Hibbett, Inc.

Greetings, and welcome to the Hibbett Incorporated's third quarter 2023 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Gavin Bell, Vice President of Investor Relations. Thank you. You may begin.

Thank you, and 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, the investor relations link found at the bottom of the homepage, or at investors.hibbett.com and under the news and events section. These materials may help you follow along with our discussion this morning. Before we begin, I'd like to remind everyone that some of the 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 are noted on slide two of the earnings presentation and the company's annual report on 10Q and other filings with the Securities and Exchange Commission. We refer you to those sources for more information. Also, to the extent non-regulatory measures are discussed on this call, you may find a reconciliation to the most directly comparable gap measures on our website. Lastly, I'd 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, November 29th, 2022. Because of the time-sensitive nature of this information, it is the policy of Hibbett, Inc., 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, Jared Briskin, Executive Vice President of Merchandising, Bob Volke, Senior Vice President and Chief Financial Officer, Bill Quinn, Senior Vice President of Marketing and Digital, and Ben Knighton, Senior Vice President of Operations. I'll now turn the call over to Mike Longo.

Good morning, and welcome to the Hibbett CityGear Q3 earnings call. For those of you following along on the slides, I'm on slide three entitled Overview. We're pleased with our strong top-line performance for the third quarter, boosted by a busy back-to-school selling season, which landed more in the current quarter this year versus the second quarter last year, as consumers waited closer to the start of school to make purchases. That helped deliver a nearly 10% year-over-year increase in comparable sales in Q3 and an increase in diluted earnings per share in excess of 15%. We had confidence in our improving inventory position going into the third quarter, and our sell-through was strong as we continued to experience robust sales for our popular footwear brands. However, we did experience some challenges related to our apparel sales, which impacted our gross margins. We also saw margins continue to be challenged by the impact of high fuel and freight costs, increased utility costs, and wage inflation. In Q3, these cost headwinds affected the operating margin somewhat more than an expected higher volume quarter like Q4. Overall, our team did an outstanding job executing this quarter despite the ongoing macroeconomic pressures. We continued to leverage the strength of our business model and provided outstanding service in both our stores and through our expanding omni-channel platform. Moving on to slide four, I'd like to reiterate our success in rebasing our sales and profits at higher levels versus pre-pandemic levels. On a three-year stack, that is compared to FY20, our total Q3 sales grew 57%, and our diluted earnings per share increased approximately 15-fold on a gap basis and 6-fold on a non-gap basis. These results derive from significant improvements to our underlying business model, which will continue to support our long-term growth. As we enter the last quarter of the year and the important holiday selling season, we remain confident we will meet our objectives for fiscal year 23. Moving on to the topic of inventory, we ended the quarter at just over $400 million, which we believe will support our expected holiday demand and meet the needs of our consumers. We're fortunate to have strong vendor partnerships which support our ability to have sufficient inventory levels of the right product mix to drive sales. In addition to the amount of inventory, we're very positive about the quality of that inventory as we approach the holidays. We continue to offer a compelling range of trend relevant brands and products that appeal to our fashion conscious consumers. While the current inflationary environment is certainly challenging for families faced with higher prices for food, shelter, and gas, we continue to see strong demand. As we enter the fourth quarter, we remain committed to executing our strategy and optimizing our performance. Our best-in-class omni-channel business model, our superior service in the stores, and our compelling merchandise assortment creates differentiation in the marketplace, provides us with a competitive advantage in the eyes of the consumer and our vendor partners, and puts us in a position to deliver strong sales and profitability in the coming years. As a result, we are reaffirming our full-year fiscal guidance. Bob will cover this in further detail in a few moments. Before turning the call over to Jared, I'd like to thank our approximately 11,000 team members across the organization. They're the face of our company. They continue to represent our brand across our network of over 1,100 stores, our omnichannel platform, our logistics facilities, and our store support center. And then finally, before I conclude, the recent 2023 Omnichannel leadership report from retail cloud platform provider NuStore audited the Omnichannel capabilities of 300 luxury, premium, and lifestyle retail brands in North America. According to the research and feedback provided from a team of mystery shoppers, Hibbett was cited as one of the top five Omnichannel retailers. We're extremely honored to be included in this exclusive group and even more grateful for the hard work of all of our team members whose commitment to excellence is being recognized in our industry. I'll now turn the call over to Jared.