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 1, 2021~~April 30, 2022


☐			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 ~~4, 2021,~~2, 2022, were ~~16,012,057~~12,934,980 shares.

HIBBETT, ~~SPORTS,~~ INC.

INDEX

Index

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 May 1,
2021 January 30,
2021 May 2,
2020
Current assets:
Cash and cash equivalents $ 270,852 $ 209,290 $ 106,205
Receivables, net 14,445 11,905 20,003
Inventories, net 182,371 202,038 241,984
Other current assets 7,388 16,567 12,302
Total current assets 475,056 439,800 380,494
Property and equipment, net 107,501 107,159 97,771
Operating right-of-use assets 215,804 216,224 219,436
Finance right-of-use assets, net 3,092 3,285 2,548
Tradename intangible asset 23,500 23,500 23,500
Deferred income taxes, net 12,264 14,625 11,429
Other assets, net 3,542 3,573 3,391
Total assets $ 840,759 $ 808,166 $ 738,569
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable $ 105,888 $ 107,215 $ 98,149
Operating lease obligations 58,875 58,613 66,791
Credit facility 0 0 50,000
Finance lease obligations 977 956 876
Accrued payroll expenses 14,341 29,948 6,359
Other accrued expenses 30,403 28,588 21,473
Total current liabilities 210,484 225,320 243,648
Operating lease obligations 185,326 186,133 185,035
Finance lease obligations 2,381 2,599 1,994
Unrecognized tax benefits 711 725 954
Other liabilities 2,391 2,353 2,371
Total liabilities 401,293 417,130 434,002
Stockholders' investment:
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, 39,559,008, 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 198,356 194,534 190,260
Retained earnings 943,718 858,951 769,315
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 439,466 391,036 304,567
Total liabilities and stockholders' investment $ 840,759 $ 808,166 $ 738,569


ASSETS	April 30, 2022		January 29, 2022		May 1, 2021
Current assets:
Cash and cash equivalents	$	23,221	$	17,054	$	270,852
Receivables, net	13,877		13,607		14,445
Inventories, net	314,861		221,219		182,371
Other current assets	16,579		25,134		7,388
Total current assets	368,538		277,014		475,056

Property and equipment, net	153,993		145,967		107,501
Operating right-of-use assets	250,522		243,751		215,804
Finance right-of-use assets, net	2,348		2,186		3,092

Tradename intangible asset	23,500		23,500		23,500
Deferred income taxes, net	3,236		7,187		12,264
Other assets, net	3,477		3,612		3,542
Total assets	$	805,614	$	703,217	$	840,759

LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable	$	164,294	$	85,647	$	105,888
Operating lease obligations	65,054		68,521		58,875
Credit facility	20,415		—		—
Finance lease obligations	1,034		975		977
Accrued payroll expenses	9,730		26,320		14,341
Other accrued expenses	15,271		13,401		30,403
Total current liabilities	275,798		194,864		210,484
Operating lease obligations	219,296		212,349		185,326
Finance lease obligations	1,516		1,427		2,381
Unrecognized tax benefits	542		546		711
Other liabilities	2,356		2,516		2,391
Total liabilities	499,508		411,702		401,293

Stockholders' investment:

Common stock, 39,779,841, 39,611,163 and 39,559,008 shares issued, respectively	398		396		395
Paid-in capital	205,720		202,729		198,356
Retained earnings	1,058,383		1,022,317		943,718
Treasury stock, at cost; 26,855,158, 26,317,947 and 23,483,504 shares repurchased, respectively	(958,395)		(933,927)		(703,003)
Total stockholders' investment	306,106		291,515		439,466
Total liabilities and stockholders' investment	$	805,614	$	703,217	$	840,759

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								13-Weeks Ended
		May 1, 2021				May 2, 2020					April 30, 2022				May 1, 2021
				% to Sales				% to Sales							% to Sales				% to Sales
Net sales	Net sales	$	506,861			$	269,837					Net sales	$	424,051			$	506,861
Cost of goods sold	Cost of goods sold	296,898		58.6	%	195,690		72.5	%			Cost of goods sold	267,218		63.0	%	296,898		58.6	%
Gross margin	Gross margin	209,963		41.4	%	74,147		27.5	%			Gross margin	156,833		37.0	%	209,963		41.4	%
Store operating, selling, and administrative expenses		91,739		18.1	%	69,673		25.8	%
Goodwill impairment		0		0	%	19,661		7.3	%
Store operating, selling and administrative expenses												Store operating, selling and administrative expenses	95,596		22.5	%	91,739		18.1	%

Depreciation and amortization	Depreciation and amortization	8,074		1.6	%	6,870		2.5	%			Depreciation and amortization	10,518		2.5	%	8,074		1.6	%
Operating income (loss)		110,150		21.7	%	(22,057)		(8.2)	%
Operating income												Operating income	50,719		12.0	%	110,150		21.7	%
Interest expense, net	Interest expense, net	99		0	%	170		0.1	%			Interest expense, net	72		—	%	99		—	%
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)	%
Income before provision for income taxes												Income before provision for income taxes	50,647		11.9	%	110,051		21.7	%
Provision for income taxes												Provision for income taxes	11,300		2.7	%	25,285		5.0	%
Net income												Net income	$	39,347	9.3	%	$	84,766	16.7	%

Basic earnings (loss) per share		$	5.19			$	(0.92)
Diluted earnings (loss) per share		$	5.00			$	(0.92)
Basic earnings per share												Basic earnings per share	$	2.98			$	5.19
Diluted earnings per share												Diluted earnings per share	$	2.89			$	5.00

Weighted-average shares:	Weighted-average shares:											Weighted-average shares:
Basic	Basic	16,325				16,546						Basic	13,224				16,325
Diluted	Diluted	16,966				16,546						Diluted	13,612				16,966

Percentages may not foot due to rounding.

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 1, 2021		May 2, 2020			April 30, 2022		May 1, 2021
Cash Flows From Operating Activities:	Cash Flows From Operating Activities:					Cash Flows From Operating Activities:
Net income (loss)		$	84,766	$	(15,287)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income						Net income	$	39,347	$	84,766
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	8,074		6,870		Depreciation and amortization	10,518		8,074
Stock-based compensation	Stock-based compensation	2,053		1,217		Stock-based compensation	2,455		2,053
Impairment charges	Impairment charges	347		32,648		Impairment charges	—		347
Contingent earnout, net	Contingent earnout, net	(13,761)		(10,980)		Contingent earnout, net	—		(13,761)
Other non-cash adjustments	Other non-cash adjustments	1,796		(2,914)		Other non-cash adjustments	3,867		1,796
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Inventories, net	Inventories, net	19,667		46,027		Inventories, net	(93,642)		19,667
Receivables, net	Receivables, net	(2,586)		(11,866)		Receivables, net	(270)		(2,586)
Accounts payable	Accounts payable	(2,683)		(33,513)		Accounts payable	76,263		(2,683)
Income tax payable, net	Income tax payable, net	22,755		(4,506)		Income tax payable, net	6,401		22,755
Other assets and liabilities	Other assets and liabilities	(12,068)		(3,814)		Other assets and liabilities	(16,117)		(12,068)
Net cash provided by operating activities	Net cash provided by operating activities	108,360		3,882		Net cash provided by operating activities	28,822		108,360

Cash Flows From Investing Activities:	Cash Flows From Investing Activities:					Cash Flows From Investing Activities:
Capital expenditures	Capital expenditures	(7,033)		(4,059)		Capital expenditures	(15,975)		(7,033)
Other, net	Other, net	102		612		Other, net	361		102
Net cash used in investing activities	Net cash used in investing activities	(6,931)		(3,447)		Net cash used in investing activities	(15,614)		(6,931)

Cash Flows From Financing Activities:	Cash Flows From Financing Activities:					Cash Flows From Financing Activities:
Proceeds under credit facilities	Proceeds under credit facilities	0		117,535		Proceeds under credit facilities	126,216		—
Repayments under credit facilities	Repayments under credit facilities	0		(67,535)		Repayments under credit facilities	(105,801)		—
Stock repurchases	Stock repurchases	(37,314)		(9,748)		Stock repurchases	(22,399)		(37,314)
Cash used for contingent earnout	Cash used for contingent earnout	(1,239)		0		Cash used for contingent earnout	—		(1,239)
Cash dividends paid to stockholders						Cash dividends paid to stockholders	(3,277)		—
Payments of finance lease obligations	Payments of finance lease obligations	(240)		(301)		Payments of finance lease obligations	(249)		(240)
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	1,772		165		Proceeds from options exercised and purchase of shares under the employee stock purchase plan	538		1,772
Other, net	Other, net	(2,846)		(424)		Other, net	(2,069)		(2,846)
Net cash (used in) provided by financing activities		(39,867)		39,692
Net cash used in financing activities						Net cash used in financing activities	(7,041)		(39,867)

Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	61,562		40,127		Net increase in cash and cash equivalents	6,167		61,562
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	209,290		66,078		Cash and cash equivalents, beginning of period	17,054		209,290
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	270,852	$	106,205	Cash and cash equivalents, end of period	$	23,221	$	270,852

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT, ~~SPORTS,~~ INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders' Investment

(in thousands)


13-Weeks Ended May 1, 2021
13-Weeks Ended April 30, 2022														13-Weeks Ended April 30, 2022
		Common Stock							Treasury Stock						Common Stock							Treasury Stock
		Number of Shares	Amount		Paid-In Capital		Retained Earnings		Number of Shares	Amount		Total Stockholders' Investment			Shares	Amount		Paid-In Capital		Retained Earnings		Shares	Amount		Total Stockholders' Investment
Balance - January 30, 2021		39,380	$	394	$	194,534	$	858,951	22,901	$	(662,843)	$	391,036
Balance - January 29, 2022														Balance - January 29, 2022	39,611	$	396	$	202,729	$	1,022,317	26,318	$	(933,927)	$	291,515
Net income	Net income	—	—		—		84,766		—	—		84,766		Net income	—	—		—		39,347		—	—		39,347
Issuance of shares through the Company's equity plans	Issuance of shares through the Company's equity plans	179	1		1,769		—		—	—		1,770		Issuance of shares through the Company's equity plans	169	2		536		—		—	—		538
Purchase of shares under the stock repurchase program	Purchase of shares under the stock repurchase program	—	—		—		—		541	(37,314)		(37,314)		Purchase of shares under the stock repurchase program	—	—		—		—		491	(22,399)		(22,399)
Settlement of net share equity awards	Settlement of net share equity awards	—	—		—		—		41	(2,846)		(2,846)		Settlement of net share equity awards	—	—		—		—		46	(2,069)		(2,069)
Cash dividends declared, $0.25 per common share														Cash dividends declared, $0.25 per common share	—	—		—		(3,280)		—	—		(3,280)
Stock-based compensation	Stock-based compensation	—	—		2,053		—		—	—		2,053		Stock-based compensation	—	—		2,455		—		—	—		2,455
Balance - May 1, 2021		39,559	$	395	$	198,356	$	943,718	23,484	$	(703,003)	$	439,466
Balance - April 30, 2022														Balance - April 30, 2022	39,780	$	398	$	205,720	$	1,058,383	26,855	$	(958,395)	$	306,106

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

~~Note:~~


13-Weeks Ended May 1, 2021
	Common Stock							Treasury Stock
	Shares	Amount		Paid-In Capital		Retained Earnings		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

Columns may not foot due to rounding.

~~(1) Adoption of Accounting Standards Update ("ASU") No. 2016-13, Topic 326,~~ ~~Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. See Note 2,~~ ~~Recent Accounting Pronouncements, in our Annual Report on Form 10-K filed on April 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 Critical 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 January ~~30, 2021,~~29, 2022, which has been derived from audited financial statements) have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("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,” 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 January ~~30, 2021~~29, 2022, filed on ~~April 7, 2021 ("2021~~March 25, 2022 (the "2022 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 the ~~2021~~2022 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.

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 periods presented.

Property and Equipment

Property and equipment are recorded at cost. Finance lease assets are shown as right-of-use ("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 consist of the following (in thousands):


		May 1, 2021		January 30, 2021		May 2, 2020			April 30, 2022		January 29, 2022		May 1, 2021
Land	Land	$	7,277	$	7,277	$	7,277	Land	$	7,277	$	7,277	$	7,277
Buildings	Buildings	21,607		21,505		21,635		Buildings	22,271		22,247		21,607
Equipment	Equipment	106,633		104,431		96,606		Equipment	122,927		119,505		106,633
Furniture and fixtures	Furniture and fixtures	42,369		42,448		36,931		Furniture and fixtures	63,081		59,137		42,369
Leasehold improvements	Leasehold improvements	112,741		109,220		103,642		Leasehold improvements	144,515		137,279		112,741
Construction in progress	Construction in progress	1,901		1,470		603		Construction in progress	6,449		4,086		1,901
Total property and equipment	Total property and equipment	292,528		286,351		266,694		Total property and equipment	366,520		349,531		292,528
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	185,027		179,192		168,923		Less: accumulated depreciation and amortization	212,527		203,564		185,027
Total property and equipment, net	Total property and equipment, net	$	107,501	$	107,159	$	97,771	Total property and equipment, net	$	153,993	$	145,967	$	107,501

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers, when control of the merchandise is transferred to our 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 and Customer ~~Orders, and Layaways:~~Orders: The net deferred revenue liability for gift cards and customer orders at April 30, 2022, January 29, 2022, and ~~layaways at~~ May 1, 2021 ~~January 30, 2021, and May 2, 2020~~ was ~~$10.1~~$10.8 million, ~~$8.8~~$9.6 million, and ~~$13.2~~$10.1 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

During the 13-weeks ended April 30, 2022 and May 1, 2021, ~~and May 2, 2020, $0.7 million and $0.5 million, respectively, of~~ gift card deferred revenue from prior periods was ~~realized.~~immaterial.

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 $3.8 million, $3.7 million, and $4.1 million ~~$3.4 million,~~at April 30, 2022, January 29, 2022, and ~~$2.3 million at~~ May 1, 2021, ~~January 30, 2021, and May 2, 2020,~~ 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 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 1, 2021		May 2, 2020				April 30, 2022		May 1, 2021
Footwear	Footwear	$	322,581	$	166,242		Footwear	$	263,652	$	322,581
Apparel	Apparel	131,108		79,407			Apparel	111,182		131,108
Equipment	Equipment	53,172		24,188			Equipment	49,217		53,172
Total	Total	$	506,861	$	269,837		Total	$	424,051	$	506,861

~~Goodwill and~~ Indefinite-Lived Intangible Assets

~~Goodwill and the~~The City Gear tradename ~~are~~is an indefinite-lived ~~assets~~asset which ~~are~~is 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 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 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 13-weeks ended May 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. InNaN impairment related to the tradename intangible was recognized during the 13-weeks ended April 30, 2022 or 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 statements of operations. As the entire goodwill balance was written off as May 2, 2020, there are 0 goodwill impairment impacts in the current period.1, 2021.

~~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 ASU 2019-12 on January 31, 2021, with no material impact to our consolidated financial statements.

~~Standards that are not yet adopted~~

We continuously monitor and review all current accounting pronouncements and standards from the ~~FASB~~Financial Accounting Standards Board of U.S. GAAP for applicability to our operations. As of ~~May 1, 2021,~~April 30, 2022, there were no other new pronouncements or interpretations that had or were expected to have a significant impact on our financial reporting.

3. Leases

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 for impairment), whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize. ~~An asset~~Asset group impairment ~~charge of approximately $0.5 million and $4.1 million was recognized~~charges in the 13-weeks ended April 30, 2022 and May 1, 2021, ~~and May 2, 2020, respectively.~~were immaterial.

Lease costs are as follows (in thousands):


		13-Weeks Ended				13-Weeks Ended
		May 1, 2021		May 2, 2020				April 30, 2022		May 1, 2021
Operating lease cost	Operating lease cost	$	14,882	$	17,139		Operating lease cost	$	18,259	$	14,882
Finance lease cost:	Finance lease cost:						Finance lease cost:
Amortization of assets	Amortization of assets	179		235			Amortization of assets	236		179
Interest on lease liabilities	Interest on lease liabilities	41		48			Interest on lease liabilities	28		41
Variable lease cost	Variable lease cost	5,865		(1,208)			Variable lease cost	4,459		5,865
		$	20,967	$	16,214			$	22,982	$	20,967

Finance ROU assets on the unaudited condensed consolidated balance ~~sheet~~sheets at April 30, 2022, January 29, 2022, and May 1, 2021 ~~January 30, 2021, and May 2, 2020~~ are shown net of accumulated amortization of ~~$1.9~~$2.8 million, ~~$1.7~~$2.5 million, and ~~$1.0~~$1.9 million, respectively.

