Hibbett Sports 2010 Annual Report Download - page 16

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without reducing our prices. As a result of this competition, we may also need to spend more on advertising and
promotion than we anticipate. We cannot guarantee that we will continue to be able to compete successfully against
existing or future competitors. Expansion into markets served by our competitors, entry of new competitors or
expansion of existing competitors into our markets could be detrimental to our business, financial condition and results
of operations.
Our operating results are subject to seasonal and quarterly fluctuations. Furthermore, our quarterly operating
results, including comparable store net sales, will fluctuate and may not be a meaningful indicator of future
performance.
We have historically experienced and expect to continue to experience seasonal fluctuations in our net sales,
operating income and net income. Our net sales, operating income and net income are typically higher in the spring,
back-to-school and Christmas holiday seasons. An economic downturn during these periods could adversely affect us
to a greater extent than if a downturn occurred at other times of the year.
Customer buying patterns around the spring sales period and the holiday season historically result in higher
first and fourth quarter net sales. In addition, our quarterly results of operations may fluctuate significantly as a result
of a variety of factors, many outside our control, including the timing of new store openings, the amount and timing of
net sales contributed by new stores, merchandise mix, demand for apparel and accessories driven by local interest in
sporting events, the demise of sports superstars key to certain product promotions or strikes or lockouts involving
professional sports teams. Any of these events, particularly in the fourth quarter, could have a material adverse effect
on our business, financial condition and operating results for the entire fiscal year.
Comparable store net sales vary from quarter to quarter, and an unanticipated decline in comparable store net
sales may cause the price of our common stock to fluctuate significantly. Factors which have historically affected, and
will continue to affect our comparable store net sales results, include:
 shifts in consumer tastes and fashion trends;
 calendar shifts of holiday or seasonal periods;
 the timing of new store openings and the relative proportion of new stores to mature stores;
 the level of pre-opening expenses associated with new stores;
 the amount and timing of net sales contributed by new stores;
 changes in the other tenants in the shopping centers in which we are located;
 pricing, promotions or other actions taken by us or our existing or possible new competitors; and
 unseasonable weather conditions or natural disasters.
We cannot assure you that comparable store net sales will trend at the rates achieved in prior periods or that
rates will not decline.
We would be materially and adversely affected if our single distribution center were shut down.
We currently operate a single centralized distribution center in Birmingham, Alabama. We receive and ship
substantially all of our merchandise at our distribution center. Any natural disaster or other serious disruption to this
facility due to fire, tornado or any other cause would damage a portion of our inventory and could impair our ability to
adequately stock our stores and process returns of products to vendors and could adversely affect our sales and
profitability. In addition, we could incur significantly higher costs and longer lead times associated with distributing
our products to our stores during the time it takes for us to reopen or replace the center.
We depend on key personnel.
We have benefited from the leadership and performance of our senior management, especially Michael J.
Newsome, our Executive Chairman and former Chief Executive Officer. If we lose the services of any of our
principal executive officers, including Mr. Newsome, we may not be able to run our business effectively and
operating results could suffer. In particular, Mr. Newsome has been instrumental in directing our business strategy
and maintaining long-term relationships with our key vendors.
On March 9, 2005, we entered into a Retention Agreement (the Agreement) with Mr. Newsome. The purpose
of the Agreement is to secure the continued employment of Mr. Newsome as an advisor to us following his future
retirement from the duties of Chief Executive Officer of our Company. Although, Mr. Newsome stepped down as
Chief Executive Officer, effective March 15, 2010, he is actively involved in the daily operations of our Company and
his retirement is not currently planned.
Provisions in our charter documents and Delaware law might deter acquisition bids for us.
Certain provisions of our certificate of incorporation and bylaws may be deemed to have anti-takeover effects
and may discourage, delay or prevent a takeover attempt that a stockholder might consider in its best interest. These
provisions, among other things: