UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May ~~2, 2020~~1, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________________ to __________________________

COMMISSION FILE NUMBER: 000-20969

HIBBETT SPORTS, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-8159608
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2700 Milan Court, Birmingham, Alabama 35211

(Address of principal executive offices, including zip code)

205-942-4292

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value Per Share	HIBB	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Shares of common stock, par value $0.01 per share, outstanding as of June ~~5, 2020,~~4, 2021, were ~~16,532,357~~16,012,057 shares.

HIBBETT SPORTS, INC.

INDEX

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements.

Unaudited Condensed Consolidated Balance Sheets at ~~May 2, 2020, February 1, 2020 and May 4, 2019~~

Unaudited Condensed Consolidated Statements of Operations ~~for the 13~~-~~weeks~~ ~~ended~~ ~~May 2, 2020 and May 4, 2019~~

Unaudited Condensed Consolidated Statements of Cash Flows ~~for the~~ 13 -~~weeks ended~~ ~~May 2, 2020 and May 4, 2019~~

Unaudited Condensed Consolidated Statements of Stockholders’ Investment ~~for the 13~~-~~weeks~~ ~~ended~~ ~~May 2, 2020 and May 4, 2019~~

Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

1614

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

2523

Item 4.

Controls and Procedures.

2523

PART II. OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds.

~~Item 5.~~

~~Other Information.~~

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share information)


ASSETS	ASSETS	May 2, 2020		February 1, 2020		May 4, 2019		ASSETS	May 1, 2021		January 30, 2021		May 2, 2020
Current Assets:
Current assets:								Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	106,205	$	66,078	$	116,963	Cash and cash equivalents	$	270,852	$	209,290	$	106,205
Receivables, net	Receivables, net	20,003		8,477		8,284		Receivables, net	14,445		11,905		20,003
Inventories, net	Inventories, net	241,984		288,011		248,548		Inventories, net	182,371		202,038		241,984
Other current assets	Other current assets	12,302		9,946		12,995		Other current assets	7,388		16,567		12,302
Total current assets	Total current assets	380,494		372,512		386,790		Total current assets	475,056		439,800		380,494

Property and equipment, net	Property and equipment, net	97,771		100,956		107,673		Property and equipment, net	107,501		107,159		97,771
Operating right-of-use assets	Operating right-of-use assets	219,436		229,155		224,870		Operating right-of-use assets	215,804		216,224		219,436
Finance right-of-use assets, net	Finance right-of-use assets, net	2,548		2,250		2,228		Finance right-of-use assets, net	3,092		3,285		2,548

Goodwill		—		19,661		19,661

Tradename intangible asset	Tradename intangible asset	23,500		32,400		32,400		Tradename intangible asset	23,500		23,500		23,500
Deferred income taxes, net	Deferred income taxes, net	11,429		8,996		3,216		Deferred income taxes, net	12,264		14,625		11,429
Other assets, net	Other assets, net	3,391		3,829		3,868		Other assets, net	3,542		3,573		3,391
Total Assets		$	738,569	$	769,759	$	780,706
Total assets								Total assets	$	840,759	$	808,166	$	738,569

LIABILITIES AND STOCKHOLDERS' INVESTMENT	LIABILITIES AND STOCKHOLDERS' INVESTMENT							LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current liabilities:								Current liabilities:
Accounts payable	Accounts payable	$	98,149	$	131,662	$	105,834	Accounts payable	$	105,888	$	107,215	$	98,149
Operating lease liabilities		66,791		60,649		66,268
Credit facilities		50,000		—		26,000
Operating lease obligations								Operating lease obligations	58,875		58,613		66,791
Credit facility								Credit facility	0		0		50,000
Finance lease obligations	Finance lease obligations	876		886		973		Finance lease obligations	977		956		876
Accrued payroll expenses	Accrued payroll expenses	6,359		20,530		7,322		Accrued payroll expenses	14,341		29,948		6,359
Other accrued expenses	Other accrued expenses	21,473		19,934		15,604		Other accrued expenses	30,403		28,588		21,473
Total current liabilities	Total current liabilities	243,648		233,661		222,001		Total current liabilities	210,484		225,320		243,648

Operating lease liabilities		185,035		190,699		188,839
Operating lease obligations								Operating lease obligations	185,326		186,133		185,035
Finance lease obligations	Finance lease obligations	1,994		1,704		1,777		Finance lease obligations	2,381		2,599		1,994
Unrecognized tax benefits	Unrecognized tax benefits	954		955		1,370		Unrecognized tax benefits	711		725		954
Other liabilities	Other liabilities	2,371		13,757		9,537		Other liabilities	2,391		2,353		2,371
Total liabilities	Total liabilities	434,002		440,776		423,524		Total liabilities	401,293		417,130		434,002

Stockholders' Investment:
Stockholders' investment:								Stockholders' investment:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, 0 shares issued	Preferred stock, $0.01 par value, 1,000,000 shares authorized, 0 shares issued	—		—		—		Preferred stock, $0.01 par value, 1,000,000 shares authorized, 0 shares issued	0		0		0
Common stock, $0.01 par value, 80,000,000 shares authorized, 39,255,293, 39,140,575 and 39,100,509 shares issued at May 2, 2020, February 1, 2020 and May 4, 2019, respectively		393		391		391
Common stock, $0.01 par value, 80,000,000 shares authorized, 39,559,008, 39,379,865 and 39,255,293 shares issued at May 1, 2021, January 30, 2021, and May 2, 2020, respectively								Common stock, $0.01 par value, 80,000,000 shares authorized, 39,559,008, 39,379,865 and 39,255,293 shares issued at May 1, 2021, January 30, 2021, and May 2, 2020, respectively	395		394		393
Paid-in capital	Paid-in capital	190,260		188,879		186,462		Paid-in capital	198,356		194,534		190,260
Retained earnings	Retained earnings	769,315		784,942		785,454		Retained earnings	943,718		858,951		769,315
Treasury stock, at cost; 22,739,229, 22,280,316 and 20,945,674 shares repurchased at May 2, 2020, February 1, 2020 and May 4, 2019, respectively		(655,401)		(645,229)		(615,125)
Treasury stock, at cost; 23,483,504, 22,901,101 and 22,739,229 shares repurchased at May 1, 2021, January 30, 2021, and May 2, 2020, respectively								Treasury stock, at cost; 23,483,504, 22,901,101 and 22,739,229 shares repurchased at May 1, 2021, January 30, 2021, and May 2, 2020, respectively	(703,003)		(662,843)		(655,401)
Total stockholders' investment	Total stockholders' investment	304,567		328,983		357,182		Total stockholders' investment	439,466		391,036		304,567
Total Liabilities and Stockholders' Investment		$	738,569	$	769,759	$	780,706
Total liabilities and stockholders' investment								Total liabilities and stockholders' investment	$	840,759	$	808,166	$	738,569

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share information)

13-Weeks Ended
May 2,
2020 May 4,
2019
Net sales $ 269,837 $ 343,295
Cost of goods sold 195,690 224,692
Gross margin 74,147 118,603
Store operating, selling and administrative expenses 69,673 74,038
Goodwill impairment 19,661 —
Depreciation and amortization 6,870 7,223
Operating (loss) income (22,057) 37,342
Interest income, net 170 46
(Loss) income before provision for income taxes (22,227) 37,296
(Benefit) provision for income taxes (6,940) 9,439
Net (loss) income $ (15,287) $ 27,857
Basic (loss) earnings per share $ (0.92) $ 1.52
Diluted (loss) earnings per share $ (0.92) $ 1.50
Weighted average shares outstanding:
Basic 16,546 18,308
Diluted 16,546 18,535


	13-Weeks Ended
	May 1, 2021				May 2, 2020
			% to Sales				% to Sales
Net sales	$	506,861			$	269,837
Cost of goods sold	296,898		58.6	%	195,690		72.5	%
Gross margin	209,963		41.4	%	74,147		27.5	%
Store operating, selling, and administrative expenses	91,739		18.1	%	69,673		25.8	%
Goodwill impairment	0		0	%	19,661		7.3	%
Depreciation and amortization	8,074		1.6	%	6,870		2.5	%
Operating income (loss)	110,150		21.7	%	(22,057)		(8.2)	%
Interest expense, net	99		0	%	170		0.1	%
Income (loss) before provision (benefit) for income taxes	110,051		21.7	%	(22,227)		(8.2)	%
Provision (benefit) for income taxes	25,285		5.0	%	(6,940)		(2.6)	%
Net income (loss)	$	84,766	16.7	%	$	(15,287)	(5.7)	%

Basic earnings (loss) per share	$	5.19			$	(0.92)
Diluted earnings (loss) per share	$	5.00			$	(0.92)

Weighted-average shares:
Basic	16,325				16,546
Diluted	16,966				16,546

See notes to unaudited condensed consolidated financial statements.

Percentages may not foot due to rounding.

Index

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


		13-Weeks Ended							13-Weeks Ended
		May 2, 2020		May 4, 2019			May 1, 2021		May 2, 2020
Cash Flows From Operating Activities:	Cash Flows From Operating Activities:					Cash Flows From Operating Activities:
Net (loss) income		$	(15,287)	$	27,857
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	84,766	$	(15,287)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:						Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	6,870		7,223		Depreciation and amortization	8,074		6,870
Stock-based compensation	Stock-based compensation	1,217		507		Stock-based compensation	2,053		1,217
Impairment charges	Impairment charges	32,648		—		Impairment charges	347		32,648
Contingent earnout valuation		(10,980)		600
Other non-cash adjustments to net income		(2,914)		3,622
Contingent earnout, net						Contingent earnout, net	(13,761)		(10,980)
Other non-cash adjustments						Other non-cash adjustments	1,796		(2,914)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Inventories, net	Inventories, net	46,027		30,783		Inventories, net	19,667		46,027
Receivables, net	Receivables, net	(11,866)		2,131		Receivables, net	(2,586)		(11,866)
Accounts payable	Accounts payable	(33,513)		(1,481)		Accounts payable	(2,683)		(33,513)
Income tax payable, net						Income tax payable, net	22,755		(4,506)
Other assets and liabilities	Other assets and liabilities	(8,320)		816		Other assets and liabilities	(12,068)		(3,814)
Net cash provided by operating activities	Net cash provided by operating activities	3,882		72,058		Net cash provided by operating activities	108,360		3,882

Cash Flows From Investing Activities:	Cash Flows From Investing Activities:					Cash Flows From Investing Activities:
Capital expenditures	Capital expenditures	(4,059)		(2,469)		Capital expenditures	(7,033)		(4,059)
Other, net	Other, net	612		(54)		Other, net	102		612
Net cash used in investing activities	Net cash used in investing activities	(3,447)		(2,523)		Net cash used in investing activities	(6,931)		(3,447)

Cash Flows From Financing Activities:	Cash Flows From Financing Activities:					Cash Flows From Financing Activities:
Proceeds under credit facilities	Proceeds under credit facilities	115,918		—		Proceeds under credit facilities	0		117,535
Repayments under credit facilities	Repayments under credit facilities	(65,918)		(9,000)		Repayments under credit facilities	0		(67,535)
Cash used for stock repurchases		(9,748)		(4,799)
Net payments on finance lease obligations		(301)		(242)
Stock repurchases						Stock repurchases	(37,314)		(9,748)
Cash used for contingent earnout						Cash used for contingent earnout	(1,239)		0
Payments of finance lease obligations						Payments of finance lease obligations	(240)		(301)
Proceeds from options exercised and purchase of shares under the employee stock purchase plan	Proceeds from options exercised and purchase of shares under the employee stock purchase plan	165		203		Proceeds from options exercised and purchase of shares under the employee stock purchase plan	1,772		165
Other, net	Other, net	(424)		(490)		Other, net	(2,846)		(424)
Net cash provided by (used in) financing activities		39,692		(14,328)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(39,867)		39,692

Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	40,127		55,207		Net increase in cash and cash equivalents	61,562		40,127
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	66,078		61,756		Cash and cash equivalents, beginning of period	209,290		66,078
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	106,205	$	116,963	Cash and cash equivalents, end of period	$	270,852	$	106,205

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of ~~Stockholders~~Stockholders' Investment

(in thousands)

13-Weeks Ended May 2, 2020
Common Stock Treasury Stock
Number of
Shares
Amount
Paid-In
Capital
Retained
Earnings
Number of
Shares
Amount
Total
Stockholders'
Investment
Balance - February 1, 2020 39,141 $ 391 $ 188,879 $ 784,942 22,280 $ (645,229) $ 328,983
Net loss — — — (15,287) — — (15,287)
Issuance of shares through the Company's equity plans 114 2 164 — — — 166
Adjustment for adoption of accounting standard⁽¹⁾
— — — (340) — — (340)
Purchase of shares under the stock repurchase program — — — — 428 (9,748) (9,748)
Settlement of net share equity awards — — — — 31 (424) (424)
Stock-based compensation — — 1,217 — — — 1,217
Balance - May 2, 2020 39,255 $ 393 $ 190,260 $ 769,315 22,739 $ (655,401) $ 304,567


13-Weeks Ended May 1, 2021
	Common Stock							Treasury Stock
	Number of Shares	Amount		Paid-In Capital		Retained Earnings		Number of Shares	Amount		Total Stockholders' Investment
Balance - January 30, 2021	39,380	$	394	$	194,534	$	858,951	22,901	$	(662,843)	$	391,036
Net income	—	—		—		84,766		—	—		84,766
Issuance of shares through the Company's equity plans	179	1		1,769		—		—	—		1,770
Purchase of shares under the stock repurchase program	—	—		—		—		541	(37,314)		(37,314)
Settlement of net share equity awards	—	—		—		—		41	(2,846)		(2,846)
Stock-based compensation	—	—		2,053		—		—	—		2,053
Balance - May 1, 2021	39,559	$	395	$	198,356	$	943,718	23,484	$	(703,003)	$	439,466


13-Weeks Ended May 4, 2019
13-Weeks Ended May 2, 2020														13-Weeks Ended May 2, 2020
		Common Stock								Treasury Stock								Common Stock							Treasury Stock
		Number of Shares	Amount		Paid-In Capital		Retained Earnings		Number of Shares	Amount		Total Stockholders' Investment			Number of Shares	Amount		Paid-In Capital		Retained Earnings		Number of Shares	Amount		Total Stockholders' Investment
Balance - February 2, 2019		38,983	$	390	$	185,752	$	759,677	20,686	$	(609,770)	$	336,049
Net income		—	—		—		27,857		—	—		27,857
Balance - February 1, 2020														Balance - February 1, 2020	39,141	$	391	$	188,879	$	784,942	22,280	$	(645,229)	$	328,983
Net loss														Net loss	—	—		—		(15,287)		—	—		(15,287)
Issuance of shares through the Company's equity plans	Issuance of shares through the Company's equity plans	118	1		203		—		—	—		204		Issuance of shares through the Company's equity plans	114	2		164		—		—	—		166
Adjustment for adoption of accounting standard⁽²⁾⁽¹⁾	Adjustment for adoption of accounting standard⁽²⁾⁽¹⁾	—	—		—		(2,080)		—	—		(2,080)		Adjustment for adoption of accounting standard⁽²⁾⁽¹⁾	—	—		—		(340)		—	—		(340)
Purchase of shares under the stock repurchase program	Purchase of shares under the stock repurchase program	—	—		—		—		230	(4,799)		(4,799)		Purchase of shares under the stock repurchase program	—	—		—		—		428	(9,748)		(9,748)
Settlement of net share equity awards	Settlement of net share equity awards	—	—		—		—		29	(556)		(556)		Settlement of net share equity awards	—	—		—		—		31	(424)		(424)
Stock-based compensation	Stock-based compensation	—	—		507		—		—	—		507		Stock-based compensation	—	—		1,217		—		—	—		1,217
Balance - May 4, 2019		39,101	$	391	$	186,462	$	785,454	20,945	$	(615,125)	$	357,182
Balance - May 2, 2020														Balance - May 2, 2020	39,255	$	393	$	190,260	$	769,315	22,739	$	(655,401)	$	304,567

Note: Columns may not foot due to rounding.

