Hibbett Inc (HIBB) 2015 Q4 法說會逐字稿

Welcome to the Hibbett Sports fourth-quarter 2015 conference call. (Operator Instructions). As a reminder, this conference is being recorded Friday, March 13, 2015. I would now like to turn the conference over to Mr. Pat Watson from Corporate Communications. Please go ahead, sir.

Thank you for joining Hibbett Sports to review the Company's financial and operating results for the fourth fiscal quarter and the fiscal year ended January 31, 2015. Before we begin I would like to remind everyone that management's comments in this conference call that are not based on historical facts are forward-looking statements.

Management may make additional forward-looking statements in response to your questions. These statements which reflect the Company's current views with respect to future events and financial performance are made in reliance of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to uncertainties and risks. It should be noted that the Company's future results may differ materially from those anticipated and discussed in the forward-looking statements.

Some of the factors that could cause or contribute to such differences have been described in the news release issued earlier this morning, in the Company's annual report on Form 10-K and in other filings with the Securities and Exchange Commission. We refer you to these sources for more information. I'd now like to turn the call over to Jeff Rosenthal, Chief Executive Officer. Please go ahead, Jeff.

Thank you. And good morning, everyone. Welcome to the Hibbett Sports fourth-quarter earnings call. I have with me this morning Scott Bowman, Senior VP and CFO; Jared Briskin, Senior VP of Merchandising; as well as Cathy Pryor, Senior VP of Store Operations.

We were very pleased with our fourth-quarter results. We experienced good comps during the holiday period on top of good comps last year and our product assortments resonated well with our customers for January and February. We experienced a shift compared to last year in terms of weather impacts and tax refunds. The weather impact shifted to February this year and the tax refunds were issued earlier this year which favored January.

Quarter to date we are down mid-single-digits due to many factors. There is a shift in tax refunds, port delays and store closings due to weather. However, we are very excited about the rest of the year. For the year we opened 80 new stores, expanded 9 high-performing stores, closed 19 underperforming stores, bringing in the store base to 988 stores in 31 states as of January 31, 2015. There are still over 400 additional markets in 31 states that we operate today.

We are very positive on our store growth as ever. Next year we are anticipating an opening of approximately 80 to 85 new stores, expand 10 to 15 stores and close approximately 15 to 20 stores. In April we will open our 1,000th store.

We are beginning to benefit from our new wholesale logistics facility. As we progress throughout this year we will plan on seeing more and more benefits from our facility and our new allocation system and our mark down optimization systems which should help us to continue to get the right product assortments in the right stores at the right time and also see an improvement in product margin.

We have also seen benefits from our new labor management tool during the fourth quarter, which gives us confidence in seeing improvements for this year. We have begun our first phase of e-commerce and setting the foundation for the future. We are as excited as ever in getting this done as soon as possible. We are putting the foundation to help Hibbett grow for many years to come.

I want to thank all the Hibbett Associates and all the people that have helped Hibbett grow and will continue to grow in the future. Now I will turn the call over to Jared Briskin to talk about the merchandise.

Thank you, Jeff. Good morning. Our apparel, footwear and equipment areas all comped positively for the quarter. Branded apparel achieved a low-single-digit increase for the quarter. Men's apparel was up mid-single-digits as the athletic drove significant gains.

In women's we had strong gains in tights and fitness apparel, but those gains were offset by declines in outwear which led to a flat comp. The kids apparel business was up low-single-digits also driven by the strong athletic bottom trend. Our accessory business was up mid-single-digits as our investments in cold-weather items drove strong results.

The footwear business was up high-single-digits. Men's was up high-single-digits; women's was down mid-single-digits; and our kids business was up low teens. Our traditional running business continued to be outperformed by the lifestyle category and basketball offerings as both of those categories drove double-digit growth.

Running across all categories grew high-single-digits. Under Armour, Nike Signature and the continued strength of our Jordan business drove the basketball category. Running inspired silhouettes as well as iconic models drove the lifestyle category.

Our licensed business was flat for the quarter as a low-single-digit gain in licensed apparel was offset by a mid-single-digit decline in headwear. Positive comps in our college business, NFL business and Major League Baseball business were offset by declines in our NBA business primarily related to the headwear business.

Our equipment area grew mid-single-digits for the quarter as strong gains in soccer, football and basketball offset a challenging fitness business. Although the quarter is off to a slow start, weather and shipment patterns should normalize and we are confident when that happens our assortment and flow of product will continue to resonate with our customer and yield our expected results. I will now turn the call over to Scott Bowman.

Thank you, Jared. For the fourth-quarter total sales increased $21.6 million to $239.3 million, an increase of 9.9% over the prior year. Comp sales were up 5.4%. Gross profit rate decreased [28] basis points in the quarter. Product margin decreased 45 basis points mainly due to markdowns associated with managing our inventory. Warehouse and store occupancy decreased 17 basis points as a percent of sales which was due to leverage of these expenses associated with higher comp sales.