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

May 1,
2021 January 30,
2021 May 2,
2020
Weighted-average remaining lease term (in years):
Operating leases 5 5 5
Finance leases 4 4 4
Weighted-average discount rate:
Operating leases 3.5 % 3.5 % 3.9 %
Finance leases 5.4 % 5.5 % 7.6 %

Index

The following table provides ~~supplemental cash flow and other information related to leases~~ROU assets obtained in exchange for lease obligations (in thousands):

13-Weeks Ended
May 1, 2021 May 2, 2020
Operating cash flows from operating leases $ 18,580 $ 19,724
Operating cash flows from finance leases $ 41 $ 48
Financing cash flows from finance leases $ 240 $ 301
ROU assets obtained in exchange for lease obligations, net:
Operating leases $ 14,631 $ 9,524
Finance leases $ 44 $ 533

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

Operating Finance Total
Remainder of Fiscal 2022 $ 49,322 $ 835 $ 50,157
Fiscal 2023 63,788 1,085 64,873
Fiscal 2024 49,667 971 50,638
Fiscal 2025 37,323 397 37,720
Fiscal 2026 26,295 302 26,597
Thereafter 40,065 42 40,107
Total minimum lease payments 266,460 3,632 270,092
Less amount representing interest 22,259 274 22,533
$ 244,201 $ 3,358 $ 247,559


	13-Weeks Ended
	April 30, 2022		May 1, 2021




ROU assets obtained in exchange for lease obligations, net:
Operating leases	$	23,534	$	14,631
Finance leases	$	397	$	44

As of ~~May 1, 2021,~~April 30, 2022, we have entered into approximately ~~$5.9~~$9.3 million of operating lease obligations related to future store locations that have not yet commenced.

4. Fair Value of Financial Instruments

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.

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 (in thousands):


		May 1, 2021						January 30, 2021						May 2, 2020							April 30, 2022						January 29, 2022						May 1, 2021
		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	$	129	$	0	$	0	$	219	$	0	$	0	$	468	$	0	$	0	Short-term investments	$	34	$	—	$	—	$	129	$	—	$	—	$	129	$	—	$	—
Long-term investments	Long-term investments	2,155		0		0		2,107		0		0		1,844		0		0		Long-term investments	2,192		—		—		2,352		—		—		2,155		—		—
Short-term contingent earnout		0		0		0		0		0		15,000		0		0		10,000
Long-term contingent earnout		0		0		0		0		0		0		0		0		77

Total investments	Total investments	$	2,284	$	0	$	0	$	2,326	$	0	$	15,000	$	2,312	$	0	$	10,077	Total investments	$	2,226	$	—	$	—	$	2,481	$	—	$	—	$	2,284	$	—	$	—

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 were achieved in Fiscal 2020 and Fiscal 2021 ("Earnout"). The total 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 was re-valued each quarter in Fiscal 2020 and Fiscal 2021 and any change in valuation was 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.

~~The table below are reconciliations of the contingent earnout balance for 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 the loan was 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 the uncertainty in the global markets resulting from the COVID-19 pandemic at that time. The proceeds from such borrowings were 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 Credit Facility") that provides for an aggregate amount of credit available to us of $75.0 million. The Amended Credit Facility superseded the Regions Bank credit agreement dated October 2018, with a maturity date of April 19, 2021, and is secured by all assets of the Company with the exception of real property. Simultaneous with the execution of the Amended Credit Facility, the $50.0 million outstanding under the previous credit agreements 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~~an amended agreement with Regions Bank that extended the maturity date of the ~~Amended Credit Facility~~then existing credit facility of $75.0 million from April 19, 2021 to July 18, 2021. ~~No other provisions of~~

On July 9, 2021, we executed a new unsecured Credit Agreement (the "2021 Credit Facility") between the ~~Amended~~Company and its subsidiaries and Regions Bank. The 2021 Credit Facility ~~were affected. We are currently in negotiations~~provided an unsecured line of credit of up to ~~replace the Amended Credit Facility.~~

~~Borrowings under the Amended~~$100.0 million. The 2021 Credit Facility ~~bear~~is effective through July 9, 2026 with an interest ~~at the~~rate of 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. 1.0% to 1.8% depending on specified leverage levels.

The ~~Amended~~2021 Credit Facility includes an annual commitment fee, payable quarterly in arrears, in an amount between 15 and 20 basis points of the unused portion of the line of credit as determined on a ~~loan fee~~daily basis, dependent on the amount of ~~$50,000 payable~~debt outstanding. In addition, the Company is subject to certain financial covenants which include:

•Advance limitation of 55% of the net book value of the Company's inventory;

•A Consolidated Lease-Adjusted Leverage Ratio comparing lease-adjusted funded debt (funded debt plus all lease

liabilities) to EBITDAR (as defined in the 2021 Credit Facility) with a maximum of 3.5x; and

•A Consolidated Fixed Coverage Charge Ratio comparing EBITDAR to fixed charges and certain current liabilities (as defined in the 2021 Credit Facility) with a minimum of 1.2x.

On April 7, 2022, we executed a First Note Modification Agreement (the "Modification Agreement") between the Company and its subsidiaries and Regions ~~Bank at~~Bank. The Modification Agreement increases the ~~maturity date or at~~line of credit specified in the ~~termination date if the agreement is terminated prior to the maturity date~~2021 Credit

108

Index

~~for any reason including due~~Facility to ~~an event~~$125.0 million. The expiration date of ~~default.~~July 9, 2026 remains unchanged. The ~~loan fee will be waived if~~financial covenants included in the ~~Amended~~2021 Credit Facility ~~is terminated due to refinancing of the loan with a new loan facility provided by Regions Bank.~~also remain unchanged.

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 net realizable value consistent with U.S. GAAP). As of ~~May 1, 2021,~~April 30, 2022, we were in compliance with ~~this covenant. The Amended~~these covenants.

In addition, on April 7, 2022, the Company executed a First Amendment to the 2021 Credit Facility ~~also restricts us from engaging in certain acquisitions~~(the “First

Amendment”) and, ~~from incurring indebtedness, other than certain customary permitted indebtedness related~~the 2021 Credit Facility, as amended by the First Amendment and the Modification Agreement, (the "Credit Facility") between the Company and its subsidiaries and Regions Bank. The First Amendment replaces LIBOR as the

benchmark rate with the Bloomberg Short-Term Bank Yield (“BSBY”) Index Rate. Pursuant to ~~business operations.~~

~~We did 0t incur any borrowings against~~ the ~~Amended~~First Amendment, the Credit Facility carries an interest rate of BSBY plus 1.0% to 1.8% depending on specified leverage levels.

There were 54 days 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~~April 30, ~~2021,~~2022, where we incurred borrowings against the ~~credit facilities~~Credit Facility for an average and maximum borrowing of ~~$43.3~~$7.7 million and ~~$50.0~~$28.7 million, respectively, and an average interest rate of ~~3.45%~~1.53%. At April 30, 2022, we had net borrowings of $20.4 million and a total of $104.6 million available to us under the Credit Facility.

There were 5821 days during the ~~13-weeks~~52-weeks ended ~~May 2, 2020,~~January 29, 2022, where we incurred borrowings against the ~~credit facilities~~2021 Credit Facility for an average and maximum borrowing of ~~$38.7~~$2.0 million and ~~$50.0~~$18.7 million, ~~respectively. The~~respectively, and an average interest rate of 1.35%.

We did not incur any borrowings during the 13-weeks ended May ~~2, 2020 was 3.22%.~~1, 2021.

6. Stock-Based Compensation

The stock-based compensation costs that have been charged against income were as follows (in thousands):


		13-Weeks Ended				13-Weeks Ended
		May 1, 2021		May 2, 2020				April 30, 2022		May 1, 2021
Stock-based compensation expense by type:	Stock-based compensation expense by type:						Stock-based compensation expense by type:
Stock options	Stock options	$	174	$	90		Stock options	$	155	$	174
Restricted stock units	Restricted stock units	1,788		1,060			Restricted stock units	2,125		1,788
Employee stock purchases	Employee stock purchases	85		44			Employee stock purchases	158		85
Director deferred compensation	Director deferred compensation	6		23			Director deferred compensation	17		6
Total stock-based compensation expense	Total stock-based compensation expense	2,053		1,217			Total stock-based compensation expense	2,455		2,053
Income tax benefit recognized	Income tax benefit recognized	479		391			Income tax benefit recognized	557		479
Stock-based compensation expense, net of income tax	Stock-based compensation expense, net of income tax	$	1,574	$	826		Stock-based compensation expense, net of income tax	$	1,898	$	1,574

Expense for restricted stock units is shown net of forfeitures ~~of approximately $0.1 million and $0.3 million~~which were immaterial for the 13-weeks ended April 30, 2022 and May 1, ~~2021 and May 2, 2020, respectively.~~ 2021.