(1) Adoption of Accounting Standards Update ~~(ASU)~~("ASU") No. 2016-13, Topic 326, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. See Note 2, Recent Accounting Pronouncements, in ~~this Quarterly Report on Form 10-Q.~~

~~(2) Adoption of ASU 2016-02, Topic 842,~~ ~~Leases. See Note 2,~~ ~~Recent Accounting Pronouncements, in~~ our Annual Report on Form 10-K filed on April ~~16, 2020.~~7, 2021.

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation and Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Hibbett Sports, Inc. and its wholly-owned subsidiaries (including the condensed consolidated balance sheet as of ~~February 1, 2020,~~January 30, 2021, which has been derived from audited financial statements) have been prepared in accordance with U.S. Generally Accepted Accounting Principles ~~(U.S. GAAP)~~("U.S. GAAP") for interim financial information and are presented in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. References to “Hibbett,” “we,” “our,” ~~“us”~~“us,” and the “Company” refer to Hibbett Sports, Inc. and its subsidiaries as well as its predecessors.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended ~~February 1, 2020~~January 30, 2021 filed on April ~~16, 2020.~~7, 2021 ("2021 Annual Report"). The unaudited condensed consolidated financial statements have been prepared on a basis consistent in all material respects with the accounting policies described in ~~our 2020~~the 2021 Annual Report and reflect all adjustments of a normal recurring nature that are, in management’s opinion, necessary for the fair presentation of the results of operations, financial position, and cash flows for the periods presented.

~~Impact~~Occasionally, certain reclassifications are made to conform previously reported data to the current presentation. Such reclassifications have no impact on total assets, total liabilities, net income, cash flows or stockholders’ investment in any of the ~~Novel Coronavirus (COVID-19)~~

COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020 and has led to adverse impacts on the U.S. and global economies. The outbreak of COVID-19 and related measures to quell the outbreak have impacted our inventory supply chain, operations and customer demand. The Company’s stores and distribution centers have continued to operate where permitted by governmental jurisdictions during the COVID-19 pandemic, and the Company is committed to maintaining a safe work and shopping environment. The COVID-19 pandemic could further affect the Company's operations and the operations of its suppliers and vendors as a result of continuing shelter-in-place orders, restrictions and limitations on travel, limitations on store or facility operations up to and including closures, and other governmental, business or consumer actions. The extent to which the COVID-19 pandemic will impact the Company’s operations, liquidity or financial results in subsequent periods ~~is uncertain, but such impact could be material.~~presented.

Property and Equipment

Property and equipment are recorded at cost. Finance lease assets are shown as right-of-use ~~(ROU)~~("ROU") assets and are excluded from property and equipment (see Note 3, Leases). The fixed asset component of asset group impairment charges was not material in any period presented.

Property and equipment ~~as of May 2, 2020, February 1, 2020 and May 4, 2019 consists~~consist of the following (in thousands):


		May 2, 2020		February 1, 2020		May 4, 2019			May 1, 2021		January 30, 2021		May 2, 2020
Land	Land	$	7,277	$	7,277	$	7,277	Land	$	7,277	$	7,277	$	7,277
Buildings	Buildings	21,635		21,635		21,311		Buildings	21,607		21,505		21,635
Equipment	Equipment	96,606		95,100		96,003		Equipment	106,633		104,431		96,606
Furniture and fixtures	Furniture and fixtures	36,931		37,048		37,225		Furniture and fixtures	42,369		42,448		36,931
Leasehold improvements	Leasehold improvements	103,642		102,528		101,540		Leasehold improvements	112,741		109,220		103,642
Construction in progress	Construction in progress	603		1,660		1,485		Construction in progress	1,901		1,470		603
Total property and equipment	Total property and equipment	266,694		265,248		264,841		Total property and equipment	292,528		286,351		266,694
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	168,923		164,292		157,168		Less: accumulated depreciation and amortization	185,027		179,192		168,923
Total property and equipment, net	Total property and equipment, net	$	97,771	$	100,956	$	107,673	Total property and equipment, net	$	107,501	$	107,159	$	97,771

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification ~~(ASC)~~("ASC") Topic 606, Revenue from Contracts with Customers, when control of the merchandise is transferred to our ~~customer.~~customer which is at delivery. Sales are recorded net of expected returns at the time the customer takes possession of the merchandise. Net sales exclude sales taxes because we are a pass-through conduit for collecting and remitting these taxes.

Gift Cards, Customer Orders, and Layaways: The net deferred revenue liability for gift cards, customer orders, and layaways at May 1, 2021, January 30, 2021, and May 2, 2020 was $10.1 million, $8.8 million, and $13.2 million, respectively, recognized in accounts payable on our unaudited condensed consolidated balance sheets. We recognize revenue when a gift card is redeemed by the customer and recognize gift card breakage income in net sales in proportion to the redemption pattern of rights exercised by the customer. For all periods presented, the gift card breakage was immaterial.

Index

~~Retail Store Sales: For merchandise sold in our stores, revenue is recognized at~~During the ~~point~~13-weeks ended May 1, 2021 and May 2, 2020, $0.7 million and $0.5 million, respectively, of ~~sale when tender is accepted and the customer takes possession of the merchandise.~~

~~Retail Store Orders~~: Retail store customers may order merchandise available in other retail store locations for pickup in the selling store at a later date. Customers make a deposit with the remaining balance due at pickup. These deposits are recorded asgift card deferred revenue until the transaction is completed and the customer takes possession of the merchandise. Retail store customers may also order merchandise to be shipped to home. Payment is received in full at the time of order and recorded as deferred revenue until delivery.

~~Layaways~~: We offer a retail store program giving customers the option of paying a deposit and placing merchandise on layaway. The customer may make further payments in installments, but the full purchase price must be received by us within 30 days. The payments are recorded as deferred revenue until the transaction is completed and the customer takes possession of the merchandise.

~~Digital Channel Sales~~: For merchandise shipped to home, customer payment is received when the order ships. Revenue is deferred until control passes to the customer at delivery. Shipping and handling costs billed to customers are included in net sales. We offer an extended payment option through a third party who assumes all credit risk. On these orders, payment is received by us when the order ships and revenue is recorded when the product is delivered to the customer.from prior periods was realized.

Loyalty Program: We offer the Hibbett Rewards program whereby upon registration and in accordance with the terms of the program, customers earn points on certain purchases. Points convert into rewards at defined thresholds. The short-term future performance obligation liability is estimated at each reporting period based on historical conversion and redemption patterns. The liability is included in other accrued expenses on our unaudited condensed consolidated balance sheets and was ~~$2.3~~$4.1 million, ~~$2.7~~$3.4 million, and $2.3 million at May ~~2, 2020, February~~ 1, ~~2020~~2021, January 30, 2021, and ~~May 4, 2019, respectively.~~

~~Gift Cards~~: Proceeds received from the issuance of our non-expiring gift cards are initially recorded as deferred revenue. Revenue is subsequently recognized at the time the customer redeems the gift cards and takes possession of the merchandise. Unredeemed gift cards are recorded in accounts payable on our unaudited condensed consolidated balance sheets.

~~The net deferred revenue liability for gift cards, customer orders and layaways at~~ May 2, 2020, February 1, 2020 and May 4, 2019 was $13.2 million, $7.7 million and $7.5 million, respectively, and is recognized in accounts payable on our unaudited condensed consolidated balance sheets. Gift card breakage income is recognized in net sales in proportion to the redemption pattern of rights exercised by the customer and was not material in any period presented.

respectively.

~~During the 13-weeks ended May 2, 2020 and May 4, 2019, $0.5 million and $0.8 million of gift card deferred revenue from prior periods was realized, respectively.~~

Return Sales: The liability for return sales is estimated at each reporting period based on historical return patterns and is recognized at the transaction price. The liability is included in ~~accounts payable~~accrued expenses on our unaudited condensed consolidated balance sheets. The return asset and corresponding adjustment to cost of goods sold for our right to recover the merchandise returned by the customer is immaterial.

Retail Store Sales: For merchandise sold in our stores, revenue is recognized at the point of sale when tender is accepted and the customer takes possession of the merchandise.

Revenues disaggregated by major product categories are as follows (in thousands):


		13-Weeks Ended							13-Weeks Ended
		May 2, 2020		May 4, 2019			May 1, 2021		May 2, 2020
Footwear	Footwear	$	166,242	$	215,075	Footwear	$	322,581	$	166,242
Apparel	Apparel	79,407		79,557		Apparel	131,108		79,407
Equipment	Equipment	24,188		48,663		Equipment	53,172		24,188
Total	Total	$	269,837	$	343,295	Total	$	506,861	$	269,837

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and the City Gear tradename are indefinite-lived assets which are not amortized, but rather tested for impairment at least annually, or on an interim basis if events and circumstances have occurred that indicate that it is more likely than not that

~~Index~~

an asset is impaired. Such events or circumstances could include, but are not limited to, significant negative industry or economic trends, unanticipated changes in the competitive environment and a significant sustained decline in the market price of our stock. If ~~it is more likely than not than~~ an asset is impaired, the amount that the carrying value exceeds the fair value is recorded as an impairment charge to current income.

Due to the macroeconomic impact of the COVID-19 pandemic, we determined that indicators of potential impairment were present during the 13-weeks ended May 2, 2020. As a result, we performed interim impairment testing on goodwill and the City Gear tradename as of April 15, 2020, using updated assumptions around prospective financial information, growth rates, discount rates applied to future cash flows, and comparable multiples from publicly traded companies in our industry.

In valuing goodwill, we use a combination of the Discounted Cash Flow methodology and the Guideline Public Company methodology, which require assumptions related to future cash flows, discount rate, and comparable public company entities. In the 13-weeks ended May 2, 2020 and year ended January 30, 2021, we determined that goodwill of our City Gear reporting unit was fully impaired and recognized a non-cash impairment charge of $19.7 million. NaN impairment related to goodwill was recognized during the ~~year ended February 1, 2020 or the~~ 13-weeks ended May ~~4, 2019.~~

~~(in thousands)~~

~~Goodwill balance at February 1, 2020~~

~~19,661~~

~~Impairment losses~~

~~(19,661)~~

~~Goodwill balance at May 2, 2020~~

—

1, 2021.

In valuing the tradename intangible, we use the Relief from Royalty method which requires assumptions related to future revenues, royalty rate, and discount rate. In the 13-weeks ended May 2, 2020 and year ended January 30, 2021, we determined that the City Gear tradename was partially impaired and recognized a non-cash impairment charge of $8.9 million in store operating, selling, and administrative expenses on our unaudited condensed consolidated ~~statement~~statements of operations. ~~NaN~~As the entire goodwill balance was written off as May 2, 2020, there are 0 goodwill impairment ~~related to~~impacts in the ~~tradename was recognized during the year ended February 1, 2020 or the 13-weeks ended May 4, 2019.~~current period.

~~(in thousands)~~

~~Tradename intangible asset balance at February 1, 2020~~

~~32,400~~

~~Impairment losses~~

~~(8,900)~~

~~Tradename intangible asset balance at May 2, 2020~~

~~23,500~~

Index

2. Recent Accounting Pronouncements

Standards that were adopted

In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU 2019-12, “Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes,” as part of its overall simplification initiative. ASU 2019-12 was issued in order to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to financial statement users. The amendments remove certain exceptions to the general provisions of Topic 740 and provide simplification in other areas of Topic 740. We adopted ~~Financial Accounting Standard Board (FASB)~~ ASU ~~2016-13, Topic 326,~~ ~~Financial Instruments - Credit Losses: Measurement of Credit Losses~~2019-12 on ~~Financial Instruments~~, which revised the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. Historical experience, current economic conditions and reasonable supportable forecasts are considered in establishing an allowance for credit losses which is shown on the unaudited condensed consolidated balance sheet in receivables, net. The adoption of ASU-2016-03 did not have aJanuary 31, 2021, with no material impact onto our ~~unaudited condensed~~ consolidated financial statements.

~~We adopted ASU 2017-04, Topic 350, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment~~, which is intended to simplify the subsequent measurement of goodwill. The amendments in ASU 2017-04 modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Goodwill impairment is no longer determined by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities, as if that reporting unit had been acquired in a business combination. As a result, we will measure impairment using the difference between the carrying amount and the fair value of the reporting unit, if required.

Standards that are not yet adopted

We continuously monitor and review all current accounting pronouncements and standards from the FASB of U.S. GAAP for applicability to our operations. As of May ~~2, 2020,~~1, 2021, there were no other new pronouncements or interpretations that had or were expected to have a significant impact on our ~~operations.~~

~~Index~~

financial reporting.

3. Leases

~~We lease all of our retail store locations; nearly all of which are operating leases. Store leases typically provide for initial terms of~~ ~~five~~ ~~to ten years. Many of our store leases contain the following provisions:~~

•~~scheduled increases in rent payments over the lease term,~~

•~~tenant inducements,~~

•~~free rent periods,~~

•~~contingent rent based on net sales in excess of stipulated amounts,~~

•~~one or more renewal options at our discretion, and~~

•~~payments for common area maintenance, insurance and real estate taxes, most of which are variable in nature.~~

Most of our store leases contain provisions that allow for early termination between the third and fifth year of the term if predetermined sales levels are not met, or upon the occurrence of other specified contingent events. When we have the option to extend the lease term (including by not exercising an available termination option) or purchase the leased asset, and it is reasonably certain that we will do so, we consider these options in determining the classification and measurement of the lease. However, generally at lease commencement, it is not reasonably certain that we will exercise an extension or purchase option. For contingent termination provisions, we generally consider both the likelihood of the contingency occurring in addition to the economic factors we consider when assessing any other termination or renewal option.

~~We also lease certain office space, office equipment and transportation equipment under operating and finance leases. Generally, these leases have initial terms of~~ ~~two~~ ~~to six years.~~

We determine whether a contract is or contains a lease at contract inception. We have lease agreements that contain both lease and non-lease components. For store leases, we account for the lease components together with the non-lease components, such as common area maintenance. For office and transportation equipment leases, we separate the non-lease components from the lease components.

In April 2020, the Financial Accounting Standards Board (FASB) issued a staff question-and-answer document (Staff Q&A) to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Under current U.S. GAAP, subsequent changes to lease payments that are not stipulated in the original lease are generally accounted for as lease modifications under ASC Topic 842, ~~Leases~~. The Staff Q&A grants relief by allowing companies to make an accounting policy election to not evaluate lease concessions related to the effects of the COVID-19 pandemic as lease modifications. We did not elect to utilize this alternative accounting.

~~Our lease agreements do not contain material residual value guarantees or material restrictive covenants.~~ ROU lease assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to test ROU assets (or asset groups that contain one or more ROU ~~assets)~~assets for ~~impairment,~~impairment), whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize. An asset group impairment charge of approximately ~~$4.1~~$0.5 million and ~~$1.1~~$4.1 million was recognized in the 13-weeks ended May ~~2, 2020~~1, 2021 and May ~~4, 2019,~~2, 2020, respectively.

