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 ~~November~~May 2, ~~2019~~

2020


☐			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~~
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~~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~~

☐

☒

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 ~~December~~June 5, ~~2019,~~2020, were ~~17,334,369~~16,532,357 shares.

HIBBETT SPORTS, INC.

INDEX

~~INDEX~~

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements.

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

Unaudited Condensed Consolidated Statements of Operations for the 13 -weeks ended May 2, 2020 and ~~39 weeks ended November 2,~~May 4, 2019 ~~and November 3, 2018~~

Unaudited Condensed Consolidated Statements of Cash Flows for the 39 13 -weeks ended ~~November~~May 2, ~~2019~~2020 and ~~November 3, 2018~~May 4, 2019

Unaudited Condensed Consolidated Statements of Stockholders’ Investment for the 13 -weeks ended May 2, 2020 and ~~39 weeks ended November 2,~~May 4, 2019 ~~and November 3, 2018~~

Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.

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

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Item 4.

Controls and Procedures.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

Item 1.1A.

~~Legal Proceedings.~~

~~Item 1A.~~

Risk Factors.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Item 6.5.

~~Exhibits.~~Other Information.

Item 6.

~~Signature~~Exhibits.

~~Exhibit Index~~Signature

Index

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

~~ITEM 1.~~

~~Financial Statements~~.

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share information)


ASSETS	November 2, 2019			February 2, 2019			ASSETS	May 2, 2020		February 1, 2020		May 4, 2019
Current Assets:							Current Assets:
Cash and cash equivalents	$	77,372		$	61,756		Cash and cash equivalents	$	106,205	$	66,078	$	116,963
Receivables, net		6,732			9,470		Receivables, net	20,003		8,477		8,284
Inventories, net		288,876			280,287		Inventories, net	241,984		288,011		248,548
Other current assets		8,809			16,343		Other current assets	12,302		9,946		12,995
Total current assets		381,789			367,856		Total current assets	380,494		372,512		386,790

Property and equipment, net		101,598			115,394		Property and equipment, net	97,771		100,956		107,673
Operating right-of-use assets		217,622			-		Operating right-of-use assets	219,436		229,155		224,870
Finance right-of-use assets, net		1,467			-		Finance right-of-use assets, net	2,548		2,250		2,228

Goodwill		19,661			23,133		Goodwill	—		19,661		19,661
Trade name intangible asset		32,400			32,400
Tradename intangible asset							Tradename intangible asset	23,500		32,400		32,400
Deferred income taxes, net		7,776			2,278		Deferred income taxes, net	11,429		8,996		3,216
Other assets, net		3,568			5,004		Other assets, net	3,391		3,829		3,868
Total Assets	$	765,881		$	546,065		Total Assets	$	738,569	$	769,759	$	780,706

LIABILITIES AND STOCKHOLDERS' INVESTMENT							LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:							Current Liabilities:
Accounts payable	$	132,386		$	107,315		Accounts payable	$	98,149	$	131,662	$	105,834
Operating lease liabilities		57,564			-		Operating lease liabilities	66,791		60,649		66,268
Credit facilities		8,000			35,000		Credit facilities	50,000		—		26,000
Finance/capital lease obligations		838			1,017
Finance lease obligations							Finance lease obligations	876		886		973
Accrued payroll expenses		15,876			13,929		Accrued payroll expenses	6,359		20,530		7,322
Deferred rent		-			5,838
Other accrued expenses		20,015			10,174		Other accrued expenses	21,473		19,934		15,604
Total current liabilities		234,679			173,273		Total current liabilities	243,648		233,661		222,001

Operating lease liabilities		182,782			-		Operating lease liabilities	185,035		190,699		188,839
Finance/capital lease obligations		967			1,994
Deferred rent		-			19,522
Finance lease obligations							Finance lease obligations	1,994		1,704		1,777
Unrecognized tax benefits		895			1,401		Unrecognized tax benefits	954		955		1,370
Other liabilities		10,399			13,826		Other liabilities	2,371		13,757		9,537
Total liabilities		429,722			210,016		Total liabilities	434,002		440,776		423,524

Stockholders' Investment:							Stockholders' Investment:
Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares issued		-			-
Common stock, $.01 par value, 80,000,000 shares authorized, 39,131,083 and 38,983,232 shares issued at November 2, 2019 and February 2, 2019, respectively		391			390
Preferred stock, $0.01 par value, 1,000,000 shares authorized, 0 shares issued							Preferred stock, $0.01 par value, 1,000,000 shares authorized, 0 shares issued	—		—		—
Common stock, $0.01 par value, 80,000,000 shares authorized, 39,255,293, 39,140,575 and 39,100,509 shares issued at May 2, 2020, February 1, 2020 and May 4, 2019, respectively							Common stock, $0.01 par value, 80,000,000 shares authorized, 39,255,293, 39,140,575 and 39,100,509 shares issued at May 2, 2020, February 1, 2020 and May 4, 2019, respectively	393		391		391
Paid-in capital		187,940			185,752		Paid-in capital	190,260		188,879		186,462
Retained earnings		778,942			759,677		Retained earnings	769,315		784,942		785,454
Treasury stock, at cost; 21,747,614 and 20,686,242 shares repurchased at November 2, 2019 and February 2, 2019, respectively		(631,114	)		(609,770	)
Treasury stock, at cost; 22,739,229, 22,280,316 and 20,945,674 shares repurchased at May 2, 2020, February 1, 2020 and May 4, 2019, respectively							Treasury stock, at cost; 22,739,229, 22,280,316 and 20,945,674 shares repurchased at May 2, 2020, February 1, 2020 and May 4, 2019, respectively	(655,401)		(645,229)		(615,125)
Total stockholders' investment		336,159			336,049		Total stockholders' investment	304,567		328,983		357,182
Total Liabilities and Stockholders' Investment	$	765,881		$	546,065		Total Liabilities and Stockholders' Investment	$	738,569	$	769,759	$	780,706

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						39 Weeks Ended							13-Weeks Ended
	November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018				May 2, 2020		May 4, 2019
Net sales	$	275,475		$	216,888		$	871,210		$	702,718		Net sales	$	269,837	$	343,295
Cost of goods sold		185,307			146,376			586,502			469,082		Cost of goods sold	195,690		224,692
Gross margin		90,168			70,512			284,708			233,636		Gross margin	74,147		118,603
Store operating, selling and administrative expenses		80,147			62,342			234,085			186,211		Store operating, selling and administrative expenses	69,673		74,038
Goodwill impairment													Goodwill impairment	19,661		—
Depreciation and amortization		7,397			6,328			22,299			18,847		Depreciation and amortization	6,870		7,223
Operating income		2,624			1,842			28,324			28,578
Operating (loss) income													Operating (loss) income	(22,057)		37,342
Interest income, net		(151	)		(277	)		(179	)		(387	)	Interest income, net	170		46
Income before provision for income taxes		2,775			2,119			28,503			28,965
Provision for income taxes		510			620			7,159			7,179
Net income	$	2,265		$	1,499		$	21,344		$	21,786
(Loss) income before provision for income taxes													(Loss) income before provision for income taxes	(22,227)		37,296
(Benefit) provision for income taxes													(Benefit) provision for income taxes	(6,940)		9,439
Net (loss) income													Net (loss) income	$	(15,287)	$	27,857

Basic earnings per share	$	0.13		$	0.08		$	1.19		$	1.16
Diluted earnings per share	$	0.13		$	0.08		$	1.18		$	1.15
Basic (loss) earnings per share													Basic (loss) earnings per share	$	(0.92)	$	1.52
Diluted (loss) earnings per share													Diluted (loss) earnings per share	$	(0.92)	$	1.50

Weighted average shares outstanding:													Weighted average shares outstanding:
Basic		17,568			18,495			17,927			18,763		Basic	16,546		18,308
Diluted		17,815			18,675			18,085			18,944		Diluted	16,546		18,535

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	39 Weeks Ended							13-Weeks Ended
	November 2, 2019			November 3, 2018				May 2, 2020		May 4, 2019
Cash Flows From Operating Activities:							Cash Flows From Operating Activities:
Net income	$	21,344		$	21,786
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income							Net (loss) income	$	(15,287)	$	27,857
Adjustments to reconcile net (loss) income to net cash provided by operating activities:							Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		22,299			18,847		Depreciation and amortization	6,870		7,223
Stock-based compensation		1,811			3,411		Stock-based compensation	1,217		507
Impairment charges							Impairment charges	32,648		—
Contingent earnout valuation							Contingent earnout valuation	(10,980)		600
Other non-cash adjustments to net income		8,212			548		Other non-cash adjustments to net income	(2,914)		3,622
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Inventories, net		(9,544	)		(2,659	)	Inventories, net	46,027		30,783
Prepaid expenses and other		532			(3,288	)
Receivables, net							Receivables, net	(11,866)		2,131
Accounts payable		25,065			15,818		Accounts payable	(33,513)		(1,481)
Other assets and liabilities		5,337			(1,990	)	Other assets and liabilities	(8,320)		816
Net cash provided by operating activities		75,056			52,473		Net cash provided by operating activities	3,882		72,058

Cash Flows From Investing Activities:							Cash Flows From Investing Activities:
Capital expenditures		(11,036	)		(13,949	)	Capital expenditures	(4,059)		(2,469)
Other, net		283			257		Other, net	612		(54)
Net cash used in investing activities		(10,753	)		(13,692	)	Net cash used in investing activities	(3,447)		(2,523)

Cash Flows From Financing Activities:							Cash Flows From Financing Activities:
(Repayments) proceeds under credit facilities, net		(27,000	)		25,000
Proceeds under credit facilities							Proceeds under credit facilities	115,918		—
Repayments under credit facilities							Repayments under credit facilities	(65,918)		(9,000)
Cash used for stock repurchases		(20,789	)		(16,058	)	Cash used for stock repurchases	(9,748)		(4,799)
Net payments on finance/capital lease obligations		(722	)		(481	)
Net payments on finance lease obligations							Net payments on finance lease obligations	(301)		(242)
Proceeds from options exercised and purchase of shares under the employee stock purchase plan		379			807		Proceeds from options exercised and purchase of shares under the employee stock purchase plan	165		203
Other, net		(555	)		(416	)	Other, net	(424)		(490)
Net cash (used in) provided by financing activities		(48,687	)		8,852
Net cash provided by (used in) financing activities							Net cash provided by (used in) financing activities	39,692		(14,328)

Net increase in cash and cash equivalents		15,616			47,633		Net increase in cash and cash equivalents	40,127		55,207
Cash and cash equivalents, beginning of period		61,756			73,544		Cash and cash equivalents, beginning of period	66,078		61,756
Cash and cash equivalents, end of period	$	77,372		$	121,177		Cash and cash equivalents, end of period	$	106,205	$	116,963

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 November 2, 2019

Common Stock Treasury Stock

Number of
Shares
Amount
Paid-In
Capital

Retained
Earnings

Number of
Shares
Amount
Total
Stockholders'
Investment

Balance - August 3, 2019
39,125

$
391

$
186,947

$
776,677

21,376

$
(624,070
)

$
339,945

Net income
-

-

-

2,265

-

-

2,265

Issuance of shares through the Company's equity plans
6

-

88

-

-

-

88

Purchase of shares under the stock repurchase program
-

-

-

-

372

(7,044
)

(7,044
)
Stock-based compensation
-

-

905

-

-

-

905

Balance - November 2, 2019
39,131

$
391

$
187,940

$
778,942

21,748

$
(631,114
)

$
336,159

13 Weeks Ended November 3, 2018

Common Stock Treasury Stock

Number of
Shares
Amount
Paid-In
Capital

Retained
Earnings

Number of
Shares
Amount
Total
Stockholders'
Investment

Balance - August 4, 2018
38,954

$
389

$
183,697

$
751,543

20,287

$
(602,078
)

$
333,551

Net income
-

-

-

1,499

-

-

1,499

Issuance of shares through the Company's equity plans
18

1

298

-

-

-

299

Purchase of shares under the stock repurchase program
-

-

-

-

395

(7,626
)

(7,626
)
Stock-based compensation
-

-

758

-

-

-

758

Balance - November 3, 2018
38,972

$
390

$
184,753

$
753,042

20,682

$
(609,704
)

$
328,481

~~Note: Columns may not foot due to rounding.~~

~~See notes to unaudited condensed consolidated financial statements.~~

~~Index~~

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders Investment ~~(continued)~~

(in thousands)

39 Weeks Ended November 2, 2019

13-Weeks Ended May 2, 2020																		13-Weeks Ended May 2, 2020
																			Common Stock													Treasury Stock
	Common Stock									Treasury Stock									Number of Shares		Amount			Paid-In Capital			Retained Earnings			Number of Shares		Amount			Total Stockholders' Investment
	Number of Shares		Amount		Paid-In Capital		Retained Earnings			Number of Shares		Amount			Total Stockholders' Investment
Balance - February 2, 2019		38,983	$	390	$	185,752	$	759,677			20,686	$	(609,770	)	$	336,049
Net income		-		-		-		21,344			-		-			21,344
Balance - February 1, 2020																		Balance - February 1, 2020	39,141		$	391		$	188,879		$	784,942		22,280		$	(645,229)		$	328,983
Net loss																		Net loss	—		—			—			(15,287)			—		—			(15,287)
Issuance of shares through the Company's equity plans		148		1		377		-			-		-			378		Issuance of shares through the Company's equity plans	114		2			164			—			—		—			166
Adjustment for adoption of accounting standard(1)		-		-		-		(2,080	)		-		-			(2,080	)	—		—			—			(340)			—		—			(340)
Purchase of shares under the stock repurchase program		-		-		-		-			1,032		(20,789	)		(20,789	)	Purchase of shares under the stock repurchase program	—		—			—			—			428		(9,748)			(9,748)
Settlement of net share equity awards		-		-		-		-			29		(556	)		(556	)	Settlement of net share equity awards	—		—			—			—			31		(424)			(424)
Stock-based compensation		-		-		1,811		-			-		-			1,811		Stock-based compensation	—		—			1,217			—			—		—			1,217
Balance - November 2, 2019		39,131	$	391	$	187,940	$	778,942			21,748	$	(631,114	)	$	336,159
Balance - May 2, 2020																		Balance - May 2, 2020	39,255		$	393		$	190,260		$	769,315		22,739		$	(655,401)		$	304,567