We ~~have~~ granted the following equity awards:


		13-Weeks Ended		13-Weeks Ended
		May 1, 2021	May 2, 2020			April 30, 2022	May 1, 2021
Stock options	Stock options	4,384	27,000		Stock options	7,212	4,384
Restricted stock unit awards	Restricted stock unit awards	61,241	334,485		Restricted stock unit awards	107,848	61,241
Performance-based restricted stock unit awards	Performance-based restricted stock unit awards	22,492	0		Performance-based restricted stock unit awards	49,978	22,492
Deferred stock units	Deferred stock units	84	2,143		Deferred stock units	405	84

At ~~May 1, 2021,~~April 30, 2022, the total compensation ~~costs~~cost not yet recognized related to unvested restricted stock unit awards was ~~$10.5~~$12.5 million and the weighted-average period over which such awards are expected to be recognized is ~~2.7~~2.4 years. There were 0no unrecognized compensation costs related to unvested stock options at ~~May 1, 2021.~~April 30, 2022.

119

Index

~~During the 13-weeks ended May 1, 2021 and May 2, 2020, 4,384 and 27,000 stock options were granted, respectively.~~ The weighted-average grant date fair value of stock options granted during the 13-weeks ended April 30, 2022 and May 1, 2021 was $21.46 and ~~May 2, 2020 was~~ $39.73 ~~and $3.33~~ per share, respectively.

Under the 2012 Non-Employee Director Equity Plan, ~~("2012 Plan"), 0~~6,388 shares of our common stock were awarded during the 13-weeks ended April 30, 2022. No shares of our common stock were awarded during the 13-weeks ended May 1, ~~2021 or May 2, 2020.~~2021.

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 1, 2021		May 2, 2020				April 30, 2022		May 1, 2021
Shares purchased	Shares purchased	7,445		17,758			Shares purchased	14,273		7,445
Average price per share	Average price per share	$	39.25	$	9.29		Average price per share	$	61.14	$	39.25
Weighted-average fair value at grant date	Weighted-average fair value at grant date	$	11.45	$	4.21		Weighted-average fair value at grant date	$	18.03	$	11.45

7. Earnings Per Share

The computation of basic earnings per share ("EPS") is based on the weighted-average number of common shares outstanding during the period. The computation of diluted EPS is based on the 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 number of common shares outstanding (in thousands):

13-Weeks Ended
May 1,
2021 May 2,
2020
Weighted-average shares used in basic computations 16,325 16,546
Dilutive equity awards 641 0
Weighted-average shares used in diluted computations 16,966 16,546


	13-Weeks Ended
	April 30, 2022	May 1, 2021
Weighted-average shares used in basic computations	13,224	16,325
Dilutive equity awards	388	641
Weighted-average shares used in diluted computations	13,612	16,966

For the 13-weeks ended ~~May 1, 2021,~~April 30, 2022, we ~~did 0t exclude any~~excluded 64,888 options from the computations of diluted weighted-average common shares or common stock ~~equivalents.~~equivalents outstanding because of their anti-dilutive effect. For the 13-weeks ended May ~~2, 2020, all stock-based awards~~1, 2021, no options were excluded from the computation of diluted weighted-average common shares ~~and~~or common share ~~equivalents outstanding because of their anti-dilutive effect.~~equivalents.

We also excluded ~~55,084~~94,962 unvested stock awards granted to certain employees from the 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 ~~May 1, 2021.~~April 30, 2022. Assuming the performance-criteria had been achieved as of ~~May 1, 2021, the~~April 30, 2022, there was no incremental dilutive impact ~~would have been 50,773~~from the exclusion of these shares.

8. Stock Repurchase ~~Activity~~Program

~~In November 2018,~~On May 26, 2021, the Board of Directors ~~("Board"~~(the "Board") authorized the expansion and extension of our existing Stock Repurchase Program ("(the "Repurchase Program") ~~in the amount~~by $500.0 million to a total of ~~$300.0~~$800.0 million to repurchase our common stock through February 1, 2025. The Repurchase Program's original authorization was approved in November 2015 in the amount of $300.0 million and, prior to the Board's action, was scheduled to expire on January 29, 2022.

The number of shares repurchased under the Repurchase 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 at an 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.were as follows:

1210

Index


	13-Weeks Ended
	April 30, 2022		May 1, 2021
Common stock repurchased under the Repurchase Program	491,218		541,283
Aggregate cost of repurchases under the Repurchase Program (in thousands)	$	22,399	$	37,314
Shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements	45,993		41,120
Tax withholding requirement from holders of restricted stock unit awards (in thousands)	$	2,069	$	2,846

As of ~~May 1, 2021,~~April 30, 2022, we had approximately ~~$99.0~~$346.1 million remaining under the Repurchase Program for stock repurchases.

9. Dividends

In August 2021, the Board instituted a recurring quarterly cash dividend with the first cash dividend made on September 9, 2021. During the 13-weeks ended April 30, 2022, we paid cash dividends of $3.3 million under one declaration of $0.25 per share of common stock outstanding as of the record date.

While we currently pay a quarterly dividend of $0.25 per share and expect to pay comparable cash dividends in the future, the declaration of dividends and the establishment of the per share amount, record dates and payment dates for any future dividends are subject to the final determination of our Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as our Board deems relevant. There can be no assurance that we will continue to declare dividends in any particular amounts or at all, and changes in our dividend policy could adversely affect the market price of our common stock.

Subsequent to April 30, 2022, on May ~~1, 2021,~~25, 2022, the ~~Program was expanded and extended. See Note 12,~~ Board declared a cash dividend of $0.25 per common share, payable on June 21, 2022, to stockholders of record at the close of business on June 9, 2022. The estimated payment is expected to be $3.3 million.

~~Subsequent Events, for additional information.~~

9.10. Commitments and Contingencies

Legal Proceedings and Contingencies.

From time to time, the Company is a party to various legal matters in the ordinary course of its business, including actions by employees, consumers, suppliers, government agencies, or others. The Company has recorded accruals with respect to these matters, where appropriate, which are reflected in the Company's unaudited condensed consolidated financial statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made.

The Company believes that its pending legal matters, both individually and in the aggregate, will be resolved without a material adverse effect on the Company's consolidated financial statements as a whole. However, litigation and other legal matters involve an element of uncertainty. Adverse decisions and settlements, including any required changes to the 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 the Company's annual consolidated financial statements. No material amounts were accrued at April 30, 2022, January 29, 2022, or May 1, 2021 ~~January 30, 2021, or May 2, 2020~~ pertaining to legal proceedings or other contingencies.

~~10.~~11. 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.

Index

We apply the provisions of ASC Subtopic 740-10 in accounting for uncertainty in income taxes. ~~In accordance with ASC Subtopic 740-10, we~~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~~

At April 30, 2022, January 29, 2022, and May 1, 2021, 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 1, 2021, we had a liability of $0.7 million associated with unrecognized tax benefits.~~was immaterial. 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 ~~2018~~2019 or by most state taxing jurisdictions for years prior to Fiscal ~~2017.~~2018.

~~11.~~12. Related-Party Transactions

The Company leases 1 store under a lease arrangement with ~~AL Florence Realty Holdings 2010,~~Preferred Growth Properties, LLC, a wholly owned subsidiary of Books-A-Million, Inc. ("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.~~28, 2027. Minimum lease payments remaining under ~~this~~the lease at April 30, 2022 and May 1, 2021 were immaterial.

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

TIG performs certain new store and ~~May 2, 2020 were $0.1 million~~store remodel construction for the Company and ~~$0.2 million, respectively.~~

~~The Company honored certain contracts in place for its wholly~~is owned ~~subsidiary, City Gear, LLC, upon acquisition. The following listing represents those contracts~~by a close relative 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 provides logistics and warehousing services to City Gear. Mr. Longo owned a majority interest in MLG and the initial contract term was effective through June 2020 but was extended to June 2021. Effective January 29, 2021, Mr. Longo fully divested his ownership interest in MLG and he no longer has any involvement with its management. InCEO. For the 13-weeks ended April 30, 2022 and May ~~2, 2020,~~1, 2021, payments to ~~MLG under the contract~~TIG for its services were ~~$1.7 million.~~$2.9 million and $1.4 million, respectively. The amount outstanding to ~~MLG at January 30, 2021 and May 2, 2020 was $0.3 million and $0.2 million, respectively, and is~~ TIG,included in accounts payable on our unaudited condensed consolidated balance ~~sheets.~~sheets at April 30, 2022, January 29, 2022, and May 1, 2021, was immaterial.