~~Store operating lease cost and logistics-related transportation equipment operating lease cost~~Lease costs are included in cost of goods sold in the unaudited condensed consolidated statements of operations. Office equipment and other transportation equipment operating lease cost is included in store operating, selling and administrative expenses in the unaudited condensed consolidated statements of operations.as follows (in thousands):

13-weeks ended
May 2, 2020 May 4, 2019
Operating lease cost $ 17,139 $ 17,138
Finance lease cost:
Amortization of assets 235 237
Interest on lease liabilities 48 65
Variable lease cost (1,208) 385
$ 16,214 $ 17,825

~~Short-term lease cost is immaterial.~~

~~Index~~


	13-Weeks Ended
	May 1, 2021		May 2, 2020
Operating lease cost	$	14,882	$	17,139
Finance lease cost:
Amortization of assets	179		235
Interest on lease liabilities	41		48
Variable lease cost	5,865		(1,208)
	$	20,967	$	16,214

Finance ~~right-of-use~~ROU assets on the unaudited condensed consolidated balance sheet at May ~~2, 2020, February~~ 1, ~~2020~~2021, January 30, 2021, and May ~~4, 2019~~2, 2020 are shown net of accumulated amortization of ~~$1.0~~$1.9 million, ~~$0.8~~$1.7 million, and ~~$0.2~~$1.0 million, respectively.

The following table provides supplemental balance sheet information related to leases:


		May 2, 2020		February 1, 2020		May 4, 2019			May 1, 2021		January 30, 2021		May 2, 2020
Weighted average remaining lease term (in years):
Weighted-average remaining lease term (in years):								Weighted-average remaining lease term (in years):
Operating leases	Operating leases	5		5		5		Operating leases	5		5		5
Finance leases	Finance leases	4		4		4		Finance leases	4		4		4

Weighted average discount rate:
Weighted-average discount rate:								Weighted-average discount rate:
Operating leases	Operating leases	3.9	%	4.1	%	4.2	%	Operating leases	3.5	%	3.5	%	3.9	%
Finance leases	Finance leases	7.6	%	8.8	%	11.6	%	Finance leases	5.4	%	5.5	%	7.6	%

Index

The following table provides supplemental cash flow and other information related to leases (in thousands):

~~Cash paid for amounts included in the measurement of lease liabilities:~~


		13-weeks ended							13-Weeks Ended
		May 2, 2020		May 4, 2019			May 1, 2021		May 2, 2020
Operating cash flows from operating leases	Operating cash flows from operating leases	$	19,724	$	17,269	Operating cash flows from operating leases	$	18,580	$	19,724
Operating cash flows from finance leases	Operating cash flows from finance leases	$	48	$	65	Operating cash flows from finance leases	$	41	$	48
Financing cash flows from finance leases	Financing cash flows from finance leases	$	301	$	242	Financing cash flows from finance leases	$	240	$	301

ROU assets obtained in exchange for lease liabilities, net
ROU assets obtained in exchange for lease obligations, net:						ROU assets obtained in exchange for lease obligations, net:
Operating leases	Operating leases	$	9,524	$	10,142	Operating leases	$	14,631	$	9,524
Finance leases	Finance leases	$	533	$	—	Finance leases	$	44	$	533

Maturities of lease ~~liabilities~~obligation as of May ~~2, 2020~~1, 2021 (in thousands):


		Operating		Finance		Total			Operating		Finance		Total
Remainder of Fiscal 2021		$	57,757	$	840	$	58,597
Fiscal 2022		65,452		740		66,192
Remainder of Fiscal 2022								Remainder of Fiscal 2022	$	49,322	$	835	$	50,157
Fiscal 2023	Fiscal 2023	50,045		707		50,752		Fiscal 2023	63,788		1,085		64,873
Fiscal 2024	Fiscal 2024	35,575		597		36,172		Fiscal 2024	49,667		971		50,638
Fiscal 2025	Fiscal 2025	25,043		178		25,221		Fiscal 2025	37,323		397		37,720
Fiscal 2026								Fiscal 2026	26,295		302		26,597
Thereafter	Thereafter	43,039		169		43,208		Thereafter	40,065		42		40,107
Total minimum lease payments	Total minimum lease payments	276,911		3,231		280,142		Total minimum lease payments	266,460		3,632		270,092
Less amount representing interest	Less amount representing interest	25,085		361		25,446		Less amount representing interest	22,259		274		22,533
		$	251,826	$	2,870	$	254,696		$	244,201	$	3,358	$	247,559

As of May ~~2, 2020,~~1, 2021, we have entered into approximately $5.9 million of operating ~~leases of approximately $0.9 million~~lease obligations related to future store locations that have not yet commenced.

4. Fair Value of Financial Instruments

~~We utilize~~ASC Topic 820, Fair Value Measurement, establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:

Level I – Quoted prices in active markets for identical assets or liabilities.

Level II – Observable inputs other than quoted prices included in Level I.

~~Index~~

Level III – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The table below segregates all financial assets and financial liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value ~~as of May 2, 2020, February 1, 2020 and May 4, 2019~~ (in thousands):


		May 2, 2020										February 1, 2020												May 4, 2019									May 1, 2021						January 30, 2021	May 2, 2020
		Level I		Level II		Level III		Level I		Level II		Level III		Level I		Level II		Level III			Level I		Level II		Level III		Level I		Level II		Level III		Level I		Level II		Level III
Short-term investments	Short-term investments	$	468	$	—	$	—	$	554	$	—	$	—	$	199	$	—	$	—	Short-term investments	$	129	$	0	$	0	$	219	$	0	$	0	$	468	$	0	$	0
Long-term investments	Long-term investments	1,844		—		—		2,208		—		—		2,499		—		—		Long-term investments	2,155		0		0		2,107		0		0		1,844		0		0
Short-term contingent earnout	Short-term contingent earnout	—		—		10,000		—		—		9,958		—		—		—		Short-term contingent earnout	0		0		0		0		0		15,000		0		0		10,000
Long-term contingent earnout	Long-term contingent earnout	—		—		77		—		—		11,099		—		—		6,600		Long-term contingent earnout	0		0		0		0		0		0		0		0		77
Total investments	Total investments	$	2,312	$	—	$	10,077	$	2,762	$	—	$	21,057	$	2,698	$	—	$	6,600	Total investments	$	2,284	$	0	$	0	$	2,326	$	0	$	15,000	$	2,312	$	0	$	10,077

Short-term investments are reported in other current assets on our unaudited condensed consolidated balance sheets. Long-term investments are reported in other assets on our unaudited condensed consolidated balance sheets. Short-term contingent earnout

Index

is reported in other accrued expenses on our unaudited condensed consolidated balance sheets. Long-term contingent earnout is reported in other liabilities on our unaudited condensed consolidated balance sheets.

The short-term and long-term contingent earnouts represent the fair value of potential additional payments outlined in the Purchase Agreement to the former members and warrant holders of City Gear if certain financial goals ~~are~~were achieved in Fiscal 2020 and Fiscal ~~2021.~~2021 ("Earnout"). The total ~~earnout~~Earnout was valued using a Monte Carlo simulation analysis in a risk-neutral framework with assumptions for volatility, risk-free rate, and dividend yield. The ~~earnout is~~Earnout was re-valued each quarter in Fiscal 2020 and Fiscal 2021 and any change in valuation iswas recognized in our consolidated statements of operations. No revaluation was required in Fiscal 2022 and therefore no costs were recognized in store operating, selling, and administrative expenses in Fiscal 2022 as both Earnouts had been fully determined and paid out by the end of Fiscal 2021. As a result of the revaluation for the 13-weeks ended May 2, 2020, a decrease of $11.0 million was recognized in store operating, selling, and administrative expenses. ~~As a result~~

The table below are reconciliations of the ~~revaluation~~contingent earnout balance for ~~the 13-weeks ended May 4, 2019, an increase of $0.6 million was recognized in store operating, selling and administrative expenses.~~each period presented (in thousands):


	13-Weeks Ended				52-Weeks Ended				13-Weeks Ended
	May 1, 2021				January 30, 2021				May 2, 2020
	Short-term		Long-term		Short-term		Long-term		Short-term		Long-term
Beginning balance	$	15,000	$	0	$	9,958	$	11,099	$	9,958	$	11,099
Change in valuation, net	0		0		3,943		0		42		(11,022)
Payment	(15,000)		0		(10,000)		0		0		0
Reclassification from long-term, net	0		0		11,099		(11,099)		0		0
Ending balance	$	0	$	0	$	15,000	$	0	$	10,000	$	77

5. Debt

In October 2018, we entered into amended agreements with Bank of America, N.A. and Regions Bank providing for an aggregate amount of credit available to us under each line of credit of $50.0 million for the purpose of financing a portion of the cash purchase price payable in the acquisition of City Gear.

The terms of the Bank of America facility allowed for borrowings up to $50.0 million with an interest rate agreed upon between the lender and us at the time athe loan iswas made. The terms of the Regions Bank facility allowed for borrowings up to $50.0 million with an interest rate at one-month LIBOR plus 1.5%. Both facilities were unsecured, due on demand and set to expire in October 2021. Under the provisions of both facilities, we did not pay commitment fees. However, both were subject to negative pledge agreements that, among other things, restricted liens or transfers of assets including inventory, tangible or intangible personal property, and land and land improvements.

In March 2020, we borrowed $50.0 million under these credit agreements as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of ~~current~~the uncertainty in the global markets resulting from the COVID-19 ~~pandemic.~~pandemic at that time. The proceeds from such borrowings were ~~used~~preserved for working capital, capital expenditures, and general corporate purposes.

On April 16, 2020, we entered into the Second Amended and Restated Note with Regions Bank ~~(Amended~~("Amended Credit ~~Facility)~~Facility") that provides for an aggregate amount of credit available to us of $75.0 million. The Amended Credit Facility ~~supersedes~~superseded the Regions Bank credit agreement dated October 2018, ~~matures~~with a maturity date of April 19, 2021, and is secured by all assets of the Company with the exception of real property. Simultaneous towith the execution of the Amended Credit Facility, the $50.0 million outstanding under the previous credit agreements ~~were~~was paid in full, the Bank of America credit agreement dated October 2018 was terminated and we incurred borrowings under the Amended Credit Facility of $50.0 million. On June 5, 2020, we entered into a Note Modification Agreement that extended the maturity date of the Amended Credit Facility from April 19, 2021 to July 18, 2021. No other provisions of the Amended Credit Facility were affected. We are currently in negotiations to replace the Amended Credit Facility.

Borrowings under the Amended Credit Facility bear interest at the one-month LIBOR rate plus 2.5% from April 16, 2020 through October 16, 2020 and the one-month LIBOR rate plus 3.0% from October 17, 2020 through the maturity date. There were no origination fees and we do not pay any commitment fees. The Amended Credit Facility includes a loan fee of $50,000 payable to Regions Bank at the maturity date or at the termination date if the agreement is terminated prior to the maturity date ~~for any reason~~

1110

Index

for any reason including due to an event of default. The loan fee will be waived if the Amended Credit Facility is terminated due to refinancing of the loan with ~~an asset-based~~a new loan facility provided by Regions Bank.

The Amended Credit Facility has one financial covenant which requires us to maintain inventory with a minimum value of $150.0 million at all times (measured at the lower of cost or ~~market~~net realizable value consistent with ~~generally accepted accounting principles)~~U.S. GAAP). As of May ~~2, 2020,~~1, 2021, we were in compliance with this covenant. The Amended Credit Facility also restricts us from engaging in certain acquisitions and from incurring indebtedness, other than certain customary permitted indebtedness related to business operations.

We did 0t incur any borrowings against the Amended Credit Facility during the 13-weeks ended May 1, 2021. At May 1, 2021, a total of $75.0 million was available to us from the Amended Credit Facility.

There were 97 days during the 52-weeks ended January 30, 2021, where we incurred borrowings against the credit facilities for an average and maximum borrowing of $43.3 million and $50.0 million, respectively, and an average interest rate of 3.45%.

There were 58 days during the 13-weeks ended May 2, 2020, where we incurred borrowings against ~~all~~the credit facilities for an average and maximum borrowing of $38.7 million and $50.0 million, respectively. The average interest rate during the 13-weeks ended May 2, 2020 was 3.22%. ~~At May 2, 2020, a total of $25.0 million was available to us from the Amended Credit Facility.~~

There were 331 days during the 52-weeks ended February 1, 2020, where we incurred borrowings against these credit facilities for an average and maximum borrowing of $21.5 million and $38.0 million, respectively, and an average interest rate of 3.73%. There were 91 days during the 13-weeks ended May 4, 2019 where we incurred borrowings against these credit facilities for an average and maximum borrowing of $30.9 million and $35.0 million, respectively, and an average interest rate of 4.00%.

On June 5, 2020, we entered into a Note Modification Agreement that extends the maturity date of the Amended Credit Facility from April 19, 2021 to July 18, 2021. No other provisions of the Amended Credit Facility were affected.

6. Stock-Based Compensation

The compensation costs that have been charged against income ~~for the 13-weeks ended May 2, 2020 and May 4, 2019~~ were as follows (in thousands):


		13-Weeks Ended							13-Weeks Ended
		May 2, 2020		May 4, 2019			May 1, 2021		May 2, 2020
Stock-based compensation expense by type:	Stock-based compensation expense by type:					Stock-based compensation expense by type:
Stock options	Stock options	$	90	$	92	Stock options	$	174	$	90
Restricted stock units	Restricted stock units	1,060		363		Restricted stock units	1,788		1,060
Employee stock purchases	Employee stock purchases	44		29		Employee stock purchases	85		44
Director deferred compensation	Director deferred compensation	23		23		Director deferred compensation	6		23
Total stock-based compensation expense	Total stock-based compensation expense	1,217		507		Total stock-based compensation expense	2,053		1,217
Income tax benefit recognized	Income tax benefit recognized	391		113		Income tax benefit recognized	479		391
Stock-based compensation expense, net of income tax	Stock-based compensation expense, net of income tax	$	826	$	394	Stock-based compensation expense, net of income tax	$	1,574	$	826

Expense for restricted stock units is shown net of forfeitures of ~~$0.3~~approximately $0.1 million and ~~$1.3~~$0.3 million for the 13-weeks ended May ~~2, 2020~~1, 2021 and ~~May 4, 2019, respectively.~~

~~In the 13-weeks ended~~ May 2, 2020, ~~and May 4, 2019, we~~respectively.

We have granted the following equity awards:


		13-Weeks Ended				13-Weeks Ended
		May 2, 2020	May 4, 2019		May 1, 2021	May 2, 2020
Stock options	Stock options	27,000	16,798	Stock options	4,384	27,000
Restricted stock unit awards	Restricted stock unit awards	334,485	191,021	Restricted stock unit awards	61,241	334,485
Performance-based restricted stock unit awards	Performance-based restricted stock unit awards	—	34,300	Performance-based restricted stock unit awards	22,492	0
Deferred stock units	Deferred stock units	2,143	1,027	Deferred stock units	84	2,143

~~Index~~

At May ~~2, 2020,~~1, 2021, the total compensation costs not yet recognized related to unvested restricted stock unit awards ~~not yet recognized~~ was ~~$7.9~~$10.5 million and the weighted-average period over which such awards are expected to be recognized ~~was 2.9~~is 2.7 years. There were no0 unrecognized compensation costs related to unvested stock options at May ~~2, 2020.~~1, 2021.