39 Weeks Ended November 3, 2018

Common Stock Treasury Stock

Number of
Shares
Amount
Paid-In
Capital

Retained
Earnings

Number of
Shares
Amount
Total
Stockholders'
Investment

Balance - February 3, 2018
38,863

$
389

$
180,536

$
731,901

19,910

$
(593,230
)

$
319,596

Net income
-

-

-

21,786

-

-

21,786

Issuance of shares through the Company's equity plans
109

1

806

-

-

-

807

Adjustment for adoption of accounting standard
-

-

-

(645
)

-

-

(645
)
Purchase of shares under the stock repurchase program
-

-

-

-

753

(16,058
)

(16,058
)
Settlement of net share equity awards
-

-

-

-

19

(416
)

(416
)
Stock-based compensation
-

-

3,411

-

-

-

3,411

Balance - November 3, 2018
38,972

$
390

$
184,753

$
753,042

20,682

$
(609,704
)

$
328,481


13-Weeks Ended May 4, 2019
	Common Stock								Treasury Stock
	Number of Shares	Amount		Paid-In Capital		Retained Earnings		Number of Shares	Amount		Total Stockholders' Investment
Balance - February 2, 2019	38,983	$	390	$	185,752	$	759,677	20,686	$	(609,770)	$	336,049
Net income	—	—		—		27,857		—	—		27,857
Issuance of shares through the Company's equity plans	118	1		203		—		—	—		204
Adjustment for adoption of accounting standard⁽²⁾	—	—		—		(2,080)		—	—		(2,080)
Purchase of shares under the stock repurchase program	—	—		—		—		230	(4,799)		(4,799)
Settlement of net share equity awards	—	—		—		—		29	(556)		(556)
Stock-based compensation	—	—		507		—		—	—		507
Balance - May 4, 2019	39,101	$	391	$	186,462	$	785,454	20,945	$	(615,125)	$	357,182

Note: 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 this Quarterly Report on Form 10-Q.

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

See notes to unaudited condensed consolidated financial statements.

Index

HIBBETT SPORTS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

1.	1. Basis of Presentation and Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Hibbett Sports, Inc. and its wholly-owned subsidiaries (including the condensed consolidated balance sheet as of February ~~2, 2019,~~1, 2020, 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 “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 February ~~2, 2019~~1, 2020 filed on April ~~18, 2019.~~16, 2020. The unaudited condensed consolidated financial statements have been prepared on a basis consistent in all material respects with the accounting policies described in our ~~2019~~2020 Annual Report ~~except as described in Note 4,~~ ~~Leases~~, 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.

~~Acquisition~~Impact of the Novel Coronavirus (COVID-19)

~~We acquired City Gear, LLC (City Gear)~~COVID-19 was declared a global pandemic by the World Health Organization on ~~November 5, 2018 with an effective date~~March 11, 2020 and has led to adverse impacts on the U.S. and global economies. The outbreak of ~~November 4, 2018 for approximately $88.0 million,~~COVID-19 and related measures to quell the outbreak have impacted our inventory supply chain, operations and customer demand. The Company’s stores and distribution centers have continued to operate where permitted by governmental jurisdictions during the COVID-19 pandemic, and the Company is committed to maintaining a safe work and shopping environment. The COVID-19 pandemic could further affect the Company's operations and the operations of its suppliers and vendors as a result of continuing shelter-in-place orders, restrictions and limitations on travel, limitations on store or facility operations up to and including ~~$86.8 million of cash paid. (See Note 3, Acquisition~~)closures, and other governmental, business or consumer actions. The extent to which the COVID-19 pandemic will impact the Company’s operations, liquidity or financial results in subsequent periods is uncertain, but such impact could be material.

Property and Equipment

Property and equipment are recorded at ~~cost and at February 2, 2019 included assets acquired through capital leases. At November 2, 2019, finance~~cost. Finance lease assets are shown as right-of-use (ROU) assets and are excluded from property and ~~equipment.~~equipment (~~See~~see Note 4,3, Leases). In Fiscal 2020, we initiated a strategic realignment that incorporates the closure of more than 90 stores. The asset impairment charge related to the strategic realignment was not material in the 13 weeks or 39 weeks ended November 2, 2019.

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


	November 2, 2019		February 2, 2019			May 2, 2020		February 1, 2020		May 4, 2019
Land	$	7,277	$	7,277	Land	$	7,277	$	7,277	$	7,277
Buildings		21,347		21,311	Buildings	21,635		21,635		21,311
Buildings under capital lease		-		3,363
Equipment		95,426		96,402	Equipment	96,606		95,100		96,003
Equipment under capital lease		-		678
Automobiles under capital lease		-		1,829
Furniture and fixtures		36,805		36,980	Furniture and fixtures	36,931		37,048		37,225
Leasehold improvements		101,835		101,572	Leasehold improvements	103,642		102,528		101,540
Construction in progress		1,244		2,080	Construction in progress	603		1,660		1,485
Total property and equipment		263,934		271,492	Total property and equipment	266,694		265,248		264,841
Less: accumulated depreciation and amortization		162,336		156,098	Less: accumulated depreciation and amortization	168,923		164,292		157,168
Total property and equipment, net	$	101,598	$	115,394	Total property and equipment, net	$	97,771	$	100,956	$	107,673

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. 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.

Index

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.

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

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

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

Loyalty Program: We offer the Hibbett Rewards program whereby upon registration and in accordance with the terms of the program, customers earn points on certain purchases. Points convert into rewards at defined thresholds. The short-term future performance obligation liability is estimated at each reporting period based on historical conversion and redemption patterns. The liability is included in other accrued expenses on our unaudited condensed consolidated balance sheets and was ~~$2.5~~$2.3 million, $2.7 million and ~~$2.2~~$2.3 million at ~~November~~May 2, ~~2019~~2020, February 1, 2020 and ~~February 2,~~May 4, 2019, respectively.

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

The net deferred revenue liability for gift cards, customer orders and layaways at ~~November~~May 2, ~~2019~~2020, February 1, 2020 and ~~February 2,~~May 4, 2019 was ~~$6.9~~$13.2 million, $7.7 million and $7.5 million, respectively, and is recognized in accounts payable on our unaudited condensed consolidated balance sheets. Gift card breakage income is recognized in net sales in proportion to the redemption pattern of rights exercised by the customer and was not material in any period presented.

During the ~~13 weeks~~13-weeks ended May 2, 2020 and ~~39 weeks ended November 2,~~May 4, 2019, $0.5 million and ~~$1.4~~$0.8 million of gift card deferred revenue from prior periods was realized, respectively.

Return Sales: The liability for return sales is estimated at each reporting period based on historical return patterns and is recognized at the transaction price. The liability is included in accounts payable on our unaudited condensed consolidated balance ~~sheet. We also recognize a~~sheets. The return asset and a corresponding adjustment to cost of goods sold for our right to recover the merchandise returned by the ~~customer. This right to recover asset~~customer is included in net inventory on our unaudited condensed consolidated balance sheet at the former carrying value of the merchandise less any expected recovery costs which was $0.5 million at both November 2, 2019 and November 3, 2018.immaterial.

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


	13 Weeks Ended				39 Weeks Ended					13-Weeks Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018			May 2, 2020		May 4, 2019
Footwear	$	168,265	$	118,298	$	535,809	$	395,948	Footwear	$	166,242	$	215,075
Apparel		69,943		58,984		216,097		179,244	Apparel	79,407		79,557
Equipment		37,267		39,606		119,304		127,526	Equipment	24,188		48,663
Total	$	275,475	$	216,888	$	871,210	$	702,718	Total	$	269,837	$	343,295

Goodwill and Indefinite-Lived Intangible Assets

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

Index

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

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

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

2.	~~Recent Accounting Pronouncements~~
(in thousands)
Goodwill balance at February 1, 2020		$	19,661
Impairment losses		(19,661)
Goodwill balance at May 2, 2020		$	—

~~Standards~~In valuing the tradename intangible, we use the Relief from Royalty method which requires assumptions related to future revenues, royalty rate and discount rate. In the 13-weeks ended May 2, 2020, we determined that ~~were adopted~~

~~We adopted Accounting Standards Update (ASU) 2016-02, Topic 842,~~ ~~Leases, as~~the City Gear tradename was partially impaired and recognized a non-cash impairment charge of February 3, 2019 using the modified retrospective transition method with the cumulative effect adjustment to the opening balance of retained earnings as of the effective date (effective date method). Under the effective date method, financial results reported$8.9 million in ~~periods prior to Fiscal 2020 are unchanged.~~

We elected the package of practical expedients, which among other things, does not require reassessment of lease classification. We did not elect to use hindsight in determining the lease term of existing contracts at the effective date. We also elected the short-term lease recognition exemption for all our leases. For those leases that qualified as short-term, we did not recognize ROU assets or lease liabilities at adoption. We have lease agreements with non-lease components that relate to the lease components. We elected not to separate the non-lease components for store ~~lease assets. We elected to separate the non-lease components for office~~operating, selling and ~~transportation equipment lease assets.~~

The adoption of ASU 2016-02 had a material impact on our unaudited condensed consolidated balance. Adoption of the standard resulted in the recognition of operating and finance lease ROU assets and operating and finance lease liabilities of $234.0 million and $265.6 million, respectively, and a reduction to retained earnings of $2.1 million, net of tax, as of February 3, 2019. The operating lease ROU assets recorded at transition include the impact of net unfavorable lease rights of approximately $2.0 million, deferred rent of approximately $25.4 million, and the impairment of ROU assets recognized in retained earnings as of February 3, 2019 of approximately $3.4 million. The adoption did not have a material impactadministrative expenses on our unaudited condensed consolidated statement of ~~operations~~operations. NaN impairment related to the tradename was recognized during the year ended February 1, 2020 or ~~statement of cash flows. See Note~~the 13-weeks ended May 4, ~~Leases, in these unaudited condensed consolidated financial statements for additional information.~~2019.


(in thousands)
Tradename intangible asset balance at February 1, 2020	$	32,400
Impairment losses	(8,900)
Tradename intangible asset balance at May 2, 2020	$	23,500

2. Recent Accounting Pronouncements

Standards that ~~are not yet~~were adopted

~~In August 2018, the~~We adopted Financial Accounting ~~Standards~~Standard Board (FASB) ~~issued~~ ASU ~~No. 2018-15,~~ ~~Intangibles – Goodwill and Other-Internal-Use Software~~, which clarifies and aligns the accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. The adoption of ASU 2018-15 is not expected to have a material impact on our financial statements and related disclosures.

~~In June 2016, the FASB issued ASU No.~~ 2016-13, Topic 326, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which ~~establishes ASC 326,~~ ~~Financial Instruments - Credit Losses. The ASU revises~~revised the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. ~~The ASU affects trade~~Historical experience, current economic conditions and reasonable supportable forecasts are considered in establishing an allowance for credit losses which is shown on the unaudited condensed consolidated balance sheet in receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In November 2018, the FASB issued ASU No. 2018-19, ~~Codification Improvements to Topic 326, Financial Instruments - Credit Losses. This ASU clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. In May 2019, the FASB issued ASU No. 2019-05,~~ ~~Targeted Transition Relief~~, which amends ASC 326. This ASU provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The effective date will be the first quarter of Fiscal 2021.net. The adoption of ~~ASU 2016-13 is~~ASU-2016-03 did not ~~expected to~~ have a material impact on our unaudited condensed consolidated financial ~~statements~~statements.

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

Standards that are not yet adopted

We continuously monitor and review all current accounting pronouncements and standards from the FASB of U.S. GAAP for applicability to our operations. As of ~~November~~May 2, ~~2019,~~2020, there were no other new pronouncements or interpretations that had or were expected to have a significant impact on our operations.

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3.	~~Acquisition~~

On November 5, 2018, through our wholly-owned subsidiary, Hibbett Sporting Goods, Inc., we acquired City Gear, a Tennessee limited liability company. Under the Purchase Agreement, we agreed to acquire all the outstanding warrants and equity interests, other than certain preferred membership interests, of City Gear, a privately held city specialty retailer.3. Leases

~~Index~~

The purchase price was $88.0 million (Purchase Price) in cash payable at the closing of the transaction (Closing), subject to customary adjustments for City Gear’s cash on hand and net working capital as of the Closing date. The Purchase Agreement provided that a portion of the Purchase Price be used at Closing to pay off and redeem the outstanding preferred membership interests in City Gear as well as certain other outstanding indebtedness. In addition, the aggregate consideration payable to the Sellers in connection with the transaction includes two contingent payments (Earnout) based on City Gear’s achievement of certain EBITDA thresholds (as defined in the Purchase Agreement) for the 52-week periods ended February 1, 2020 and January 30, 2021, respectively. The aggregate amount of the Earnout, if any, will not exceed $25.0 million.

The acquisition provides us with substantially greater scale in the athletic specialty market and is an extension of our strategy to provide high demand, branded products to underserved markets. During the 13 weeks and 39 weeks ended November 2, 2019, we incurred $5.0 million and $14.2 million in acquisition-related expenses, respectively, excluding acquisition-related interest expense.

There were no adjustments recorded in the 13 weeks ended November 2, 2019 to the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date of November 4, 2018. The measurement period closed during the third quarter ended November 2, 2019.

The following unaudited consolidated pro forma summary has been prepared by adjusting the Company’s historical data to give effect to the City Gear acquisition as if it had occurred on January 29, 2017 (the beginning of Hibbett’s fiscal year ended February 3, 2018).

Ended November 3, 2018
(in thousands, except per share data) 13 Weeks 39 Weeks
Net sales $ 258,076 $ 846,664
Net (loss) income $ (6,735 ) $ 17,966
Basic (loss) earnings per share $ (0.36 ) $ 0.96
Diluted (loss) earnings per share $ (0.36 ) $ 0.95

~~The results for the 13 weeks and 39 weeks ended November 3, 2018 have been primarily adjusted to include:~~

~~the pro forma impact of amortization of intangible assets~~

~~the depreciation of property and equipment, based on purchase price allocations;~~

~~the pro forma impact of additional interest expense relating to the acquisition;~~

~~the pro forma impact of acquisition-related costs incurred by the Company directly attributable to the transaction; and~~

~~the pro forma tax effect of income taxes on the above adjustments.~~

~~Results have been adjusted to exclude the impact of acquisition-related expenses and purchase accounting adjustments incurred by the Company that are directly attributable to the transaction.~~

The pro forma financial information has been prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are based on estimates derived from currently available information and not indicative of the results of operations that would have occurred if the City Gear acquisition had been completed on the date indicated. They do not reflect the effect of costs or synergies that are expected to result from the integration of the City Gear acquisition.

4.	~~Leases~~

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

•scheduled increases in rent payments over the lease term,

•tenant inducements,

•free rent periods,

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

•one or more renewal options at our discretion, and

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

~~Index~~

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

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

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

In April 2020, ~~operating~~the Financial Accounting Standards Board (FASB) issued a staff question-and-answer document (Staff Q&A) to respond to some frequently asked questions about accounting for lease ~~liabilities are recognized based on~~concessions related to the ~~present value~~effects of ~~remaining fixed~~the COVID-19 pandemic. Under current U.S. GAAP, subsequent changes to lease payments ~~over~~that are not stipulated in the original lease ~~term. Operating~~are generally accounted for as lease ~~ROU assets are recognized based on~~modifications under ASC Topic 842, Leases. The Staff Q&A grants relief by allowing companies to make an accounting policy election to not evaluate lease concessions related to the calculated lease liability, adjusted for lease prepayments, initial direct costs and tenant inducements. Because the implicit rate is generally not readily determinable for our leases, we use our estimated incremental borrowing rate as the discount rate for the leases when measuring operating lease liabilities. The incremental borrowing rate represents an estimateeffects of the ~~interest rate we would incur at~~COVID-19 pandemic as lease ~~commencement~~modifications. We did not elect to ~~borrow an amount equal to the~~utilize this alternative accounting.

Our lease payments on a collateralized basis over a similar term as the lease term. Operating lease cost for fixed lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred.

~~None of our leases~~agreements do not contain material residual value guarantees or material restrictive covenants. ROU lease assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to test ROU assets (or asset groups that contain one or more ROU assets) for impairment, whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize. An asset group impairment charge of approximately ~~$0.3~~$4.1 million and ~~$1.2~~$1.1 million was recognized in the ~~13 weeks~~13-weeks ended May 2, 2020 and ~~39 weeks ended November 2,~~May 4, 2019, respectively.

Store operating lease cost and logistics-related transportation equipment operating lease cost are included in cost of goods sold in the unaudited condensed consolidated statements of operations. Office equipment and other transportation equipment operating lease cost is included in store operating, selling and administrative expenses in the unaudited condensed consolidated statements of operations.


							13-weeks ended
	13 Weeks Ended November 2, 2019			39 Weeks Ended November 2, 2019			May 2, 2020		May 4, 2019
Operating lease cost	$	17,051		$	52,593	Operating lease cost	$	17,139	$	17,138
Finance lease cost:						Finance lease cost:
Amortization of assets		224			684	Amortization of assets	235		237
Interest on lease liabilities		53			176	Interest on lease liabilities	48		65
Variable lease cost		(49	)		55	Variable lease cost	(1,208)		385
	$	17,279		$	53,508		$	16,214	$	17,825

Short-term lease cost is immaterial.

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Finance right-of-use assets on the unaudited condensed consolidated balance sheet at ~~November~~May 2, 2020, February 1, 2020 and May 4, 2019 are shown net of accumulated amortization of ~~$0.7 million.~~$1.0 million, $0.8 million and $0.2 million, respectively.

The following table provides supplemental balance sheet information ~~as of November 2, 2019,~~ related to leases:

~~Weighted average remaining lease term (in years):~~
~~Operating leases~~	5
~~Finance leases~~	3

~~Weighted average discount rate:~~
~~Operating leases~~	~~4.2~~	%
~~Finance leases~~	~~13.5~~	%


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

Weighted average discount rate:
Operating leases	3.9	%	4.1	%	4.2	%
Finance leases	7.6	%	8.8	%	11.6	%

~~Index~~

The following table provides supplemental cash flow and other information related to leases ~~for the 39 weeks ended November 2, 2019~~ (in thousands):

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


				13-weeks ended
				May 2, 2020		May 4, 2019
Operating cash flows from operating leases	$	53,020	Operating cash flows from operating leases	$	19,724	$	17,269
Operating cash flows from finance leases	$	176	Operating cash flows from finance leases	$	48	$	65
Financing cash flows from finance leases	$	722	Financing cash flows from finance leases	$	301	$	242

ROU assets obtained in exchange for lease liabilities, net			ROU assets obtained in exchange for lease liabilities, net
Operating leases	$	32,699	Operating leases	$	9,524	$	10,142
Finance leases	$	-	Finance leases	$	533	$	—

Maturities of lease liabilities as of ~~November~~May 2, ~~2019~~2020 (in thousands):

	Operating		Finance		Total
Remainder of Fiscal 2020	$	12,025	$	286	$	12,311
Fiscal 2021		71,429		869		72,298
								Operating		Finance		Total
Remainder of Fiscal 2021							Remainder of Fiscal 2021	$	57,757	$	840	$	58,597
Fiscal 2022		57,889		383		58,272	Fiscal 2022	65,452		740		66,192
Fiscal 2023		42,942		343		43,285	Fiscal 2023	50,045		707		50,752
Fiscal 2024		29,793		240		30,033	Fiscal 2024	35,575		597		36,172
Fiscal 2025							Fiscal 2025	25,043		178		25,221
Thereafter		52,850		23		52,873	Thereafter	43,039		169		43,208
Total minimum lease payments		266,928		2,144		269,072	Total minimum lease payments	276,911		3,231		280,142
Less amount representing interest		26,582		339		26,921	Less amount representing interest	25,085		361		25,446
	$	240,346	$	1,805	$	242,151		$	251,826	$	2,870	$	254,696

As of ~~November~~May 2, ~~2019,~~2020, we have entered into operating leases of approximately ~~$0.6~~$0.9 million related to future store locations that have not yet commenced.

Prior to the adoption of ASC 842, we had entered into capital leases for certain property. At February 2, 2019, total capital lease obligations were $3.0 million, of which $1.0 million was included in short-term capital lease obligations and $2.0 million was included in long-term capital lease obligations on our unaudited condensed consolidated balance sheet.

As previously disclosed in our 2019 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments due under non-cancelable capital and operating leases as of February 2, 2019 were as follows:

Capital Operating Total
Fiscal 2020
$
1,259

$
68,002

$
69,261

Fiscal 2021
951

58,666

59,617

Fiscal 2022
451

46,683

47,134

Fiscal 2023
408

34,011

34,419

Fiscal 2024
306

22,426

22,732

Thereafter
217

40,181

40,398

Total minimum lease payments
3,592

269,969

273,561

Less amount representing interest
581

-

581

$
3,011

$
269,969

$
272,980

5.	4. Fair Value of Financial Instruments

We utilize 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.

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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.

~~Index~~

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


	November 2, 2019						February 2, 2019							May 2, 2020										February 1, 2020								May 4, 2019
	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	$	613	$	-	$	-	$	158	$	-	$	-	Short-term investments	$	468	$	—	$	—	$	554	$	—	$	—	$	199	$	—	$	—
Long-term investments		2,086		-		-		2,377		-		-	Long-term investments	1,844		—		—		2,208		—		—		2,499		—		—
Short-term contingent earnout		-		-		9,866							Short-term contingent earnout	—		—		10,000		—		—		9,958		—		—		—
Long-term contingent earnout		-		-		7,881		-		-		9,200	Long-term contingent earnout	—		—		77		—		—		11,099		—		—		6,600
Total investments	$	2,699	$	-	$	17,747	$	2,535	$	-	$	9,200	Total investments	$	2,312	$	—	$	10,077	$	2,762	$	—	$	21,057	$	2,698	$	—	$	6,600

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 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 members and warrant holders of City Gear if certain financial goals are achieved in Fiscal 2020 and Fiscal 2021. 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 is re-valued each quarter and any change in valuation is recognized in our statements of operations. As a result of the revaluation for the ~~13 weeks and 39 weeks~~13-weeks ended ~~November~~May 2, ~~2019, an increase~~2020, a decrease of ~~$4.1 million and $11.7~~$11.0 million was recognized in store operating, selling and administrative ~~expenses, respectively. Subsequent to February 2, 2019, we made~~expenses. As a ~~$3.2 million adjustment to~~result of the ~~acquisition date contingent earnout valuation from $9.2 million to $6.0 million. The impact of this measurement period adjustment flowed through goodwill in~~revaluation for the ~~quarter~~13-weeks ended May 4, ~~2019.~~2019, an increase of $0.6 million was recognized in store operating, selling and administrative expenses.

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

In March 2020, we borrowed $50.0 million under these credit agreements as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic. The proceeds from such borrowings were used 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 supersedes the Regions Bank credit agreement dated October 2018, matures April 19, 2021, and is secured by all assets of the Company with the exception of real property. Simultaneous to the execution of the Amended Credit Facility, the $50.0 million outstanding under the previous credit agreements were 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.

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

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

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

There were ~~91 and 273~~58 days during the ~~13 weeks and 39 weeks~~13-weeks ended ~~November~~May 2, ~~2019,~~2020, where we incurred borrowings against ~~our~~all credit facilities ~~with Bank of America and Regions Bank~~ for an average ~~borrowing of $13.8 million and $22.1 million, respectively,~~ and maximum borrowing of ~~$17.0~~$38.7 million and ~~$35.0~~$50.0 million, respectively. The average interest rate during the ~~13 weeks and 39 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 was ~~3.58% and 3.83%, respectively.~~3.22%. At ~~November~~May 2, ~~2019,~~2020, a total of ~~$92.0~~$25.0 million was available to us from ~~these facilities.~~the Amended Credit Facility.

There were 95331 days during the ~~52 weeks~~52-weeks ended February 2,1, 2020, where we incurred borrowings against these credit facilities for an average and maximum borrowing of $21.5 million and $38.0 million, respectively, and an average interest rate of 3.73%. There were 91 days during the 13-weeks ended May 4, 2019 where we incurred borrowings against these credit facilities for an average and maximum borrowing of ~~$45.4~~$30.9 million and ~~$75.0~~$35.0 million, respectively, and an average interest rate of ~~3.70%~~4.00%.

13On June 5, 2020, we entered into a Note Modification Agreement that extends the maturity date of the Amended Credit Facility from April 19, 2021 to July 18, 2021. No other provisions of the Amended Credit Facility were affected.

~~Index~~

6. Stock-Based Compensation

7.	~~Stock-Based Compensation~~

The compensation costs that have been charged against income for the ~~13 weeks~~13-weeks ended May 2, 2020 and ~~39 weeks ended November 2,~~May 4, 2019 ~~and November 3, 2018~~ were as follows (in thousands):


	13 Weeks Ended				39 Weeks Ended					13-Weeks Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018			May 2, 2020		May 4, 2019
Stock-based compensation expense by type:									Stock-based compensation expense by type:
Stock options	$	-	$	8	$	92	$	185	Stock options	$	90	$	92
Restricted stock units		859		702		1,576		3,074	Restricted stock units	1,060		363
Employee stock purchases		22		24		73		81	Employee stock purchases	44		29
Director deferred compensation		24		24		70		71	Director deferred compensation	23		23
Total stock-based compensation expense		905		758		1,811		3,411	Total stock-based compensation expense	1,217		507
Income tax benefit recognized		295		172		428		762	Income tax benefit recognized	391		113
Stock-based compensation expense, net of income tax	$	610	$	586	$	1,383	$	2,649	Stock-based compensation expense, net of income tax	$	826	$	394

Expense for restricted stock units is shown net of forfeitures of ~~$36,000~~$0.3 million and ~~$1.8~~$1.3 million for the ~~13 weeks~~13-weeks ended May 2, 2020 and ~~39 weeks ended November 2,~~May 4, 2019, respectively. ~~Expense for restricted stock units is shown net of forfeitures of $0.1 million and $0.2 million for the 13 weeks and 39 weeks ended November 3, 2018.~~

In the ~~13 weeks~~13-weeks ended May 2, 2020 and ~~39 weeks ended November 2,~~May 4, 2019, ~~and November 3, 2018,~~ we granted the following equity awards:


	13 Weeks Ended				39 Weeks Ended					13-Weeks Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018			May 2, 2020	May 4, 2019
Stock options		--		--		16,798		19,994	Stock options	27,000	16,798
Restricted stock unit awards		6,934		--		229,528		169,572	Restricted stock unit awards	334,485	191,021
Performance-based restricted stock unit awards		--		--		34,300		44,700	Performance-based restricted stock unit awards	—	34,300
Deferred stock units		1,023		1,247		3,338		3,249	Deferred stock units	2,143	1,027

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At ~~November~~May 2, ~~2019,~~2020, the total compensation costs related to ~~nonvested~~unvested restricted stock unit awards not yet recognized was ~~$6.1~~$7.9 million and the weighted-average period over which such awards are expected to be recognized was ~~2.4~~2.9 years. There were no compensation costs related to ~~nonvested~~unvested stock options at ~~November~~May 2, ~~2019.~~

2020.

Under the 2012 Non-Employee Director Equity Plan (2012 Plan), no0 shares of our common stock were awarded during the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019 and November 3, 2018.~~2020. A total of 13,858 ~~and 4,435~~ shares of our common stock were awarded during the ~~39 weeks~~13-weeks ended ~~November 2,~~May 4, 2019, ~~and November 3, 2018, respectively,~~ as part of the annual equity award to directors in the first quarter.

NoDuring the 13-weeks ended May 2, 2020 and May 4, 2019, 27,000 and 16,798 stock options were granted, ~~during the 13 weeks ended November 2, 2019 and November 3, 2018.~~respectively. The weighted-average grant date fair value of stock options granted during the ~~39 weeks~~13-weeks ended ~~November~~May 2, 2020 and May 4, 2019 was $3.33 and ~~November 3, 2018 was~~ $5.46 ~~and $7.15~~ per share, respectively.

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				39 Weeks Ended					13-Weeks Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018			May 2, 2020		May 4, 2019
Shares purchased		5,652		6,029		21,205		18,360	Shares purchased	17,758		9,925
Average price per share	$	15.73	$	15.98	$	13.99	$	17.56	Average price per share	$	9.29	$	12.16
Weighted average fair value at grant date	$	4.16	$	5.10	$	3.96	$	4.97	Weighted average fair value at grant date	$	4.21	$	3.14

~~Index~~

8.	7. Earnings Per Share

The computation of basic earnings per share (EPS) is based on the number of weighted average 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 common shares outstanding (in thousands):


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

13 Weeks Ended 39 Weeks Ended
November 2,
2019 November 3,
2018 November 2,
2019 November 3,
2018
Weighted-average shares used in basic computations
17,568

18,495

17,927

18,763

Dilutive equity awards
247

180

158

181

Weighted-average shares used in diluted computations
17,815

18,675

18,085

18,944

For the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019, we~~2020, all stock-based awards were excluded ~~251,847 options~~ from the computation of diluted weighted-average common shares and common share equivalents outstanding because of their anti-dilutive effect. For the ~~13 weeks~~13-weeks ended ~~November 3, 2018,~~May 4, 2019, we excluded ~~251,314~~253,142 options from the computation of diluted weighted-average common shares and common share equivalents outstanding because of their anti-dilutive effect.

~~We excluded 42,300 nonvested stock~~During periods of net income, we exclude anti-dilutive stock-based awards granted to certain employees from the computation 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 ~~November 2, 2019. Assuming the performance-criteria had been achieved as~~period end. During periods of ~~November 2, 2019, the incremental dilutive impact would have been 18,340 shares.~~net loss, no effect is given for anti-dilutive options or unvested stock awards.

9.	8. Stock Repurchase Activity

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

During the ~~13 weeks~~13-weeks ended ~~November~~May 2, 2020, we repurchased 428,018 shares of our common stock under a 10b5-1 plan at a cost of $9.7 million under the Program and acquired 30,895 shares from holders of restricted stock unit awards to satisfy tax

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withholding requirements of $0.4 million. During the 13-weeks ended May 4, 2019, we repurchased ~~371,976~~230,000 shares of our common stock at a cost of ~~$7.0~~$4.8 million ~~under the Program. During the 39 weeks ended November 2, 2019, we repurchased 1,031,940 shares of our common stock at a cost of $20.8 million under the Program~~ and acquired 29,432 shares from holders of restricted stock unit awards to satisfy tax withholding requirements of $0.6 million.

During the 13 weeks ended November 3, 2018, we repurchased 395,450 shares of our common stock at a cost of $7.6 million. During the 39 weeks ended November 3, 2018, we repurchased 753,286 shares of our common stock at a cost of $16.1 million under the Program and acquired 18,765 shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements of $0.4 million.

As of ~~November~~May 2, ~~2019,~~2020, we had approximately ~~$167.2~~$143.3 million remaining under the Program for stock repurchases. ~~Subsequent to November 2, 2019, we have repurchased 49,100 shares of our common stock at a cost of $1.3 million under the Program as of December 5, 2019.~~

~~10.~~

9. Commitments and Contingencies

Annual Bonuses and Equity Incentive Awards.

Specified officers and corporate employees of our Company are eligible to receive annual bonuses, based on measures of Company operating performance. For Fiscal 2021, the Compensation Committee of our Board again based the short-term cash incentive on earnings before interest and taxes (EBIT) for Fiscal 2021 but in light of the COVID-19 pandemic, the Compensation Committee expects that adjustments to the set goal will be made in its discretion. Annual bonus related expenses included in accrued payroll expenses on our unaudited condensed consolidated balance sheets was ~~$6.7~~$0.9 million, $8.7 million and ~~$3.9~~$1.5 million at ~~November~~May 2, ~~2019~~2020, February 1, 2020 and ~~February 2,~~May 4, 2019, respectively.

~~Index~~

In addition, the Compensation Committee of the Board has placed performance criteria on awards of restricted stock units (PSUs) to our “named executive officers” as determined in accordance with Item 402(a) of Regulation S-K. The performance criteria are tied to performance targets with respect to future return on invested capital and earnings before interest and taxes over a specified period of time. These PSUs are expensed under the provisions of ASC Topic 718, Compensation – Stock Compensation, and are evaluated each quarter to determine the probability that the performance conditions set within will be met.

In May 2019, our President and CEO, Jeffry Rosenthal, entered into a Retirement Agreement (Agreement) with the Company. The Agreement provides, among other things, a salary continuation of $0.6 million payable after his effective retirement date in equal installments over one year and a lump sum cash payment equal Due to the ~~number~~current macroeconomic environment and unprecedented disruption caused by the COVID-19 pandemic, the resulting significant global market decline, and its effect on the value of ~~outstanding~~our common stock, the Compensation Committee decided to make adjustments to the compensation structure for Fiscal 2021. For Fiscal 2021 only, equity awards ~~granted~~ to Mr. Rosenthal (which terminated effective May 10, 2019) multiplied by a computed value defined in the Agreement, but not less than $1.0 million. At November 2, 2019, $2.9 million was accrued under the Agreement and is included in accrued payroll expenses on our unaudited condensed consolidated balance sheet.

executive officers were service-based only, with no performance criteria.

Legal Proceedings and Other Contingencies.

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

~~11.~~

10. Income Taxes

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

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

At ~~November~~May 2, ~~2019,~~2020, we had a liability of ~~$0.9~~$1.0 million associated with unrecognized tax benefits. We file income tax returns in ~~the~~ U.S. federal and various state jurisdictions. Generally, we are not subject to changes in income taxes by the U.S. federal taxing jurisdiction for years prior to Fiscal 2017 or by most state taxing jurisdictions for years prior to Fiscal 2016.

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

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

11. Related-Party Transactions

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

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

Memphis Logistics Group (MLG)

MLG provides logistics and warehousing services to City Gear. Mr. Longo owns a majority interest in MLG and the existing contract is effective through June 2020. The supply chain and logistic transition is currently in the planning stages. In the 13-weeks ended May 2, 2020 and May 4, 2019 payments to MLG under the contract were $1.7 million and $2.0 million, respectively. The amount outstanding to MLG at May 2, 2020, February 1, 2020 and May 4, 2019 was $0.2 million, $0.5 million and $0.4 million, respectively, and is included in accounts payable on our unaudited condensed consolidated balance sheets.

T.I.G. Construction (TIG)

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

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 2, 2020 and May 4, 2019, minimum lease payments to MC were $51.2 thousand. There were 0 minimum lease payments remaining under this lease at May 2, 2020. There were 0 amounts outstanding to MC at May 2, 2020, February 1, 2020 or May 4, 2019.

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

~~ITEM 2.~~

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

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

~~Important Notice~~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 orand results and ~~typically use~~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 anticipated impact to our business operations consumer demand and supply chain due to the recent global pandemic of a novel strain of the coronavirus (COVID-19);

•our ~~expectations concerning store growth, product margin,~~cash needs, including our ability to fund our future capital expenditures, working capital requirements and repurchases of Company common stock under our repurchase program;

•our relationships with vendors and the ~~remodeling, relocation or expansion~~loss of ~~selected existing stores, and growth in our e-commerce business;~~

key vendor support;

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

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

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

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

•our store ~~closure plan, including estimates of impairment and store closure charges;~~

~~our expectations concerning cash needs and capital expenditures,~~growth, including our ~~intentions and~~plans to add, expand, relocate or close stores, our markets' ability to ~~fund the opening of~~support such growth, expected changes in total square footage, our ability to secure suitable locations for new stores and the ~~remodeling, relocation~~suitability of our wholesale and logistics facility;

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

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

•the cost of ~~existing stores, our plans relating to information technology~~regulatory compliance, including the costs and possible outcomes of pending legal actions and other ~~future capital expenditures~~contingencies;

•our analysis of our risk factors and ~~working capital requirements;~~

their possible effect on financial results;

~~our expectations concerning the impact of the acquisition and integration of City Gear, including the payment of contingent earnout amounts and the amount and timing of acquisition-related expenses;~~

•our ability and plans to renew our credit ~~facilities;~~

facility;

•our expectations regarding our capital expenditures and dividend policy;

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

•our expectations regarding competition;

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

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

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

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

•the ~~impact or~~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 ~~pending legal proceedings~~tariffs on Chinese goods imposed by the United States and other ~~contingencies on our business, financial condition or results of operations;~~

potential impediments to imports;

~~seasonality and the effect of inflation; and~~

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

•our ability to mitigate the ~~transition~~risk of possible business interruptions, including, without limitation, from ~~LIBOR as an interest rate benchmark to other potential alternative reference rates.~~

political or social unrest (including vandalism and looting).

A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should ~~assume that the~~not place undue reliance on forward-looking statements. Our forward-looking statements are based on currently available operation, financial and business information ~~appearing in this report is accurate~~and speak only as of the date ~~it was issued.~~of this report. Our business, financial condition, results of operations, financial condition, results of operations and ~~intentions~~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,” “Business” and “Properties”~~

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Factors” in our Form 10-K for the fiscal year ended February ~~2, 2019~~1, 2020 filed with the Securities and Exchange Commission on April ~~18, 2019.~~16, 2020. 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.

~~Our~~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 ~~be wrong in light of these risks, uncertainties and assumptions. The future events, developments or results~~differ materially from those described in ~~this report~~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 ~~turn out to be materially different.~~ have an impact on our forward-looking statements.

We ~~have no obligation~~do not undertake to publicly update or revise ~~our~~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 others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

~~Index~~

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 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 Securities and Exchange Commission on its EDGAR database at www.sec.gov. In addition to accessing copies of our reports online, you may request a copy of our Annual Report on Form 10-K for the fiscal year ended February ~~2, 2019,~~1, 2020, at no charge, by writing to: Investor Relations, Hibbett Sports, Inc., 2700 Milan Court, Birmingham, Alabama 35211.

Adapting to the COVID-19 Business Environment

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

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

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

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

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

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

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

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

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

•Stores are being extensively cleaned on a daily basis.

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

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

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

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

•Contactless payment is available in all stores.

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

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

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

General Overview

Hibbett Sports, Inc. is a leading athletic-inspired fashion retailer primarily located in small and mid-sized communities across the country. Founded in 1945, Hibbett has a rich history of convenient locations, personalized customer service and access to coveted footwear, apparel and equipment from top brands like Nike, Jordan, Adidas and Under Armour. Consumers can browse styles, find new releases, shop looks and make purchases online or in their nearest store or by visiting www.hibbett.com or www.citygear.com. ~~Follow~~ and can follow us ~~@hibbettsports~~@HibbettSports and ~~@citygear.~~ @CityGear. We became a public company in October 1996. As of ~~November~~May 2, ~~2019,~~2020, we operated a total of ~~1,097~~1,078 retail stores in 35 states composed of ~~933~~908 Hibbett Sports stores, ~~146~~152 City Gear stores and 18 Sports Additions athletic shoe stores.

Our Hibbett Sports stores average ~~5,700~~5,800 square feet and are located primarily in strip centers, which are usually near a major chain retailer such as Wal-Mart. Our City Gear stores average 5,000 square feet and are located primarily in strip centers. OfAs of May 2, 2020, our store base ~~77% are~~consisted of 798 stores located in strip centers, ~~which includes~~31 free-standing stores and ~~23% are in~~249 enclosed mall ~~locations as of November 2, 2019.~~locations.

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

As the retail environment continues to evolve, we remain focused on improving the productivity of the store base while continuing to grow our omni-channel business to serve customers where and when they want to shop and improve the overall customer experience. As a result, subsequent to the year ended February 2, 2019, we decided to close approximately 95 underperforming Hibbett stores during Fiscal 2020, while opening 10 to 15 new Hibbett and City Gear stores in more relevant locations. We expect these closures will result in non-recurring impairment and store closure charges in the range of $0.08 to $0.12 per diluted share in Fiscal 2020.

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

Inclusion of our City Gear stores ~~will not be included~~began in ~~comparable store sales data until~~ the fourth quarter of Fiscal 2020. If a store remodel, relocation or expansion results in the store being closed for a significant period of time, its sales are removed from the comparable sales base until it has been open a full 12 months. During the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019,~~2020, we included ~~927~~1,047 stores in comparable sales. ~~During~~We did not exclude any stores from the ~~39 weeks ended November 2, 2019, we included 914 stores in~~ comparable ~~sales.~~sales base that were temporarily closed due to the COVID-19 pandemic.

Executive Summary

Net sales for the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019, increased 27.0%~~2020, decreased 21.4% to ~~$275.5~~$269.8 million compared with ~~$216.9~~$343.3 million for the ~~13 weeks~~13-weeks ended ~~November 3, 2018.~~May 4, 2019. Comparable store sales ~~which did not include City Gear stores, increased 10.7%~~decreased 19.5% for the ~~13 weeks~~13-weeks ended ~~November~~May 2, 2019, with strong performance in footwear and positive performance in activewear and accessories connecting to footwear products. We experienced continued challenges in equipment and licensed products.2020. E-commerce sales accounted for ~~10.5%~~22.3% of total sales for the ~~period~~13-weeks ended May 2, 2020 compared to ~~8.8%~~8.3% of total sales for the ~~third quarter~~13-weeks ended ~~November 3, 2018. During the third quarter, we integrated City Gear’s digital site into our online platform.~~May 4, 2019. Gross margin was ~~32.7%~~27.5% of net sales for the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019,~~2020, compared with ~~32.5%~~34.5% for the ~~13 weeks~~13-weeks ended November 3, 2018. The increase in the gross margin percentage was partially due to lower occupancy costs as a percent of net sales. At the end of the third quarter of Fiscal 2020, aged inventory levels were significantly improved compared with the same period last year.

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Net sales for the 39 weeks ended November 2, 2019, increased 24.0% to $871.2 million compared with $702.7 million for the 39 weeks ended November 3, 2018. Comparable store sales, which did not include City Gear stores, increased 5.4% for the 39 weeks ended November 2,May 4, 2019. E-commerce sales accounted for 9.1% of total sales for the 39-week period compared to 7.8% of total sales for the same period last year. Gross margin was 32.7% of net sales for the 39 weeks ended November 2, 2019, compared with 33.2% for the 39 weeks ended November 3, 2018. The decrease in the gross margin percentage was ~~primarily~~ due to ~~liquidation stores which trended at low~~the higher concentration of e-commerce sales to ~~negative product margin,~~brick and ~~increased freight costs from strong e-commerce sales.~~mortar sales in addition to a $5.1 million increase in our lower of cost or net realizable value (LCM) inventory reserve.

Store operating, selling and administrative (SG&A) expense, including goodwill impairment, was 33.1% of net sales for the 13-weeks ended May 2, 2020, compared with 21.6% of net sales for the 13-weeks ended May 4, 2019. The main drivers of the SG&A increase were non-cash impairment charges for goodwill of $19.7 million, City Gear tradename of $8.9 million and other asset impairment of $4.1 million, partially offset by a reduction of $11.0 million for the second year earnout liability related to the City Gear acquisition.

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During the ~~third~~first quarter of Fiscal ~~2020,~~2021, we opened ~~four~~three new stores, rebranded ~~four~~two Hibbett stores to City Gear stores, and closed 19eight underperforming stores, bringing the store base to ~~1,097~~1,078 in 35 states as of ~~November~~May 2, ~~2019.~~2020. Store closures include Hibbett stores closed for rebranding. ~~In addition, one high-performing store was expanded.~~ We ended the ~~third~~first quarter of Fiscal ~~2020~~2021 with ~~$77.4~~$106.2 million of available cash and cash equivalents, ~~and~~including outstanding debt of ~~$8.0~~$50.0 million and after stock repurchases during the ~~39 weeks~~13-weeks ended ~~November~~May 2, ~~2019,~~2020, of ~~$20.8~~$9.7 million.

About Non-GAAP Measures

This MD&A includes ~~presentation and discussion of~~ certain non-GAAP financial measures, including adjusted net income, earnings per share, gross margin ~~SG&A expenses~~ and SG&A expenses as a percentage of net sales. Management believes ~~that~~ these non-GAAP financial measures ~~which exclude the effects of expenses related to the acquisition of City Gear and our strategic realignment plan,~~ are useful ~~measures for providing more accurate~~to investors to facilitate comparisons of our current financial results to historical operations ~~forward looking guidance~~ and the financial results of peer ~~companies.~~companies, as they exclude the effects of items that may not be indicative of, or are unrelated to, our underlying operating results, such as expenses related to the COVID-19 pandemic, the acquisition of City Gear and our accelerated store closure plan in Fiscal 2020. The costs related to the COVID-19 pandemic include impairment charges of goodwill, tradename and other assets, paid-not-worked labor costs net of related tax credits and excess LCM inventory reserve charges. The costs related to the acquisition of City Gear include amortization of inventory step-up value, professional service fees, and legal and accounting fees. The change in valuation of the contingent earnout ~~legal~~was included in COVID-19 costs for the 13-weeks ended May 2, 2020 and ~~accounting fees. In future periods, such acquisition-related~~in acquisition of City Gear costs ~~may include one or more of~~for the ~~following categories of expenses: (i) transition and integration costs, (ii) professional service fees and expenses and (iii) contingent earnout valuation updates. Future costs~~13-weeks ended May 4, 2019. Costs related to the strategic realignment plan ~~may include: (i)~~included lease and equipment impairment costs, ~~(ii)~~ third party liquidation fees, ~~(iii)~~ store exit costs, and ~~(iv)~~ residual net lease ~~costs.~~costs and were specific to Fiscal 2020.

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

Reconciliations of our unaudited condensed consolidated statements of operations for the 13 weeks ended May 2, 2020 and ~~39 weeks ended November 2,~~May 4, 2019, ~~and November 3, 2018,~~ respectively as reported on a GAAP basis, to statements of operations for the same period prepared on a non-GAAP basis, are provided below under the heading “Reconciliations of Non-GAAP Financial Measures.”

Critical Accounting Policies and Estimates

The unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our critical and significant accounting policies and estimates are described more fully in our Annual Report on Form 10-K for the fiscal year ended February ~~2, 2019,~~1, 2020, as filed on April ~~18, 2019.~~16, 2020. There have been no changes in our accounting policies in the current period ended ~~November~~May 2, ~~2019,~~2020, that had a material impact on our unaudited condensed consolidated financial statements with the exception of the adoption of FASB Topic 842. The adoption of FASB Topic 842 is discussed in Notes 1, 2 and 4 to the unaudited condensed consolidated financial statements included in this Form 10-Q.statements.

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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 ~~November~~May 2, ~~2019,~~2020, for information regarding recent accounting pronouncements.

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Results of Operations

Summarized Unaudited Information


	13 Weeks Ended						39 Weeks Ended							13-Weeks Ended
	November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018				May 2, 2020			May 4, 2019
Statements of Operations													Statements of Operations
Net sales increase		27.0	%		-8.8	%		24.0	%		2.0	%
Comparable sales increase		10.7	%		0.1	%		5.4	%		1.4	%
Net sales (decrease) increase													Net sales (decrease) increase	(21.4		%)	25.0		%
Comparable sales (decrease) increase													Comparable sales (decrease) increase	(19.5		%)	5.1		%
Gross margin (as a % to net sales)		32.7	%		32.5	%		32.7	%		33.2	%	Gross margin (as a % to net sales)	27.5		%	34.5		%
Store operating, selling and administrative expenses (as a % to net sales)		29.1	%		28.7	%		26.9	%		26.5	%	Store operating, selling and administrative expenses (as a % to net sales)	25.8		%	21.6		%
Goodwill impairment													Goodwill impairment	7.3		%	—		%
Depreciation and amortization (as a % to net sales)		2.7	%		2.9	%		2.6	%		2.7	%	Depreciation and amortization (as a % to net sales)	2.5		%	2.1		%
Provision for income taxes (as a % to net sales)		0.2	%		0.3	%		0.8	%		1.0	%
Net income (as a % to net sales)		0.8	%		0.7	%		2.4	%		3.1	%

Diluted earnings per share	$	0.13		$	0.08		$	1.18		$	1.15
(Benefit) provision for income taxes (as a % to net sales)													(Benefit) provision for income taxes (as a % to net sales)	(2.6		%)	2.7		%
Net (loss) income (as a % to net sales)													Net (loss) income (as a % to net sales)	(5.7		%)	8.1		%
Diluted (loss) earnings per share													Diluted (loss) earnings per share	$	(0.92)		$	1.50
Weighted-average dilutive shares (in thousands)		17,815			18,675			18,085			18,944		Weighted-average dilutive shares (in thousands)	16,546			18,535

Balance Sheets													Balance Sheets
Ending cash and cash equivalents (in thousands)	$	77,372		$	121,177								Ending cash and cash equivalents (in thousands)	$	106,205		$	116,963
Average inventory per store	$	263,333		$	246,501								Average inventory per store	$	224,475		$	217,262

Store Information													Store Information
Beginning of period		1,108			1,059			1,163			1,079		Beginning of period	1,081			1,163
New stores opened		4			7			9			20		New stores opened	3			3
Rebranded stores		4			-			8			-		Rebranded stores	2			2
Stores closed		(19	)		(24	)		(83	)		(57	)	Stores closed	(8)			(24)
End of period		1,097			1,042			1,097			1,042		End of period	1,078			1,144

Stores expanded or relocated		3			1			9			9
Estimated square footage at end of period (in thousands)		6,181			5,957								Estimated square footage at end of period (in thousands)	6,088			6,446

Share Repurchase Information													Share Repurchase Information
Shares purchased under our Program		371,976			395,450			1,031,940			753,286		Shares purchased under our Program	428,018			230,000
Cost (in thousands)	$	7,045		$	7,625		$	20,789		$	16,058		Cost (in thousands)	$	9,748		$	4,799
Settlement of net share equity awards		-			-			29,432			18,765		Settlement of net share equity awards	30,895			29,432
Cost (in thousands)	$	-		$	-		$	555		$	416		Cost (in thousands)	$	424		$	556

~~13 Weeks~~

13-Weeks Ended ~~November~~May 2, ~~2019~~2020 Compared to ~~13 Weeks~~13-Weeks Ended ~~November 3, 2018~~May 4, 2019

Net sales. Net sales ~~increased $58.6~~decreased ($73.5) million, or ~~27.0%~~(21.4%), to ~~$275.5~~$269.8 million for the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 from ~~$216.9~~$343.3 million for the comparable period in the prior year. Furthermore:

•We opened 4three stores, rebranded 4two Hibbett Sports stores to City Gear stores and closed ~~19 underperforming~~eight stores. ~~In addition, we expanded one store.~~

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•Comparable store sales ~~increased 10.7%~~decreased 19.5% mainly due to ~~strength~~the large number of stores that were closed entirely or were limited to fulfill e-commerce orders and curbside pick-up which began in footwear and sneaker-connected apparel and accessories offset by softer sales in licensed products and team sports. Sales were also positively impacted by a shift of peak back to school sales into the third quarter, as we are seeing shoppers make back to school purchases closer to the school start date.

March.

~~Stores not in the comparable store net sales calculation accounted for $51.5 million in net sales of which $43.7 million was attributable to City Gear.~~

•E-commerce sales represented ~~10.5%~~22.3% of total ~~sales. The City Gear website was integrated into Hibbett’s digital platform during~~sales compared to 8.3% for the ~~third quarter.~~

~~Footwear increased~~comparable period in the ~~mid-teens and has been~~prior year.

•Footwear was positive ~~for nine consecutive quarters. Men’s, women’s and kid’s~~across all genders with key investments in women's footwear ~~categories were all up double-digits in the quarter.~~

showing strong results.

~~The apparel business~~•Apparel was ~~up low single-digits. All genders in activewear were~~ positive ~~including a double-digit gain in men’s activewear. The license business was down double-digits~~prior to COVID-19 as we ~~have moved investment dollars to other categories.~~

~~Accessories were positive mid-single-digits as we continue to~~believe that our renewed selling focus on ~~this category~~connecting our apparel assortment to sneakers resonated with customers.

•Accessories performed well and was supported by our initiative to connect accessories ~~with footwear~~to sneakers and ~~deliver on-trend products. Strong results from key back-to-school categories such as backpacks, lunch totes~~by vendor-funded selling initiatives and ~~socks drove our results.~~contests.

Equipment continued to experience declines and was down low-single-digits. Strength in baseball, softball, volleyball and wrestling was more than offset by continued declines in football and weakness in soccer.20

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Gross margin. Cost of goods sold includes the cost of merchandise, occupancy costs for stores, occupancy and operating costs for our wholesale and logistics facility and ship-to-home freight. Gross margin was ~~$90.2~~$74.1 million, or ~~32.7%~~27.5% of net sales, in the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019,~~2020, compared with ~~$70.5~~$118.6 million, or ~~32.5%~~34.5% of net sales, in the same period of the prior fiscal year. Excluding ~~$0.8 million in net benefits related to our strategic realignment plan (30 basis points as a percentage of net sales),~~certain COVID-19 expenses, non-GAAP gross margin was ~~$89.3~~$79.2 million, or ~~32.4%~~29.4% of net ~~sales. Furthermore:~~

~~Product margin decreased approximately 32 basis points as a percentage~~sales in the 13-weeks ended May 2, 2020, compared to $119.6 million or 34.8% of net ~~sales. Margin~~sales, in the same period of the prior fiscal year.

GAAP gross margin was negatively impacted by ~~higher~~the significant mix shift toward e-commerce sales, which ~~typically run at~~carry a lower ~~product~~ margin rate due to ~~a higher percentage of their sales coming from clearance items.~~

incremental shipping costs. Logistics expenses were relatively flat year over year ~~as a percentage of net sales.~~

~~Store occupancy costs decreased approximately 54~~in dollars, but increased 38 basis points as a percentage of net sales ~~primarily~~ due to ~~higher net~~lower sales ~~and a lower overall store count. Adjusting for the $0.8 million in net benefits related to our strategic realignment plan, non-GAAP store~~volume. Store occupancy ~~improved 24~~costs increased approximately 130 basis points as a percentage of net ~~sales.~~

sales also due to lower sales volume. An increase in aged inventory, defined as items six months past the date of last receipt, resulted in a $5.1 million increase in the LCM inventory reserve during the quarter. This amount was excluded from the non-GAAP gross margin figure.

~~Store operating, selling and administrative expenses~~.Store operating, selling and administrative (SG&A) expenses. SG&A expenses, including goodwill impairment, were ~~$80.1~~$89.3 million, or ~~29.1%~~33.1% of net sales, for the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019,~~2020, compared to ~~$62.3~~$74.0 million, or ~~28.7%~~21.6% of net sales, for the comparable period a year ago. ~~Furthermore:~~

~~As discussed in Note 3~~Excluding non-GAAP adjustments, SG&A was $64.6 million, or 23.9% net sales, for the 13-weeks ended May 2, 2020, from $72.4 million, or 21.1% of net sales for the same period in the ~~accompanying notes~~prior year.

A large portion of the SG&A increase resulted from impacts related to ~~unaudited condensed consolidated financial statements,~~COVID-19. This included non-cash intangible asset impairments to goodwill in the amount of $19.7 million and the City Gear ~~acquisition purchase agreement included two contingent~~tradename of $8.9 million, partially offset by a reduction of $11.0 million for the second year earnout ~~payments based on~~liability related to the City ~~Gear’s achievement of certain EBITDA thresholds for Fiscal 2020 and Fiscal 2021. The preliminary fair value~~Gear acquisition. These adjustments resulted from a significant decrease in the market valuation of the ~~liability was~~Company. Other COVID-19 impacts included innet payroll costs to support team members at closed stores of approximately $2.4 million and other ~~liabilities in~~right-of-use asset impairments of approximately $4.1 million.

On a non-GAAP basis, the Fiscal 2019 year-end consolidated balance sheet. Subsequent changes in the liability are recorded through current period earnings. Based on current forecasts for City Gear performance for Fiscal 2020 and Fiscal 2021, the earnout liability was increased $4.1 million, an impact of 148280 basis point ~~as a percentage to net sales,~~increase in ~~the current quarter. Additionally, we incurred $0.9 million (32 basis points as a percentage of net sales) in acquisition and integration costs.~~

SG&A ~~includes $0.2 million (6 basis points as a percentage of net sales), in costs related~~compared to ~~our strategic realignment plan.~~

~~Excluding these costs, SG&A was $75.0 million, or 27.2% of sales, which represents an 80 basis point improvement from~~ the prior year ~~third quarter on a non-GAAP basis.~~

resulted mainly from incremental marketing expenses that drove more customers to our website during the second half of the quarter.

~~SG&A also includes a revalued one-time charge related to the previously announced transition of our CEO of approximately 24 basis points as a percentage of net sales.~~

We experienced strong leverage in retail personnel costs as digital continues to increase as a percentage of total sales (thus leveraging store payroll). Additionally, we also experienced strong leverage in advertising as we continue to move toward more productive advertising programs.

~~Index~~

Depreciation and amortization. Depreciation and amortization of ~~$7.4~~$6.9 million ~~decreased 23~~increased 45 basis points as a percentage of net sales for the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 compared to the same period of the prior fiscal year. This ~~decrease~~increase was mainly due to ~~leverage~~the deleverage from ~~higher~~lower net sales.

Provision for income taxes.The combined federal, state and local effective income tax rate as a percentage of pre-tax ~~income~~loss was ~~18.4% and 29.2%~~31.2% for the ~~13 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 and ~~November 3, 2018, respectively. The decrease in rate~~ was ~~primarily due to resolution~~25.3% of ~~uncertain tax positions.~~

~~39 Weeks Ended November 2, 2019 Compared to 39 Weeks Ended November 3, 2018~~

~~Net sales~~. ~~Net sales increased $168.5 million, or 24.0%, to $871.2 million~~the pre-tax income for the ~~39 weeks~~13-weeks ended ~~November 2, 2019 from $702.7 million for the comparable period in the prior year. Furthermore:~~

~~We opened 9 stores, rebranded 8 Hibbett Sports stores to City Gear stores and closed 83 underperforming stores. In addition, we expanded 5 stores.~~

Comparable store sales increased 5.4% mainly due to strength in footwear and sneaker-connected apparel and accessories. These strengths were partially offset by softer sales in licensed products and team sports.

~~Stores not in the comparable store net sales calculation accounted for $186.6 million in net sales of which $145.2 million was attributable to City Gear.~~

~~E-commerce sales represented 9.1% of total sales. The City Gear website was integrated into Hibbett’s digital platform during the third quarter.~~

~~Footwear increased low-double-digits and has been positive for nine consecutive quarters posting strong gains in men’s, women’s and kids.~~

Apparel was up low-single-digits driven by product that had strong connectivity to our footwear business. Men’s apparel had low-double-digit gains. Women’s and kid’s apparel were both slightly negative.

~~Accessories experienced a mid-single-digit increase with strong performance in items that had strong sneaker-connectivity to our footwear business and back-to-school relevancy.~~

~~Licensed business remains soft, down low-double-digits. Equipment experienced a high-single-digit decline primarily due to weakness in football and fitness.~~

~~Gross margin~~. Cost of goods sold includes the cost of merchandise, occupancy costs for stores, occupancy and operating costs for our wholesale and logistics facility and ship-to-home freight. Gross margin was $284.7 million, or 32.7% of net sales, in the 39 weeks ended November 2, 2019, compared with $233.6 million, or 33.2% of net sales, in the same period of the prior fiscal year. Excluding approximately $1.0 million (11 basis points as a percentage of net sales) in costs related to the acquisition of City Gear and excluding $0.4 million in net benefits related to our strategic realignment plan (4 basis points as a percentage of net sales), non-GAAP gross margin was $285.3 million, or 32.7% of net sales. Furthermore:

Excluding the $1.0 million amortization of inventory step-up for City Gear, product margin decreased approximately 33 basis points as a percentage of net sales primarily due to margin pressures from the complete inventory liquidation of stores that were part of a previously announced store closure plan. Product margin was also impacted by markdown activity which resulted in a clean inventory position at the end of the quarter as well as freight costs associated with higher e-commerce sales.

~~Logistics expenses as a percentage of net sales remained relatively flat year over year.~~

Store occupancy expenses as a percentage of net sales improved 12 basis points primarily due to higher net sales and a lower overall store count. Adjusting for the $0.4 million in net benefits related to our strategic realignment plan, non-GAAP store occupancy improved 8 basis points as a percentage of net sales.

~~Store operating, selling and administrative expenses~~. SG&A expenses were $234.1 million, or 26.9% of net sales, for the 39 weeks ended November 2, 2019, compared to $186.2 million, or 26.5% of net sales, for the comparable period a year ago. Furthermore:

Excluding approximately $13.3 million (152 basis points as a percentage of net sales) in costs related to the acquisition of City Gear and $1.5 million (18 basis points as a percentage of net sales), in costs related to our strategic realignment plan, non-GAAP store operating, selling and administrative expenses were $219.3 million, or 25.2% of net sales. This adjusted 111 basis point improvement on a non-GAAP basis as a percentage to net sales was predominately driven by improvement in personnel and advertising costs.

~~Index~~

~~Additionally, salary costs included a reduction in stock-based compensation expense of approximately $1.8 million related to the forfeiture of certain stock awards from employee departures.~~

~~SG&A also includes a revalued one-time charge related to the previously announced transition of our CEO of approximately 29 basis points as a percentage of net sales.~~

~~Depreciation and amortization~~. Depreciation and amortization decreased 12 basis points as a percentage of net sales for the 39 weeks ended November 2, 2019 compared to the same period of the prior fiscal year. This decrease was mainly due to leverage from higher net sales.

~~Provision for income taxes~~.~~The combined federal, state and local effective income tax rate as a percentage of pre-tax income was 25.1% and 24.8% for the 39 weeks ended November 2, 2019 and November 3, 2018, respectively.~~May 4, 2019. The increase in rate was primarily ~~due~~the result of the income tax benefit generated by the Federal net operating loss (NOL) carryback provided for under the Coronavirus Aid, Relief, and Economic Security Act(CARES Act). This provision provides for a five-year NOL carryback for taxable years beginning after December 31, 2017, and before January 1, 2021. As a result, the NOL projected to ~~executive compensation deduction limitations under IRC Section 162(m) and fluctuations~~be generated for Fiscal 2021 may be carried back to Fiscal 2016, a tax year in which the ~~value of stock-based awards between the award grant and vesting dates.~~Federal income tax rate was 35.0%.

~~Reconciliations of Non-GAAP Financial Measures~~. The following tables provide reconciliations of our unaudited condensed consolidated statement of operations for the 13 weeks ended November 2, 2019 and November 3, 2018, as reported on a GAAP basis, to a statement of operations for the same period prepared on a non-GAAP basis. For more information regarding our non-GAAP financial measures, see “Executive Summary – About Non-GAAP Measures” above.

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GAAP to Non-GAAP Reconciliations

(Dollars in thousands, except per share amounts)

(Unaudited)

13-Week Period Ended November 2, 2019
Non-Recurring Amounts:
GAAP Basis
(As Reported)
Acquisition
Costs⁽¹⁾

Strategic
Realignment
Costs⁽²⁾

Non-GAAP
Basis

% of
Sales

Net sales
$
275,475

$
-

$
-

$
275,475

Cost of goods sold
185,307

-

(828
)

186,135

67.6
%
Gross margin
90,168

-

(828
)

89,340

32.4

Store operating, selling and administrative expenses
80,147

4,965

155

75,027

27.2

Depreciation and amortization
7,397

-

-

7,397

2.7

Operating income
2,624

4,965

(673
)

6,916

2.5

Interest income, net
(151
)

-

-

(151
)

-0.1

Loss before provision for income taxes
2,775

4,965

(673
)

7,067

2.6

Provision for income taxes
510

912

(124
)

1,298

0.5

Net income
$
2,265

$
4,053

$
(549
)

$
5,769

2.1
%

Basic earnings per share
$
0.13

0.23

(0.03
)

0.33

Diluted earnings per share
$
0.13

$
0.23

$
(0.03
)

$
0.32

Non-recurring acquisition amounts during the 13-week period ended November 2, 2019, related to the acquisition of City Gear, LLC consist primarily of contingent earnout valuation update and legal, accounting and professional fees.

Non-recurring strategic realignment amounts during the 13-week period ended November 2, 2019, related to our accelerated store closure plan consist primarily of gain on operating leases net of accelerated amortization on ROU assets in cost of goods sold (COGS) and professional fees, impairment costs and loss on fixed assets in SG&A.

~~Index~~

13-Week Period Ended November 3, 2018
Non-Recurring Amounts:
GAAP Basis
(As Reported)
Acquisition⁽¹⁾
Non-GAAP Basis
November 3, 2018
% of
Sales

Net sales
$
216,888

$
-
$ 216,888
Cost of goods sold
146,376

-
146,376 67.5
%
Gross margin
70,512

-
70,512 32.5
Store operating, selling and administrative expenses
62,342

1,528
60,814 28.0
Depreciation and amortization
6,328

-
6,328 2.9
Operating income
1,842

1,528
3,370 1.6
Interest income, net
(277
)

-
(277 ) -0.1
Income before provision for income taxes
2,119

1,528
3,647 1.7
Provision for income taxes
620

447
1,067 0.5
Net income
$
1,499

$
1,081
$ 2,580 1.2
%

Basic earnings per share
$
0.08

$
0.06
$ 0.14
Diluted earnings per share
$
0.08

$
0.06
$ 0.14

~~Non-recurring acquisition amounts during the 13-week period ended November 3, 2018, related to the acquisition of City Gear, LLC consists primarily of legal, accounting and professional fees.~~

The following tables provide reconciliations of our unaudited condensed consolidated statement of operations for the ~~39 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 and ~~November 3, 2018,~~May 4, 2019, as reported on a GAAP basis, to a statement of operations for the same period prepared on a non-GAAP basis.

39-Week Period Ended November 2, 2019
Non-Recurring Amounts:
GAAP Basis
(As Reported)
Acquisition
Costs⁽¹⁾

Strategic
Realignment
Costs⁽²⁾

Non-GAAP
Basis

% of
Sales

Net sales
$
871,210

$
-

$
-

$
871,210

Cost of goods sold
586,502

956

(356
)

585,902

67.3
%
Gross margin
284,708

956

(356
)

285,308

32.7

Store operating, selling and administrative expenses
234,085

13,252

1,529

219,304

25.2

Depreciation and amortization
22,299

-

-

22,299

2.6

Operating income
28,324

14,208

1,173

43,705

5.0

Interest income, net
(179
)

-

-

(179
)

-

Income before provision for income taxes
28,503

14,208

1,173

43,884

5.0

Provision for income taxes
7,159

3,569

295

11,023

1.3

Net income
$
21,344

$
10,639

$
878

$
32,861

3.8
%

Basic earnings per share
$
1.19

0.59

0.05

1.83

Diluted earnings per share
$
1.18

$
0.59

$
0.05

$
1.82


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	%
(Loss) income before provision for income taxes	$	(22,227)	$	654	$	29,183	$	7,610	2.8	%
(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)	~~Non-recurring~~
1) Excluded acquisition amounts during the ~~39-week~~13-week period ended ~~November~~May 2, ~~2019,~~2020, related to the acquisition of City Gear, LLC consist primarily of accounting and professional fees.
2) Excluded amounts during the 13-week period ended May 2, 2020, related to COVID-19 consist primarily of non-cash LCM reserve charges in cost of goods sold and impairment (goodwill, tradename and other assets) costs, change in valuation of contingent earnout and paid-not-worked salaries net of related tax credits.
3)Weighted average diluted shares outstanding were not adjusted for dilutive options and restricted stock in the calculation of GAAP loss per share.


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


1) Excluded acquisition costs represent costs incurred during the 13-week period ended May 4, 2019, related to the acquisition of City Gear, LLC and consists of amortization of inventory ~~fair-market value~~ step-up, ~~in COGS and~~ contingent earnout valuation update and legal, accounting and professional ~~fees in SG&A.~~fees.

~~Non-recurring~~ Excluded strategic realignment amounts during the ~~39-week~~13-week period ended ~~November 2,~~May 4, 2019, related to our accelerated store closure plan ~~consist primarily~~and consists of ~~gain on operating leases~~impairment costs net of ~~accelerated amortization on ROU assets~~reductions in ~~COGS and professional fees, impairment costs and loss on fixed assets in SG&A.~~

~~Index~~

39-Week Period Ended November 3, 2018
Non-Recurring Amounts:
GAAP Basis
(As Reported)
Acquisition⁽¹⁾
Non-GAAP Basis
November 3, 2018
% of
Sales

Net sales
$
702,718

$
-

$
702,718

Cost of goods sold
469,082

-

469,082

66.8
%
Gross margin
233,636

-

233,636

33.2

Store operating, selling and administrative expenses
186,211

1,528

184,683

26.3

Depreciation and amortization
18,847

-

18,847

2.7

Operating income
28,578

1,528

30,106

4.3

Interest income, net
(387
)

-

(387
)

-0.1

Income before provision for income taxes
28,965

1,528

30,493

4.3

Provision for income taxes
7,179

379

7,558

1.1

Net income
$
21,786

$
1,149

$
22,935

3.3
%

Basic earnings per share
$
1.16

$
0.06

$
1.22

Diluted earnings per share
$
1.15

$
0.06

$
1.21

~~Non-recurring acquisition amounts during the 39-week period ended November 3, 2018,~~lease liabilities related to ~~the acquisition of City Gear, LLC consist primarily of legal, accounting and professional fees.~~

accelerated store closures.

Index

Liquidity and Capital Resources

Impact of COVID-19 on Liquidity

In response to the uncertain market conditions resulting from the COVID-19 pandemic, we have enhanced our liquidity position through the following actions:

•In March 2020, we borrowed $50.0 million under our two unsecured, demand lines of credit as a precautionary measure in order to increase our cash position and preserve financial flexibility;

•In April 2020, we converted these lines of credit into a single secured line of credit with a one-year term;

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

•We temporarily suspended our stock repurchase program.

Analysis of Cash Flows

Our capital requirements relate primarily to new store openings, stock repurchases, 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 invest in interest-bearing securities and money market accounts, as well as to offset bank fees.

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


	39 Weeks Ended							13-Weeks Ended
	November 2, 2019			November 3, 2018				May 2, 2020		May 4, 2019
Net cash provided by operating activities	$	75,056		$	52,473		Net cash provided by operating activities	$	3,882	$	72,058
Net cash used in investing activities		(10,753	)		(13,692	)	Net cash used in investing activities	(3,447)		(2,523)
Net cash (used in) provided by financing activities		(48,687	)		8,852
Net cash provided by (used in) financing activities							Net cash provided by (used in) financing activities	39,692		(14,328)
Net increase in cash and cash equivalents	$	15,616		$	47,633		Net increase in cash and cash equivalents	$	40,127	$	55,207

Operating Activities.

Cash flow from operations is seasonal in our business. Typically, we use cash flow from operations to increase inventory in advance of peak selling seasons, such as winter holidays, the spring sales period and late summer back-to-school shopping. 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 ~~$75.1~~$3.9 million for the ~~39 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 compared with net cash provided by operating activities of ~~$52.5~~$72.1 million for the ~~39 weeks~~13-weeks ended ~~November 3, 2018.~~May 4, 2019. Operating activities consist primarily of net income, adjusted for certain non-cash items and changes in operating assets and liabilities. Adjustments to net income for non-cash items include depreciation and amortization, valuation of the contingent earnout liability, impairments, deferred income taxes, amortization of inventory step-up valuation from the City Gear opening balance sheet, and stock-based compensation. Net cash provided by operating activities for ~~November~~May 2, ~~2019~~2020 and ~~November 3, 2018~~May 4, 2019 was impacted by the following:

~~Index~~

•Net income used cash of $15.3 million and provided cash of ~~$21.3 million and $21.8~~$27.9 million during the ~~39 weeks~~13-weeks ended ~~November~~May 2, 2020 and May 4, 2019, ~~and November 3, 2018,~~ respectively.

•Net inventories ~~increased $9.5~~decreased $46.0 million and ~~$2.7~~$30.8 million during the ~~39 weeks~~13-weeks ended ~~November~~May 2, 2020 and May 4, 2019, ~~and November 3, 2018, respectively, primarily~~respectively. Inventory levels typically decline during the first quarter, but the decrease was more pronounced this year due to aggressive inventory management in response to the ~~seasonality of the business as we ready for the holiday selling season.~~

COVID-19 pandemic.

•The change in accounts payable ~~provided~~used cash of ~~$25.1~~$33.5 million and ~~$15.8~~$1.5 million during the ~~39 weeks~~13-weeks ended ~~November~~May 2, 2020 and May 4, 2019, ~~and November 3, 2018, respectively, and is typically affected~~respectively. The current year impact was impacted by the ~~timing~~significant reduction in inventory receipts in the last month of ~~receipts prior to peak selling seasons.~~

the quarter.

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

•Non-cash charges included depreciation and amortization expense of ~~$22.3~~$6.9 million and ~~$18.8~~$7.2 million and stock-based compensation expense of ~~$1.8~~$1.2 million and ~~$3.4~~$0.5 million during the ~~39 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 and ~~November 3, 2018,~~May 4, 2019, respectively. Depreciation expense ~~increased~~decreased due to ~~additional depreciation for City Gear property and equipment, offset in part by~~ a lower store sales base. Fluctuations in stock-based compensation generally result from the achievement of performance-based equity awards at greater or lesser than their granted level, fluctuations in the price of our common stock and levels and effects of forfeitures in any given period. ~~The current 39-week expense was impacted by a reduction in stock-based compensation of approximately $1.8 million related to the forfeiture of certain stock awards.~~

Index

•Other non-cash adjustments to net income for the ~~39 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 included ~~$11.7~~$32.6 million of impairment charges of intangible assets resulting from a significant decrease in the market valuation of the Company during the pandemic, partially offset by an $11.0 million change in the valuation of the contingent earnout related to City ~~Gear, $1.0~~Gear.

•The change in receivables of $11.9 million ~~inventory amortization~~resulted primarily from employee retention credits under the CARES Act and an increase in receivables related to ~~the acquisition of City Gear and a related offset of $4.0 million for the change in deferred and unrecognized income tax balances.~~

strong e-commerce sales.

Investing Activities.

Net cash used in investing activities in the ~~39 weeks~~13-weeks ended ~~November~~May 2, ~~2019~~2020 totaled ~~$10.8~~$3.4 million compared with net cash used in investing activities of ~~$13.7~~$2.5 million in the ~~39 weeks~~13-weeks ended ~~November 3, 2018.~~May 4, 2019. Capital expenditures used ~~$11.0~~$4.1 million of cash in the13-weeks ended May 2, 2020 versus $2.5 million of cash in the ~~39 weeks~~13-weeks ended ~~November 2, 2019 versus $13.9 million of cash in the 39 weeks ended November 3, 2018.~~May 4, 2019. Capital expenditures were used mainly to open new stores, remodel, expand or relocate existing stores, and continued investment in digital initiatives.

We opened 9three new stores and rebranded 8two Hibbett Sports stores to City Gear stores during the 13-weeks ended May 2, 2020, as compared to opening three new stores and ~~relocated or expanded 9~~rebranding two existing stores during the ~~39 weeks~~13-weeks ended ~~November 2, 2019 as compared to opening 20 new stores and relocating or expanding 9 existing stores during the 39 weeks ended November 3, 2018.~~

May 4, 2019.

We ~~estimate the cash outlay for~~anticipate that our capital expenditures infor the fiscal year ending ~~February 1, 2020~~January 30, 2021 will ~~be approximately $15.0 million to $18.0 million, which relates~~primarily relate to expenditures for:

~~The~~•the opening of new stores, the remodeling, relocation or expansion of selected existing stores;

~~Information~~•information system infrastructure, projects, upgrades and ~~security (including City Gear integration);~~security; and

~~Other~~•other departmental needs.

~~Of the total estimated dollars~~Our plan for capital expenditures for Fiscal ~~2020,~~2021 will remain flexible as we ~~anticipate that approximately 60% will be~~navigate through the economic impact related to COVID-19. We will assess our capital expenditure needs against our cash availability during the ~~opening of new stores, store expansions and relocations and store remodels. The remainder will be related~~crisis to information technology, consisting primarily of expenditures for projects and software, City Gear integration, omni-channel, infrastructure, various system enhancements, upgrades and security and other expenditures related primarily to specific departmental needs including facility upgrades, transportation equipment, automobiles, fixtures and security equipmentmake the most strategic decisions for our ~~stores.~~business. We have the ability to defer or accelerate much of the anticipated capital expenditure budget depending on our financial position and the needs of the business.

Financing Activities.

Net cash provided by financing activities was $39.7 million in the 13-weeks ended May 2, 2020 compared to net cash used in financing activities ~~was $48.7 million in the 39 weeks ended November 2, 2019 compared to net cash provided by financing activities~~ of ~~$8.9~~$14.3 million in the prior year period. During the ~~39 weeks~~13-weeks ended ~~November~~May 2, ~~2019,~~2020, net borrowings on our credit facilities provided cash of $50.0 million compared to net repayments on our credit facilities ~~used cash~~ of ~~$27.0 million.~~$9.0 million in the same period of the prior year. We also repurchased ~~$20.8~~$9.7 million of our common stock under our ~~Stock Repurchase~~ Program ~~and an~~per a 10b5-1 plan that was enacted prior to the COVID-19 pandemic. An additional ~~$0.6~~$0.4 million was purchased from holders of restricted stock unit awards to satisfy tax withholding ~~requirements, which~~requirements. Combined, this is an increase of ~~$4.9~~$4.8 million from the prior year ~~39 weeks~~13-weeks ended ~~November 3, 2018.~~May 4, 2019. See Note 9, 8, Stock Repurchase Activity, to the unaudited condensed consolidated financial ~~statements.~~

statements for additional information.

~~Index~~

At ~~November~~May 2, ~~2019,~~2020, we had ~~two unsecured~~one secured credit ~~facilities~~facility with Regions Bank that ~~allow~~allows borrowings up to ~~$50.0~~$75.0 million ~~each,~~ and ~~which expire in October~~had an expiration date of April 19, 2021. On June 5, 2020, the Company and Regions Bank entered into a Note Modification Agreement (Agreement) that extends the maturity date of the Amended Credit Facility to July 18, 2021. No other provisions of the Amended Credit Facility were affected by the Agreement. Under the provisions of ~~both facilities,~~the facility, we do not pay commitment ~~fees. However, both are subject to negative pledge agreements that, among other things, restrict liens or transfers~~fees; however, it is secured by all assets of assets including inventory, tangible or intangible personal property and land and land improvements. We plan to renew these facilities as they expire and do not anticipate any problems in doing so; however, no assurance can be given that we will be granted a renewal or terms which are acceptable to us.the Company with the exception of real property. As of ~~November~~May 2, ~~2019,~~2020, a total of ~~$92.0~~$25.0 million was available to us ~~from these facilities.~~

under the facility. See Note 5, Debt, to the unaudited condensed consolidated financial statements for additional information.

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

facility.

Off-Balance Sheet Arrangements.

We have not provided any financial guarantees as of ~~November~~May 2, ~~2019.~~2020. All merchandise purchase obligations are cancelable. We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. We do not have any arrangements or relationships with entities that are not included in the unaudited condensed consolidated financial statements.

Quarterly and Seasonal Fluctuations

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

Index

weather fluctuations, 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.

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

~~ITEM 3.~~

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Investment and Credit Availability Risk

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

We also have a financial ~~institutions~~institution that ~~are~~is committed to provide loans under our credit ~~facilities.~~facility. There is a risk that ~~these institutions~~this institution cannot deliver against these obligations. For a further discussion of this risk and risks related to our deposits, see “Risk Factors” in our Form 10-K for the fiscal year ended February ~~2, 2019.~~

1, 2020.

Interest Rate Risk

Our exposure to market risks results primarily from fluctuations in interest rates. There have been no material changes to our exposure to market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended February ~~2, 2019~~1, 2020 filed with the Securities and Exchange Commission on April ~~18, 2019.~~16, 2020.

~~In July 2017,~~Borrowing under the ~~Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates~~Amended Credit Facility uses the London Interbank Offering Rate (LIBOR) as a benchmark for establishing the ~~calculation~~interest rate. LIBOR has been the subject of LIBOR after 2021. The Alternative Reference Rates Committee (AARC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to LIBOR for use in derivativesrecent national, international and other regulatory guidance and proposals for reform, and the financial ~~contracts~~industry is currently ~~indexed to LIBOR. AARC has proposed a paced market transition plan to SOFR from LIBOR. We are currently evaluating the impact of the transition~~transitioning away from LIBOR as ~~an interest rate~~a benchmark for the interbank lending market. Due to ~~other potential alternative reference rates, including SOFR. We do not currently have material contracts, with~~ the ~~exception~~short-term nature of our current secured credit ~~facilities, that are indexed to LIBOR. We will continue to actively assess~~facility, the ~~related opportunities and risks involved in this transition.~~potential transition away from LIBOR does not impact us.

~~Index~~

~~ITEM 4.~~

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

Evaluation of Disclosure Controls and Procedures.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of ~~November~~May 2, ~~2019.~~2020. 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, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting.

We have not identified any changes in our internal control over financial reporting that occurred during the period ended ~~November~~May 2, ~~2019,~~2020, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~ITEM 1.~~

ITEM 1. Legal Proceedings.