SG&A expenses increased 3.4% in the quarter but decreased 129 basis points as a percent of sales. We experienced increased leverage due to higher comp sales and tight expense controls and also experienced lower cost for employee benefits, new store costs and the annual recognition of gift card breakage.

Depreciation and amortization increased 8 basis points as a percent of sales in the quarter mainly due to our new wholesale logistics facility and the addition of new stores. The income tax rate for the quarter was 37.5%, which was similar to last year's rate.

Operating income of $31.9 million increased 18.1% from last year and was 13.4% of sales versus 12.4% last year, an increase of 93 basis points. Diluted earnings per share came in at $0.79 per share versus $0.64 last year, an increase of 23.4%.

For the full year I would also like to mention a few highlights. Total sales were up 7.2% while comp store sales were up 2.9%. Gross profit rate was down 53 basis points while SG&A expenses decreased 22 basis points as a percent of sales. Operating income decreased 44 basis points to 12.9% and earnings per diluted share of $2.87 increased 6.3%.

From a balance sheet perspective the Company ended the quarter with $88.4 million in cash versus $66.2 million last year with no bank debt. Inventories increased 6.1% over last year and were 0.4% lower on a per store basis. We spent $3.9 million in CapEx the quarter. Also for the quarter the Company bought back 134,000 shares for a total of $6.4 million. At quarter end we have approximately $173 million remaining under the existing purchase authorization.

As we turn our focus to fiscal 2016, I would like to provide some highlights related to our guidance. For the year we expect comparable store sales to increase in the low- to mid-single-digit range. We plan to open 80 to 85 new stores, expand 10 to 15 existing stores and close 15 to 20 underperforming stores.

We expect earnings per diluted share to be in the range of $2.95 to $3.09. Included in this range are impacts of approximately $0.05 per diluted share for the implementation of a new point-of-sale system, approximately $0.04 per share for increased healthcare and IT costs, and approximately $0.03 per share for increased depreciation.

For gross margin we expect product margin to be slightly positive. We expect benefits from our markdown optimization system as it continues to mature, as well as some initial benefits from our new wholesale and logistics facility.

With respect to SG&A, we expect the implementation of the new point-of-sale system to negatively impact SG&A by approximately 20 basis points. Additionally, increased healthcare and IT costs will impact SG&A by another 15 to 20 basis points.

Depreciation is expected to increase 10 to 15 basis points mainly due to the full-year effect of our new wholesale and logistics facility, the capitalization of IT initiatives and an increase in new store openings. We expect our tax rate to be in the range of 37.5% to 37.6% for the year.

Our earnings per share guidance reflects the continuation of our share buyback program and we expect a weighted average share count of 24.8 million to 25 million at the end of the year.

For capital expenditures we expect to spend $30 million to $35 million as we invest in our new POS system, grow our store base and execute on our strategic initiatives to improve the business. With that preview of fiscal 2016, operator, we are now ready for questions.

(Operator Instructions). [Dan Bewer] (sic), Hibbett Sports (sic).

Still with Raymond James, by the way, not with you guys. Jeff, you led off noting that you wanted to achieve e-commerce capabilities as soon as possible. Could you elaborate on what kind of competitive disadvantage that you think Hibbett is facing today not having those capabilities? And the reason I was asking is I am sure you have seen the results at Dick's and Foot Locker showing 30% plus e-commerce growth.

Sure. Dan, I think we are holding our own, especially in the brick-and-mortar stores. And I be crazy not to say that e-commerce hasn't affected as some, but when we get that up and running I really think that between the way we operate stores and added that benefit it will definitely help us.

If you look at some of those calls, it is probably helping their comps somewhere between 1% to 2%. So when we have that extra feature, I think that will even drive our sales even that much faster.

Okay. Scott, a question for you. It was a pretty amazing reduction in your expenses during the fourth quarter. It looks like it actually dropped on an absolute basis at a store level. Can you talk about the sustainability of that into 2015, particularly given you have all these new expense headwinds?

Yes. We did have some more one time favorability in fourth quarter, Dan. As we look forward a couple of main benefits that I see going forward are, number one, from a store labor standpoint I think we continue to get better there. Jeff mentioned the implementation of our labor management system. Cathy Pryor and her operations team have really embraced that system and, as they continue to learn with that system, I think we will see some decent leverage from a store labor standpoint.

So I think that will benefit us and I think that is the main thing going forward. And I think the other thing is as we continue to grow we continue to look for ways to lever our expenses, even in light of some of the additional expenses we are adding on. So, it is a constant focus for us, so as we generate that comp sales number of around 3% we still continue to get some leverage there.

Okay. And then just a last question I had for Jared. Did I understand correctly that running was up high-single-digits, but it was still underperforming basketball?

That is correct. Running holistically was up in the high-single-digit area inclusive of your traditional performance running categories and lifestyle running categories, yes.

Is that an acceleration for running?

Running inclusively would include all those categories, has been at that level for some time. I think it really depends on how you look at the running category and what is included in the running category. Our traditional running categories, performance running categories were off mid-single-digits. But when you look at running holistically, which includes the fashion running category, it was up high-single-digits.

