Hibbett, Inc. (NASDAQ:HIBB) Q4 2023 Earnings Call Transcript

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When it comes to discretionary spend, we anticipate that customers will make reductions in entertainment, travel and eating out before reducing retail expenditures. Also, our research indicates that customers likely plan to spend the same or more as last year on Footwear and specific key brands. Turning to our e-commerce business, in Q4 sales increase 21.4% versus last year and 79.8% versus FY’20. These results were driven by increases in traffic, average order value and investments in our digital customer experience. Last year and this year our focus has been and will continue to be improving the digital customer experience by reducing friction points on two dimensions; one, improving the pre-purchase experience; and two, improving the post purchase experience.

Improvements to the pre-purchase experience include making it easier to find and discover products and making it easy to purchase. Our post purchase efforts remain focused on improving fulfillment speed and enhancing customer service capability to resolve issues quickly, as well as intercepting and preventing issues from occurring. I will now turn the call to Ben to discuss our store experience.

Ben Knighten : Thanks Bill. Our store culture is sales focused. The last two years, we’ve focused on developing and implementing tools to drive that culture. This includes investing heavily in creating a true mobile experience for both our consumers and our associates. Our store level infrastructure and systems required an overhaul to go mobile. This included ensuring every store had high speed internet, WiFi, multiple mobile devices and the apps required to deliver on that experience. The investments were significant, but were also required to achieve increased sales while lowering operating costs over time. The mobile environment enables process improvements to both customer facing and non-facing tasks. We’ve reengineered the way we operate.

This includes not only what tasks are done, but also how they are completed. Most importantly, we’ve redefined how we interact with the consumer on the sales floor. The things Bill mentioned about driving the e-commerce business also hold true for the in-store consumer. The investments we made allow associates to leverage the inventory process supply chain. They also improve the conversion rate, which lead to an improved consumer experience. This year is a payoff year. Much of the costs were front loaded. Now we can begin to leverage these investments. The productivity gains will allow us to take costs out of our model while improving our best-in-class omni-channel experience. I will now turn the call back to Bob to discuss our guidance.

Bob Volke : Thanks, Ben. The business outlook for fiscal ’24 is complex and constantly evolving. There are a number of challenges considered, but also a handful of tailwinds that will help to mitigate these headwinds as noted on slide 11. Inflation has a broad impact not only on consumer sentiment and spending patterns, but also contributes to operating cost increases in the form of wage pressure and higher prices paid for goods and services. We expect the promotional environment to be more significant than in fiscal €˜23 and we’ll be dealing with higher costs of borrowing and some intermittent lingering supply change disruptions throughout the year. On the flip side, low unemployment and higher wages provides consumers with more purchasing power.

We feel our inventory assortment has become much healthier in the past several months, and the unique and hard to find products we offer is expected to attract more customers to our stores and website. In addition, investments in store development, the customer experience and to back office infrastructure will begin to yield operating cost leverage as we move forward. Slide 12 summarizes fiscal 2024 guidance. Total net sales for the full year, including the impact of the 53rd week, are anticipated to increase mid-single digits compared to our fiscal 2023 results. The 53rd week is expected to be approximately 1% of full year sales. We anticipate full year sales will break down as follows: Approximately 26% in the first quarter, approximately 22% in the second quarter, approximately 24% in the third quarter, and approximately 28% in the fourth quarter.

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