Hibbett, Inc.

Greetings and welcome to the Hibbett Sports first quarter 2022 earnings conference call. During the presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach the operator, please press star 0. As a reminder, this conference is being recorded. Friday, May 28th, 2021. It is now my pleasure to turn the conference over to Jason Fructel, Director of Finance and Investor Relations.

Please go ahead. Good morning. Please note that we have prepared a slide deck that we will refer to during our prepared remarks. The slide deck is available on Hibbett.com via the Investor Relations link found at the bottom of the homepage or at investors.hibbett.com. These materials may help you follow along with our discussion this morning. Before we begin, I would like to remind everyone that some of management's comments during this conference call are forward-looking statements. These statements, which reflect the company's current views with respect to future events and financial performance, are made in reliance on the safe harbor provisions 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 this morning and the company's annual report on Form 10-K, the most recent quarterly report on Form 10-Q, and other filings with the Securities and Exchange Commission. We refer you to those sources for more information. Also, to the extent non-GAAP financial measures are discussed on this call, you may find a reconciliation to the most directly comparable gap measures on our website. Lastly, I would like to point out that management's remarks during the conference call are based on information and understandings believed accurate as of today's date, May 28th, 2021. Because of the time-sensitive nature of this information, it is the policy of Hibbett Sports to limit the archived replay of this conference call webcast to a period of 30 days. The participants on this call are Mike Longo, President and Chief Executive Officer, Bob Volke, Senior Vice President and Chief Financial Officer, Jared Briskin, Senior Vice President and Chief Merchant, Bill Quinn, Senior Vice President of Marketing and Digital, and Ben Knighton, Senior Vice President of Operations. I will now turn the call over to Mike Longo.

Thanks, Jason. Good morning and welcome to Hibbett's Q1 earnings call. If you're following along using the slide deck, I'm on the third slide entitled Introduction. This quarter was a terrific outcome from a financial perspective for the company. As you saw in the press release, we reported an increase of 87% for comparable sales, and the components of that were 113% for brick and mortar, and e-commerce was 1%. This resulted in operating income of just over $110 million and diluted earnings per share of $5. These results were made possible, of course, by the hard work of our 10,000 teammates in the stores, the store support center, and the distribution center. As always, they helped lead us through another quarter in a challenging business environment. We are proud to represent our teammates today and wanted to make sure to thank them for a job well done. We believe that our results put us on track to significantly outperform our previously announced fiscal year guidance. Later, Bob Volke will address that new guidance. But first, I want to highlight some of the reasons for the strong Q1 performance. Several factors last year gave both new and existing customers even more reasons to shop with us. This included competitive closures, increased e-commerce adoption, spending rotation into our product categories, and of course fiscal stimulus. As a result, we believe we have increased our market share. The momentum from these factors gave us even more opportunities to attract and retain new consumers, and our data shows that we've done a good job retaining them so far. Let's talk a little bit more about sales drivers on slide four. As we stated previously, our competitive advantages of service, selection, and a best-in-class omni-channel capability provide us with a strong and resilient business model that continues to satisfy our existing customers while also attracting and retaining new customers without sacrificing our ability to deliver a premium consumer experience. We continue to update and expand our product assortments, improve our supply chain capabilities, and enhance our overall consumer experience, both in store and online. Our first quarter results exceeded expectations, both in sales growth as well as a strong gross margin performance. Some of the key contributors to these results included, first of all, delivering a number of business model improvements earlier than anticipated. Those include things like supply chain innovations, continued emphasis on the store culture, and numerous other investments that will provide future benefits. Another of those factors were that we continued to see large increases in new customers and gains in customer retention. Next, we saw existing consumer shopping frequency and continued order value increases. As well, competitive closures and limited distribution had a larger impact than projected. And finally, of course, we had stimulus payments that not only came on early but were more significant than anyone probably forecast. And as a reminder, we did not put that in our guidance previously. The combination of these factors drove higher sales, which allowed us to maintain a high gross margin and provide significant leverage on our SG&A. So moving on to slide five, I wanted to give you a little bit of insight into the next few quarters. Of course, some of the factors mentioned previously are temporary. while others will persist into the future and could significantly improve our opportunity to drive incremental sales and profitability. We believe these factors that will have a lasting impact into the future include continued improvements in our business model, additional investments in the consumer experience, new customer retention, capitalizing on competitive closures and reductions in distribution of key brands, and improved inventory positions. That last factor, improved inventory position, warrants a little bit of additional discussion. We estimate our inventory position at the end of the first quarter was approximately $80 to $100 million below where we wanted it to be in order to support customer demand. And that shortfall cost us sales. We expect to make progress toward achieving our desired inventory levels in the coming months. When our inventory position improves, we expect that the increased revenue from a higher in-stock position will provide the opportunity to deliver incremental sales that will help mitigate much of the drag when the benefit of the temporary factors fade. I'll now turn over the call to Jared to discuss our merchandising performance.