Okay, great. Thank you very much.

Rafe Jadrosich, Bank of America-Merrill Lynch.

Can you talk about the traffic and ticket trend during the fourth quarter and how is that trending quarter to date?

Yes, Rafe, for the fourth quarter we actually saw traffic slightly positive. Really continuing at the same -- the similar trend that we have seen recently with ticket driving more of the comp in traffic. But we did see traffic per transactions slightly positive in the quarter.

And just in terms of the your same-store sales guidance for 2015, what is sort of the average selling price outlook there?

I think as we go into this year, I still think that the average selling price and ticket will be more of the driver of the comp. We continue to work on things to increase the transaction side, but I still think for this year it will be more driven by the ASP and ticket.

And then just the final question. In terms of the point of sale system upgrade for 2015, can you provide any color on what additional investments after that need to be made to get an e-commerce platform up and running? And then maybe any color on the timing of that would be great.

Yes, the new POS that we will install this year will certainly give us a good foundation to build on. After that point in time there are some additional capabilities that we can add on to be able to ship store to home and from the DC to home. So that is some added functionality in the core kind of POS.

When we talk about e-commerce along with that, really the big work there is the creation of the website and the hosting and the feeds for all of the content and everything that you have in front of you.

Okay, great. Thank you.

Anthony Lebiedzinski, Sidoti & Company.

Just wanted to get a little bit more clarity on the quarter-to-date performance. Just wondering in these stores that are not affected by the weather, can you talk about what same-store sales you guys are seeing so for quarter to date?

Anthony, we talk like some of the major categories like baseball or soccer, we've seen some pretty good results like in Florida where the weather hasn't been so bad. But when you talk like an Alabama, Mississippi, even some parts of Texas and some other states, the fields are too wet, people can't get out, and that is where we are seeing it.

Even locally in some other areas like in Atlanta and some other areas the fields are just soaking wet and they are not letting the kids get on the fields. But like Florida is encouraging because we really haven't had bad weather in Florida like we have throughout the country. So we have seen some positive things which gives us some confidence that when the weather gets a little bit more normalized that we will see positive results.

Got you. And also can you give us an update as far as your traffic driving initiatives? I know in the past you have spoken about doing more mobile texting and then the MVP rewards program. Is there any other initiative perhaps underway to try to get that traffic to your stores in a better direction?

I think we are still looking at certainly growing the loyalty program through MVP and then certainly our mobile database. And then we are paying particular attention to our social channels currently and we have seen substantial growth over the last 12 months. And more specifically in the last six months really trying to utilize those channels to drive traffic and certainly our new releases featured on our website and through our mobile site have been real drivers for us.

Okay, great. And as far as the point-of-sale system itself, how much of your CapEx is going to go for that?

On the CapEx side it is going to be about a third of our CapEx will be dedicated towards that initiative.

Got it, okay, that is helpful. Thank you very much.

Peter Benedict, Robert W. Baird & Company.

First on the fixed cost leverage in COGS during the fourth quarter, Scott, you said around 17 basis points. Can you break that down between occupancy and warehouse distribution? And then how were you thinking about the leverage hurdle points for those items as we look into 2015?

So warehouse costs, they were leveraged by about 13 points and then store occupancy 4. And as I look at this year, I think our leverage point for that category of expenses is still right around the 3% level.

Okay, perfect. And then just drill a little more into the drivers of the product margin as you see 2015. I know product margin was down probably 40 bps for the year in 2014; I know you think it is going to be up a little bit. Just remind us kind of what are the good inputs and the bad inputs for 2015? And the timing if there is any timing we should think about.

Yes, so I think the first input is from an aging standpoint where we currently stand today and what we continue to see from an improvement standpoint. And we kind of fought all year last year to really get our aging under control and we made improvement month over month. And we are certainly in a better place us we went through the year, but really are continuing to manage that piece of it.

But are getting that closer to where we'd like that to be so that is where we will see the first improvement. And as we continue to go through this year, certainly at the beginning of the year and as every month progresses we expect to get some benefits out of the markdown optimization system with some of the discipline that has given us with regard to timing of markdowns and how that influences the gross margins over the long-term.

Okay, that is helpful. And then just lastly, back to kind of the quarter -- first quarter. Given where you are to date, low -- I think down mid-single is what Jeff said. Given how much of the [bid] the quarter has already been transacted, I mean is there a view here that you can back to positive comps for 1Q in general or is that probably -- is that too much to expect at this point? Thanks.

We are still optimistic. We've got a big hurdle to overcome because February is such a huge volume month for us. We hope with an earlier Easter and some of the initiatives we have with launches and some other products getting here finally we are optimistic that that could happen.

The first quarter will be a little tougher, but we still feel good about the year and where we sit from product assortments and the way we sit in the stores and definitely getting some benefits from our new logistics facility. We think a combination of those type things should be able to help us at least get through it. Obviously February miss definitely makes it a little tougher.

Yes, and as you look for the remainder of the quarter our compares from last year do ease a little bit as we go through the remainder of the quarter.

Okay, good, that makes sense. Thanks, guys.

Sam Poser, Sterne Agee.

A couple of -- a bunch of things. December, January, February comps, did you give those?

No, I didn't, Sam. If you look at November we had a comp of 8.9% followed by December at 1.4% and then January 11.3%.

Thank you. And then a couple of things -- you talked about expecting the average selling prices to go up in the year. How much of that do you think is going to be driven by mix versus just improved -- your improvement on the systems given the new DC markdown op and the allocation system?

Yes, Sam, it is Jared. I think it is going to be a combination of both. I definitely think we will certainly see some of the improvement from the allocation system and the mix of markdowns, but I also think mix is going to drive some of that as well. And with some of our focus points on some of our premium initiatives.

Okay. And then, Jeff, you talked about with the new POS system being put in place by the end of the year. I mean when you are looking at really having an e-commerce platform up and running, are we looking at next year or are we looking at the beginning of fiscal 2018? I mean what -- as you see it right now where do we stand?

Well, we feel really good about the first phase which really builds that foundation. It gives us real-time visibility of inventory. It gives us the capability of stores selling store to store and raising the conversion. And once we get through that phase then we think a lot of it will speed up. But we are still -- until you get through that first phase, which is really the heavy lifting and then we think we can move it along much faster.

You're spending a nickel -- you said a nickel and a earnings this year for the POS system. I mean have you -- I mean is there any way if you spend a little more money upfront could you get multiple things going on so you could get this done more quickly? So when you have the situations you faced a year ago January and this February when you have the number of store closings that you did that you don't just shut down business and could actually do business through the sites and so on and so forth?

Well, you know, yes, we look at -- we are looking at doing multiple things at a single time. And we continue to look at other ways to do multiple projects at the same time. We are looking to bring in someone to help us move down that way even quicker. So we feel a lot of these things could move up, but we've got to get this foundation done to do that. But absolutely, we want to move it up as fast as we can.

So I mean again, to my original question, 2000 -- next year or 2018, I mean calendar 2016, calendar 2017 -- I mean right now what should we be thinking?

It is still a little too early to commit.

All right. Well, thanks. Good luck.

David Magee, SunTrust.

Good morning. Just a couple of questions. One, Jared, on the ASP, do have the benefit this year of much inflation or is it like last year?

It will be similar to last year, there is some inflation and, again, it is not broad across all categories, but there are some categories where it is some inflation. But I think some of our inflation will more be due to our mix versus necessarily broad category inflation.

Okay. And also, Jared, you had mentioned during the run down of the categories a couple of women's categories were down, it sounded like to me. And you mentioned headwear. Could you give a little more color about those two areas?

Yes. So from a women's perspective, from a footwear perspective specifically, we have been challenged there for a period of time. We still feel like there is some significant opportunity there and we feel like we are putting the pieces of that together to get that business turned around. We see it as a significant opportunity.

On the apparel side we oversold early and we ran out of some key items, so I think we will have that rectified as we go forward. We feel like we are in a much better position for the spring selling season in our key products that will help us there.

From a headwear standpoint, the headwear business has been challenged for a little while. The headwear business had a trendy silhouette in the two year ago period and year ago period and there is not a trendy silhouette in that category today. So that is where the challenge is coming from.

Excuse my ignorance, what is that trendy silhouette?

It was a snapback -- snapback flat bill hat was the trendy silhouette.

And it is really more from a licensed standpoint, David, from a team. Our regular branded like the Nike or Under Armour or [Costa] hats have done pretty well.

Okay, thank you. And, Jeff, just the last question. On the logistics facility this year, at what point do you anticipate that it will be meaningful with regard to in stocks at the store level and helping comps from that perspective?

Yes, I think it will be marked second half of the year, but we are starting to get some small wins now. And as we fine-tune that we think we will get even more benefit from it.

But do you think it will be perceptible in the second half of this year?

I do.

Great. All right, thanks, guys.

Stephen Tanal, Goldman Sachs.

Just a quick clarification. On the POS investments, what's sort of the cadence by quarter? Are you doing a lot of that in Q1 or is that more back half just as you think about the model?

It will be more back half loaded, Stephen. If I had to guess it would be more like 75% back half loaded.

Got it. Okay, and just to be clear, it didn't sound like you were committing to sort of a rough timeframe for like having the ability to sell a line, is that right?

Yes, still a lot of work to be done in that area. And like Jeff said, as we get this first foundational layer in place that will tell us more and give us a little bit better visibility for the future.

In the meantime, I mean we continue to look at the technology options for e-commerce as well as the business process side, when you start thinking about returns and logistics and content management and things like that. So there is work being done on it, but after we get this first foundational layer in place we will have a better idea of what we see going forward.

Got it. And then on the healthcare expenses, I presume this is related to ACA. And pursuant to that, my question would be what percent of your full-time employees are being offered insurance today and what percent of those accept it?