~~T.I.G. Construction~~Retail Security Gates, LLC ("~~TIG"~~RSG")

~~TIG historically performed~~During the ~~majority~~second quarter of ~~new store and store remodel construction for City Gear and is owned by~~Fiscal 2022, a close relative of Mr. ~~Longo.~~Longo purchased a 50% interest in an existing Company vendor, which was reorganized as RSG. We utilize RSG for specially manufactured store front security gates. For the 13-weeks ended ~~May 1, 2021 and May 2, 2020,~~April 30, 2022, payments to ~~TIG for its services~~RSG were ~~$1.4 million and $0.7 million, respectively.~~$0.3 million. The amount outstanding to ~~TIG at May 1, 2021, January 30, 2021, and May 2, 2020 was approximately $0.2 million, $26,000, and $0.2 million, respectively, and is~~RSG, included in accounts payable on our unaudited condensed consolidated balance ~~sheets.~~sheets at April 30, 2022 and January 29, 2022, was immaterial.

~~Merchant's Capital ("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, lease payments to MC were $51,200. There were 0 amounts outstanding to MC at May 1, 2021, January 30, 2021, or May 2, 2020.

In addition to the related party interests listed above, Mr. Longo also ~~has~~had a membership interest in a contingent earnout (the "Earnout") related to the ~~earnout discussed~~acquisition of City Gear based on City Gear's achievement of an EBITDA threshold for the 52-weeks ended January 30, 2021. The Earnout was in ~~Note 4 -~~ ~~Fair Value~~addition to the aggregate consideration payable to the sellers of ~~Financial Instruments~~.City Gear, LLC in November 2018. Pursuant to the Membership Interest and Warrant Purchase Agreement dated October 29, 2018, and based on Fiscal ~~2020~~2021 financial results, the former members and warrant holders of City Gear were entitled to and were paid the ~~first earnout payment of $10.0 million in June 2020. Based on Fiscal 2021 financial results, the remaining earnout~~Earnout payment of $15.0 million ~~was achieved and paid to the former members and warrant holders of City Gear~~ in April 2021. Mr. Longo's share of the earnout ~~payments~~payment was approximately 22.8% or approximately ~~$2.3 million of the initial earnout payment and approximately 22.8% or approximately~~ $3.4 ~~million of the second earnout payment.~~million.

~~12. 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.

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,” or other similar words, phrases or expressions. For example, our forward-looking statements include statements regarding:

•the potential impact of ~~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;results;

•the ~~impact that~~uncertainty of future stimulus payments and extended unemployment benefits, ~~will have~~if any, and the related effects on consumer demand for our products and our overall ~~business operations;~~business;

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

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•our ability to 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, recurring quarterly dividends and repurchases of Company common stock under our stock repurchase program ("(the "Repurchase Program");

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

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

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•our ability to retain key personnel and other employees at Hibbett and City ~~Gear;~~Gear due to current labor challenges or otherwise;

•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;

•the future reliability of, and cost associated with, disruptions in the global supply chain and the potential impacts on our domestic and international sources of product, including the actual and potential effect of tariffs on international goods imposed by the United States and other potential impediments to imports;

•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, 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 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 preferable tax and financial accounting methods, accruals, inventory valuations, long-lived assets, 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 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, 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).~~armed conflicts.

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 operational, financial and business information and speak only as of the date of this report. Our business, 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 Factors” in our Form 10-K for the fiscal year ended January ~~30, 2021,~~29, 2022, filed with the Securities and Exchange Commission ("SEC") on ~~April 7, 2021 ("2021~~March 25, 2022 (the "2022 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.~~Quarterly Report on Form 10-Q.

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 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

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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~~(the "Securities Exchange 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 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~~2022 Annual Report, at no charge, by writing to: Investor Relations, Hibbett, ~~Sports,~~ Inc., 2700 Milan Court, Birmingham, Alabama 35211.

General Overview

Hibbett, ~~Sports, Inc.,~~ headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer, primarily located in underserved ~~communities across the country.~~communities. Founded in 1945, Hibbett ~~stores have~~has a rich history of convenient locations, personalized customer service and access to coveted footwear and apparel from top brands like Nike, Jordan, and adidas. Consumers can browse styles, find new releases, and make purchases by visiting www.hibbett.com. Purchases can be made online or by visiting their nearest store. Follow us @hibbettsports and @citygear on Facebook, Instagram, and Twitter.

As of ~~May 1, 2021,~~April 30, 2022, we operated a total of ~~1,071~~1,105 retail stores under the Hibbett, City Gear and Sports Additions banners in 35 ~~states composed of 883 Hibbett Sports stores, 170 City Gear stores, and 18 Sports Additions athletic shoe stores.~~states:

~~Our~~


		Location
Brand	Average Square Footage	Strip Center(1)	Mall	Total
Hibbett	5,800	727	180	907
City Gear	5,100	145	37	182
Sports Additions(2)	2,900	3	13	16

(1)Strip centers include free-standing stores and, for our Hibbett ~~Sports stores average 5,800 square feet and are located primarily in strip centers, which~~locations, are usually near a major chain retailer. ~~Our City Gear~~

(2)Approximately 90% of the merchandise carried in our Sports Additions stores average 5,000 square feet and are located primarily in strip centers. As of May 1, 2021, our store base consisted of 807 stores located in strip centers, 32 free-standing stores, and 232 enclosed mall locations.is athletic footwear.

Our ~~primary~~ merchandising ~~strategy is to~~emphasizes a TOE-TO-HEADTM approach. We provide a broad assortment of ~~quality~~premium brand name footwear, apparel, accessories and ~~accessories~~team sports equipment at competitive prices in a ~~conveniently located full-service~~full service omni-channel environment. ~~We continue to grow our online business aggressively, while enhancing our stores to improve the overall customer experience.~~ We believe that the ~~breadth and depth~~assortment of ~~our~~ brand name merchandise we offer consistently exceeds the ~~product~~merchandise selection carried by most of our competitors, particularly in our ~~smaller markets.~~underserved markets and neighborhood centers. Many of these brand name products have limited availability and/or are ~~highly~~ technical ~~and require expert~~in nature requiring considerable sales assistance. We ~~continuously~~coordinate with our vendors to educate our sales staff at the store level on new products and ~~trends through coordinated efforts with our vendors.~~trends.

Comparable ~~store sales~~Store Sales - ~~Comparable store sales for a particular period~~Stores deemed as comparable stores include our Hibbett, ~~Sports,~~ City Gear and Sports Additions stores open throughout ~~that~~the reporting 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 deleveraging of costs. Comparable store sales also have a direct impact on our total net sales and the level of cash flow.

If a store remodel, relocation or expansion results in the store being closed for a significant period, 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~~stores 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 April 30, 2022, we included 1,060 stores and e-commerce sales in comparable store sales. During the 13-weeks ended May 1, 2021, we included 1,035 stores and e-commerce sales in comparable store sales.

Executive Summary

Net sales for the 13-weeks ended ~~May 1, 2021, increased 87.8%~~April 30, 2022, decreased 16.3% to ~~$506.9~~$424.1 million, compared with ~~$269.8~~$506.9 million for the 13-weeks ended May ~~2, 2020.~~1, 2021. Comparable store sales ~~increased 87.3%. Brick~~decreased 18.9%, as brick and mortar comparable store sales ~~increased 113.5%~~decreased 22.0%. E-commerce sales ~~grew~~increased by ~~1.0%~~4.1% and represented ~~11.7%~~14.6% of total net sales for the first quarter compared to ~~22.3%~~11.7% in

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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~~that stimulus ~~the availability of in-demand product, and improved store level engagement, which collectively helped increase traffic and revenue per transaction~~funds in the ~~quarter.~~first quarter of Fiscal 2022 provided a significant boost to sales and drove leverage in a number of expense categories.

In addition to the positive sales impact of stimulus on the first quarter of Fiscal 2022 as noted above, the onset of the COVID-19 pandemic had a substantial negative sales impact on the first quarter of Fiscal 2021. As a result, we believe sales performance relative to the first quarter of Fiscal 2020 provides the most relevant comparison prior to the pandemic. On a three-year basis, compared to the 13-weeks ended May 4, 2019, net sales increased 23.5% and comparable sales increased 22.9%.

Store operating, selling, and administrative ("SG&A") expenses were 22.5% of net sales for the 13-weeks ended April 30, 2022, compared with 18.1% of net sales for the 13-weeks ended May 1, ~~2021, compared with 33.1% of net sales for the 13-weeks ended May 2, 2020.~~2021. This ~~decrease~~increase was primarily the result of ~~leverage gained~~deleverage resulting 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 compares to prior year first quarter adjusted SG&A expenses of 23.9% of net sales, which excludes certain City Gear acquisition and integration activities and pandemic-related impairment and valuation costs. This decrease of approximately 580 basis points was also primarily due to leverage from the significant sales increase.lower sales.

