / shares | 51.67 | |||||
Forfeited, cancelled or expired (in dollars per share) | $ / shares | 40.07 | |||||
Outstanding at end of period (in dollars per share) | $ / shares | $ 31.37 | $ 39.34 | ||||
Restricted Stock Units [Member] | ||||||
Restricted Stock and Performance-Based Units [Abstract] | ||||||
Vesting period | 4 years | |||||
Number of Restricted Stock Unit Awards [Roll Forward] | ||||||
Outstanding at beginning of period (in shares) | shares | 313,611 | |||||
Granted (in shares) | shares | 174,007 | 166,690 | 163,643 | |||
PSU Adjustment (in shares) | shares | 0 | |||||
Vested (in shares) | shares | (60,658) | |||||
Forfeited, cancelled or expired (in shares) | shares | (22,583) | |||||
Outstanding at end of period (in shares) | shares | 404,377 | 313,611 | ||||
Weighted Average Grant Date Fair Value [Abstract] | ||||||
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 40.10 | |||||
Granted (in dollars per share) | $ / shares | 22.55 | $ 29.60 | $ 35.12 | |||
PSU Adjustment (in dollars per share) | $ / shares | 0 | |||||
Vested (in dollars per share) | $ / shares | 51.47 | |||||
Forfeited, cancelled or expired (in dollars per share) | $ / shares | 33.31 | |||||
Outstanding at end of period (in dollars per share) | $ / shares | $ 31.22 | $ 40.10 | ||||
Intrinsic value of vested RSUs | $ | $ 1.4 | |||||
Intrinsic value of nonvested RSUs | $ | 8.9 | $ 9.9 | $ 12.9 | |||
Total compensation costs related to nonvested awards not yet recognized | $ | $ 5.0 | |||||
Unrecognized compensation cost related to nonvested awards, recognition period | 2 years 9 months 18 days | |||||
Performance-based Restricted Stock Units [Member] | ||||||
Number of Restricted Stock Unit Awards [Roll Forward] | ||||||
Outstanding at beginning of period (in shares) | shares | 132,370 | |||||
Granted (in shares) | shares | 44,700 | |||||
PSU Adjustment (in shares) | shares | [1] | (13,725) | ||||
Vested (in shares) | shares | (5,025) | |||||
Forfeited, cancelled or expired (in shares) | shares | (14,650) | |||||
Outstanding at end of period (in shares) | shares | 143,670 | 132,370 | ||||
Weighted Average Grant Date Fair Value [Abstract] | ||||||
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 37.55 | |||||
Granted (in dollars per share) | $ / shares | 22.55 | |||||
PSU Adjustment (in dollars per share) | $ / shares | [1] | 29.30 | ||||
Vested (in dollars per share) | $ / shares | 54.06 | |||||
Forfeited, cancelled or expired (in dollars per share) | $ / shares | 50.48 | |||||
Outstanding at end of period (in dollars per share) | $ / shares | $ 31.78 | $ 37.55 | ||||
Number of grant goal | Goal | 1 | |||||
Percentage of grant goal | 50.00% | |||||
Performance-based Restricted Stock Units [Member] | Minimum [Member] | ||||||
Restricted Stock and Performance-Based Units [Abstract] | ||||||
Vesting period | 3 years | |||||
Performance-based Restricted Stock Units [Member] | Maximum [Member] | ||||||
Restricted Stock and Performance-Based Units [Abstract] | ||||||
Vesting period | 4 years | |||||
|
Stock-Based Compensation, Employee Stock Purchase Plan (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
Fair value and valuation assumptions [Abstract] | |||
Stock-based compensation expense related to employee stock purchase plans | $ 105 | $ 96 | $ 104 |
Store Operating, Selling and Administrative Expenses [Member] | |||
Fair value and valuation assumptions [Abstract] | |||
Stock-based compensation expense related to employee stock purchase plans | $ 105 | $ 96 | $ 104 |
Employee Stock Purchase Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of quarterly closing price employees pay for shares | 85.00% | ||