Yes, a high percentage of our full timers do have healthcare today. And as we look at healthcare next year there is some increase that we are putting in there for ACA. But really the bigger part of the increase is just the addition of employees that we plan on hiring next year with new store growth and everything.

I am modeling kind of an estimate from Blue Cross on claims inflation. That number can fluctuate but I am kind of using the average that they are putting out there. So it is really a combination of some increase in claims, increase in employee headcount and then some increase in ACA including some of the fixed costs that are in there. So it is a combination of those three things.

Okay, that is helpful. And the last one for me -- you stopped short of saying gross margin altogether would be up for 2015. But it sounds like a lot of the drivers that you are talking to would suggest that that is a possibility. Am I thinking about that wrong or is there something else going on there?

No, you are thinking about that correctly. The additional impacts that I laid out, a lot of that will hit the SG&A line and depreciation. If you look at the gross margin line, at kind of a low- to mid-single-comp we should get at least flat or some leverage on our fixed expenses. And then on the product margin side, as we mentioned, we think there is some opportunity for improvement there.

Okay, thanks a lot, guys.

Seth Sigman, Credit Suisse.

I wanted to follow-up on the questions about the investments that are planned. So obviously this year seems like a little bit of a step up in some of the costs both on a dollar basis and as a percent of sales. I am just trying to understand where the Company is within the investment cycle.

So when you look at that $0.12 for this year how much of that is one time? How much of that goes away? How much of that is structurally being added to the cost structure? As we think about those big buckets like POS and other IT costs are there other incremental e-commerce costs that come? Just trying to figure out how to think about that.

Yes, I will break it down in a couple of categories for you. As you look at the e-commerce initiative over time, this first phase will have an impact of the $0.05 that I mentioned. As we look at the next year after that we will still see an impact there as we continue to build out that capability. You also see some additional depreciation expense in future years as we start to capitalize pieces of that project. So that will be ongoing for the foreseeable future.

Some of the other increases I mentioned for healthcare and IT costs, we continue to make improvements in our IT infrastructure and so some of that is a little bit more heavily weighted I would say this year than what we will see in future years.

So we are making some nice improvements in our capacity, our security, looking at more cloud options to help us be more reliable and stable in the future. So we are making a lot of improvement on the back end of that kind of IT business that will help us in the future and set us up to be more efficient as we grow.

Okay, that is helpful. And just to narrow on to the e-commerce business the $0.05. So it sounds like there are some investments that will continue. But also as you start to actually sell things online do you have a feel for the economics of what a sale online will look like if that is expected to be a drag initially? Or is there a way that you are partnered up with some third parties where it should be neutral to the margins? How do you think about that?

Yes, the way that we are thinking about that -- it's a good question -- because as we look at the whole initiative, I mean we have a focus on the opportunity from a sales standpoint, but we also are very aware of the profitability side and that is one of the reasons why we are going down the path that we are.

We want to enable ours stores to be able to help us from a distribution standpoint of you can get some more efficient distribution and possibly some freight costs there. From a customer standpoint I think it means a lot to have that capability, especially from a return standpoint.

So enabling our stores to kind of integrate in with an e-commerce business is very important to us especially as we grow the volume of that business. And so, as we continue to grow we will continue to look for ways like that to leverage our store base to mitigate those costs so we can make some decent money in the future.

Okay. And I am sorry if I missed this, but just from a labor perspective, from a wage perspective, are you anticipating in the numbers any upward pressure on wages in the upcoming quarters or in the year ahead?

We are not really anticipating a huge increase there. We have seen the articles in the news and everything. And so, we will continue to monitor that. We feel that today that we are competitive from a wage and total kind of benefits package standpoint.

Our aim is to continue to be competitive and we will continue to monitor the marketplace as we go forward. But right now there is not a big impact baked in there. But we will continue to monitor that situation.

Okay, thanks very much.

Camilo Lyon, Canaccord Genuity.

Just going back to the port delays, could you guys talk a little bit about the categories that you are seeing that are most affected and maybe some of the brands that are -- that you are seeing delays in those shipments? And also when in the discussions with the brands do you expect to have that project flow start to normalize is that -- in other words could that peer into second quarter from a delay perspective?

Yes, I think I will start with the second question. I mean we are starting to see it normalize a little bit, I think it will still take a little bit of time to clean up. The larger brands differently seem to handle it better than the smaller brands. From a categorical perspective it was pretty broad-based.

We know the delays were very different. It wasn't necessarily categorical based, but the larger brands seemed to have a smaller number of days in delay and the smaller brands seemed to have a much longer we time.

Okay (multiple speakers).

And some of our brands, they even moved things to the East Coast to try to get ahead of it. So we were trying to be proactive. And then the East Coast couldn't handle all the volume. So it kind of -- the shipments just kind of got backed up even when we try to get a little bit more proactive on it.

Great, well, thanks for the color. And then just moving on to -- two more questions. One, I don't -- if I missed it I apologize. Could you tell us what basketball was for you guys and -- in the quarter? And what's your view on the product launch calendar as far as you can see, which I think should take you through calendar 2015?

Yes, the basketball category was double-digit in the fourth quarter and was still the driver within the footwear category. And from what we have seen so far we are still very confident in the category and its influence in our business for the rest of the year.

And is there anything that you are seeing on the product side that could start to turn the performance aspect of running? It seems like that is starting to or has been a fairly decelerating/weakening category.

Yes, I think there is, I think some focus on some of the core technology particularly around Air and some of the product coming with that I think will be helpful. And there is some newness coming into the market on the running side that will be helpful.

So we do see some things coming. I don't see necessarily a dramatic change in that business. But there is some newness coming that I think can give it some life, but I still see the strength in the footwear business coming from the basketball and the lifestyle categories.

Great. And then just finally, what is February as a part of the first quarter? How big is that month to the quarter?

It is slightly over 35% of our quarter.

And is that the biggest month of the quarter?

It is.

Okay. Thanks, guys. Good luck for the balance of the year.

Sam Poser, Sterne Agee.

One of the questions was answered. Jared just real quick, the fashion -- you are expecting the club fashion or retro running business to continue to outperform the performance running business as you see it right now going forward, is that accurate?

That is accurate.

And can you give us some idea -- just for a category -- for what you categorize where, could you give us an example of like one or two shoes in each category so people understand what you deem as what?

Sure, so technical running, so like an ASICS Nimbus as an example would be in our performance running category and a Nike Roshe is in lifestyle.

And the Free and the Lunar, those live --?

Free and Lunar live in performance for us.

Okay. Thanks for clarifying that, appreciate it.

Sean McGowan, Needham & Company.

Going back to something you have touched on in a couple of questions regarding the kind of normalization. I think I understand what you are saying about the port delays and the weather. But can you sort of prioritize the impact of the tax rebate shift? How much of the first-quarter impact do you think -- or the reduction in comps in the first quarter is a result of that shift?

It is hard to pinpoint exactly how much of that comp. If I would estimate I would estimate 1 to 2 points of impact because of that. In terms of number of days, it was about 10 or 11 days that shifted into the back half of January.

So that should absolutely have been normalized fairly quickly in the quarter, right?

It should.

Okay. And, Jeff, could you talk a little bit about the performance of the expanded stores, how that is going?

Yes, we continue to look at that and on average we are around 5,000, we go to about 7,500 on average. The stores continue to do well. We always have to look for the right real estate opportunity and they are not always there. But we still have a list of quite a few stores close to 100 that we would like to expand if we could get the right deal and the real estate works correctly from a lease standpoint. Those stores always continue to do pretty well when we do that.

Okay, thanks. And then, Scott, last question for me is on CapEx. If you see it at that $30 million to $35 million would you characterize that as an unusually high year level relative to what we could expect in the subsequent years?

Yes, I think that level will be similar to what we will see over the next two or three years. And this initial phase that we are putting in new POS definitely is a step up. We will continue to have some investments over the next couple years at least -- similar to that. It may be slightly lower than this year but it will be comparable.

Okay, but you don't see it ramping up or ramping down dramatically, right?

I don't, no.

Okay. All right, thank you very much.

Rick Nelson, Stephens Inc.

How did the mall-based stores compare to the strips in terms of comps? And if you could comment also on the oil belt, particularly Texas, how those stores are performing?

Strips performed a little better than the mall stores in the fourth quarter. And as we look at those stores close to the oil patch, those stores continue to do well. You see some stories out there that there has been some layoffs and so forth in those areas. However, there is still a lot of activity going on in those areas.

So we still see some nice volume out of those stores near that oil patch. As we go forward that may level off a little bit, but there is still a lot of activity there.

Okay, thanks for that. I'd also like to ask you about the shoe wall roll out, where you are with that compared to the prior year and how much of an impact does that have on your footwear comps?

We've definitely seen an impact early in the process. We were measuring it and we were seeing the stores with the wall certainly outperform the stores without. We are in the process of getting it completely rolled out and are just about complete. So we feel very good about the program.

So it is a year from now basically that you anniversary the full rollout?

Correct.

Thanks.

Peter Keith, Piper Jaffray.

Just to twist the oil question around a little bit. Could you comment on how you feel about the economic backdrop for your customer? Certainly you guys cater to somewhat of a, in some cases, lower income base with maybe longer drive times. Are you beginning to see any benefit from these lower gas prices at this point?

The main benefit that we have seen so far is just really on the expense side on our fuel cost. From a consumer standpoint we really haven't seen a bump yet. There is some indication that those folks have increased their savings rate somewhat, and so that may be coming. But we haven't seen any significant impact so far.

Okay, fair enough. And then one other separate question just regarding to the POS roll out. I want to confirm, are you guys planning to have all stores done by the end of this year? And then to pivot off of that, when would we expect that the ship from store capabilities are fully turned on across the base?

