This document contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
address future events, developments and results and do not relate strictly to
historical facts. Any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. They include
statements preceded by, followed by or including words such as "believe,"
"anticipate," "expect," "intend," "plan," "forecast," "guidance," "outlook,"
"estimate" "will," "may," "could," "possible," "potential" or other similar
words, phrases or expressions.  For example, our forward-looking statements
include statements regarding:
•the 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 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 loss of key vendor support;
•our plans, expectations and estimates concerning the integration of City Gear
and related costs;
•our ability to retain key personnel at Hibbett and City Gear;
•our anticipated net sales, comparable store net sales changes, net sales
growth, gross margins, expenses and earnings;
•our business strategy, omni-channel platform, logistics structure, target
market presence and the expected impact of such factors on our net sales growth;
•our store growth, including our plans to add, expand, relocate or close stores,
our markets' ability to support such growth, expected changes in total square
footage, our ability to secure suitable locations for new stores and the
suitability of our wholesale and logistics facility;
•our expectations regarding the growth of our online business and the role of
technology in supporting such growth;
•our policy of leasing rather than owning stores and our ability to renew or
replace store leases satisfactorily;
•the cost of regulatory compliance, including the costs and possible outcomes of
pending legal actions and other contingencies;
•our analysis of our risk factors and their possible effect on financial
results;
•our ability and plans to renew our credit 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-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 adoption by the Financial Accounting Standards Board;
•the possible effects of uncertainty within the capital markets, on the
commercial credit environment and on levels of consumer confidence;
•our analyses of trends as related to marketing, sales and earnings performance;
•our ability to receive favorable brand name merchandise and pricing from key
vendors;
•the future reliability of, and cost associated with, our sources of supply,
particularly imported goods, including the actual and potential effect of
tariffs on Chinese goods imposed by the United States and other potential
impediments to imports;
•the impact of technology on our operations and business, including
cyberattacks, cyberliability, or potential liability for breaches of our privacy
or information security systems; and
•our ability to mitigate the risk of possible business interruptions, including,
without limitation, from political or social unrest (including vandalism and
looting).
A forward-looking statement is neither a prediction nor a guarantee of future
results, events or circumstances. You should not place undue reliance on
forward-looking statements. Our forward-looking statements are based on
currently available operation, financial and business information and speak only
as of the date of this report. Our business, financial condition, results of
operations, financial condition, results of operations and prospects may have
changed since that date. For a discussion of the risks, uncertainties and
assumptions that could affect our future events, developments or results, you
should carefully consider the risk factors described from time to time in our
other documents and reports, including the factors described under "Risk
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Factors" in our Form 10-K for the fiscal year ended February 1, 2020 filed with the Securities and Exchange Commission on April 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. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Moreover, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on our forward-looking statements. We do not undertake to publicly update or revise any forward-looking statements after the date of this Quarterly Report on form 10-Q, whether as a result of new information, future events, or otherwise, and you should not expect us to do so. Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, we do not, by policy, selectively disclose to them any material non-public information with any statement or report issued by any analyst regardless of the content of the statement or report. We do not, by policy, confirm forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