Under the 2012 Non-Employee Director Equity Plan (2012 Plan), 0 shares of our common stock were awarded during the 13-weeks ended May 2, 2020. A total of 13,858 shares of our common stock were awarded during the 13-weeks ended May 4, 2019, as part of the annual equity award to directors in the first quarter.

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During the 13-weeks ended May 1, 2021 and May 2, 2020, 4,384 and ~~May 4, 2019,~~ 27,000 ~~and 16,798~~ stock options were granted, respectively. The weighted-average grant date fair value of stock options granted during the 13-weeks ended May 1, 2021 and May 2, 2020 was $39.73 and ~~May 4, 2019 was~~ $3.33 ~~and $5.46~~ per share, respectively.

Under the 2012 Non-Employee Director Equity Plan ("2012 Plan"), 0 shares of our common stock were awarded during the 13-weeks ended May 1, 2021 or May 2, 2020.

The number of shares purchased, the average price per share, and the weighted-average grant date fair value of shares purchased through our employee stock purchase plan were as follows:


		13-Weeks Ended							13-Weeks Ended
		May 2, 2020		May 4, 2019			May 1, 2021		May 2, 2020
Shares purchased	Shares purchased	17,758		9,925		Shares purchased	7,445		17,758
Average price per share	Average price per share	$	9.29	$	12.16	Average price per share	$	39.25	$	9.29
Weighted average fair value at grant date		$	4.21	$	3.14
Weighted-average fair value at grant date						Weighted-average fair value at grant date	$	11.45	$	4.21

7. Earnings Per Share

The computation of basic earnings per share ~~(EPS)~~("EPS") is based on the weighted-average number of ~~weighted average~~ common shares outstanding during the period. The computation of diluted EPS is based on the ~~weighted average~~weighted-average number of shares outstanding plus the incremental shares that would be outstanding assuming exercise of dilutive stock options and issuance of restricted stock. The number of incremental shares is calculated by applying the treasury stock method. The following table sets forth the ~~weighted average~~weighted-average number of common shares outstanding (in thousands):


		13-Weeks Ended				13-Weeks Ended
		May 2, 2020	May 4, 2019		May 1, 2021	May 2, 2020
Weighted-average shares used in basic computations	Weighted-average shares used in basic computations	16,546	18,308	Weighted-average shares used in basic computations	16,325	16,546
Dilutive equity awards	Dilutive equity awards	—	227	Dilutive equity awards	641	0
Weighted-average shares used in diluted computations	Weighted-average shares used in diluted computations	16,546	18,535	Weighted-average shares used in diluted computations	16,966	16,546

For the 13-weeks ended May 1, 2021, we did 0t exclude any options from the computations of diluted weighted-average common shares or common stock equivalents. For the 13-weeks ended May 2, 2020, all stock-based awards were excluded from the computation of diluted weighted-average common shares and common share equivalents outstanding because of their anti-dilutive effect. ~~For the 13-weeks ended May 4, 2019, we~~

We also excluded ~~253,142 options from the computation of diluted weighted-average common shares and common share equivalents outstanding because of their anti-dilutive effect.~~

~~During periods of net income, we exclude anti-dilutive stock-based~~55,084 unvested stock awards granted to certain employees from the ~~computation~~computations of diluted weighted-average common shares and common share equivalents outstanding because they are subject to certain performance-based annual vesting conditions which had not been achieved by ~~period end. During periods~~May 1, 2021. Assuming the performance-criteria had been achieved as of ~~net loss, no effect is given for anti-dilutive options or unvested stock awards.~~May 1, 2021, the incremental dilutive impact would have been 50,773 shares.

8. Stock Repurchase Activity

In November 2018, the Board of Directors ~~(Board)~~("Board") authorized the extension of our Stock Repurchase Program ~~(Program)~~("Program") in the amount of $300.0 million to repurchase our common stock through ~~Jan.~~January 29, 2022. The Program authorizes repurchases of our common stock in open market or negotiated transactions, with the amount and timing of repurchases dependent on market conditions and at the discretion of our management. In addition to the Program, we also acquire shares of our common stock from holders of restricted stock unit awards to satisfy tax withholding requirements due at vesting. Shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements do not reduce the Program authorization.

During the 13-weeks ended May 1, 2021, we repurchased 541,283 shares of our common stock under the Program at an aggregate cost of $37.3 million and acquired 41,120 shares from holders of restricted stock unit awards to satisfy tax withholding requirements of $2.8 million. During the 13-weeks ended May 2, 2020, we repurchased 428,018 shares of our common stock ~~under a 10b5-1 plan~~ at aan aggregate cost of $9.7 million under the Program and acquired 30,895 shares from holders of restricted stock unit awards to satisfy tax withholding requirements of $0.4 million.

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withholding requirements of $0.4 million. During the 13-weeks ended May 4, 2019, we repurchased 230,000 shares of our common stock at a cost of $4.8 million and acquired 29,432 shares from holders of restricted stock unit awards to satisfy tax withholding requirements of $0.6 million.

As of May ~~2, 2020,~~1, 2021, we had approximately ~~$143.3~~$99.0 million remaining under the Program for stock repurchases.

Subsequent to May 1, 2021, the Program was expanded and extended. See Note 12, Subsequent Events, for additional information.

9. Commitments and Contingencies

~~Annual Bonuses~~Legal Proceedings and ~~Equity Incentive Awards.~~Contingencies.

~~Specified officers and corporate~~

From time to time, the Company is a party to various legal matters in the ordinary course of its business, including actions by employees, ~~of our~~consumers, suppliers, government agencies, or others. The Company has recorded accruals with respect to these matters, where appropriate, which are ~~eligible to receive annual bonuses, based on measures of Company operating performance. For Fiscal 2021,~~reflected in the Compensation Committee of our Board again based the short-term cash incentive on earnings before interest and taxes (EBIT) for Fiscal 2021 but in light of the COVID-19 pandemic, the Compensation Committee expects that adjustments to the set goal will be made in its discretion. Annual bonus related expenses included in accrued payroll expenses on ourCompany's unaudited condensed consolidated ~~balance sheets was $0.9 million, $8.7 million~~financial statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and ~~$1.5 million at May 2, 2020, February 1, 2020~~therefore an accrual has not been made.

The Company believes that its pending legal matters, both individually and ~~May 4, 2019, respectively.~~

~~In addition,~~in the Compensation Committee of the Board has placed performance criteria on awards of restricted stock units (PSUs) to our “named executive officers” as determined in accordance with Item 402(a) of Regulation S-K. The performance criteria are tied to performance targets with respect to future return on invested capital and earnings before interest and taxes over a specified period of time. These PSUs are expensed under the provisions of ASC Topic 718, ~~Compensation – Stock Compensation,~~ ~~and are evaluated each quarter to determine the probability that the performance conditions set within~~aggregate, will be ~~met. Due to the current macroeconomic environment and unprecedented disruption caused by the COVID-19 pandemic, the resulting significant global market decline, and its~~resolved without a material adverse effect on the ~~value~~Company's consolidated financial statements as a whole. However, litigation and other legal matters involve an element of ~~our common stock, the Compensation Committee decided to make adjustments~~uncertainty. Adverse decisions and settlements, including any required changes to the ~~compensation structure for Fiscal 2021. For Fiscal 2021 only, equity awards~~Company's business, or other developments in such matters could affect our operating results in future periods or result in a liability or other amounts material to ~~executive officers were service-based only, with no performance criteria.~~

~~Legal Proceedings and Other Contingencies.~~

~~If we believe that a loss is both probable and estimable for a particular matter,~~ the ~~loss is accrued in accordance with the requirements of ASC Topic 450,~~ ~~Contingencies~~.Company's annual consolidated financial statements. No material amounts were accrued at May ~~2, 2020, February~~ 1, ~~2020~~2021, January 30, 2021, or May ~~4, 2019~~2, 2020 pertaining to legal proceedings or other contingencies.

10. Income Taxes

Our effective tax rate is based on expected annual income, statutory tax rates, and tax planning opportunities available in the various jurisdictions in which we operate. For interim financial reporting, we estimate the annual effective tax rate based on expected taxable income or loss for the full year and record a quarterly income tax provision (benefit) in accordance with the anticipated annual effective rate and adjust for discrete items. We update the estimates of the taxable income or loss throughout the year as new information becomes available, including year-to-date financial results. This process often results in a change to our expected effective tax rate for the year. When this occurs, we adjust the income tax provision (benefit) during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual effective tax rate.

We apply the provisions of ASC Subtopic 740-10 in accounting for uncertainty in income taxes. In accordance with ASC Subtopic 740-10, we recognize a tax benefit associated with an uncertain tax position when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we initially and subsequently measure the tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. Our liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments, and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. Our effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management.

At May ~~2, 2020,~~1, 2021, we had a liability of ~~$1.0~~$0.7 million associated with unrecognized tax benefits. We file income tax returns in U.S. federal and various state jurisdictions. Generally, we are not subject to changes in income taxes by the U.S. federal taxing jurisdiction for years prior to Fiscal ~~2017~~2018 or by most state taxing jurisdictions for years prior to Fiscal ~~2016.~~

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted on March 27, 2020. The CARES Act includes, among other things, refundable payroll tax credits, deferral of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and

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~~technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31,~~ 2017. ~~We have recognized an income tax benefit of $1.9 million in the 13-weeks ended May 2, 2020, due to enactment of the CARES Act.~~

11. Related-Party Transactions

The Company leases 1 store under a lease arrangement with AL Florence Realty Holdings 2010, LLC, a wholly owned subsidiary of Books-A-Million, Inc. ~~(BAMM)~~("BAMM"). One of our Directors, Terrance G. Finley is an executive officer of BAMM. Minimum annual lease payments are $0.1 million, if not in co-tenancy, and the lease termination date is February 2022. Minimum lease payments remaining under this lease at May 1, 2021 and May 2, 2020 ~~and May 4, 2019~~ were ~~$0.2~~$0.1 million and ~~$0.3~~$0.2 million, respectively.

The Company honored certain contracts in place for its wholly owned subsidiary, City Gear, LLC, upon acquisition. The following listing represents those contracts of which Michael E. Longo, the Company's President and CEO, has or had an interest in, either directly or indirectly:

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Memphis Logistics Group ~~(MLG)~~("MLG")

MLG provides logistics and warehousing services to City Gear. Mr. Longo ~~owns~~owned a majority interest in MLG and the ~~existing~~initial contract isterm was effective through June ~~2020. The supply chain~~2020 but was extended to June 2021. Effective January 29, 2021, Mr. Longo fully divested his ownership interest in MLG and ~~logistic transition is currently in the planning stages.~~he no longer has any involvement with its management. In the 13-weeks ended May 2, 2020, ~~and May 4, 2019~~ payments to MLG under the contract were $1.7 ~~million and $2.0 million, respectively.~~million. The amount outstanding to MLG at January 30, 2021 and May 2, 2020 ~~February 1, 2020 and May 4, 2019~~ was ~~$0.2 million, $0.5~~$0.3 million and ~~$0.4~~$0.2 million, respectively, and is included in accounts payable on our unaudited condensed consolidated balance sheets.

T.I.G. Construction ~~(TIG)~~("TIG")

TIG historically performed the majority of new store and store remodel construction for City Gear and is owned by a close relative of Mr. Longo. ~~These functions are currently being transitioned to the Company's property management department.~~ For the 13-weeks ended May ~~2, 2020~~1, 2021 and May ~~4, 2019,~~2, 2020, payments to TIG for its services were ~~$0.7~~$1.4 million and ~~$0.4~~$0.7 million, respectively. The amount outstanding to TIG at May 1, 2021, January 30, 2021, and May 2, 2020 ~~February 1, 2020 and May 4, 2019~~ was approximately $0.2 million, ~~$0.1 million~~$26,000, and $0.2 million, respectively, and is included in accounts payable on our unaudited condensed consolidated balance sheets.

Merchant's Capital ~~(MC)~~("MC")

Merchant's Capital owned the office building where City Gear had its corporate offices in Memphis, Tennessee. Mr. Longo is a 33.3% partner in MC. The initial lease term ended on December 31, 2019 but was extended to April 30, 2020 to allow for the transition of City Gear's corporate office to the Company's Birmingham, Alabama headquarters. In the 13-weeks ended May 1, 2021, there were 0 lease payments to MC. In the 13-weeks ended May 2, 2020, ~~and May 4, 2019, minimum~~ lease payments to MC were ~~$51.2 thousand. There were 0 minimum lease payments remaining under this lease at May 2, 2020.~~$51,200. There were 0 amounts outstanding to MC at May ~~2, 2020, February~~ 1, ~~2020~~2021, January 30, 2021, or May ~~4, 2019.~~2, 2020.

In addition to the related party interests listed above, Mr. Longo also has a membership interest in the ~~Earnout~~earnout discussed in Note 4 - Fair Value of Financial Instruments. Pursuant to the Membership Interest and Warrant Purchase Agreement dated October 29, 2018, and based on Fiscal 2020 financial results, ~~original~~the former members and warrant holders of City Gear ~~are~~were entitled to and were paid the first ~~Earnout~~earnout payment of $10.0 million ~~which~~in June 2020. Based on Fiscal 2021 financial results, the remaining earnout payment of $15.0 million was achieved and paid ~~on June 1, 2020.~~to the former members and warrant holders of City Gear in April 2021. Mr. ~~Longo is entitled to~~Longo's share of the earnout payments was approximately 22.8% ~~of any Earnout payment~~ or ~~up to~~approximately $2.3 million of the initial ~~Earnout~~earnout payment and approximately 22.8% or approximately $3.4 million of the second earnout payment. ~~If the maximum remaining Earnout payment of $15.0 million is earned based on Fiscal 2021 financial results, Mr. Longo would be entitled up to an additional $4.4 million payable in Fiscal 2022.~~

1512. Subsequent Events

On May 26, 2021, the Board authorized the expansion of the Program by $500.0 million to a total of $800.0 million and authorized the Program's extension through February 1, 2025.

Subsequent to May 1, 2021, we repurchased 75,000 shares of our common stock at a cost of $6.5 million. As of June 4, 2021, we had approximately $592.5 million remaining under the Program for stock repurchases.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Statements

This document contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. They include statements preceded by, followed by or including words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “forecast,” “guidance,” “outlook,” “estimate” “will,” “may,” “could,” “possible,” ~~“potential”~~“potential,” or other similar words, phrases or expressions. For example, our forward-looking statements include statements regarding:

•the ~~anticipated~~ impact toof the duration and scope of the COVID-19 pandemic on our business, operations, and financial results, including additional waves of infections or periods of increases in the number of COVID-19 cases in areas in which we operate, and the measures that might be imposed by federal, state, or local governments in response to the pandemic, including restrictions impacting school closures and remote learning requirements, sporting events, and local sports leagues and programs;

•the impact that stimulus payments and extended unemployment benefits will have on consumer demand for our products and ~~supply chain due~~our overall business operations;

•the potential impact of new trade, tariff, and tax regulations on our profitability;

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•our ability to ~~the recent global pandemic of a novel strain of the coronavirus (COVID-19);~~accurately forecast consumer demand for our products and manage our inventory in response to changing demands;

•our cash needs, including our ability to fund our future capital expenditures, working capital requirements, and repurchases of Company common stock under our stock repurchase ~~program;~~program ("Program");

•our relationships with vendors and the loss of key vendor support;

•~~our plans, expectations and estimates concerning the integration of City Gear and related costs;~~

•our ability to retain key personnel at Hibbett and City Gear;

•our anticipated net sales, comparable store net sales changes, net sales growth, gross margins, expenses, and earnings;

•our business strategy, omni-channel platform, logistics structure, target market presence, and the expected impact of such factors on our net sales growth;

•our store growth, including our plans to add, expand, relocate or close stores, our markets' ability to support such growth, expected changes in total square footage, our ability to secure suitable locations for new stores and the suitability of our wholesale and logistics facility;

•our expectations regarding the growth of our online business and the role of technology in supporting such growth;

•our policy of leasing rather than owning stores and our ability to renew or replace store leases satisfactorily;

•the cost of regulatory compliance, including the costs and possible outcomes of pending legal actions and other ~~contingencies;~~contingencies, and new or additional legal, legislative, and regulatory requirements to reduce or mitigate the effects of climate change;

•our analysis of our risk factors and their possible effect on financial results;

•our ability and plans to ~~renew~~replace our credit facility;

•our expectations regarding our capital expenditures and dividend policy;

•our seasonal sales patterns and assumptions concerning customer buying behavior;

•our ability to retain new customers;

•our expectations regarding competition;

•our estimates and assumptions as they relate to ~~the fair value of assets acquired and liabilities assumed in the purchase of City Gear,~~ preferable tax and financial accounting methods, accruals, inventory valuations, ~~long-live~~long-lived assets, ~~store closure charges,~~ carrying amount and liquidity of financial instruments, fair value of options and other stock-based compensation, economic and useful lives of depreciable assets and leases, income tax liabilities, deferred taxes, and uncertain tax positions;

•our expectations concerning future stock-based award types and the exercise of outstanding stock options;

•the possible effect of inflation, market decline, and other economic changes on our costs and profitability;

•our assessment of the materiality and impact on our business of adopting recent accounting pronouncements ~~adoption~~issued by the Financial Accounting Standards Board;

•the possible effects of uncertainty within the capital markets, on the commercial credit environment, and on levels of consumer confidence;

•our analyses of trends as related to marketing, sales, and earnings performance;

•our ability to receive favorable brand name merchandise and pricing from key vendors;

•the future reliability of, and cost associated with, our sources of supply, particularly imported goods, including the actual and potential effect of tariffs on Chinese goods imposed by the United States and other potential impediments to imports;

•the impact of technology on our operations and business, including cyberattacks, ~~cyberliability,~~cyber liability, or potential liability for breaches of our privacy or information security systems; and

•our ability to mitigate the risk of possible business interruptions, including, without limitation, from political or social unrest (including vandalism and looting).

A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should not place undue reliance on forward-looking statements. Our forward-looking statements are based on currently available ~~operation,~~operational, financial, and business information and speak only as of the date of this report. Our business, ~~financial condition, results of operations,~~ financial condition, results of operations, and prospects may have changed since that date. For a discussion of the risks, uncertainties, and assumptions that could affect our future events, developments, or results, you should carefully consider the risk factors described from time to time in our other documents and reports, including the factors described under “Risk

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Factors” in our Form 10-K for the fiscal year ended ~~February 1, 2020~~January 30, 2021, filed with the Securities and Exchange Commission ("SEC") on April ~~16, 2020.~~7, 2021 ("2021 Annual Report"). You should also read such information in conjunction with our unaudited condensed consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report.

We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Moreover, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on our forward-looking statements.

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We do not undertake to publicly update or revise any forward-looking statements after the date of this Quarterly Report on ~~form~~Form 10-Q, whether as a result of new information, future events, or otherwise, and you should not expect us to do so.

Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, we do not, by policy, selectively disclose to them any material non-public information with any statement or report issued by any analyst regardless of the content of the statement or report. We do not, by policy, confirm forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

Investor Access to Company Filings

We make available free of charge on our website, www.hibbett.com under the heading “Investor Relations,” copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ~~(Securities~~("Securities Exchange ~~Act)~~Act") as well as all Forms 3, 4, and 5 filed by our executive officers and directors, as soon as the filings are made publicly available by the ~~Securities and Exchange Commission~~SEC on its EDGAR database at www.sec.gov. In addition to accessing copies of our reports online, you may request a copy of our 2021 Annual Report, ~~on Form 10-K for the fiscal year ended February 1, 2020,~~ at no charge, by writing to: Investor Relations, Hibbett Sports, Inc., 2700 Milan Court, Birmingham, Alabama 35211.

~~Adapting to the COVID-19 Business Environment~~

Throughout this challenging time, the Company was able to navigate a rapidly changing retail landscape by leveraging omni-channel and distribution capabilities, having access to and availability of in-demand products, taking decisive action to protect liquidity and demonstrating the ability to reopen stores quickly when circumstances allowed. A few highlights include:

•~~Total comparable sales were down less than 20% versus the prior year despite having our store fleet open for approximately 60% of the total available selling days in the quarter.~~

•~~Digital traffic was up over 80% for the quarter compared to the prior year. Over 40% of online sales in the second half of the quarter were new customers.~~

•~~Inventory allocation systems and distribution infrastructure ramped up to support increased online demand.~~

•The Merchandise team proactively managed the flow of goods in collaboration with our vendor partners, resulting in a decrease in year-over-year inventory and an inventory balance that remained in line with demand.

•~~We worked with merchandise and non-merchandise vendors to extend terms.~~

•We borrowed $50.0 million under our two unsecured, demand lines of credit as a precautionary measure in order to increase our cash position and preserve financial flexibility, and subsequently converted these lines of credit into a single secured line of credit with a one-year term.

•Nearly 700 stores were open to the public at the end of the quarter and over 1,000 are open as of the date of this filing with a majority of them reporting significant comparable sales increases upon their reopening.

~~In addition, the Company continues to be proactive in protecting the health and safety of our team members and customers and all locations are subject to the following safety guidelines:~~

•~~Stores are being extensively cleaned on a daily basis.~~

•~~The number of customers allowed in stores open to the public is limited and social distancing is being practiced and maintained.~~

•~~Store employees or customers exhibiting any symptoms are not permitted to enter the store.~~

•~~Hand sanitizer is readily available to all team members and customers.~~

•~~Curbside pick-up is available for all Buy Online, Pick-up In-Store orders where allowed.~~

•~~Contactless payment is available in all stores.~~

~~For more information, please visit www.hibbett.com/shop-safely-in-stores.html.~~

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The COVID-19 pandemic remains a rapidly evolving situation. We continue to actively monitor developments that may cause us to take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our team members, customers, suppliers and stockholders.

While we cannot predict the duration or the severity of the COVID-19 pandemic or the impact it will have on our business, results of operations or liquidity, it is important to share the impact to-date, how our response is progressing, and how our results and financial condition may change going forward.

General Overview

Hibbett Sports, Inc., headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer primarily located in ~~small and mid-sized~~underserved communities across the country. Founded in 1945, Hibbett ~~has~~stores have a rich history of convenient locations, personalized customer service, and access to coveted footwear ~~apparel~~ and ~~equipment~~apparel from top brands like Nike, Jordan, ~~Adidas~~ and ~~Under Armour.~~adidas. Consumers can browse styles, find new releases, ~~shop looks~~ and make purchases by visiting www.hibbett.com. Purchases can be made online ~~or in their nearest store~~ or by visiting ~~www.hibbett.com~~ or ~~www.citygear.com~~their nearest store. Follow us @hibbettsports and ~~can follow us @HibbettSports~~@citygear on Facebook, Instagram, and ~~@CityGear. We became a public company in October 1996.~~Twitter. As of May ~~2, 2020,~~1, 2021, we operated a total of ~~1,078~~1,071 retail stores in 35 states composed of ~~908~~883 Hibbett Sports stores, ~~152~~170 City Gear stores, and 18 Sports Additions athletic shoe stores.

Our Hibbett Sports stores average 5,800 square feet and are located primarily in strip centers, which are usually near a major chain ~~retailer such as Wal-Mart.~~retailer. Our City Gear stores average 5,000 square feet and are located primarily in strip centers. As of May ~~2, 2020,~~1, 2021, our store base consisted of ~~798~~807 stores located in strip centers, 3132 free-standing stores, and ~~249~~232 enclosed mall locations.

Our primary merchandising strategy is to provide a broad assortment of quality brand name footwear, apparel, ~~accessories~~ and ~~team sports equipment~~accessories at competitive prices in a conveniently located full-service environment. ~~In July 2017, we successfully launched our e-commerce website.~~ We continue to grow our online business aggressively, while enhancing our stores to ~~imporve~~improve the overall customer experience. We believe that the breadth and depth of our brand name merchandise consistently exceeds the product selection carried by most of our competitors, particularly in our smaller markets. Many of these brand name products are highly technical and require expert sales assistance. We continuously educate our sales staff on new products and trends through coordinated efforts with our vendors.

Comparable store sales ~~data for the periods presented reflects~~ - Comparable store sales for a particular period include our ~~retail~~Hibbett Sports, City Gear, and Sports Additions stores open throughout ~~the entire~~that period and the corresponding period of the prior fiscal year, and e-commerce sales. We consider comparable store sales to be a key indicator of our current performance; measuring the growth in sales and sales productivity of existing stores. Management believes that positive comparable store sales contribute to greater leveraging of operating costs, particularly payroll and occupancy costs, while negative comparable store sales contribute to ~~de-leveraging~~deleveraging of costs. Comparable store sales also have a direct impact on our total net sales and the level of cash flow.

~~Inclusion of our City Gear stores began in the fourth quarter of Fiscal 2020.~~

If a store remodel, relocation, or expansion results in the store being closed for a significant period, ~~of time,~~ its sales are removed from the comparable store sales base until it has been open a full 12 months. In addition, rebranded stores are treated as a new store and are not presented in comparable store sales until they have been open a full 12 months under the new brand.

During the 13-weeks ended May ~~2, 2020,~~1, 2021, we included ~~1,047~~1,035 stores in comparable store sales. ~~We did not exclude any stores from the comparable sales base that were temporarily closed due to the COVID-19 pandemic.~~

Executive Summary

Net sales for the 13-weeks ended May ~~2, 2020, decreased 21.4%~~1, 2021, increased 87.8% to ~~$269.8~~$506.9 million, compared with ~~$343.3~~$269.8 million ~~for the 13-weeks ended May 4, 2019. Comparable store sales decreased 19.5%~~ for the 13-weeks ended May 2, 2020. Comparable store sales increased 87.3%. Brick and mortar comparable store sales increased 113.5%. E-commerce sales ~~accounted for 22.3%~~grew by 1.0% and represented 11.7% of total net sales for the ~~13-weeks ended May 2, 2020~~first quarter compared to ~~8.3%~~22.3% in the prior year first quarter. We believe our record quarterly sales growth was driven by new customer acquisition and retention,

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prior year market disruption, government stimulus, the availability of ~~total sales for~~in-demand product, and improved store level engagement, which collectively helped increase traffic and revenue per transaction in the ~~13-weeks ended May 4, 2019. Gross margin was 27.5%~~quarter.

Store operating, selling, and administrative ("SG&A") expenses were 18.1% of net sales for the 13-weeks ended May ~~2, 2020,~~1, 2021, compared with 34.5% for the 13-weeks ended May 4, 2019. The decrease in the gross margin percentage was due to the higher concentration of e-commerce sales to brick and mortar sales in addition to a $5.1 million increase in our lower of cost or net realizable value (LCM) inventory reserve.

~~Store operating, selling and administrative (SG&A) expense, including goodwill impairment, was~~ 33.1% of net sales for the 13-weeks ended May 2, ~~2020, compared~~2020. This decrease was the result of leverage gained from the strong sales performance as well as having minimal costs in the current yearassociated with ~~21.6%~~City Gear acquisition and integration activities and cycling the pandemic-induced impairment and valuation charges recorded in the first quarter of the prior year. First quarter SG&A expenses of 18.1% of net sales ~~for the 13-weeks ended May 4, 2019. The main drivers~~compares to prior year first quarter adjusted SG&A expenses of ~~the SG&A increase were non-cash impairment charges for goodwill~~23.9% of ~~$19.7 million,~~net sales, which excludes certain City Gear ~~tradename~~acquisition and integration activities and pandemic-related impairment and valuation costs. This decrease of ~~$8.9 million and other asset impairment of $4.1 million, partially offset by a reduction of $11.0 million for~~approximately 580 basis points was also primarily due to leverage from the ~~second year earnout liability related to the City Gear acquisition.~~significant sales increase.

~~Index~~

During the first quarter of Fiscal ~~2021,~~2022, we opened ~~three~~six new ~~stores, rebranded two Hibbett stores to City Gear~~ stores and closed ~~eight~~two underperforming stores bringing the store base to ~~1,078~~1,071 in 35 states as of May ~~2, 2020. Store closures include Hibbett stores closed for rebranding.~~1, 2021. We ended the first quarter of Fiscal ~~2021~~2022 with ~~$106.2~~$270.9 million of available cash and cash equivalents ~~including~~with no outstanding ~~debt~~debt. Net inventory was $182.4 million at May 1, 2021, a 24.6% decrease compared to the prior year first quarter. The continued strength of ~~$50.0 million~~consumer demand for the products we carry and ~~after stock repurchases~~ongoing supply chain constraints during the quarter were the main drivers of the inventory reduction.

About Non-GAAP Measures

This Management Discussion and Analysis includes certain non-GAAP financial measures for the 13-weeks ended May 2, 2020, ~~of $9.7 million.~~

~~About Non-GAAP Measures~~

~~This MD&A includes certain non-GAAP financial measures,~~ including adjusted net income, earnings per share, cost of goods sold, gross margin, ~~and~~ SG&A expenses, and operating income as a percentage of net sales. Management believes these non-GAAP financial measures are useful to investors to facilitate comparisons of our current financial results to historical operations and the financial results of peer companies, as they exclude the effects of items that may not be indicative of, or are unrelated to, our underlying operating results, such as expenses related to the COVID-19 pandemic and the acquisition of City ~~Gear and our accelerated store closure plan in Fiscal 2020. The costs~~Gear. Costs related to the COVID-19 pandemic include impairment charges of goodwill, tradename, and other assets ~~paid-not-worked labor costs~~and lower of cost or net ~~of related tax credits and excess LCM~~realizable value inventory reserve charges. The costs related to the acquisition of City Gear include ~~amortization of inventory step-up value, professional service fees, and legal and accounting fees. The~~ change in valuation of the contingent earnout ~~was included in COVID-19 costs~~and professional fees. There were no non-GAAP financial measures for the 13-weeks ended May 2, 2020 and in acquisition of City Gear costs for the 13-weeks ended May 4, 2019. Costs related to the strategic realignment plan included lease and equipment impairment costs, third party liquidation fees, store exit costs, and residual net lease costs and were specific to Fiscal 2020.1, 2021.

While our management uses these non-GAAP financial measures as a tool to enhance their ability to assess certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial statements. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial statements, allows for greater transparency in the review of our financial and operational performance. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.

Reconciliations of our unaudited condensed consolidated statements of operations for the 13 weeks ended May 2, 2020, ~~and May 4, 2019, respectively~~ as reported on a GAAP basis, to statements of operations for the same period prepared on a non-GAAP basis, are provided below under the heading ~~“Reconciliations of~~“GAAP to Non-GAAP ~~Financial Measures.~~Reconciliations.”

Critical Accounting Policies and Estimates

The unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our critical and significant accounting policies and estimates are described more fully in our 2021 Annual ~~Report on Form 10-K for the fiscal year ended February 1, 2020, as filed on April 16, 2020.~~Report. There have been no changes in our accounting policies in the current period ended May ~~2, 2020,~~1, 2021, that had a material impact on our unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements

See Note 2, Recent Accounting Pronouncements, to the unaudited condensed consolidated financial statements included in this Form 10-Q for the period ended May ~~2, 2020,~~1, 2021, for information regarding recent accounting pronouncements.

Index

Results of Operations

Summarized Unaudited Information


		13-Weeks Ended										13-Weeks Ended
		May 2, 2020			May 4, 2019				May 1, 2021			May 2, 2020
Statements of Operations	Statements of Operations							Statements of Operations
Net sales (decrease) increase		(21.4		%)	25.0		%
Comparable sales (decrease) increase		(19.5		%)	5.1		%
Net sales increase (decrease)								Net sales increase (decrease)	87.8		%	(21.4		%)
Comparable store sales increase (decrease)								Comparable store sales increase (decrease)	87.3		%	(19.5		%)
Gross margin (as a % to net sales)	Gross margin (as a % to net sales)	27.5		%	34.5		%	Gross margin (as a % to net sales)	41.4		%	27.5		%
Store operating, selling and administrative expenses (as a % to net sales)		25.8		%	21.6		%
Goodwill impairment		7.3		%	—		%
SG&A expenses (as a % to net sales)								SG&A expenses (as a % to net sales)	18.1		%	25.8		%
Goodwill impairment (as a % of net sales)								Goodwill impairment (as a % of net sales)	—		%	7.3		%
Depreciation and amortization (as a % to net sales)	Depreciation and amortization (as a % to net sales)	2.5		%	2.1		%	Depreciation and amortization (as a % to net sales)	1.6		%	2.5		%
(Benefit) provision for income taxes (as a % to net sales)		(2.6		%)	2.7		%
Net (loss) income (as a % to net sales)		(5.7		%)	8.1		%
Diluted (loss) earnings per share		$	(0.92)		$	1.50
Provision (benefit) for income taxes (as a % to net sales)								Provision (benefit) for income taxes (as a % to net sales)	5.0		%	(2.6		%)
Net income (loss) (as a % to net sales)								Net income (loss) (as a % to net sales)	16.7		%	(5.7		%)
Diluted earnings (loss) per share								Diluted earnings (loss) per share	$	5.00		$	(0.92)
Weighted-average dilutive shares (in thousands)	Weighted-average dilutive shares (in thousands)	16,546			18,535			Weighted-average dilutive shares (in thousands)	16,966			16,546

Balance Sheets	Balance Sheets							Balance Sheets
Ending cash and cash equivalents (in thousands)	Ending cash and cash equivalents (in thousands)	$	106,205		$	116,963		Ending cash and cash equivalents (in thousands)	$	270,852		$	106,205
Average inventory per store	Average inventory per store	$	224,475		$	217,262		Average inventory per store	$	170,281		$	224,475

Store Information	Store Information							Store Information
Beginning of period	Beginning of period	1,081			1,163			Beginning of period	1,067			1,081
New stores opened	New stores opened	3			3			New stores opened	6			3
Rebranded stores	Rebranded stores	2			2			Rebranded stores	—			2
Stores closed	Stores closed	(8)			(24)			Stores closed	(2)			(8)
End of period	End of period	1,078			1,144			End of period	1,071			1,078

Estimated square footage at end of period (in thousands)	Estimated square footage at end of period (in thousands)	6,088			6,446			Estimated square footage at end of period (in thousands)	6,041			6,088

Share Repurchase Information	Share Repurchase Information							Share Repurchase Information
Shares purchased under our Program	Shares purchased under our Program	428,018			230,000			Shares purchased under our Program	541,283			428,018
Cost (in thousands)	Cost (in thousands)	$	9,748		$	4,799		Cost (in thousands)	$	37,314		$	9,748
Settlement of net share equity awards	Settlement of net share equity awards	30,895			29,432			Settlement of net share equity awards	41,120			30,895
Cost (in thousands)	Cost (in thousands)	$	424		$	556		Cost (in thousands)	$	2,846		$	424

13-Weeks Ended May ~~2, 2020~~1, 2021 Compared to 13-Weeks Ended May ~~4, 2019~~2, 2020

Net sales

Net sales ~~decreased ($73.5)~~for the 13-week period ended May 1, 2021, increased 87.8% to $506.9 million ~~or (21.4%), to~~compared with $269.8 million for the ~~13-weeks~~13-week period ended May 2, ~~2020 from $343.3 million~~2020. Comparable store sales increased 87.3%. Brick and mortar comparable sales increased 113.5%. E-commerce sales grew by 1.0% and represented 11.7% of total net sales for the ~~comparable period~~first quarter compared to 22.3% in the prior ~~year. Furthermore:~~

•~~We opened three~~year first quarter. Our stores ~~rebranded two Hibbett Sports stores to City Gear stores and closed eight stores.~~

•~~Comparable store sales decreased 19.5% mainly due~~were open to the ~~large number~~public for approximately 60% of ~~stores that were closed entirely or were limited to fulfill e-commerce orders and curbside pick-up which began in March.~~

•~~E-commerce sales represented 22.3% of total sales compared to 8.3% for~~ the ~~comparable period~~available days in the prior ~~year.~~

•~~Footwear~~year first quarter, which drove a significant amount of business to our online channel. Also, product launches shifted exclusively to online during much of that time period. This year, the product launch business migrated more heavily back toward stores, which impacted e-commerce comparable store sales. Although e-commerce revenue was ~~positive across all genders with key investments in women's footwear showing strong results.~~

•~~Apparel~~relatively flat compared to last year’s first quarter, online revenues have grown by over 105.0% compared to the first quarter of Fiscal 2020. We believe our record quarterly sales growth was ~~positive~~driven by new customer acquisition and retention, prior ~~to COVID-19 as we believe that our renewed selling focus on connecting our apparel assortment to sneakers resonated with customers.~~

•~~Accessories performed well and was supported by our initiative to connect accessories to sneakers and by vendor-funded selling initiatives and contests.~~

year market disruption, government

2018

Index

stimulus, the availability of in-demand product, and improved store level engagement, which collectively helped increase traffic and revenue per transaction in the quarter.

Gross margin

. ~~Cost of goods sold includes the cost of merchandise, occupancy costs for stores, occupancy and operating costs for our wholesale and logistics facility and ship-to-home freight.~~

Gross margin was ~~$74.1 million, or~~41.4% of net sales for the 13-week period ended May 1, 2021, compared with 27.5% of net sales infor the ~~13-weeks~~13-week period ended May 2, ~~2020, compared with $118.6 million, or 34.5% of net sales, in the same period of the prior fiscal year. Excluding certain COVID-19 expenses, non-GAAP gross margin~~2020. The approximate 1,390 basis point increase was ~~$79.2 million, or 29.4% of net sales in the 13-weeks ended May 2, 2020, compared to $119.6 million or 34.8% of net sales, in the same period of the prior fiscal year.~~

~~GAAP gross margin was negatively impacted~~driven by ~~the significant~~higher sell-through, a low promotional environment, a mix shift ~~toward~~away from e-commerce sales, which carry a lower margin ~~rate~~ due to incremental ~~shipping costs. Logistics~~fulfillment costs, leverage of store occupancy expenses, ~~were relatively flat~~and a decline in non-cash lower of cost or net realizable value ("inventory valuation") reserve charges. Gross margin of 41.4% for the first quarter of the current year compares to the prior year first quarter adjusted gross margin of 29.4%, which excludes adjustments to our non-cash inventory valuation reserves last year. This year over year ~~in dollars, but increased 38 basis points as~~improvement was the result of higher sell-through, a ~~percentage~~lower promotional environment, a mix shift away from e-commerce, and leverage of store occupancy expenses.

SG&A expenses

SG&A expenses were 18.1% of net sales due to lower sales volume. Store occupancy costs increased approximately 130 basis points as a percentage of net sales also due to lower sales volume. An increase in aged inventory, defined as items six months pastfor the ~~date of last receipt, resulted in a $5.1 million increase in the LCM inventory reserve during the quarter. This amount was excluded from the non-GAAP gross margin figure.~~

~~Store operating, selling and administrative (SG&A) expenses~~. ~~SG&A expenses, including goodwill impairment, were $89.3 million, or~~13-week period ended May 1, 2021, compared with 33.1% of net sales for the ~~13-weeks~~13-week period ended May 2, ~~2020, compared to $74.0 million, or 21.6%~~2020. This decrease was the result of leverage gained from the strong sales performance as well as having minimal costs in the current year associated with City Gear acquisition and integration activities and cycling the pandemic-induced impairment and valuation charges recorded in the first quarter of the prior year. First quarter SG&A expenses of 18.1% of net sales ~~for~~in the ~~comparable period a~~current year ~~ago.~~

~~Excluding non-GAAP adjustments,~~compares to prior year first quarter adjusted SG&A ~~was $64.6 million, or~~expenses of 23.9% ~~net sales, for the 13-weeks ended May 2, 2020, from $72.4 million, or 21.1%~~ of net sales, ~~for the same period in the prior year.~~

~~A large portion of the SG&A increase resulted from impacts related to COVID-19. This included non-cash intangible asset impairments to goodwill in the amount of $19.7 million and the~~which excludes certain City Gear ~~tradename of $8.9 million, partially offset by a reduction of $11.0 million for the second year earnout liability related to the City Gear acquisition. These adjustments resulted from a significant~~acquisition and integration activities and pandemic-related impairment and valuation costs. This decrease ~~in the market valuation of the Company. Other COVID-19 impacts included net payroll costs to support team members at closed stores~~ of approximately ~~$2.4 million and other right-of-use asset impairments of approximately $4.1 million.~~580 basis points was also primarily due to leverage from the significant sales increase.

On a non-GAAP basis, the 280 basis point increase in SG&A compared to the prior year resulted mainly from incremental marketing expenses that drove more customers to our website during the second half of the quarter.

Depreciation and amortization.

Depreciation and amortization of ~~$6.9~~$8.1 million ~~increased 45~~decreased approximately 95 basis points as a percentage of net sales for the 13-weeks ended May ~~2, 2020~~1, 2021, compared to the same period of the prior fiscal year. This ~~increase~~decrease was mainly due to the ~~deleverage~~leverage from ~~lower~~higher net sales.

Provision (benefit) for income taxes

The combined federal, state, and local effective income tax rate as a percentage of pre-tax ~~loss~~income was 23.0% for the 13-weeks ended May 1, 2021, and was 31.2% for the 13-weeks ended May 2, ~~2020~~2020. The quarterly effective tax rate fluctuates based on full-year taxable income projections and ~~was 25.3%~~is also influenced by the relative level of ~~the pre-tax~~pretax income or loss in each quarter.

Net income (loss)

Net income for the ~~13-weeks~~13-week period ended May ~~4, 2019. The increase~~1, 2021, was $84.8 million, or $5.00 per diluted share, compared with a net loss of $15.3 million, or $0.92 per share, for the 13-week period ended May 2, 2020. As there were no adjustments in ~~rate was primarily~~ the ~~result~~first quarter of the current year, net income ~~tax benefit generated by~~for the ~~Federal~~13-week period ended May 1, 2021, was $84.8 million, or $5.00 per diluted share, compared to adjusted net ~~operating loss (NOL) carryback provided~~income for ~~under~~ the ~~Coronavirus Aid, Relief, and Economic Security Act~~(CARES Act). This provision provides for a five-year NOL carryback for taxable years beginning after December 31, 2017, and before January 1, 2021. As a result, the NOL projected to be generated for Fiscal 2021 may be carried back to Fiscal 2016, a tax year in which the Federal income tax rate was 35.0%.

13-week period ended May 2, 2020, of $5.2 million, or $0.31 per diluted share.

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Index

GAAP to Non-GAAP Reconciliations

(Dollars in thousands, except per share amounts)

(Unaudited)

The following tables provide reconciliations of our unaudited condensed consolidated statement of operations for the 13-weeks ended May 2, 2020, ~~and May 4, 2019,~~ as reported on a GAAP basis, to a statement of operations for the same period prepared on a non-GAAP basis.


13-Weeks Ended May 2, 2020	13-Weeks Ended May 2, 2020																					13-Weeks Ended May 2, 2020
															Excluded Amounts
				Excluded Amounts											GAAP Basis (As Reported)		Acquisition Costs(1)		COVID-19 (2)		Non-GAAP Basis (As Adjusted)
		GAAP Basis (As Reported)		Acquisition Costs⁽¹⁾		COVID-19⁽²⁾		Non-GAAP Basis (As Adjusted)		% of Sales											% of Sales
Cost of goods sold	Cost of goods sold	$	195,690	$	—	$	5,089	$	190,601	70.6	%	Cost of goods sold	$	195,690	$	—	$	5,089	$	190,601	70.6		%
Gross margin	Gross margin	$	74,147	$	—	$	5,089	$	79,236	29.4	%	Gross margin	$	74,147	$	—	$	5,089	$	79,236	29.4		%
SG&A expenses	SG&A expenses	$	69,673	$	654	$	4,433	$	64,586	23.9	%	SG&A expenses	$	69,673	$	654	$	4,433	$	64,586	23.9		%
Goodwill impairment	Goodwill impairment	$	19,661	$	—	$	19,661	$	—	—	%	Goodwill impairment	19,661		—		19,661		—		—		%
Operating (loss) income	Operating (loss) income	$	(22,057)	$	654	$	29,183	$	7,780	2.9	%	Operating (loss) income	$	(22,057)	$	654	$	29,183	$	7,780	2.9		%
(Loss) income before provision for income taxes		$	(22,227)	$	654	$	29,183	$	7,610	2.8	%
(Benefit) provision for income taxes	(Benefit) provision for income taxes	$	(6,940)	$	204	$	9,112	$	2,376	0.9	%	(Benefit) provision for income taxes	$	(6,940)	$	204	$	9,112	$	2,376	0.9		%
Net (loss) income	Net (loss) income	$	(15,287)	$	450	$	20,072	$	5,235	1.9	%	Net (loss) income	$	(15,287)	$	450	$	20,072	$	5,235	1.9		%
Diluted (loss) earnings per share⁽³⁾	Diluted (loss) earnings per share⁽³⁾	$	(0.92)	$	0.03	$	1.21	$	0.31			Diluted (loss) earnings per share(3)	$	(0.92)	$	0.03	$	1.21	$	0.31


1) Excluded acquisition amounts during the 13-week period ended May 2, 2020, related to the acquisition of City Gear, LLC, consist primarily of change in valuation of the contingent earnout and accounting and professional fees.
2) Excluded amounts during the 13-week period ended May 2, 2020, related to COVID-19 pandemic, consist primarily of non-cash ~~LCM~~inventory valuation reserve charges in cost of goods sold and impairment costs (goodwill, tradename, and other assets) ~~costs, change~~ in ~~valuation of contingent earnout and paid-not-worked salaries net of related tax credits.~~SG&A expenses.
3)~~Weighted average~~ Weighted-average diluted shares outstanding were not adjusted for dilutive options and restricted stock in the calculation of GAAP loss per share.

13-Weeks Ended May 4, 2019
Excluded Amounts
GAAP Basis (As Reported)
Acquisition Costs⁽¹⁾
Strategic Realignment
⁽²⁾
Non-GAAP Basis (As Adjusted) % of Sales
Cost of goods sold $ 224,692 $ 956 $ — $ 223,736 65.2 %
Gross margin $ 118,603 $ 956 $ — $ 119,559 34.8 %
SG&A expenses $ 74,038 $ 734 $ 900 $ 72,404 21.1 %
Operating income $ 37,342 $ 1,690 $ 900 $ 39,932 11.6 %
Income before provision for income taxes $ 37,296 $ 1,690 $ 900 $ 39,886 11.6 %
Provision for income taxes $ 9,439 $ 428 $ 228 $ 10,095 2.9 %
Net income $ 27,857 $ 1,262 $ 672 $ 29,791 8.7 %
Diluted earnings per share $ 1.50 $ 0.07 $ 0.04 $ 1.61


1) Excluded acquisition costs represent costs incurred during the 13-week period ended May 4, 2019, related to the acquisition of City Gear, LLC and consists of amortization of inventory step-up, contingent earnout valuation update and legal, accounting and professional fees.
2) Excluded strategic realignment amounts during the 13-week period ended May 4, 2019, related to our accelerated store closure plan and consists of impairment costs net of reductions in lease liabilities related to accelerated store closures.

2220

Index

Liquidity and Capital Resources

Impact of the COVID-19 Pandemic on Liquidity

In response to the uncertain market conditions resulting from the COVID-19 pandemic early in the first quarter of Fiscal 2021, we ~~have~~ enhanced our liquidity position through the following actions:

•In March 2020, we borrowed $50.0 million, ~~under~~$25.0 million from each of our two separate $50.0 million unsecured, demand lines of ~~credit~~credit. This was done as a precautionary measure in order to increase our cash position and preserve financial ~~flexibility;~~flexibility.

•In April 2020, we ~~converted~~replaced these two lines of credit ~~into~~with a single $75.0 million secured line of credit with a one-year ~~term;~~term and continued to have $50.0 million in outstanding borrowings. In June 2020, the term of the secured line of credit was extended to July 2021. The outstanding $50.0 million balance was subsequently paid off during the second quarter of Fiscal 2021.

•We worked with merchandise and non-merchandise vendors to extend ~~terms; and~~payment terms temporarily through the end of May 2020.

•We ~~temporarily suspended~~negotiated rent deferrals with landlords at select locations.

As the result of strong sales beginning in the second quarter of Fiscal 2021, our ~~stock repurchase program.~~liquidity position improved significantly. We ended the first quarter of Fiscal 2022 with $270.9 million of available cash and cash equivalents on the unaudited condensed consolidated balance sheet. As of May 1, 2021, we had no debt outstanding and full availability under our $75.0 million secured credit facility.

Inventory at the end of the first quarter of Fiscal 2022 was $182.4 million, a 24.6% decrease compared to the prior year first quarter. The continuing strength of sales in both brick and mortar and e-commerce channels coupled with ongoing supply chain constraints were the main drivers of the lower inventory levels.

Analysis of Cash Flows

Our capital requirements relate primarily to new store openings, relocations, and remodels, stock repurchases, investments in facilities, and systems to support company growth and working capital requirements. Our working capital requirements are somewhat seasonal in nature and typically reach their peak near the end of the third and the beginning of the fourth quarters of our fiscal year. Historically, we have funded our cash requirements primarily through our cash flow from operations and occasionally from borrowings under our credit facilities. We use excess cash to offset bank fees and may invest in interest-bearing securities and money market accounts ~~as well as to offset bank fees.~~at management's discretion.

Our unaudited condensed consolidated statements of cash flows are summarized as follows (in thousands):


		13-Weeks Ended							13-Weeks Ended
		May 2, 2020		May 4, 2019			May 1, 2021		May 2, 2020
Net cash provided by operating activities	Net cash provided by operating activities	$	3,882	$	72,058	Net cash provided by operating activities	$	108,360	$	3,882
Net cash used in investing activities	Net cash used in investing activities	(3,447)		(2,523)		Net cash used in investing activities	(6,931)		(3,447)
Net cash provided by (used in) financing activities		39,692		(14,328)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(39,867)		39,692
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	$	40,127	$	55,207	Net increase in cash and cash equivalents	$	61,562	$	40,127

Operating Activities.

Cash flow from operations is seasonal in our business. Typically, we use cash flow from operations to increase inventory in advance of peak selling seasons, such as winter holidays, the spring sales period, and late summer back-to-school ~~shopping.~~shopping season. Inventory levels are reduced in connection with higher sales during the peak selling seasons and this inventory reduction, combined with proportionately higher net income, typically produces a positive cash flow.

Net cash provided by operating activities was ~~$3.9~~$108.4 million for the 13-weeks ended May ~~2, 2020~~1, 2021, compared with net cash provided by operating activities of ~~$72.1~~$3.9 million for the 13-weeks ended May ~~4, 2019.~~2, 2020. Operating activities consist primarily of net income adjusted for certain non-cash items and changes in operating assets and liabilities. Adjustments to net income for non-cash items include depreciation and amortization, valuation of the contingent City Gear earnout liability, impairments,

Index

deferred income taxes, ~~amortization of inventory step-up valuation from the City Gear opening balance sheet,~~ and stock-based compensation. Net cash provided by operating activities for May ~~2, 2020~~1, 2021 and May ~~4, 2019~~2, 2020 was impacted by the following:

•Net income provided cash of $84.8 million and used cash of $15.3 ~~million and provided cash of $27.9~~ million during the 13-weeks ended May ~~2, 2020~~1, 2021 and ~~May 4, 2019, respectively.~~

•~~Net inventories decreased $46.0 million and $30.8 million during the 13-weeks ended~~ May 2, 2020, ~~and May 4, 2019,~~ respectively. ~~Inventory levels typically decline during the first quarter, but the decrease was more pronounced this year due to aggressive inventory management in response to the COVID-19 pandemic.~~

•The change in accounts payable used cash of $33.5 million and $1.5 million during the 13-weeks ended May 2, 2020 and May 4, 2019, respectively. The current year impact was impacted by the significant reduction in inventory receipts in the last month of the quarter.

•~~The change in other assets and liabilities is impacted by changes in income tax payable and other contract payments due to the timing of payments.~~

•Non-cash charges included depreciation and amortization expense of ~~$6.9~~$8.1 million and ~~$7.2~~$6.9 million and stock-based compensation expense of ~~$1.2~~$2.1 million and ~~$0.5~~$1.2 million during the 13-weeks ended May ~~2, 2020~~1, 2021 and May ~~4, 2019,~~2, 2020, respectively. Depreciation expense ~~decreased~~increased due to ~~a lower~~capital expenditure investments in new stores, existing store ~~sales base.~~remodels, and supporting corporate infrastructure. Fluctuations in stock-based compensation generally result from the ~~achievement of~~variability associated with performance-based equity awards, ~~at greater or lesser than their granted level,~~ fluctuations in the price of our common stock, and ~~levels and~~the effects of forfeitures in any given period.

~~Index~~

•Other non-cash adjustments to net income for the 13-weeks ended May 2, 2020, included $32.6 million of asset impairment charges ~~of intangible assets~~with the largest impact resulting from a significant temporary decrease in the market valuation of the Company ~~during~~at the onset of the COVID-19 pandemic, partially offset by an $11.0 million change in the valuation of the contingent earnout related to the City ~~Gear.~~Gear acquisition.

•Net inventories decreased $19.7 million and $46.0 million during the 13-weeks ended May 1, 2021 and May 2, 2020, respectively. Inventory levels typically decline during the first half of the year, but the decreases have been more pronounced over the last two years due to a significant increase in sales volume and constraints within the supply chain.

•The change in receivables in the 13-weeks ended May 2, 2020, of $11.9 million resulted primarily from employee retention credits under the Coronavirus Aid, Relief, and Economic Security Act ("CARES ~~Act~~Act") and an increase in receivables related to strong e-commerce sales.

•The change in accounts payable used cash of $2.7 million and $33.5 million during the 13-weeks ended May 1, 2021 and May 2, 2020, respectively. This change is due mainly to the timing of payments in relation to inventory receipts.

•The change in income tax payable, net, provided cash of $22.8 million and used cash of $4.5 million during the 13-weeks ended May 1, 2021 and May 2, 2020, respectively. This change is impacted by the timing of estimated tax payments that are determined based on projected annual taxable income. The taxable income projection in the current year is based on strong financial results versus last year, which was significantly impacted by the uncertainty of the COVID-19 pandemic.

Additionally, we paid $15.0 million during the 13-weeks ended May 1, 2021, to the former members and warrant holders of City Gear for achievement of previously defined financial goals in the second-year post acquisition. Of this amount, $13.8 million was reflected as operating activities and $1.2 million was reflected as financing activities, which represents the fair value of the long-term portion of the contingent earnout booked through the purchase price allocation.

Investing Activities.

Net cash used in investing activities in the 13-weeks ended May ~~2, 2020~~1, 2021, totaled ~~$3.4~~$6.9 million compared with net cash used in investing activities of ~~$2.5~~$3.4 million in the 13-weeks ended May ~~4, 2019.~~2, 2020. Capital expenditures used ~~$4.1 million of cash in the13-weeks ended May 2, 2020 versus $2.5~~$7.0 million of cash in the 13-weeks ended May ~~4, 2019.~~1, 2021, versus $4.1 million of cash in the 13-weeks ended May 2, 2020. Capital expenditures ~~were used mainly~~are primarily related to ~~open~~opening new stores, ~~remodel, expand~~remodeling, expanding or ~~relocate~~relocating existing stores, and continued investment in digital initiatives.

We opened ~~three~~six new ~~stores and rebranded two Hibbett Sports stores to City Gear~~ stores during the 13-weeks ended May ~~2, 2020,~~1, 2021, as compared to opening three new stores and rebranding two existing stores during the 13-weeks ended May ~~4, 2019.~~2, 2020.

We anticipate that our capital expenditures for the fiscal year ending January ~~30, 2021~~29, 2022 will primarily relate to expenditures for:

•the opening of new ~~stores,~~ stores;

•the remodeling, relocation, or expansion of selected existing stores;

•digital initiatives

•corporate, distribution, and information system infrastructure ~~projects, upgrades~~ and ~~security;~~enhancements; and

•other departmental needs.

Our plan for capital expenditures for Fiscal 2021 will remain flexible as we navigate through the economic impact related to COVID-19. We will assess our capital expenditure needs against our cash availability during the crisis to make the most strategic decisions for our business. We have the ability to defer or accelerate much of the anticipated capital expenditure budget depending on our financial position and the needs of the business.

Financing Activities.

Net cash ~~provided by~~used in financing activities was ~~$39.7~~$39.9 million in the 13-weeks ended May ~~2, 2020~~1, 2021, compared to net cash ~~used in~~provided by financing activities of ~~$14.3~~$39.7 million in the prior year period. During the 13-weeks ended May ~~2, 2020,~~1, 2021, we had no borrowings against our credit facilities compared to net borrowings on our credit facilities ~~provided cash~~ of $50.0 ~~million compared to net repayments on our credit facilities of $9.0~~ million in the same period of the prior year. ~~We also~~In the current year's first quarter, we have repurchased ~~$9.7~~$37.3 million of our common stock under our Program. This

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compares to $9.7 million used to repurchase our common stock under our Program ~~per a 10b5-1 plan that was enacted prior to~~in the ~~COVID-19 pandemic. An additional $0.4 million was purchased from holders~~same period of ~~restricted stock unit awards to satisfy tax withholding requirements. Combined, this is an increase of $4.8 million from~~ the prior ~~year 13-weeks ended May 4, 2019.~~year. See Note 8, Stock Repurchase Activity, to the unaudited condensed consolidated financial statements for additional information.

At May ~~2, 2020,~~1, 2021, we had one secured credit facility with Regions Bank that allows for borrowings up to $75.0 million ~~and had an expiration date of April 19, 2021. On June 5, 2020, the Company and Regions Bank entered into~~("Amended Credit Facility"), which has a ~~Note Modification Agreement (Agreement) that extends the~~ maturity date of ~~the Amended Credit Facility to~~ July 18, 2021. ~~No other~~Under the provisions of the Amended Credit Facility, ~~were affected by the Agreement. Under the provisions of the facility,~~ we do not pay commitment ~~fees; however, it~~fees. The Amended Credit Facility is secured by all assets of the Company with the exception of real property. As of May ~~2, 2020,~~1, 2021, a total of ~~$25.0~~$75.0 million was available to us under the facility. See Note 5, Debt, to the unaudited condensed consolidated financial statements for additional information.

Based on our current operating plans, store forecasts, plans for the repurchase of our common stock, and expected capital expenditures, we believe that we can fund our cash needs for the foreseeable future through cash generated from operations and, if necessary, through periodic future borrowings against our ~~credit facility.~~Amended Credit Facility.

~~Off-Balance Sheet Arrangements.~~

We have not provided any financial guarantees as of May 2, 2020. All merchandise purchase obligations are cancelable. We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. We do not have any arrangements or relationships with entities that are not included in the unaudited condensed consolidated financial statements.

Quarterly and Seasonal Fluctuations

We experience seasonal fluctuations in our net sales and results of operations. We typically experience higher net sales in early spring due to spring sports and annual tax refunds, late summer due to back-to-school shopping and winter due to holiday shopping. In addition, our quarterly results of operations may fluctuate significantly as a result of a variety of factors, including

~~Index~~

unseasonal weather ~~fluctuations,~~patterns, the timing of high demand footwear launches, demand for merchandise driven by local interest in sporting events, back-to-school sales, and the timing of sales tax holidays and annual income tax refunds. The COVID-19 pandemic has negatively impacted youth and high school team sports and has resulted in some shifts of normal seasonal patterns during the periods presented.

Although our operations are influenced by general economic conditions, we do not believe that, historically, inflation has had a material impact on our results of operations as we are generally able to pass along inflationary increases in costs to our customers.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Investment and Credit Availability Risk

We manage cash and cash equivalents in various institutions at levels beyond federally insured limits per institution, and we purchase investments not guaranteed by the FDIC. Accordingly, there is a risk that we will not recover the full principal of our investments or that their liquidity may be diminished. In an attempt to mitigate this risk, our investment policy emphasizes preservation of principal and liquidity.

~~We also have a financial institution that~~Additionally, Regions Bank is committed to provide loans under our ~~credit facility.~~Amended Credit Facility. There is a risk that ~~this institution~~Regions Bank cannot deliver against these obligations. For a further discussion of this risk and risks related to our deposits, see “Risk Factors” in our ~~Form 10-K for the fiscal year ended February 1, 2020.~~2021 Annual Report.

Interest Rate Risk

Our exposure to market risks results primarily from fluctuations in interest rates. There have been no material changes to our exposure to market risks from those disclosed in our 2021 Annual ~~Report on Form 10-K for the fiscal year ended February 1, 2020 filed with the Securities and Exchange Commission on April 16, 2020.~~Report.

Borrowing under the Amended Credit Facility uses the London Interbank Offering Rate (LIBOR) as a benchmark for establishing the interest rate. LIBOR has been the subject of recent national, international, and other regulatory guidance and proposals for reform, and the financial industry is currently transitioning away from LIBOR as a benchmark for the interbank lending market. Due to the short-term nature of our current secured credit facility, the potential transition away from LIBOR does not impact us.