For the first phase of the POS implementation our goal is to be in a position to start rolling out to all stores at the end of this year. So our plan right now is not to have all stores complete by the end of the year, but we should be ready to start rolling out by the end of the year.

And when we do start to roll out our aim is to do that as quickly as possible. As you start to look at store to home capability, I mean that will be something that we look at after we get this first phase complete. And we will firm up those timelines as we get closer to that. But that will be after the initial implementation.

Okay. And just to help us understand I guess the first phase/second phase, is it just the hardware implementation and then getting it turned on? Could you just help us understand how that kind of roles across 2015 and 2016?

For this year a lot of the work is to install more of the hardware and some base level capability. And then following this year it is more about building out the capability of that system in the software.

Okay, that is helpful. Thanks a lot. And good luck with this year.

Mark Smith, Feltl & Company.

Can you talk a little bit about results in returns that you are seeing on stores in new geographic markets versus those in older markets?

Yes, I think as we look at stores in new geographic markets, sometimes it is mixed, sometimes we will go into new geographic areas and we get a slow start. And it sometimes takes us a little bit of time to figure out that customer and figure out the assortment and actually the timing of the flow of goods.

And so, we have seen cases like that in states like Wisconsin and Minnesota. As we learn more about those new geographic areas typically year two and year three they out comp the base up our other stores. And so we have seen that in a few different instances, but I think as we move forward we continue to learn it to get better at doing that.

Okay. And then talking about kind of northern country a little bit more. Can you talk about cold weather apparel fleece, kind of how that performed through the whole winter and then how you feel about inventory levels today?

We had a good season overall. We did have some challenges in the outerwear category, but overall we had a productive season on the winter apparel side. And we feel we have addressed some of our issues on the winter weather product. I feel like we have entered the year in good shape.

Perfect, thank you.

David Woodyatt, Keeley Asset Management.

On the discussion of the outlook for fiscal 2016, the three items that you singled out gave us a heads up on those items that would be kind of a headwind, appreciate you breaking those out. But it strikes me that most of those items look to be sort of ongoing continuing expense items -- in some cases like healthcare would probably continue to increase.

To what degree are there elements of any of those three items, particularly maybe in the point-of-sale expenses, that would be -- could be considered temporary and sort of one time in nature that will subsequently fall off?

I would say for healthcare it is hard to predict what is going to happen beyond this year, and so we will continue to monitor that and update as needed. On some of the IT costs, as I mentioned, we are making some improvements in our infrastructure and security, disaster recovery and things like that. So there is probably a little bit more heavily weighted spending in that area this year, which should level off in future years.

Depreciation, that will increase this year and it will likely increase in the following years. But as we bring on the capabilities of some of the initiatives we have talked about, that will offset some of these expenses in future years. So it is an investment that it does take a little bit of while to get some benefit against that, but that is our long-term plan is to get the benefit to help offset these future expenses.

Will the -- these point-of-sale expenses be subsequently falling back after fiscal 2016?

As we get further into this year I mean we will update kind of the next phase and what that looks like. But to continue to build out the capability of that system as well as looking at more of a typical e-commerce presence, there will still some spending after this year to enable that.

But like I said, the further we get down the road we will start to generate some favorability from a sales standpoint to help offset those expenses. So I think what we are seeing now is more of a front end load of the expense side of it to really position ourselves to get the benefit in future years.

Okay, thank you.

John O'Neil, Imperial Capital.

Congratulations on a good quarter. My first question with respect to SG&A, you mentioned there were some onetime items in there. Could you elaborate on that and how much that might have impacted the quarter?

Yes, there was a fair amount of impact on more of what I would call one-time cost. A couple of bits of information there. If you look at our new store cadence for last year it was much more balanced. And so, for example, in the fourth quarter we open 22 stores, in the prior year we opened 30 stores in the fourth quarter. So that alone reduced our new store cost in that quarter.

We had some favorability for workers comp insurance, just lower claims. We had some insurance claims that we got reimbursed for in the quarter. Annually we look at our gift card breakage. As our gift card base has grown and continues to grow that number does increase year over year.

And then salaries and benefits were also favorable. Healthcare claims were a little bit lower. Store operations did a very good job on controlling store labor.

So it is a combination of a lot of things that really helped us in the quarter, many of which won't continue for future quarters, at least what we are modeling. But things like store labor, I think we will see some improvement there especially with the new labor management system that we have recently implemented.

Thank you. And with respect to the POS rollout, you mentioned that you plan to be in a position to roll that out toward the end of this year. How long would that rollout take to complete?

The rollout would take several months to outfit all 1,000 stores. But whenever you have a POS switchover like that the emphasis is on speed just because you don't want two POS systems at the same time. And so, we are doing as much work as possible to make sure that we shorten that window.

So would the expectation be that you will have all that in place kind of in advance of the holiday season? Because I would imagine you don't want to be changing over in your fourth quarter, right?

Right. And, yes, so we are just trying to position ourselves to start the roll out at the end of this fiscal year. And so, there will be a lot of activity as we get into the beginning of next year.