During the first quarter of Fiscal ~~2022,~~2023, we opened ~~six~~nine new stores, rebranded one store and closed ~~two~~one underperforming ~~stores~~store bringing the store base to ~~1,071~~1,105 in 35 states as of ~~May 1, 2021.~~April 30, 2022. We ended the first quarter of Fiscal ~~2022~~2023 with ~~$270.9~~$23.2 million of available cash and cash equivalents ~~with no outstanding debt.~~and $104.6 million available under our Credit Facility. Net inventory was ~~$182.4~~$314.9 million at ~~May 1, 2021,~~April 30, 2022, a ~~24.6% decrease~~72.6% increase compared to the prior year first quarter. ~~The continued strength of consumer demand for the products we carry and ongoing supply chain constraints~~Our inventory position has greatly improved during the quarter ~~were~~ended April 30, 2022 despite ongoing disruptions in 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, including adjusted net income, earnings per share, cost of goods sold, gross margin, 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 relatedsupply chain due to the COVID-19 pandemic impacts on manufacturing capacity, port backlogs, transportation equipment availability and ~~the acquisition of City Gear. Costs related~~international conflicts. Foundational improvements to the ~~COVID-19 pandemic include impairment charges of goodwill, tradename,~~customer experience and other assets and lower of cost or net realizable value inventory reserve charges. The costs related to the acquisition of City Gear include change in valuation of the contingent earnout and professional fees. There were no non-GAAP financial measures for the 13-weeks ended May 1, 2021.

~~While~~ our ~~management uses these non-GAAP financial measures as a tool to enhance their~~ ability to ~~assess certain aspects of~~attract and stay connected to underserved customers continues to strengthen our ~~financial performance,~~relationships with 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, 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 “GAAP to Non-GAAP Reconciliations.”vendor partners.

Critical Accounting Policies and Estimates

Our critical accounting policies are described in Item 1, Note 1 - Basis of Presentation and Critical Accounting Policies.

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~~2022 Annual Report. There have been no changes in our accounting policies in the current period ended ~~May 1, 2021,~~April 30, 2022, 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 1, 2021,~~April 30, 2022, for information regarding recent accounting pronouncements.

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Results of Operations

Summarized Unaudited Information

13-Weeks Ended
May 1,
2021 May 2,
2020
Statements of Operations
Net sales increase (decrease) 87.8 % (21.4 %)
Comparable store sales increase (decrease) 87.3 % (19.5 %)
Gross margin (as a % to net sales) 41.4 % 27.5 %
SG&A expenses (as a % to net sales) 18.1 % 25.8 %
Goodwill impairment (as a % of net sales) — % 7.3 %
Depreciation and amortization (as a % to net sales) 1.6 % 2.5 %
Provision (benefit) for income taxes (as a % to net sales) 5.0 % (2.6 %)
Net income (loss) (as a % to net sales) 16.7 % (5.7 %)
Diluted earnings (loss) per share $ 5.00 $ (0.92)
Weighted-average dilutive shares (in thousands) 16,966 16,546
Balance Sheets
Ending cash and cash equivalents (in thousands) $ 270,852 $ 106,205
Average inventory per store $ 170,281 $ 224,475
Store Information
Beginning of period 1,067 1,081
New stores opened 6 3
Rebranded stores — 2
Stores closed (2) (8)
End of period 1,071 1,078
Estimated square footage at end of period (in thousands) 6,041 6,088
Share Repurchase Information
Shares purchased under our Program 541,283 428,018
Cost (in thousands) $ 37,314 $ 9,748
Settlement of net share equity awards 41,120 30,895
Cost (in thousands) $ 2,846 $ 424


	13-Weeks Ended
	April 30, 2022			May 1, 2021
Statements of Operations
Net sales (decrease) increase	(16.3		%)	87.8		%
Comparable store sales (decrease) increase	(18.9		%)	87.3		%








Balance Sheets
Ending cash and cash equivalents (in thousands)	$	23,221		$	270,852
Average inventory per store	$	284,942		$	170,281

Store Information
Beginning of period	1,096			1,067
New stores opened	9			6
Rebranded stores	1			—
Stores closed	(1)			(2)
End of period	1,105			1,071

Estimated square footage at end of period (in thousands)	6,252			6,041

Share Repurchase Information
Shares purchased under our Repurchase Program	491,218			541,283
Cost (in thousands)	$	22,399		$	37,314
Settlement of net share equity awards	45,993			41,120
Cost (in thousands)	$	2,069		$	2,846

13-Weeks Ended ~~May 1, 2021~~April 30, 2022 Compared to 13-Weeks Ended May ~~2, 2020~~1, 2021

Net ~~sales~~Sales

Net sales for the ~~13-week period~~13-weeks ended April 30, 2022, decreased 16.3% to $424.1 million compared with $506.9 million for the 13-weeks ended May 1, ~~2021, increased 87.8% to $506.9 million compared with $269.8 million for the 13-week period ended May 2, 2020.~~2021. Comparable store sales ~~increased 87.3%~~decreased 18.9%. Brick and mortar comparable sales ~~increased 113.5%~~decreased 22.0%. E-commerce sales ~~grew~~increased by ~~1.0%~~4.1% and represented ~~11.7%~~14.6% of total net sales for the first quarter compared to ~~22.3%~~11.7% in the prior year first quarter. ~~Our stores were open to the public for approximately 60% of the available days in the~~Although current year sales performance was strong, prior 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 revenuesales performance was ~~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.~~historically strong. We believe ~~our record quarterly sales growth was driven by new customer acquisition and retention, prior year market disruption, government~~

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~~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~~

~~Gross margin was 41.4% of~~ net sales ~~for the 13-week period ended May 1, 2021, compared with 27.5% of net sales for the 13-week period ended May 2, 2020. The approximate 1,390 basis point increase was driven~~were unfavorably impacted by ~~higher sell-through, a low promotional environment, a mix shift away from e-commerce sales, which carry a lower margin due to incremental fulfillment costs, leverage of store occupancy expenses, 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~~discretionary income due to the ~~prior year first quarter adjusted gross margin~~lack of ~~29.4%,~~stimulus funds which excludes adjustments to our non-cash inventory valuation reserves last year. This year over year improvement was the result of higher sell-through, a 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 for the 13-week period ended May 1, 2021, compared with 33.1% of net sales for the 13-week period ended May 2, 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 recordedpresent in the first quarter of the prior year. ~~First~~

Due to the impact of the COVID-19 pandemic on the first quarters of both Fiscal 2022 and Fiscal 2021, we believe the 13-weeks ended May 4, 2019, the first quarter of Fiscal 2020, is the most relevant comparable period. Net sales increased 23.5% and comparable sales increased 22.9% versus the first quarter of Fiscal 2020. Brick and mortar comparable sales increased 13.6% and e-commerce sales grew 116.9% over the three-year period.

Gross Margin

Gross margin was 37.0% of net sales for the 13-weeks ended April 30, 2022, compared with 41.4% of net sales for the 13-weeks ended May 1, 2021. The approximate 440 basis point decline was primarily driven by deleverage of store occupancy costs of approximately 160 basis points mainly due to the combination of cost increases associated with a higher store count and the large year-over-year sales decline. In addition, product margin declined approximately 150 basis points due to product and channel mix and freight and transportation costs increased approximately 130 basis points primarily due to fuel surcharges and other accessorial charges.

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SG&A Expenses

Store operating, selling, and administrative ("SG&A") expenses were 22.5% of net sales for the 13-weeks ended April 30, 2022, compared with 18.1% of net sales for the 13-weeks ended May 1, 2021. The approximate 440 basis point increase was primarily the result of deleverage resulting from lower sales in ~~the current year compares~~addition to ~~prior year first quarter adjusted SG&A expenses~~increased costs of ~~23.9% of net sales, which excludes certain City Gear acquisition~~advertising, professional services and ~~integration activities~~general supplies to support a larger store base and ~~pandemic-related impairment and valuation costs. This decrease of approximately 580 basis points was also primarily due to leverage from the significant sales increase.~~increased e-commerce volume.

Depreciation and ~~amortization~~Amortization

Depreciation and amortization of ~~$8.1~~$10.5 million ~~decreased~~increased by approximately 9590 basis points as a percentage of net sales for the 13-weeks ended ~~May 1, 2021,~~April 30, 2022, compared to the same period of the prior fiscal year. ~~This decrease~~The increase in dollar spend was mainly due to ~~the leverage from higher net sales.~~increased capital investment on organic growth opportunities and infrastructure projects.

Provision ~~(benefit)~~ for ~~income taxes~~Income Taxes

The combined federal, state, and local effective income tax rate as a percentage of pre-tax income was 22.3% for the 13-weeks ended April 30, 2022 and was 23.0% for the 13-weeks ended May 1, ~~2021, and was 31.2% for the 13-weeks ended May 2, 2020.~~2021. The quarterly effective tax rate fluctuates based on full-year taxable income projections, the impact of discrete items, and ~~is also influenced by~~ the relative level of ~~pretax~~pre-tax income or loss in each quarter.

