Hibbett Sports

A Billion Dollar Year, but Big Changes Ahead.
In Style: Champion and Puma product as seen on a recent visit to a Hibbett Sports store in Durham, NC.

HEADQUARTERS
Birmingham, AL

DIGITAL FOOTPRINT
Our quick scan of Hibbett’s digital presence: A Hibbett app lets consumers check out the latest sneaker releases, shop the full product range and access a Hibbett Rewards account. The website was offering a “20% off $99+  orders” on a Presidents Day visit to the site, along with free shipping on orders over $49. Free returns for 60 days. Buy Online and Pick Up In Store within 90 minutes, or Reserve In Store is also available. On social media, product is the highlight with images and purchase links directing consumers to Hibbett’s e-commerce site.

SOCIAL FOLLOWING
Facebook: 654K
Twitter: 90.2K
Instagram: 163K

IN-STORE REPORT
We visited a Hibbett Sports store in Durham, NC at the Northgate Mall.
Top takeaways: the footwear selection is strong. Shoes are displayed as you walk in and there are shoe walls to the left and right. Nike and Jordan are the store’s most prominent sneaker brands, with Adidas and Puma also strongly represented. Nike and Adidas apparel have a decent selection; there are a lot of Champion sweats – in the sale racks! Basketball footwear and kids footwear are featured prominently. Other customers in store are young men browsing the sneakers. Sales associate was friendly. Store is well merchandised. Selection of balls and other sporting goods is in the store, but sneakers look to be the main attraction.

The Rundown: Hibbett Sports ended the most recent fiscal year with 1,136 locations across 35 states. In December, 2018, Hibbett Sports acquired the 136-door, privately held City G.E.A.R. chain for $88 million cash and a possible two-year earnout of an additional $25 million. Hibbett opened 12 locations this year (including 2 City G.E.A.R. stores) and shuttered 27 underperforming stores. Annual sales topped the $1 billion mark despite negative comparable store sales in three of four quarters. Same store sales were slightly positive in the second half of the fiscal year.

Background: Founded as Dixie Supply Company in 1945, the chain had 13 stores in 1979 when known as Hibbett Sporting Goods with stores of approximately 5,000-sq. ft. in small and mid-size markets. In 1996 with 96 stores, the chain became publicly traded on NASDAQ. Now, more than two decades later, Hibbett is shifting its focus, becoming more tech-savvy and looking for a new president to replace the retiring Jeffry Rosenthal.

Major developments in 2018: The biggest had to be the acquisition of CITY G.E.A.R., which at the time, had annual sales of approximately $190 million and 46 percent of its locations in the U.S. southern metro markets of Atlanta, New Orleans, Memphis and Houston. CITY G.E.A.R. has a strong Nike/Brand Jordan business and generates 70 percent of its revenues from footwear. It has produced mid-single digit comp growth in recent years.

2019 and Beyond: Besides the pending retirement of Rosenthal, who has been with Hibbett for 20 years, the company announced that it will shutter approximately 95 Hibbett stores in fiscal year 2020 and open 10-15 new Hibbett or City G.E.A.R. locations. Senior management recently confirmed that most of the closures will be sporting goods-oriented stores in smaller towns where the lower-margin products have become commodity items.

E-commerce: Major investments and inroads have been made here over the last 18 months. The company realized 60 percent e-commerce sales growth in Q4 to account for 10.6 percent of period revenues or approximately $32.4 million. Hibbett has added BOPIS and ROPIS programs, redesigned its email program, launched new mobile apps and expanded digital marketing to help grow its overall e-commerce business to the $100 million mark in less than two years. More omnichannel investments are likely on the horizon.

What’s Next?: At the time of the City G.E.A.R. acquisition, Hibbett senior management was most attracted to the banner’s higher-margin sales and ability to connect with its “neighborhoods” of customers through localized assortments and events, social media, and in-store specials such as an in-store barber at Back-To-School. Hibbett hopes to leverage its learnings from City G.E.A.R. into its 350 existing largely “fashion” Hibbett doors and could eventually convert some of those Hibbett locations to City G.E.A.R. stores in the future. The new Hibbett CEO, whenever he or she is named, will have some say in that strategy as will Hibbett’s key vendor partners. On the flip side, City G.E.A.R. apparently needs guidance from Hibbett on how to increase its e-commerce penetration, currently pegged at approximately two percent. Ultimately, that task may prove challenging given CG’s largely lower-income, cash-based demographic.