Got it. Thank you very much.

(Operator Instructions). Bill Priebe, Geneva Capital Markets (sic).

It's Bill Priebe, Geneva Capital Management. I had just a question on competition from some of your larger competitors, Academy, Sports Authority and Dick's. Do you have any data that would tell us how many of your stores are within 20 miles, for example, just to pick a number that is maybe a 45 minute drive, or a half hour drive let's say, of a large big-box retailer? And how are those type of stores that are affected -- how are they comping versus the general store base?

I will start off on that one. As you kind of look at our geographic dispersion of ours stores, if you look at a 10 mile radius there is about a 25% overlap where we will see a big-box competitor in our market. If you go down to a 5 mile radius it goes down to 15% or 16%. If you expand it to a 20 mile radius it is closer to 40%.

So that is kind of what we have seen over the last couple years. That's stayed fairly constant. And one of the benefits that we have is as we continue to open new stores, those new stores predominantly are in areas with little or no competition. So that does help us keep those ratios in line. The question on --.

Could I -- I had a -- can I get a clarification on that? You said stores with a competitor within 20 miles there is 40% of your stores, is that what you just said? I want to make sure I get it right.

Yes, close to 40% of our stores will have that big-box competitor in a 20 mile radius.

And if you narrow it to 10 miles about a quarter of your stores.

Correct.

Okay. And then you were saying in terms of how they comp the -- let's say the ones that are 10 miles or so where there is real competition, not a real disincentive to drive over there. How are they doing?

Actually we have seen a lot of the stores have done better this year than even some of the average of the stores. So we really don't see that as being a major factor.

Okay, thank you.

Adam Sindler, Deutsche Bank.

One quick question on just one product. I didn't hear you mention anything about the [athleisure], I think you guys call it, cycle. Where are you in that now? And just how do you see that playing out over 2015?

I mean, without question I didn't call it athleisure within the comments, but we are certainly referring to that internally. And they are calling out some of the fitness apparel in tights and the fleece bottom trends, that all fits in athleisure. And I still feel like we are at the beginning stages of it based on the cycle that we are in.

And if I may, is that help (technical difficulty) category driving some of the expected growth in price points and mix over 2015?

I'm sorry, the beginning part of your question broke up so I apologize.

Sure, yes, so is continued growth in this category specifically, is that what is helping to drive some of the better price points you are expecting for 2015?

Absolutely we definitely expect growth in these categories, no question.

Very good, thank you. Appreciate it.

[Eric Frazier], Janney.

Jeff, I guess for you, just a little bit bigger picture, as you layer in the e-com build out, still aggressively opening the door base, has there been any kind of thought discussion on what that ultimate store base should be? Any thought to tempering that and sort of using the DTC business as the -- another channel? Just kind of curious on thoughts on that.

We discuss that all the time. We know in the next few years we could easily get over 1,300 -- there is no reason that we can't operate -- that is within the 31 to 32 states that we operate in. Over time there is no reason that we can't have 2,000 stores.

We still -- the way we look at real estate we still make a lot of money with our stores. And we are going to places that brick-and-mortar stores are needed. So we look pretty optimistic on that and we look at that number every year and the monies -- the stores make a good return that first year.

And we think that once we get with our e-commerce strategy we are just going to enhance -- put the volume in stores and also extra volume with the e-commerce. So we really think we have such a bright future ahead of us that once we get some of these foundational things that we need from a system standpoint that we will grow even faster once we get all that situated and some of these fundamentals done.

Okay, and then once the e-com is up and running, maybe talk through the plan to differentiate. Arguably other retailers are certainly well ahead, the brands themselves well ahead in terms of already tapping into that consumer.

How do you recapture perhaps that consumer? What differentiates the e-com business for Hibbett? And then the follow-on is just sort of the product segmentation, how that is going to differ from say going to like a direct?

Correct. Obviously the brands are growing and -- the brands themselves are growing and other retailers are growing. You like to shop one place and be able to either buy it in a store, pick up in a store or ship to your home. And I think people are very familiar with this in these small markets with our customer service and convenience.

A lot of times you want something shipped that you can just drop back off at a store. And most of the time we are the only store in town. And I think it is a huge advantage for us because we have such a huge customer base and we are in small towns. I think is that what we add the difference is more about convenience.

And a lot of people don't like to drop off at UPS or get picked up. And also they like that customer service which has always been and always will be the most important thing we do is how do we service that customer.

And we think that we are just adding additional value to what we already do. And we think especially now we will be able to get exactly the right size or the right color and with our service and people are very familiar with us, especially in a small town where maybe we are the only operator, will only enhance our value to the customer.

Okay, great. Thank you guys so much.

And Mr. Rosenthal, there are no further questions at this time. I will turn the call back to you for closing remarks.

I just want to thank everyone for being on the call. As you see, we had a great fourth quarter. We feel that we are set up very nicely for the rest of this year and that we have lots of value that we can handle that we can give to our shareholders over time. And we look forward to having you on our first-quarter call on May 22. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.