Net ~~income (loss)~~Income

Net income for the ~~13-week period~~13-weeks ended ~~May 1, 2021,~~April 30, 2022, was $39.3 million, or $2.89 per diluted share, compared with net income of $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 the first quarter of the current year, net income for the 13-week period ended May 1, 2021, was $84.8 million, or $5.00 per diluted share, compared to adjusted net income for the 13-week period ended May 2, 2020, of $5.2 million, or $0.31 per diluted share.

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~~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, 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
Excluded Amounts
GAAP Basis (As Reported)
Acquisition Costs(1)
COVID-19
(2)
Non-GAAP Basis
(As Adjusted)
% of Sales
Cost of goods sold $ 195,690 $ — $ 5,089 $ 190,601 70.6 %
Gross margin $ 74,147 $ — $ 5,089 $ 79,236 29.4 %
SG&A expenses $ 69,673 $ 654 $ 4,433 $ 64,586 23.9 %
Goodwill impairment 19,661 — 19,661 — — %
Operating (loss) income $ (22,057) $ 654 $ 29,183 $ 7,780 2.9 %
(Benefit) provision for income taxes $ (6,940) $ 204 $ 9,112 $ 2,376 0.9 %
Net (loss) income $ (15,287) $ 450 $ 20,072 $ 5,235 1.9 %
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 inventory valuation reserve charges in cost of goods sold and impairment costs (goodwill, tradename, and other assets) in SG&A expenses.
~~3) Weighted-average diluted shares outstanding were not adjusted for dilutive options and restricted stock in the calculation of GAAP loss per share.~~

~~Index~~

1, 2021.

Liquidity and Capital Resources

~~Impact~~COVID-19 and Other Macroeconomic Factors

We continue to monitor the impacts of the COVID-19 ~~Pandemic~~pandemic, the inflationary economic environment, supply chain disruptions and labor shortages, and geopolitical conflicts on ~~Liquidity~~

~~In response to~~our business. The positive impact on sales that we experienced as a result of the ~~uncertain market conditions resulting from~~pandemic over the ~~COVID-19 pandemic early~~last two fiscal years began moderating in the fourth quarter of Fiscal 2022 and continued in the first quarter of Fiscal ~~2021, we enhanced our liquidity position through~~2023. We have experienced significant input cost inflation, for commodities and transportation, and to a lesser extent, for labor in the ~~following actions:~~

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

•~~In April 2020, we replaced~~monitor these two lines of credit with a single $75.0 million secured line of credit with a one-year 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 payment terms temporarily through the end of May 2020.~~

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

~~As the result of strong sales beginning in the second quarter of Fiscal 2021, our liquidity position improved significantly.~~ We ended the first quarter of Fiscal ~~2022~~2023 with ~~$270.9~~$23.2 million of available cash and cash equivalents on the unaudited condensed consolidated balance sheet. As of ~~May 1, 2021,~~April 30, 2022, we had no$20.4 million of debt outstanding and ~~full availability~~$104.6 million available to us under ~~our $75.0 million secured credit facility.~~the Credit Facility, discussed in Note 5, Debt, to the unaudited condensed consolidated financial statements.

Inventory at the end of the first quarter of Fiscal ~~2022~~2023 was ~~$182.4~~$314.9 million, a ~~24.6% decrease~~72.6% increase compared to the prior year first quarter and a 42.3% increase from the beginning of the quarter. The ~~continuing strength of sales in both brick and mortar and e-commerce channels coupled with ongoing supply chain constraints were~~inventory balance at the ~~main drivers~~end of the ~~lower~~prior year first quarter was well below ideal levels. Higher order quantities resulting from our increased sales volume and strong relationships with our vendor partners have allowed us to build inventory ~~levels.~~to a level that better supports customer demand.

Analysis of Cash Flows

Our capital requirements relate primarily to ~~new store openings, relocations, and remodels,~~funding capital expenditures, stock repurchases, ~~investments in~~dividends, the maintenance of 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~~fees.

We believe that our existing cash balances, expected cash flow from operations, funds available under the Credit Facility, operating and ~~may invest in interest-bearing securities~~finance leases and ~~money market accounts at management's discretion.~~normal trade credit will be sufficient to fund our operations and capital expenditures. We are not aware of any trends or events that would materially affect our capital requirements of liquidity.

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

Index


		13-Weeks Ended					13-Weeks Ended
		May 1, 2021		May 2, 2020			April 30, 2022		May 1, 2021
Net cash provided by operating activities	Net cash provided by operating activities	$	108,360	$	3,882	Net cash provided by operating activities	$	28,822	$	108,360
Net cash used in investing activities	Net cash used in investing activities	(6,931)		(3,447)		Net cash used in investing activities	(15,614)		(6,931)
Net cash (used in) provided by financing activities		(39,867)		39,692
Net cash used in financing activities						Net cash used in financing activities	(7,041)		(39,867)
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	$	61,562	$	40,127	Net increase in cash and cash equivalents	$	6,167	$	61,562

Operating ~~Activities.~~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 season.~~shopping. 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 ~~$108.4~~$28.8 million for the 13-weeks ended ~~May 1, 2021,~~April 30, 2022, compared with net cash provided by operating activities of ~~$3.9~~$108.4 million for the 13-weeks ended May ~~2, 2020.~~1, 2021. 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~~liabilities as noted in the ~~contingent City Gear earnout liability, impairments,~~

~~Index~~

~~deferred income taxes, and stock-based compensation. Net cash provided by operating activities for May 1, 2021 and May 2, 2020 was impacted by the following:~~bullets below.

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

•Non-cash ~~charges included~~ depreciation and amortization ~~expense of $8.1 million and $6.9 million and stock-based compensation expense of $2.1 million and $1.2 million during the 13-weeks ended May 1, 2021 and May 2, 2020, respectively. Depreciation~~ expense increased due to capital expenditure investments in new stores, existing store remodels and ~~supporting~~refreshes, technology enhancements and corporate infrastructure. Fluctuations in stock-based compensation generally result from the variability associated with performance-based equity awards, fluctuations in the price of our common stock, and the effects of forfeitures in any given period.

•Other non-cash adjustments to net income for the 13-weeks ended May 2, 2020, included $32.6 million of asset impairment charges with the largest impact resulting from a significant temporary decrease in the market valuation of the Company 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 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~~contingent earnout in the ~~13-weeks ended May 2, 2020, of $11.9~~prior year represented $15.0 million ~~resulted primarily from employee retention credits under the Coronavirus Aid, Relief, and Economic Security Act ("CARES 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~~represented the fair value of the long-term portion of the contingent earnout booked through the purchase price allocation.

•Inventory balances in the current year have continued building from less than ideal levels. Inventory levels in the prior year were reduced significantly due to a surge in demand combined with a disruption in the supply chain that made it difficult to replenish balances.

•The change in accounts payable is due mainly to the timing of payments in relation to inventory receipts.

•The change in net income tax payable is due mainly to the timing of estimated payments.

Investing ~~Activities.~~Activities

Net cash used in investing activities in the 13-weeks ended ~~May 1, 2021,~~April 30, 2022, totaled ~~$6.9~~$15.6 million compared with net cash used in investing activities of ~~$3.4~~$6.9 million in the 13-weeks ended May ~~2, 2020.~~1, 2021. Capital expenditures used $16.0 million of cash in the 13-weeks ended April 30, 2022, versus $7.0 million of cash in the 13-weeks ended May 1, ~~2021, versus $4.1 million of cash in the 13-weeks ended May 2, 2020.~~2021. Capital expenditures are primarily related to opening new stores, remodeling, expanding or relocating existing stores, and continued investment in ~~digital initiatives.~~technology initiatives and corporate infrastructure.

We opened nine new stores and rebranded one existing store during the 13-weeks ended April 30, 2022, as compared to opening six new stores during the 13-weeks ended May 1, ~~2021, as compared to opening three new stores and rebranding two existing stores during the 13-weeks ended May 2, 2020.~~2021.

We anticipate that our capital expenditures for the fiscal year ending January ~~29, 2022~~28, 2023 will be approximately $60.0 million to $70.0 million and primarily ~~relate to expenditures for:~~related to:

•store development, including the opening of new ~~stores;~~

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

•~~digital initiatives~~

•~~corporate, distribution,~~additional technology and ~~information system~~ infrastructure ~~and enhancements;~~investments; and

•other departmental ~~needs.~~needs for ongoing maintenance and support.

Financing Activities.