Employee Stock Purchase Plan, Shares and Average Price Per Share [Abstract] | |||
Shares purchased (in shares) | 26,077 | 23,555 | 14,890 |
Average price per share (in dollars per share) | $ 15.96 | $ 16.36 | $ 28.48 |
Fair value and valuation assumptions [Abstract] | |||
Weighted average fair value at grant date (in dollars per share) | $ 4.75 | $ 4.06 | $ 6.98 |
Expected life | 3 months | 3 months | 3 months |
Expected volatility - minimum | 34.80% | 30.20% | 30.10% |
Expected volatility - maximum | 36.10% | 36.20% | 32.00% |
Risk-free interest rate - minimum | 3.26% | 1.19% | 0.37% |
Risk-free interest rate - maximum | 5.21% | 2.48% | 0.68% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Stock-Based Compensation, Director Deferred Compensation (Details) - Deferred Compensation, Share-based Payments [Member] |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019
Director
shares
|
Feb. 03, 2018
shares
|
Jan. 28, 2017
shares
|
|
Director Deferred Compensation [Abstract] | |||
Total number of stock units deferred under plan (in shares) | shares | 4,888 | 1,195 | 2,542 |
Number of directors elected | Director | 2 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019 |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
Basic and diluted earnings per share [Abstract] | |||||||||||
Net income | $ 6,634 | $ 1,499 | $ (1,222) | $ 21,509 | $ 9,733 | $ 7,564 | $ (3,176) | $ 20,910 | $ 28,421 | $ 35,030 | $ 61,075 |
Weighted average number of common shares outstanding (in shares) | 18,644,000 | 20,347,000 | 22,240,000 | ||||||||
Weighted average number of common shares outstanding and dilutive shares (in shares) | 18,826,000 | 20,450,000 | 22,427,000 | ||||||||
Basic earnings per share (in dollars per share) | $ 0.36 | $ 0.08 | $ (0.06) | $ 1.13 | $ 0.51 | $ 0.37 | $ (0.15) | $ 0.98 | $ 1.52 | $ 1.72 | $ 2.75 |
Diluted earnings per share (in dollars per share) | $ 0.36 | $ 0.08 | $ (0.06) | $ 1.12 | $ 0.51 | $ 0.37 | $ (0.15) | $ 0.97 | $ 1.51 | $ 1.71 | $ 2.72 |
Stock Options [Member] | |||||||||||
Basic and diluted earnings per share [Abstract] | |||||||||||
Dilutive equity awards (in shares) | 3,000 | 5,000 | 40,000 | ||||||||
Antidilutive securities excluded from the computation of earnings per share (in shares) | 260,845 | 235,232 | 104,091 | ||||||||
Restricted Stock Units [Member] | |||||||||||
Basic and diluted earnings per share [Abstract] | |||||||||||
Dilutive equity awards (in shares) | 179,000 | 98,000 | 147,000 | ||||||||
Nonvested Stock Awards [Member] | |||||||||||
Basic and diluted earnings per share [Abstract] | |||||||||||
Antidilutive securities excluded from the computation of earnings per share (in shares) | 49,800 | ||||||||||
Incremental dilutive impact if performance criteria had been achieved (in shares) | 39,190 |
DEBT (Details) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Feb. 02, 2019
USD ($)
|
Feb. 03, 2018
USD ($)
CreditFacility
|
Oct. 31, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
|
Credit facility [Abstract] | ||||
Number of unsecured credit facilities | CreditFacility | 2 | |||
Number of days where borrowings incurred against facilities | 95 days | 7 days | ||
Average borrowings outstanding | $ 45.4 | $ 4.1 | ||
Maximum borrowings outstanding | $ 75.0 | $ 4.9 | ||
Average interest rate on outstanding borrowings | 3.70% | 2.78% | ||
Available borrowings under credit facilities | $ 65.0 | $ 60.0 | ||
Regions LOC [Member] | ||||
Credit facility [Abstract] | ||||
Maximum borrowing capacity under renewed facility | $ 50.0 | $ 30.0 | ||
Expiration date of renewed facility | Oct. 31, 2021 | Apr. 30, 2018 | ||
