Hibbett, Inc.

Greetings, and welcome to the Hibbett, Inc.' 's fourth quarter fiscal year 2023 earnings call. At this time, all participants are in a listen-only mode. The 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 and Treasury. Thank you. You may begin.

Thank you and good morning. Please note that we have prepared a slide deck that we'll 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 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 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 Form 10-K. and in 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 GAAP measures on our website. Lastly, I'd like to point out that management's remarks during the conference call were based on information and understandings believed accurate as of today's date. Because of the time-sensitive nature of this information, it's the policy of Hibbett, Inc. to limit the archive replay of this conference call 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 Voelke, 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 Q4 Earnings Call. For those of you following along on the slides, I'm on the slide three entitled Results. Before we get started, I would note that we've used FY20 calendar 2019 as a basis of comparison for some time now because of the effects of the pandemic stimulus and all the other effects that you already know. Now that we've experienced a relatively normal seasonality last year, this quarter will be the last time we need to make these types of comparisons. Q4 was a strong performance with a comp sales increase of 15.5% versus last year and an almost 40% increase versus FY20. Operating margin for the quarter was 11.1% and diluted earnings per share was $2.91, an increase of 133% last year and up eightfold versus FY20. These results came from strong demand for popular footwear brands and a recovery in inventory levels. Despite that, these results did not meet our high expectations for ourselves and fell short of our guidance. We are going to address that particular issue through the course of this call. But first, some history around the results. So I'm moving on to slide four entitled history. The last four years, as you well know, have been eventful for all of us, and Hibbett in particular. And while nobody needs a history lesson, it is instructive to review it through the Hibbett point of view. By the end of FY20, Hibbett was substantially complete with the transformation from a sporting goods retailer to a fashion retailer, a retailer that was squarely focused on a narrower, well-defined customer base in underserved markets selling athletically-inspired footwear and apparel. In FY21, of course, the pandemic struck and changed everything. Tibbett made some good decisions on how to navigate through the crisis, and those decisions drove the business higher, much higher. In FY22, the reopening of the economy, coupled with stimulus and market disruptions, drove us another leg higher. And last year, we dealt with the aftermath of the supply chain crisis and its uneven effects. including inventory shortages. Since FY20, we have rebased the business at a higher level with sales 50% and higher, gross margin percentage 300 basis points higher, non-GAAP EBIT dollars three times higher, and non-GAAP earnings per share four times higher. Last year, we were able to consolidate those gains and produce sales of $1.7 billion and earnings per share of $9.62. We achieved that by focusing on our three competitive advantages. And you're by now very familiar with them, but I'll say them again. Superior customer service, a compelling assortment of hard-to-access product, and a best-in-class omnichannel experience. It was our investment in these advantages and our strategy that drove our results. But none of this is inexpensive. With these investments came incremental cost. especially regarding managing in a chaotic environment. Now that we're operating in a somewhat more normal environment, it's time to address our SG&A and some areas where costs have increased. As a result, we are conducting a systematic review of our operating expense structure with a particular focus on SG&A. In other words, we're committed to improving operating cost leverage while still investing in the business model. These investments are outlined in somewhat greater detail in slide five entitled Strategic Imperatives. Our focus within that is to drive effectiveness and efficiency of the existing franchise and to drive growth in the future. And of course, the four pillars, category offense, increasing traffic, improving conversion, and leveraging our investments are our strategic imperatives. So in summary, Before we move on, I would like to thank all of our teammates in the stores, the distribution centers, and the store support center. They're the ones who make all of these results possible. I'll now turn the call over to Jared.