Net cash used in financing activities was ~~$39.9~~$7.0 million in the 13-weeks ended ~~May 1, 2021,~~April 30, 2022, compared to net cash ~~provided by~~used in financing activities of ~~$39.7~~$39.9 million in the prior year period. ~~During the 13-weeks ended May 1, 2021, we had no borrowings against our credit facilities compared to net borrowings on our credit facilities of $50.0 million in the same period of the prior year.~~

Index

In the current ~~year's first quarter,~~year, we have repurchased ~~$37.3~~$22.4 million of our common stock under our Repurchase Program. This

~~Index~~

compares to ~~$9.7~~$37.3 million used to repurchase our common stock under our Repurchase Program in the same period of the prior year. See Note 8, Stock Repurchase ~~Activity,~~Program, to the unaudited condensed consolidated financial statements for additional information.

AtDuring the 13-weeks ended April 30, 2022, we had net borrowings of $20.4 million against our Credit Facility and $104.6 million available under the Credit Facility at April 30, 2022. We did not have any borrowings under our facilities during the 13-weeks ended May 1, 2021.

On July 9, 2021, we ~~had one secured~~executed the 2021 Credit Facility between the Company and its subsidiaries and Regions Bank. The 2021 Credit Facility provided an unsecured line of credit ~~facility with Regions Bank that allows for borrowings~~of up to ~~$75.0 million ("Amended~~$100.0 million. The 2021 Credit ~~Facility"),~~Facility is effective through July 9, 2026 with an interest rate of one-month LIBOR plus 1.0% to 1.8% depending on specified leverage levels.

The 2021 Credit Facility includes an annual commitment fee, payable quarterly in arrears, in an amount between 15 and 20 basis points of the unused portion of the line of credit as determined on a daily basis, dependent on the amount of debt outstanding. In addition, the Company is subject to certain financial covenants which ~~has~~include:

•Advance limitation of 55% of the net book value of the Company's inventory;

•A Consolidated Lease-Adjusted Leverage Ratio comparing lease-adjusted funded debt (funded debt plus all lease

liabilities) to EBITDAR (as defined in the 2021 Credit Facility) with a ~~maturity~~maximum of 3.5x; and

•A Consolidated Fixed Coverage Charge Ratio comparing EBITDAR to fixed charges and certain current liabilities (as defined in the 2021 Credit Facility) with a minimum of 1.2x.

On April 7, 2022, we executed the Modification Agreement between the Company and its subsidiaries and Regions Bank. The Modification Agreement increases the line of credit specified in the 2021 Credit Facility to $125.0 million. The expiration date of July ~~18, 2021. Under~~9, 2026 remains unchanged. The financial covenants included in the ~~provisions of the Amended~~2021 Credit Facility ~~we do not pay commitment fees. The Amended Credit Facility is secured by all assets of the Company with the exception of real property.~~ also remain unchanged.

As of ~~May 1, 2021, a total of $75.0 million was available to us under the facility.~~April 30, 2022, we were in compliance with these covenants. See Note 5, Debt, to the unaudited condensed consolidated financial statements for additional information.

In addition, on April 7, 2022, the Company executed the First Amendment between the Company and its subsidiaries and Regions Bank. The First Amendment replaces LIBOR as the benchmark rate with the BSBY Index Rate. Pursuant to the First Amendment, the Credit Facility carries an interest rate of BSBY plus 1.0% to 1.8% depending on specified leverage levels.

During the 13-weeks ended April 30, 2022, we paid $3.3 million of dividends to our stockholders. On May 25, 2022, the Board declared a cash dividend of $0.25 per common share, payable on June 21, 2022, to stockholders of record at the close of business on June 9, 2022. The estimated payment is expected to be $3.3 million. No dividends were paid during the 13-weeks ended May 1, 2021.

The declaration of future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to authorization by our Board of Directors and are dependent upon multiple factors, including future earnings, cash flows, financial requirements, and other considerations.

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 Amended~~the Credit Facility.

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 unseasonal weather 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.

Index

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.

Additionally, Regions Bank is committed to provide loans under our Amended Credit Facility. There is a risk that 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 2021 Annual Report.

~~Interest Rate Risk~~

~~Our exposure to market risks results primarily from fluctuations in interest rates.~~ There have been no material changes toin our quantitative and qualitative market risks since January 29, 2022. For a discussion of the Company's exposure to market ~~risks from those disclosed in our 2021 Annual 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. Duerisk, refer to the ~~short-term nature~~Company's market risk disclosures set forth in Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" of ~~our current secured credit facility,~~ the ~~potential transition away from LIBOR does not impact us.~~Company's 2022 Annual Report

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and ~~Procedures.~~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 1, 2021.~~April 30, 2022. 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 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.~~Reporting

We have not identified any changes in our internal control over financial reporting that occurred during the period ended ~~May 1, 2021,~~April 30, 2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

Information relating to material legal proceedings is set forth in Note 9,10, Commitments and Contingencies, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and is incorporated herein by reference.

ITEM 1A. Risk Factors.

We operate in an environment that involves a number of risks and uncertainties which are described in our ~~2021~~2022 Annual Report. If any of the risks described in our ~~2021~~2022 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 ~~2021~~2022 Annual Report.

Index

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 1, 2021:~~April 30, 2022:

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


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 30, 2022 to February 26, 2022	—	$	—	—	$	368,521
February 27, 2022 to April 2, 2022	401,643	$	46.08	368,932	$	351,521
April 3, 2022 to April 30, 2022	135,568	$	43.97	122,286	$	346,121
Total	537,211	$	45.55	491,218	$	346,121

(1)In ~~November 2018, our Board of Directors authorized the extension of our $300.0 million Program through January 29, 2022. Subsequent to~~ May 1, 2021, our Board of Directors authorized an expansion of the Repurchase 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-18expansion of the ~~Securities Exchange Act. The timing and amount of stock repurchases will depend~~Repurchase Program was announced 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.May 28, 2021. See Note 8, Stock Repurchase ~~Activity,~~Program, ~~and Note 12,~~ ~~Subsequent Events~~, to the unaudited condensed consolidated financial statements for additional information.

2421

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 Current Report on Form 8-K filed with the Securities and Exchange Commission on May 31, 2012.
3.2		Certificate of Amendment to the 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~~Current Report 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 24, 2021.
3.3		Certificate of Amendment to the Certificate of Incorporation of the Registrant; incorporated herein by reference to Exhibit 3.1 of the Registrant's Form Current Report on Form 8-K with the Securities and Exchange Commission on May ~~28, 2021.~~27, 2022.

		Form of Stock Certificate
4.1		Form of Common Stock Certificate; incorporated herein by reference to Exhibit ~~99.1~~4.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on ~~September 26, 2007.~~June 24, 2021

		Material Agreements
10.1		~~None.~~First Note Modification Agreement, dated as of April 7, 2022, among Hibbett, Inc., as Borrower, and Regions Bank, as Lender; incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2022
10.2		First Amendment to Credit Agreement, dated as of April 7, 2022, among Hibbett, Inc., as Borrower, subsidiaries of Borrower, as Guarantors, and Regions Bank, as Lender; incorporated herein by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2022
10.3		Hibbett, Inc. Amended and Restated Non-Employee Director Equity Plan; incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 27, 2022
10.4		Hibbett, Inc. 2016 Executive Officer Cash Bonus Plan (as amended to date); incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 27, 2022

		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 cover page for the Registrant's Quarterly Report on Form 10-Q for the quarter ended ~~May 1, 2021,~~April 30, 2022, has been formatted in Inline XBRL.
	*	Filed Within
	**	Furnished Herewith

2522

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 ~~7, 2021~~6, 2022	By:	/s/ Robert Volke
			Robert Volke
			Senior Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)

2623


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Unaudited Condensed Consolidated Balance Sheets	2

	Unaudited Condensed Consolidated Statements of Operations	3

	Unaudited Condensed Consolidated Statements of Cash Flows	4

	Unaudited Condensed Consolidated Statements of Stockholders’ Investment	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1412

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2320

Item 4.	Controls and Procedures.	2320

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings.	2420

Item 1A.	Risk Factors.	2420

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2421

Item 6.	Exhibits.	2522

	Signature	2623


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


	Operating		Finance		Total
Remainder of Fiscal 2022	$	49,322	$	835	$	50,157
Fiscal 2023	63,788		1,085		64,873
Fiscal 2024	49,667		971		50,638
Fiscal 2025	37,323		397		37,720
Fiscal 2026	26,295		302		26,597
Thereafter	40,065		42		40,107
Total minimum lease payments	266,460		3,632		270,092
Less amount representing interest	22,259		274		22,533
	$	244,201	$	3,358	$	247,559


	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


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