Hibbett Sports 2010 Annual Report Download - page 25

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stores not in the comparable store net sales calculation accounted for $25.5 million of the increase in net
sales. Store openings and closings are reported net of relocations.
 We experienced a 0.7% increase in comparable store net sales for the 52 weeks ended January 30, 2010
compared to the 52 weeks ended January 31, 2009. Higher comparable store net sales contributed $3.8
million to the increase in net sales.
 Items per sales transaction improved by 3.3% compared to last year.
During Fiscal 2010, 646 stores were included in the comparable store sales comparison. The slight
increase in comparable store net sales was primarily attributable to an increase in the number of items per
transaction and improved efficiencies in systems that enhanced our ability to offer the right product in the right
store. We also believe that the close proximity of our stores, coupled with brand name merchandise selection and
successful college and professional sports seasons within our markets in the fourth quarter contributed to our
increase in comparable store net sales. With the exception of footwear, we experienced an overall increase in
comparable store sales across our merchandise categories. Accessories made the largest comparable stores sales
gains in the high teens and twenties while footwear, excluding cleats, declined mid-single digits. We believe the
gains in accessory sales is the direct result of concentrated efforts of our Operations and Marketing teams to increase
items per transaction by offering accessories as add-ons at the point of sale.
We believe that the decline in footwear sales resulted from the lack of economic stimulus checks that were
in the market one year ago and also from the tougher macroeconomic environment which has affected discretionary
spending. All other categories of merchandise performed within the levels we expected. Strip center locations
continue to outperform enclosed mall stores. Strip center locations now comprise approximately 75% of our total
store base.
Gross profit. Cost of goods sold includes the cost of inventory, occupancy costs for stores and occupancy
and operating costs for the distribution center. Gross profit was $196.2 million, or 33.1% of net sales, in the 52
weeks ended January 30, 2010, compared with $185.4 million, or 32.9% of net sales, in the 52 week period of the
prior fiscal year. We attribute this increase in gross profit to increased markups, improved vendor contributions and
reduced freight costs. Of the store occupancy related costs, rent expense had the greatest increase due to the 3%
increase in our store base and fewer construction allowance dollars to offset rent as landlords are delivering more
complete stores. Utility expenses and real estate taxes also increased as a percent to net sales. Distribution expense
decreases contributed the most to our increase in gross profit percent to net sales. The most significant decreases
were in data processing costs and fuel costs as we move towards delivery by third-party logistics providers to our
outlying stores, increasing the efficiency of the Hibbett fleet.
Store operating, selling and administrative expenses. Store operating, selling and administrative expenses
were $129.9 million, or 21.9% of net sales, for the 52 weeks ended January 30, 2010, compared with $123.1 million,
or 21.8% of net sales, for the 52 weeks ended January 31, 2009. Expense trends we experienced included:
 Salary and benefit costs in our stores increased by 24 basis points, resulting primarily from increased
incentive sales pay and increases in the minimum wage. Administrative salary and benefit costs decreased
slightly, although stock-based compensation increased 7 basis points as the result of the achievement of
performance-based awards and a higher stock price at the date of grant as compared to last year.
 As a result of fewer store openings compared to last year, new store costs decreased 14 basis points and
store training costs associated primarily with the training of new store managers decreased 5 basis points.
 Credit and debit card fees increased as a percent to net sales due to higher exchange rates.
Depreciation and amortization. Depreciation and amortization as a percentage of net sales was 2.3% in the
52 weeks ended January 30, 2010, and 2.5% in the 52 weeks ended January 31, 2009. The average lease term of
new store leases added in Fiscal 2010 compared to those added in Fiscal 2009 decreased to 6.38 years compared to
6.65 years, respectively. We attribute the decrease in depreciation expense as a percent of net sales to the lower
number of new stores added in the last two years and a lower investment in leasehold improvements for each new
location as landlords are moving toward delivering more occupant-ready stores and moving away from construction
allowances and tenant-completed units.
Provision for income taxes. Provision for income taxes as a percentage of net sales was 3.3% in the 52
weeks ended January 30, 2010, compared to 3.2% for the 52 weeks ended January 31, 2009. The combined federal,
state and local effective income tax rate as a percentage of pre-tax income was 37.8% for Fiscal 2010 and Fiscal
2009.