ITEM ~~4.Controls~~4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of May ~~2, 2020.~~1, 2021. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were designed and functioning effectively to provide reasonable assurance that the information required to be disclosed in our Securities Exchange Act reports is recorded, processed,

Index

summarized and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting.

We have not identified any changes in our internal control over financial reporting that occurred during the period ended May ~~2, 2020,~~1, 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

~~We are a party~~Information relating to ~~various~~material legal proceedings ~~incidental~~is set forth in Note 9, Commitments and Contingencies, to our ~~business. Where we are able to reasonably estimate an amount of probable loss~~unaudited condensed consolidated financial statements included elsewhere in ~~these matters based~~this Quarterly Report on known facts, we have accrued that amount as a liability on our balance sheet. We are not able to reasonably estimate the possible loss or range of loss in excess of the amount accrued for these proceedings based on the information currently available to us, including, among others, (i) uncertainties as to the outcome of pending proceedings (including motionsForm 10-Q and appeals) and (ii) uncertainties as to the likelihood of settlement and the outcome of any negotiations with respect thereto. We do not believe that any of these matters will, individually or in the aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that one or more of these proceedings will not have a

~~Index~~is incorporated herein by reference.

~~material effect on our results of operations for the period in which they are resolved. No material amounts were accrued at May 2, 2020, February 1, 2020 or May 4, 2019.~~

ITEM 1A. Risk Factors.

We operate in an environment that involves a number of risks and uncertainties which are described in our ~~Form 10-K for the year ended February 1, 2020.~~2021 Annual Report. If any of the risks described in our ~~Fiscal 2020 Form 10-K~~2021 Annual Report were to actually occur, our business, results of operations, and financial results could be adversely affected. There were no material changes to the risk factors disclosed in our ~~Form 10-K for the fiscal year ended February 1, 2020, except as the supplemental information set forth below.~~2021 Annual Report.

The continuing impacts of the COVID-19 pandemic are highly unpredictable, volatile, and uncertain, and could continue to adversely affect our business operations, demand for our products and services, our costs of doing business, availability of labor, access to inventory, supply chain operations, our ability to predict future performance, our exposure to litigation, and our financial performance, among other things.

The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty, and volatility, all of which have impacted and may continue to adversely impact our business, results of operations, liquidity, cash flow and financial condition. While we have taken numerous steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful.

Due to numerous uncertainties and factors beyond our control, we are unable to predict the impact that COVID-19 will have going forward on our business, results of operations, liquidity, cash flows, and financial condition. These factors and uncertainties include, but are not limited to:

•the severity and duration of the pandemic, including whether there is a “second wave” or other additional periods of increases or spikes in the number of COVID-19 cases in future periods in the communities or states we operate;

•~~the rapidly changing and fluid circumstances caused by the pandemic and our ability to respond quickly enough or appropriately to those circumstances;~~

•the duration and degree of governmental, business or other actions in response to the pandemic, including but not limited to quarantine or shelter-in-place measures; restrictions on our operations up to and including complete or partial closure of our stores and distribution centers; economic measures; access to unemployment compensation; fiscal policy changes; or additional measures that may yet be effected;

•~~the health of, and effect of, the pandemic on our team members and our ability to maintain staffing needs to effectively operate our business;~~

•~~evolving macroeconomic factors, including general economic uncertainty, unemployment rates, and recessionary pressures;~~

•~~our ability to enter into rent deferral arrangements with our landlords;~~

•our ability to move existing inventory, including potentially having to sell existing inventory at a discount or write-down of value of inventory, and the costs and expenses of updating and replacing inventory;

•~~our ability to attract customers to our stores when, or if, they reopen, given the risks, or perceived risks, of gathering in public places;~~

•~~the impact of the pandemic and related economic uncertainty on consumer confidence, economic well-being, spending, and shopping behaviors, both during and after the crisis;~~

•~~impacts – financial, operational or otherwise – on our supply chain, including manufacturers or suppliers of our products and logistics or transportation providers;~~

•unknown consequences on our business performance and strategic initiatives stemming from the substantial investment of time and other resources to the pandemic response, including potential delays in or adjustments to our strategic investments;

•~~the incremental costs of doing business during and/or after the crisis;~~

•~~volatility in the credit and financial markets during and after the pandemic;~~

•~~the potential effects on our internal control environment and data security as a result of changes to a remote work environment;~~

•~~the impact of regulatory and judicial changes in liability for workers compensation;~~

•~~potential increases in insurance premiums, medical claims costs, and workers’ compensation claim costs;~~

•~~the availability of, and prevalence of access to, effective medical treatments and vaccines for COVID-19;~~

•~~the impact of litigation or claims from customers, team members, suppliers, regulators or other third parties relating to COVID-19 or our actions in response thereto;~~

•~~the pace of recovery when the pandemic subsides; and~~

•~~the long-term impact of the pandemic on our business.~~

~~Index~~

The above factors and uncertainties, or others of which we are not currently aware, may result in additional adverse impacts to our business, results of operations, cash flows, and financial condition.

~~In addition to the factors above, the COVID-19 pandemic has subjected our business to a number of risks, including, but not limited to those discussed below:~~

~~Team Member and Customer Safety-Related Risks~~. In response to the COVID-19 pandemic, we have taken a number of actions across our business to help protect our team members, customers, and others in the communities we serve. These measures include, among other things, adjusted store hours; remote working opportunities for our store support center, increased cleaning and sanitizing measures; limits on customer traffic in stores to maintain physical and social distancing protocols; other physical and social distancing efforts such as markings on floors, signage and plexiglass shields; providing masks to team members in stores, store support center and distribution centers; offering curbside pick-up from stores; and instituting contactless payment in all stores.

We have also taken other steps to support our team members, including expanding our paid time off policy to help alleviate some of the challenges our team members are facing as a result of COVID-19 and expanding health care benefits. The actions that we have taken in response to the pandemic have resulted in incremental costs, and we expect that we will continue to incur additional costs due to the pandemic going forward, which in turn will have an adverse impact on our results of operations.

The health and safety of our team members and customers are of primary concern to our management team. However, due to the unpredictable nature of COVID-19 and the consequences of our actions, we may see unexpected outcomes from our added safety measures. For example, if we do not respond appropriately to the pandemic, or if our customers do not participate in social distancing and other safety measures, the well-being of our team members and customers could be at risk. Furthermore, any failure to appropriately respond, or the perception of an inadequate response, could cause reputational harm to our brand and/or subject us to claims and litigation from team members, customers, suppliers, regulators or other third parties. Additionally, a future outbreak of confirmed cases of COVID-19 in our stores, store support center or distribution centers could result in temporary or sustained workforce shortages or facility closures, which would negatively impact our business and results of operations.

Additionally, some jurisdictions have taken measures intended to expand the availability of workers compensation or to change the presumptions applicable to workers compensation measures. These actions may increase our exposure to workers compensation claims and increase our cost of insurance.

~~Information Technology-Related Risks~~. As a result of the pandemic and related quarantines, shelter-in-place orders, and similar restrictions, we have experienced increased demand for online purchases of products. While we have managed this increased volume to date without interruption, there are no assurances that we will continue to be able to do so. We have also had to rapidly modify certain technology to support our interconnected offerings in connection with the pandemic, such as the addition of curbside pick-up. Disruptions, failures or other performance issues with our customer-facing technology systems, either due to the increased volume or other factors, could impair the benefits they provide, adversely impact our sales, and negatively affect our relationship with our customers. In addition, as more business activities have shifted online due to COVID-19 restrictions, and as many of our store support team members are working remotely, we face an increased risk due potential failure of internal or external information technology infrastructure as well as increased cybersecurity threats and attempts to breach our security networks.

~~Supply Chain-Related Risks~~. Circumstances related to the COVID-19 pandemic have significantly impacted the global supply chain, particularly those products that are sourced from China, with restrictions and limitations on business activities causing disruption and delay. These disruptions and delays, which may expand depending on the progression of the pandemic, are placing strain on the domestic and international supply chain, which has affected and could continue to negatively affect the flow or availability of certain products. Customer demand for certain products has also fluctuated as the pandemic has progressed and customer behaviors have changed, which has challenged our ability to anticipate and/or adjust inventory levels to meet that demand. These factors have challenged our management of inventory positions as well as some delays in delivering products to our distribution centers, stores or customers. Increased demand for online purchases of products has impacted our fulfillment operations and, if it continues, could result in delays in delivering products to customers. The operation of our distribution centers and stores as fulfillment centers is crucial to our business operations.

If our distribution centers or significant number of stores experience closures or labor shortages, whether temporary or sustained, we could face adverse impacts related to the flow or availability of products to our stores and customers. Any of these circumstances could impair our ability to meet customer demand for products and result in lost sales, increased supply chain costs, or damage to our reputation.

~~Index~~

~~Financial and Liquidity Risks~~. In an effort to strengthen our liquidity position while navigating the COVID-19 pandemic, we took proactive steps during the first quarter of Fiscal 2021, including suspending our share repurchase program, converting two unsecured, demand lines of credit into a single secured line of credit with a one-year term, working with merchandise and non-merchandise vendors to extend terms, ramping up inventory allocation systems and distribution infrastructure to support increased online demand and managing the flow of goods in collaboration with our vendor partners, resulting in a decrease in year-over-year inventory and an inventory balance that remained in line with demand.

Additionally, changes in our capital allocation strategy could have adverse impacts, both short- and long-term, on our results of operations and financial position. Temporary suspension of our share repurchase program impacts our earnings per share and return on invested capital, which in turn could adversely impact our stock price.

To the extent the COVID-19 pandemic continues to adversely affect the U.S. and global economy and/or adversely affect our business, results of operations, cash flows, or financial condition, it may also have the effect of heightening other risks described in the “Risk Factors” section in our Fiscal 2020 Form 10-K, including but not limited to those related to consumer behavior and expectations, competition, brand reputation, implementation of strategic initiatives, cybersecurity threats, technology systems disruption, supply chain disruptions, labor availability and cost, litigation, and regulatory requirements.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table presents our stock repurchase activity for the 13-weeks ended May ~~2, 2020:~~1, 2021:

Period
Total Number
of Shares
Purchased
Average
Price Paid per
Share
Total Number of
Shares Purchased
as Part of Publicly
Announced
Programs⁽¹⁾
Approximate Dollar
Value of Shares that
may yet be Purchased
Under the Programs (in
thousands)
February 2, 2020 to February 29, 2020 373,423 $ 23.24 373,423 $ 144,385
March 1, 2020 to April 4, 2020 85,490 $ 17.46 54,595 $ 143,316
April 5, 2020 to May 2, 2020 — $ — — $ 143,316
Total 458,913 $ 22.17 428,018 $ 143,316


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs(1)	Approximate Dollar Value of Shares that may yet be Purchased Under the Programs (in thousands)
January 31, 2021 to February 27, 2021	—	$	—	—	$	136,347
February 28, 2021 to April 3, 2021	408,490	$	68.41	383,178	$	110,117
April 4, 2021 to May 1, 2021	173,913	$	70.23	158,105	$	99,032
Total	582,403	$	68.96	541,283	$	99,032

(1)In November 2018, ~~the~~our Board of Directors authorized the extension of our ~~Program of~~ $300.0 million ~~to repurchase our common stock~~Program through January 29, ~~2022 that replaced~~2022. Subsequent to May 1, 2021, our Board of Directors authorized an ~~existing authorization.~~expansion of the Program by $500.0 million to $800.0 million and extended the date through February 1, 2025. The Company may repurchase shares on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act. The timing and amount of stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate and regulatory considerations. The Program may be suspended, modified or discontinued at any time and the Company has no obligation to repurchase any amount of its common stock under the Program. See Note 8, Stock Repurchase Activity, and Note 12, Subsequent Events, to the unaudited condensed consolidated financial ~~statements.~~statements for additional information.

~~Item 5. Other Information.~~

On June 5, 2020, the Company and Regions Bank entered into a Note Modification Agreement (Agreement) that extends the maturity date of the Amended Credit Facility from April 19, 2021 to July 18, 2021. No other provisions of the Amended Credit Facility disclosed in Note 5, ~~Debt, were affected.~~

The foregoing summary of the Agreement contained in this Part II, Item 5 of the Company’s Quarterly Report on Form 10-Q does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agreement, a copy of which is attached hereto as Exhibit 10.4 and incorporated herein by reference.

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Index

ITEM 6. Exhibits.

The following exhibits are being filed or furnished as part of this Quarterly Report on Form 10-Q:


Exhibit No.		Description
		Certificate of Incorporation and By-Laws
3.1		Certificate of Incorporation of the Registrant; incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 31, 2012.
3.2		Bylaws of the Registrant, as amended; incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on ~~June 1, 2020.~~May 28, 2021.

		Form of Stock Certificate
4.1		Form of Stock Certificate; incorporated herein by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 26, 2007.

		Material Agreements
~~10.1~~	†	Separation Agreement and Release, between Hibbett Sports, Inc. and Cathy Pryor, effective April 1, 2020; incorporated herein by reference to Exhibit 10.26 of the Registrant’s Form 10-K filed with the Securities and Exchange Commission on April 16, 2020.
~~10.2~~		~~Second Amended and Restated Note with Regions Bank; incorporated herein by reference to Exhibit 10.27 of the Registrant's Form 10-K filed with the Securities and Exchange Commission on April 16, 2020.~~
~~10.3~~	†	Hibbett Sports, Inc. Amended and Restated 2015 Equity Incentive Plan; incorporated herein by reference to Exhibit 99.1 of the Registrant’s Registration Statement on Form S-8 (File No .333-238767) filed with the Securities and Exchange Commission on May 29, 2020.
~~10.4~~	*	~~Note Modification Agreement with Regions Bank (filed herewith).~~None.

		Certifications
31.1	*	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2	*	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.1	*	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

		Interactive Data Files
101.INS	*	Inline XBRL Instance Document
101.SCH	*	Inline XBRL Taxonomy Extension Schema Document
101.CAL	*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	*	The ~~following financial information from~~cover page for the Registrant's Quarterly Report on Form 10-Q for the ~~fiscal~~ quarter ended May ~~2, 2020,~~1, 2021, has been formatted in XBRL (eXtensible Business Reporting Language) and submitted electronically herewith: (i) the Unaudited Condensed Consolidated Balance Sheets at May 2, 2020, February 1, 2020 and May 4, 2019; (ii) the Unaudited Condensed Consolidated Statements of Operations for the 13-weeks ended May 2, 2020 and May 4, 2019; (iii) the Unaudited Condensed Consolidated Statements of Cash Flows for the 13-weeks ended May 2, 2020 and May 4, 2019; (iv) the Unaudited Condensed Consolidated Statements of Stockholders Investment for the 13-weeks ended May 2, 2020 and May 4, 2019; and (v) the Notes to Unaudited Condensed Consolidated Financial Statements.

~~101.INS~~	*	~~XBRL Instance Document~~
~~101.SCH~~	*	~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~	*	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~	*	~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~	*	~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~	*	~~XBRL Taxonomy Extension Presentation Linkbase Document~~
		Inline XBRL.
	*	Filed Within
	†	~~Management Contract or Compensatory Plan or Arrangement~~

2925

Index

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HIBBETT SPORTS, INC.

Date:

June ~~8, 2020~~7, 2021

By:

/s/ Robert Volke

Robert Volke

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

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