Investor Access to Company Filings

We make available free of charge on our website, www.hibbett.com under the heading "Investor Relations," copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (Securities 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 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 and can follow us @HibbettSports
and @CityGear. We became a public company in October 1996. As of May 2, 2020, we
operated a total of 1,078 retail stores in 35 states composed of 908 Hibbett
Sports stores, 152 City Gear stores and 18 Sports Additions athletic shoe
stores.
Our Hibbett Sports stores average 5,800 square feet and are located primarily in
strip centers, which are usually near a major chain retailer such as
Wal-Mart. Our City Gear stores average 5,000 square feet and are located
primarily in strip centers. As of May 2, 2020, our store base consisted of 798
stores located in strip centers, 31 free-standing stores and 249 enclosed mall
locations.
Our primary merchandising strategy is to provide a broad assortment of quality
brand name footwear, apparel, accessories and 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 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.
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. 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 began in the fourth quarter of Fiscal 2020. If
a store remodel, relocation or expansion results in the store being closed for a
significant period of time, its sales are removed from the comparable sales base
until it has been open a full 12 months. During the 13-weeks ended May 2, 2020,
we included 1,047 stores in comparable sales. We did not exclude any stores from
the comparable sales base that were temporarily closed due to the COVID-19
pandemic.
Executive Summary
Net sales for the 13-weeks ended May 2, 2020, decreased 21.4% to $269.8 million
compared with $343.3 million for the 13-weeks ended May 4, 2019. Comparable
store sales decreased 19.5% for the 13-weeks ended May 2, 2020. E-commerce sales
accounted for 22.3% of total sales for the 13-weeks ended May 2, 2020 compared
to 8.3% of total sales for the 13-weeks ended May 4, 2019. Gross margin was
27.5% of net sales for the 13-weeks ended May 2, 2020, compared with 34.5% for
the 13-weeks ended May 4, 2019. The decrease in the gross margin percentage was
due to the higher concentration of e-commerce sales to brick and mortar sales in
addition to a $5.1 million increase in our lower of cost or net realizable value
(LCM) inventory reserve.
Store operating, selling and administrative (SG&A) expense, including goodwill
impairment, was 33.1% of net sales for the 13-weeks ended May 2, 2020, compared
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 first quarter of Fiscal 2021, we opened three new stores, rebranded
two Hibbett stores to City Gear stores, and closed eight underperforming stores,
bringing the store base to 1,078 in 35 states as of May 2, 2020. Store closures
include Hibbett stores closed for rebranding. We ended the first quarter of
Fiscal 2021 with $106.2 million of available cash and cash equivalents,
including outstanding debt of $50.0 million and after stock repurchases during
the 13-weeks ended May 2, 2020, of $9.7 million.
About Non-GAAP Measures
This MD&A includes certain non-GAAP financial measures, including adjusted net
income, earnings per share, gross margin and SG&A expenses as a percentage of
net sales. Management believes these non-GAAP financial measures are useful to
investors to facilitate comparisons of our current financial results to
historical operations and the financial results of peer companies, as they
exclude the effects of items that may not be indicative of, or are unrelated to,
our underlying operating results, such as expenses related to the COVID-19
pandemic, 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 was included in COVID-19 costs for
the 13-weeks ended May 2, 2020 and in acquisition of City Gear costs for the
13-weeks ended May 4, 2019. Costs related to the strategic realignment plan
included lease and equipment impairment costs, third party liquidation fees,
store exit costs, and residual net lease costs and were specific to Fiscal 2020.

While our management uses these non-GAAP financial measures as a tool to enhance
their ability to assess certain aspects of our financial performance, our
management does not consider these measures to be a substitute for, or superior
to, the information provided by GAAP financial statements. Consistent with this
approach, we believe that disclosing non-GAAP financial measures to the readers
of our financial statements provides such readers with useful supplemental data
that, while not a substitute for GAAP financial statements, allows for greater
transparency in the review of our financial and operational performance. It
should be noted as well that our non-GAAP information may be different from the
non-GAAP information provided by other companies.
Reconciliations of our unaudited condensed consolidated statements of operations
for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively as reported on
a GAAP basis, to statements of operations for the same period prepared on a
non-GAAP basis, are provided below under the heading "Reconciliations of
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 1, 2020, as filed on April 16, 2020. There have been no changes
in our accounting policies in the current period ended May 2, 2020, that had a
material impact on our unaudited condensed consolidated financial statements.
Recent Accounting Pronouncements
See Note 2, Recent Accounting Pronouncements, to the unaudited condensed
consolidated financial statements included in this Form 10-Q for the period
ended May 2, 2020, for information regarding recent accounting pronouncements.
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