We are a party to various legal proceedings incidental to our business. Where we are able to reasonably estimate an amount of probable loss in these matters based on known facts, we have accrued that amount as a ~~current~~ liability on our balance sheet. We are not able to reasonably estimate the possible loss or range of loss in excess of the amount accrued for these proceedings based on the information currently available to us, including, among others, (i) uncertainties as to the outcome of pending proceedings (including motions and appeals) and (ii) uncertainties as to the likelihood of settlement and the outcome of any negotiations with respect thereto. We do not believe that any of these matters will, individually or in the aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that one or more of these proceedings will not have a

Index

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

~~ITEM 1A.~~

ITEM 1A. Risk Factors.

We operate in an environment that involves a number of risks and uncertainties which are described in our Form 10-K for the year ended February ~~2, 2019.~~1, 2020. If any of the risks described in our Fiscal ~~2019~~2020 Form 10-K were to actually occur, our business, ~~operating~~ results of operations and financial results could be adversely affected. There were no material changes to the risk factors disclosed in our Form 10-K for the fiscal year ended February ~~2, 2019.~~1, 2020, except as the supplemental information set forth below.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

•the pace of recovery when the pandemic subsides; and

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

Index

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

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

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

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

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

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

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

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

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

Index

~~ITEM 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

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

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

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

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

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


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

(1)In November ~~2, 2019 (1):~~2018, the Board authorized the extension of our Program of $300.0 million to repurchase our common stock through January 29, 2022 that replaced an existing authorization. The Company may repurchase shares on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act. The timing and amount of stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate and regulatory considerations. The Program may be suspended, modified or discontinued at any time and the Company has no obligation to repurchase any amount of its common stock under the Program. See Note 8, Stock Repurchase Activity, to the unaudited condensed consolidated financial statements.

Period
Total Number
of Shares
Purchased

Average
Price per
Share

Total Number of
Shares Purchased
as Part of Publicly
Announced
Programs

Approximate Dollar
Value of Shares that
may yet be Purchased
Under the Programs (in
thousands)

August 4, 2019 to August 31, 2019
60,000

$
16.99

60,000

$
173,204

September 1, 2019 to October 5, 2019
225,300

$
17.75

225,300

$
169,205

October 6, 2019 to November 2, 2019
86,676

$
23.38

86,676

$
167,179

Total
371,976

$
18.94

371,976

$
167,179

~~(1)~~

In November 2018, the Board authorized the extension of our Stock Repurchase Program of $300.0 million to repurchase our common stock through January 29, 2022 that replaced an existing authorization. See Note 9, ~~Stock Repurchase Activity,~~ ~~to the unaudited condensed consolidated financial statements.~~

Item 5. Other Information.

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

~~ITEM 6.~~

~~Exhibits.~~

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

Index

ITEM 6. Exhibits.

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

~~SIGNATURE~~


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

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

		Material Agreements
10.1	†	Separation Agreement and Release, between Hibbett Sports, Inc. and Cathy Pryor, effective April 1, 2020; incorporated herein by reference to Exhibit 10.26 of the Registrant’s Form 10-K filed with the Securities and Exchange Commission on April 16, 2020.
10.2		Second Amended and Restated Note with Regions Bank; incorporated herein by reference to Exhibit 10.27 of the Registrant's Form 10-K filed with the Securities and Exchange Commission on April 16, 2020.
10.3	†	Hibbett Sports, Inc. Amended and Restated 2015 Equity Incentive Plan; incorporated herein by reference to Exhibit 99.1 of the Registrant’s Registration Statement on Form S-8 (File No .333-238767) filed with the Securities and Exchange Commission on May 29, 2020.
10.4	*	Note Modification Agreement with Regions Bank (filed herewith).

		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
		The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended May 2, 2020, formatted in XBRL (eXtensible Business Reporting Language) and submitted electronically herewith: (i) the Unaudited Condensed Consolidated Balance Sheets at May 2, 2020, February 1, 2020 and May 4, 2019; (ii) the Unaudited Condensed Consolidated Statements of Operations for the 13-weeks ended May 2, 2020 and May 4, 2019; (iii) the Unaudited Condensed Consolidated Statements of Cash Flows for the 13-weeks ended May 2, 2020 and May 4, 2019; (iv) the Unaudited Condensed Consolidated Statements of Stockholders Investment for the 13-weeks ended May 2, 2020 and May 4, 2019; and (v) the Notes to Unaudited Condensed Consolidated Financial Statements.

101.INS	*	XBRL Instance Document
101.SCH	*	XBRL Taxonomy Extension Schema Document
101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document

	*	Filed Within
	†	Management Contract or Compensatory Plan or Arrangement

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:~~December 11, 2019~~

~~By:~~

June 8, 2020

By:

/s/ ~~Scott Humphrey~~Robert Volke

~~Scott Humphrey~~

Robert Volke

~~Interim~~

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

~~Index~~

~~Exhibit Index~~

~~Exhibit No.~~		~~Description~~

		~~Certificate of Incorporation and By-Laws~~
~~3.1~~		~~Certificate of Incorporation of the Registrant; incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 31, 2012.~~
~~3.2~~		~~Bylaws of the Registrant, as amended; incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 28, 2019.~~

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

		~~Material Agreements~~
~~10.1~~		~~NONE~~

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

		~~Interactive Data Files~~
		The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended November 2, 2019, formatted in XBRL (eXtensible Business Reporting Language) and submitted electronically herewith: (i) the Unaudited Condensed Consolidated Balance Sheets at November 2, 2019 and February 2, 2019; (ii) the Unaudited Condensed Consolidated Statements of Operations for the 13 weeks and 39 weeks ended November 2, 2019 and November 3, 2018; (iii) the Unaudited Condensed Consolidated Statements of Cash Flows for the 39 weeks ended November 2, 2019 and November 3, 2018; (iv) the Unaudited Condensed Consolidated Statements of Stockholders Investment for the 13 weeks and 39 weeks ended November 2, 2019 and November 3, 2018; and (v) the Notes to Unaudited Condensed Consolidated Financial Statements.

~~101.INS~~	*	~~XBRL Instance Document~~
~~101.SCH~~	*	~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~	*	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~	*	~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~	*	~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~	*	~~XBRL Taxonomy Extension Presentation Linkbase Document~~

	*	~~Filed Within~~

13 Weeks Ended November 2, 2019

	Common Stock								Treasury Stock
	Number of Shares		Amount		Paid-In Capital		Retained Earnings		Number of Shares		Amount			Total Stockholders' Investment
Balance - August 3, 2019		39,125	$	391	$	186,947	$	776,677		21,376	$	(624,070	)	$	339,945
Net income		-		-		-		2,265		-		-			2,265
Issuance of shares through the Company's equity plans		6		-		88		-		-		-			88
Purchase of shares under the stock repurchase program		-		-		-		-		372		(7,044	)		(7,044	)
Stock-based compensation		-		-		905		-		-		-			905
Balance - November 2, 2019		39,131	$	391	$	187,940	$	778,942		21,748	$	(631,114	)	$	336,159

13 Weeks Ended November 3, 2018

	Common Stock								Treasury Stock
	Number of Shares		Amount		Paid-In Capital		Retained Earnings		Number of Shares		Amount			Total Stockholders' Investment
Balance - August 4, 2018		38,954	$	389	$	183,697	$	751,543		20,287	$	(602,078	)	$	333,551
Net income		-		-		-		1,499		-		-			1,499
Issuance of shares through the Company's equity plans		18		1		298		-		-		-			299
Purchase of shares under the stock repurchase program		-		-		-		-		395		(7,626	)		(7,626	)
Stock-based compensation		-		-		758		-		-		-			758
Balance - November 3, 2018		38,972	$	390	$	184,753	$	753,042		20,682	$	(609,704	)	$	328,481

39 Weeks Ended November 3, 2018

	Common Stock									Treasury Stock
	Number of Shares		Amount		Paid-In Capital		Retained Earnings			Number of Shares		Amount			Total Stockholders' Investment
Balance - February 3, 2018		38,863	$	389	$	180,536	$	731,901			19,910	$	(593,230	)	$	319,596
Net income		-		-		-		21,786			-		-			21,786
Issuance of shares through the Company's equity plans		109		1		806		-			-		-			807
Adjustment for adoption of accounting standard		-		-		-		(645	)		-		-			(645	)
Purchase of shares under the stock repurchase program		-		-		-		-			753		(16,058	)		(16,058	)
Settlement of net share equity awards		-		-		-		-			19		(416	)		(416	)
Stock-based compensation		-		-		3,411		-			-		-			3,411
Balance - November 3, 2018		38,972	$	390	$	184,753	$	753,042			20,682	$	(609,704	)	$	328,481

	Ended November 3, 2018
(in thousands, except per share data)	13 Weeks			39 Weeks
Net sales	$	258,076		$	846,664
Net (loss) income	$	(6,735	)	$	17,966
Basic (loss) earnings per share	$	(0.36	)	$	0.96
Diluted (loss) earnings per share	$	(0.36	)	$	0.95

	Capital		Operating		Total
Fiscal 2020	$	1,259	$	68,002	$	69,261
Fiscal 2021		951		58,666		59,617
Fiscal 2022		451		46,683		47,134
Fiscal 2023		408		34,011		34,419
Fiscal 2024		306		22,426		22,732
Thereafter		217		40,181		40,398
Total minimum lease payments		3,592		269,969		273,561
Less amount representing interest		581		-		581
	$	3,011	$	269,969	$	272,980

13-Week Period Ended November 2, 2019
				Non-Recurring Amounts:
	GAAP Basis (As Reported)			Acquisition Costs⁽¹⁾		Strategic Realignment Costs⁽²⁾			Non-GAAP Basis			% of Sales
Net sales	$	275,475		$	-	$	-		$	275,475
Cost of goods sold		185,307			-		(828	)		186,135			67.6	%
Gross margin		90,168			-		(828	)		89,340			32.4
Store operating, selling and administrative expenses		80,147			4,965		155			75,027			27.2
Depreciation and amortization		7,397			-		-			7,397			2.7
Operating income		2,624			4,965		(673	)		6,916			2.5
Interest income, net		(151	)		-		-			(151	)		-0.1
Loss before provision for income taxes		2,775			4,965		(673	)		7,067			2.6
Provision for income taxes		510			912		(124	)		1,298			0.5
Net income	$	2,265		$	4,053	$	(549	)	$	5,769			2.1	%

Basic earnings per share	$	0.13			0.23		(0.03	)		0.33
Diluted earnings per share	$	0.13		$	0.23	$	(0.03	)	$	0.32

	13-Week Period Ended November 3, 2018
				Non-Recurring Amounts:
	GAAP Basis (As Reported)			Acquisition⁽¹⁾		Non-GAAP Basis November 3, 2018			% of Sales
Net sales	$	216,888		$	-	$	216,888
Cost of goods sold		146,376			-		146,376			67.5	%
Gross margin		70,512			-		70,512			32.5
Store operating, selling and administrative expenses		62,342			1,528		60,814			28.0
Depreciation and amortization		6,328			-		6,328			2.9
Operating income		1,842			1,528		3,370			1.6
Interest income, net		(277	)		-		(277	)		-0.1
Income before provision for income taxes		2,119			1,528		3,647			1.7
Provision for income taxes		620			447		1,067			0.5
Net income	$	1,499		$	1,081	$	2,580			1.2	%

Basic earnings per share	$	0.08		$	0.06	$	0.14
Diluted earnings per share	$	0.08		$	0.06	$	0.14

39-Week Period Ended November 2, 2019
				Non-Recurring Amounts:
	GAAP Basis (As Reported)			Acquisition Costs⁽¹⁾		Strategic Realignment Costs⁽²⁾			Non-GAAP Basis			% of Sales
Net sales	$	871,210		$	-	$	-		$	871,210
Cost of goods sold		586,502			956		(356	)		585,902			67.3	%
Gross margin		284,708			956		(356	)		285,308			32.7
Store operating, selling and administrative expenses		234,085			13,252		1,529			219,304			25.2
Depreciation and amortization		22,299			-		-			22,299			2.6
Operating income		28,324			14,208		1,173			43,705			5.0
Interest income, net		(179	)		-		-			(179	)		-
Income before provision for income taxes		28,503			14,208		1,173			43,884			5.0
Provision for income taxes		7,159			3,569		295			11,023			1.3
Net income	$	21,344		$	10,639	$	878		$	32,861			3.8	%

Basic earnings per share	$	1.19			0.59		0.05			1.83
Diluted earnings per share	$	1.18		$	0.59	$	0.05		$	1.82

	39-Week Period Ended November 3, 2018
				Non-Recurring Amounts:
	GAAP Basis (As Reported)			Acquisition⁽¹⁾		Non-GAAP Basis November 3, 2018			% of Sales
Net sales	$	702,718		$	-	$	702,718
Cost of goods sold		469,082			-		469,082			66.8	%
Gross margin		233,636			-		233,636			33.2
Store operating, selling and administrative expenses		186,211			1,528		184,683			26.3
Depreciation and amortization		18,847			-		18,847			2.7
Operating income		28,578			1,528		30,106			4.3
Interest income, net		(387	)		-		(387	)		-0.1
Income before provision for income taxes		28,965			1,528		30,493			4.3
Provision for income taxes		7,179			379		7,558			1.1
Net income	$	21,786		$	1,149	$	22,935			3.3	%

Basic earnings per share	$	1.16		$	0.06	$	1.22
Diluted earnings per share	$	1.15		$	0.06	$	1.21

Period	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Approximate Dollar Value of Shares that may yet be Purchased Under the Programs (in thousands)
August 4, 2019 to August 31, 2019		60,000	$	16.99		60,000	$	173,204
September 1, 2019 to October 5, 2019		225,300	$	17.75		225,300	$	169,205
October 6, 2019 to November 2, 2019		86,676	$	23.38		86,676	$	167,179
Total		371,976	$	18.94		371,976	$	167,179