Regions LOC [Member] | LIBOR [Member] | ||||
Credit facility [Abstract] | ||||
Basis spread on variable interest rate | 1.50% | 2.50% | ||
Debt instrument, term of variable rate | 1 month | 1 month | ||
Bank of America LOC [Member] | ||||
Credit facility [Abstract] | ||||
Maximum borrowing capacity under renewed facility | $ 50.0 | $ 30.0 | ||
Expiration date of renewed facility | Oct. 31, 2021 | Mar. 31, 2018 |
LEASES (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019
USD ($)
Store
Office
|
Feb. 03, 2018
USD ($)
|
Jan. 28, 2017
USD ($)
|
|
Operating leases [Abstract] | |||
Total capital lease obligation | $ 3,000 | $ 3,200 | |
Capital lease obligations | 1,017 | 663 | |
Capital lease obligations, long-term | 1,994 | 2,522 | |
Total assets under capital lease (Cost Basis) | 5,900 | 5,400 | |
Accumulated amortization of capital leases (Cost Basis) | 3,300 | 2,700 | |
Amortization expense of capital leases (Cost Basis) | $ 700 | 600 | $ 600 |
Description of lease arrangements | We lease the majority of our stores under operating leases. The leases typically provide for terms of five to ten years with options to extend at our discretion. Many of our leases contain scheduled increases in annual rent payments and the majority of our leases also require us to pay maintenance, insurance and real estate taxes. Additionally, many of the lease agreements contain tenant improvement allowances, rent holidays and/or rent escalation clauses (contingent rentals) based on net sales for the location. For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, we use the date of initial possession to begin amortization, which is generally when we enter the space and begin to make improvements in preparation of our intended use. | ||
Number of stores acquired | Store | 136 | ||
Number of stores opened | Store | 32 | ||
Number of stores increased by lease commitments | Store | 84 | ||
Number of administrative offices leased | Office | 1 | ||
Future minimum payments under capital leases [Abstract] | |||
Fiscal 2020 | $ 1,259 | ||
Fiscal 2021 | 951 | ||
Fiscal 2022 | 451 | ||
Fiscal 2023 | 408 | ||
Fiscal 2024 | 306 | ||
Thereafter | 217 | ||
Total minimum lease payments | 3,592 | ||
Less amount representing interest | 581 | ||
Present value of total minimum lease payments | 3,011 | ||
Future minimum payments under operating leases [Abstract] | |||
Fiscal 2020 | 68,002 | ||
Fiscal 2021 | 58,666 | ||
Fiscal 2022 | 46,683 | ||
Fiscal 2023 | 34,011 | ||
Fiscal 2024 | 22,426 | ||
Thereafter | 40,181 | ||
Total minimum lease payments | 269,969 | ||
Present value of total minimum lease payments | 269,969 | ||
Total future lease payments under capital and operating leases [Abstract] | |||
Fiscal 2020 | 69,261 | ||
Fiscal 2021 | 59,617 | ||
Fiscal 2022 | 47,134 | ||
Fiscal 2023 | 34,419 | ||
Fiscal 2024 | 22,732 | ||
Thereafter | 40,398 | ||
Total minimum lease payments | 273,561 | ||
Less amount representing interest | 581 | ||
Present value of total minimum lease payments | 272,980 | ||
Total rental expense for operating leases [Abstract] | |||
Minimum rentals | 55,755 | 54,337 | 54,910 |
Contingent rentals | 4,397 | 4,931 | 4,744 |
Total | $ 60,152 | $ 59,268 | $ 59,654 |
Minimum [Member] | |||
Operating leases [Abstract] | |||
Lease term | 5 years | ||
Initial lease termination dates | May 31, 2023 | ||
Minimum [Member] | Office Equipment [Member] | |||
Operating leases [Abstract] | |||
Lease term | 1 year | ||
Minimum [Member] | Transportation Equipment [Member] | |||
Operating leases [Abstract] | |||
Lease term | 1 year | ||
Maximum [Member] | |||
Operating leases [Abstract] | |||
Lease term | 10 years | ||
Initial lease termination dates | March 31, 2029 |
DEFINED CONTRIBUTION BENEFIT PLANS (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
Defined contribution plan [Abstract] | |||
Matching contribution | 4.50% | 4.50% | 4.50% |
Annual contribution by employee | 6.00% | 6.00% | 6.00% |
First Eligible Compensation [Member] | |||
Defined contribution plan [Abstract] | |||
Matching contribution | 100.00% | 100.00% | 100.00% |
Annual contribution by employee | 3.00% | 3.00% | 3.00% |
Next Eligible Compensation [Member] | |||
Defined contribution plan [Abstract] | |||
Matching contribution | 50.00% | 50.00% | 50.00% |
Annual contribution by employee | 3.00% | 3.00% | 3.00% |
401(k) Plan [Member] | |||
Defined contribution plan [Abstract] | |||
Defined contribution plan, minimum number of years of service for plan eligibility | 1 year | ||
Contribution expense | $ 1,300 | $ 1,400 | $ 1,400 |
401(k) Plan [Member] | Minimum [Member] | |||
Defined contribution plan [Abstract] | |||
Annual contribution by employee | 1.00% | ||
401(k) Plan [Member] | Maximum [Member] | |||
Defined contribution plan [Abstract] | |||
Annual contribution by employee | 100.00% | ||
Supplemental 401(k) Plan [Member] | |||
Defined contribution plan [Abstract] | |||
Contribution expense | $ 0 | $ 0 | $ 0 |
Percentage of deferred compensation | 40.00% | ||
Voluntary Plan [Member] | |||
Defined contribution plan [Abstract] | |||
Percentage of deferred base salary | 50.00% | ||
Percentage of deferred bonus earned | 100.00% | ||
Voluntary Plan [Member] | Minimum [Member] | |||
Defined contribution plan [Abstract] | |||
Payout period | 2 years | ||
Voluntary Plan [Member] | Maximum [Member] | |||
Defined contribution plan [Abstract] | |||
Payout period | 10 years | ||
FSA [Member] | |||
Defined contribution plan [Abstract] | |||
Maximum unused amount can rollover under FSA | $ 500 |
RELATED-PARTY TRANSACTIONS (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019
USD ($)
Store
|
Feb. 03, 2018
USD ($)
|
Jan. 28, 2017
USD ($)
|
|
Lease arrangement [Abstract] | |||
Future minimum annual lease payments | $ 269,969 | ||
Books-A-Million, Inc. [Member] | |||
Lease arrangement [Abstract] | |||
Description of related-party transaction | The Company leases one store under a lease arrangement with AL Florence Realty Holdings 2010, LLC, a wholly-owned subsidiary of Books-A-Million, Inc., (BAMM). One of our Directors, Terrance G. Finley is an executive officer of BAMM. Minimum annual lease payments are $0.1 million, if not in co-tenancy, and the lease termination date is February 2022. | ||
Number of store leases under lease arrangement | Store | 1 | ||
Lease termination date | Feb. 28, 2022 | ||
Minimum annual lease payments | $ 100 | $ 100 | $ 100 |
Future minimum annual lease payments | $ 300 |
INCOME TAXES (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
Federal: | |||
Current | $ 7,375,000 | $ 16,154,000 | $ 31,007,000 |
Deferred | 339,000 | 3,257,000 | 1,359,000 |
Total federal | 7,714,000 | 19,411,000 | 32,366,000 |
State: | |||
Current | 1,625,000 | 1,668,000 | 3,042,000 |
Deferred | (202,000) | 338,000 | 13,000 |
Total state | 1,423,000 | 2,006,000 | 3,055,000 |
Provision for income taxes | $ 9,137,000 | $ 21,417,000 | $ 35,421,000 |
Reconciliation of federal statutory tax rate to effective tax rate | |||
Tax provision computed at the federal statutory rate | 21.00% | 33.72% | 35.00% |
Effect of state income taxes, net of federal benefits | 2.86% | 2.50% | 2.22% |
Enactment of the Tax Cuts and Job Acts | 0.00% | 1.39% | 0.00% |
Federal income tax credits | (1.36%) | (0.32%) | (0.45%) |
Equity compensation tax deficiencies | 1.30% | 1.23% | 0.00% |
