Basis of Presentation and Critical Accounting Policies

3 Months Ended

Apr. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Critical Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Hibbett, Inc. and its wholly-owned subsidiaries (including the condensed consolidated balance sheet as of January 29, 2022, which has been derived from audited financial statements) have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") for interim financial information and are presented in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. References to “Hibbett,” “we,” “our,” “us,” and the “Company” refer to Hibbett, Inc. and its subsidiaries, as well as its predecessors.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2022, filed on March 25, 2022 (the "2022 Annual Report"). The unaudited condensed consolidated financial statements have been prepared on a basis consistent in all material respects with the accounting policies described in the 2022 Annual Report and reflect all adjustments of a normal recurring nature that are, in management’s opinion, necessary for the fair presentation of the results of operations, financial position and cash flows for the periods presented.

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

Property and Equipment

Property and equipment are recorded at cost. Finance lease assets are shown as right-of-use ("ROU") assets and are excluded from property and equipment (see Note 3, Leases). The fixed asset component of asset group impairment charges was not material in any period presented.

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


	April 30, 2022		January 29, 2022		May 1, 2021
Land	$	7,277	$	7,277	$	7,277
Buildings	22,271		22,247		21,607
Equipment	122,927		119,505		106,633
Furniture and fixtures	63,081		59,137		42,369
Leasehold improvements	144,515		137,279		112,741
Construction in progress	6,449		4,086		1,901
Total property and equipment	366,520		349,531		292,528
Less: accumulated depreciation and amortization	212,527		203,564		185,027
Total property and equipment, net	$	153,993	$	145,967	$	107,501

Revenue Recognition

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

Gift Cards and Customer Orders: The net deferred revenue liability for gift cards and customer orders at April 30, 2022, January 29, 2022, and May 1, 2021 was $10.8 million, $9.6 million, and $10.1 million, respectively, recognized in accounts payable on our unaudited condensed consolidated balance sheets. We recognize revenue when a gift card is redeemed by the customer and recognize gift card breakage income in net sales in proportion to the redemption pattern of rights exercised by the customer. For all periods presented, gift card breakage was immaterial.

During the 13-weeks ended April 30, 2022 and May 1, 2021, gift card deferred revenue from prior periods was immaterial.

Loyalty Program: We offer the Hibbett Rewards program whereby upon registration and in accordance with the terms of the program, customers earn points on certain purchases. Points convert into rewards at defined thresholds. The short-term future performance obligation liability is estimated at each reporting period based on historical conversion and redemption patterns. The liability is included in other accrued expenses on our unaudited condensed consolidated balance sheets and was $3.8 million, $3.7 million, and $4.1 million at April 30, 2022, January 29, 2022, and May 1, 2021, respectively.

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


	13-Weeks Ended
	April 30, 2022		May 1, 2021
Footwear	$	263,652	$	322,581
Apparel	111,182		131,108
Equipment	49,217		53,172
Total	$	424,051	$	506,861

Indefinite-Lived Intangible Assets

The City Gear tradename is an indefinite-lived asset which is not amortized, but rather tested for impairment at least annually, or on an interim basis if events and circumstances have occurred that indicate that it is more likely than not that an asset is impaired. In valuing the tradename intangible, we use the Relief from Royalty method which requires assumptions related to future revenues, royalty rate and discount rate. No impairment related to the tradename intangible was recognized during the 13-weeks ended April 30, 2022 or May 1, 2021.