Hibbett Sports 2012 Annual Report Download - page 11

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Our Distribution
We maintain a single distribution center in Birmingham, Alabama. The distribution process is centrally managed from our
corporate headquarters, which is located in the same building as the distribution center. We believe strong distribution support for
our stores is a critical element of our expansion strategy and is central to our ability to maintain a low cost operating structure. We
also use third-party logistics providers to gain efficiencies in the cost of distribution to approximately 17% of our outlying stores,
which also saves space in our distribution center. We believe our current distribution infrastructure, which includes the use of third-
party logistics providers, improved technology and vendor assistance with cross-docking, can service over 1,200 stores. The lease
for our existing facility expires in December 2014. In Fiscal 2012, we began an active search for a new distribution facility or site to
support our expected growth over the next several years with an expected operations date in mid Fiscal 2015.
We receive substantially all of our merchandise at our distribution center. For key products, we maintain backstock at the
distribution center that is allocated and distributed to stores through an automatic replenishment program based on inventory levels
and sales. Merchandise is typically delivered to stores weekly via Company-operated vehicles or third-party logistics providers.
Our Merchandising Strategy
Our merchandising strategy is to provide a broad assortment of quality brand name footwear, apparel and athletic
equipment at competitive prices in a full service environment. Historically, as well as for Fiscal 2012, our most popular consumer
item was athletic footwear, followed by performance and fashion apparel and team sports equipment, ranked according to sales.
We believe that the breadth and the depth of brand name merchandise selection that we offer generally exceeds the
merchandise selection carried by local independent competitors. Many of these brand name products are highly technical and require
considerable sales assistance. We coordinate with our vendors to educate the sales staff at the store level on new products and trends.
Although the core merchandise assortment tends to be similar for each Hibbett Sports store, important local or regional
differences exist. Accordingly, our stores offer products that reflect preferences for particular sporting activities in each community
and local interests in college and professional sports teams. Our knowledge of these interests, combined with access to leading
vendors, enables our merchandising staff to react quickly to emerging trends or special events, such as college or professional
championships.
Our merchandising staff, operations staff and management analyze current sporting goods trends primarily through the
gathering and analyzing of daily sales activity available through point-of-sale terminals located in the stores. Other strategic
measures we utilize to recognize trends or changes in our industry include:
 studying other retailers for best practices in merchandising;
 attending various trade shows, both in our industry and outside as well as reviewing industry trade publications;
 actively participating in industry associations such as the National Sporting Goods Association (NSGA);
 visiting competitor store locations;
 monitoring product selection at competing stores;
 maintaining close relationships with vendors and other retailers; and
 communicating with our regional vice presidents, district managers and store managers.
The merchandising staff works closely with store personnel to meet the requirements of individual stores for appropriate
merchandise in sufficient quantities. Our success depends in part on our ability to anticipate and respond to changing merchandise
trends and consumer demand on a store level in a timely manner. See “Risk Factors.”
Our Vendor Relationships
The sporting goods retail business is brand name driven. Accordingly, we maintain positive relationships with a number
of well-known sporting goods vendors to satisfy customer demand. We believe that our stores are among the primary retail
distribution avenues for brand name vendors that seek to penetrate our target markets. As a result, we are able to attract considerable
vendor interest and establish long-term partnerships with vendors. As our vendors expand their product lines and grow in popularity,
we expand sales and promotions of these products within our stores. In addition, as we continue to increase our store base and enter
new markets, our vendors increase their brand presence within these regions. We also work with our vendors to establish favorable
pricing and to receive cooperative marketing funds. We believe that we maintain good working relationships with our vendors.
The loss of key vendor support could be detrimental to our business, financial condition and results of operations. We
believe that we have long-standing and strong relationships with our vendors and that we have adequate sources of brand name
merchandise on competitive terms; however, we cannot guarantee that we will be able to acquire such merchandise at
competitive prices or on competitive terms in the future. In this regard, certain merchandise that is high profile and in high
demand may be allocated by vendors based upon the vendors’ internal criterion, which is beyond our control. See “Risk
Factors.”