Other, net | 0.53% | (0.58%) | (0.06%) |
Tax provision at effective rate | 24.33% | 37.94% | 36.71% |
Deferred tax assets and liabilities, net | |||
Deferred rent | $ 6,333,000 | $ 6,971,000 | |
Inventories | 3,442,000 | 3,209,000 | |
Accruals | 5,080,000 | 3,616,000 | |
Stock-based compensation | 3,681,000 | 3,714,000 | |
Other | 328,000 | 49,000 | |
Total deferred tax assets | 18,864,000 | 17,559,000 | |
Accumulated depreciation and amortization | (15,089,000) | (14,395,000) | |
Prepaid expenses | (1,420,000) | (644,000) | |
Other | 0 | (224,000) | |
State taxes | (77,000) | (120,000) | |
Total deferred tax liabilities | (16,586,000) | (15,383,000) | |
Deferred income taxes, net | 2,278,000 | 2,176,000 | |
Reconciliation of unrecognized tax benefit [Roll Forward] | |||
Unrecognized tax benefit - beginning of year | 1,156,000 | 1,267,000 | $ 1,242,000 |
Gross increases - tax positions in prior period | 246,000 | 140,000 | 158,000 |
Gross decreases - tax positions in prior period | (10,000) | (7,000) | (26,000) |
Gross increases - tax positions in current period | 107,000 | 70,000 | 121,000 |
Settlements | 0 | 0 | 0 |
Lapse of statute of limitations | (254,000) | (314,000) | (228,000) |
Unrecognized tax benefit - end of year | 1,245,000 | 1,156,000 | 1,267,000 |
Accrued interest and penalties related to unrecognized tax benefits | 200,000 | 100,000 | 100,000 |
Interest and penalties recorded | 18,000 | 4,000 | 21,000 |
Unrecognized tax benefits that would affect effective income tax rate | $ 1,000,000 | $ 1,000,000 | $ 900,000 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
Feb. 02, 2019 |
Feb. 03, 2018 |
---|---|---|
COMMITMENTS AND CONTINGENCIES [Abstract] | ||
Annual bonus related expenses included in accrued payroll expenses | $ 3.9 | $ 1.9 |
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019 |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||
Net sales | $ 305,964 | $ 216,888 | $ 211,123 | $ 274,707 | $ 266,738 | $ 237,834 | $ 187,958 | $ 275,688 | $ 1,008,682 | $ 968,219 | $ 972,960 |
Gross margin | 95,099 | 70,512 | 66,351 | 96,773 | 83,977 | 76,113 | 54,408 | 98,218 | 328,735 | 312,717 | 338,596 |
Operating income (loss) | 8,963 | 1,842 | (1,885) | 28,621 | 15,884 | 11,787 | (5,162) | 34,168 | 37,541 | 56,678 | 96,764 |
Net income (loss) | $ 6,634 | $ 1,499 | $ (1,222) | $ 21,509 | $ 9,733 | $ 7,564 | $ (3,176) | $ 20,910 | $ 28,421 | $ 35,030 | $ 61,075 |
Basic earnings (loss) per share (in dollars per share) | $ 0.36 | $ 0.08 | $ (0.06) | $ 1.13 | $ 0.51 | $ 0.37 | $ (0.15) | $ 0.98 | $ 1.52 | $ 1.72 | $ 2.75 |
Diluted earnings (loss) per share (in dollars per share) | $ 0.36 | $ 0.08 | $ (0.06) | $ 1.12 | $ 0.51 | $ 0.37 | $ (0.15) | $ 0.97 | $ 1.51 | $ 1.71 | $ 2.72 |
FAIR VALUE MEASUREMENTS (Details) - Recurring [Member] - USD ($) $ in Thousands |
Feb. 02, 2019 |
Feb. 03, 2018 |
---|---|---|
Level I [Member] | ||
Assets measured at fair value on recurring basis [Abstract] | ||
Short-term investments | $ 158 | $ 463 |
Long-term investments | 2,377 | 2,418 |
Long-term contingent earnout | 0 | 0 |
Total investments | 2,535 | 2,881 |
Level II [Member] | ||
Assets measured at fair value on recurring basis [Abstract] | ||
Short-term investments | 0 | 0 |
Long-term investments | 0 | 0 |
Long-term contingent earnout | 0 | 0 |
Total investments | 0 | 0 |
Level III [Member] | ||
Assets measured at fair value on recurring basis [Abstract] | ||
Short-term investments | 0 | 0 |
Long-term investments | 0 | 0 |
Long-term contingent earnout | 9,200 | 0 |
Total investments | $ 9,200 | $ 0 |
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