Hibbett Sports 2007 Annual Report Download - page 30

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
Overview
Hibbett Sports, Inc. is a rapidly growing operator of sporting goods stores in small to mid-sized markets
predominantly in the Sunbelt, Mid-Atlantic and Midwest. Our stores offer a broad assortment of quality athletic
equipment, footwear and apparel with a high level of customer service. As of February 3, 2007 we operated a total of
613 retail stores composed of 593 Hibbett Sports stores, 16 Sports Additions athletic shoe stores and 4 Sports & Co.
superstores in 23 states.
Our primary retail format and growth vehicle is Hibbett Sports, a 5,000-square-foot store located in strip centers
which are generally the centers of commerce within the area and which are usually anchored by a Wal-Mart store and in
enclosed malls. Over the last few years, we have concentrated and expect to continue our store base growth in strip
centers versus enclosed malls as the centers are more prominent in the markets we target. We believe Hibbett Sports
stores are typically the primary sporting goods retailers in their markets due to the extensive selection of traditional team
merchandise and a high level of customer service. We do not expect that the average size of our stores opening in fiscal
2008 will vary significantly from the average size of stores opened in fiscal 2007.
We historically have comparable store sales in the low to mid-single digit range and we plan to increase total
company-wide square footage by approximately 15% in fiscal year 2008. We believe total sales percentage growth will
be in the mid teens in fiscal 2008. Over the past several years, we have increased our product margin due to improved
vendor discounts, fewer retail reductions, increased efficiencies in logistics and favorable leveraging of store occupancy
costs. We expect gross profit to increase 15 to 20 basis points in fiscal 2008 attributable to vendor leveraging and
continued improvement of inventory turns.
Due to our increased sales, we have historically leveraged our store operating, selling and administrative
expenses. With our expected sales increase, we expect operating, selling and administrative expenses to increase
somewhat in fiscal 2008 primarily due to the movement of certain stock option expense into fiscal 2008, the new store
cost related to approximately 18 additional new stores over fiscal 2007 and the start up costs related to the second
distribution center we plan to open in the second half of fiscal 2008. We also expect to continue to generate sufficient
cash to enable us to expand and remodel our store base, to provide capital expenditures for both distribution center and
technology upgrade projects and to repurchase shares of our common stock through the stock repurchase plan.
Hibbett maintains a merchandise management system that allows us to identify and monitor trends. However,
this system does not produce U.S. generally accepted accounting principle (“GAAP”) financial information by product
category. Thus it is impracticable to provide GAAP net sales by product category.
Hibbett operates on a 52- or 53-week fiscal year ending on the Saturday nearest to January 31 of each year.
The consolidated statement of operations for fiscal year ended February 3, 2007 includes 53 weeks of operations
while the consolidated statements of operations for fiscal years ended January 28, 2006 and January 29, 2005 both
include 52 weeks of operations.