Hibbett Sports, Inc.

1. “Game Tested. Athlete Approved.” Hibbett Sports, Inc. Kevin A. Pribil

2. Est. 1945 as Dixie Supply Co. in Alabama • Began in the marine and small aircraft markets but moved into sporting goods by the ‘60s • IPO in October 1996; operated 79 stores at the time • Incorporated in Delaware in 2007 • Immense growth into a now 873 store company • CEO- Jeffry Rosenthal, 55, former executive at Champs • Chairman- Michael Newsome, 74, began at Hibbett over 45 years ago and worked his way up from cashier Hibbett History

3. Crucial in order to accurately interpret information • Reasonably analyze the company’s health and market influences on future cash flows, accounting, and growth • Well-rounded financial forecasts used for valuation require comprehension prior to estimation Why Understand the Business?

4. Impressive Growth Source: Yahoo! Finance

5. Activities that create profit for the company • Primary • Inbound & Outbound Logistics, Operations, Marketing & Sales, Servicing • Support • Firm Infrastructure, HR Management, Tech & Development, Procurement Porter’s Value-Chain Model

6. Seek to provide a wide variety of full service products including Nike, Under Armour, adidas, etc. • All products are received at the sole warehouse in Birmingham, Alabama • Merchandising trends vary across region due to college/ professional sport fan bases and are monitored using POS computers that maintain perpetual inventory records. Inbound

7. Product movement from Birmingham warehouse to individual stores and customers via online shopping is done 2 ways: • 1) Internal distribution • 2) 3rd Party logistics providers • Back-stock is kept at warehouse and automatically replenished based on system inventory levels • Stores in outlying locations are serviced by 3rd party providers to help gain ~20% efficiency Outbound

8. As a retailer Hibbettoperates typically in 5,000 sq. ft. stores usually influenced by the location of a WalMart • 4 different types of stores • Hibbett Sports: full retail format • Sports Additions: 90% footwear and headgear • Sports & Co.: a 25,000 sq. ft. superstore (1 in operation) • Team: leading customized apparel supplier • CEO and CFO conduct annual evaluation of efficiency of internal controls procedures based on COSO standards • KPMG released audit report on Hibbett’s internal controls Operations

9. Centrally monitored advertising system uses mail catalogs, billboards, and signage. • MVP loyalty program • Plans for the future: delve into mobile, social, and website advertising • Sales are recorded perpetually via the company-wide IT system and monitored by company Headquarters Marketing and Sales

10. Active trademarks are renewed indefinitely so long as they are still in use. • Typically warranty packages for specialty products are offered to customers at an additional cost. On the other hand, certain products hold independent warranties through the manufacturing company itself Servicing

11. Adopted Code of Business Conduct and Ethics as well as Corporate Governance Guidelines. • There are 3 committees; audit, compensation, and nominating & corporate governance. • KPMG is independent external auditor. • Inventory valued at lower of weighted-average cost or market value. • All stores, the warehouse, and transportation are leased; a majority of which are recorded as operating. Firm Infrastructure

12. 2,600 FT and 4,800 PT employees • More PT employees during Q1/Q4 due to seasonal fluctuations • Training is done by DVD instructional videos and Hibbett prefers to promote from within • “Hibbett U” is a 4-day intensive training program geared for new store managers Human Resource Management

13. Product development is not particularly relevant as a retailer • However, IT and inventory system development is consistently being improved • Marketing department tests market areas for growth opportunities Tech/Product Development

14. Recurring positive relationship with vendors leads to favorable pricing • As Hibbett continues to grow, they gain more power at the bargaining table Procurement

15. Competition: High (Walmart, Dicks Sporting Goods, etc.) • Buyer Bargaining Power: Low (Customers pay the listed price for goods) • Supplier Bargaining Power: Moderate (Hibbett is a large company and does not concede power to vendors, however, high competition increases the supplier power) • Substitution: Not Applicable • New Entrants: High 5 Forces – Competition is intense!

16. SWOT analysis remains more subjective • Opinions are more likely to vary widely and produce analysis that cannot be recreated 5 Forces vs. SWOT Analysis

17. Source: HibbettSports, Inc. 2013 Annual Report

18. Source: HibbettSports, Inc. 2013 Annual Report

19. Source: HibbettSports, Inc. 2013 Annual Report

20. Life according to Dickinson (2011)

21. Industry growth increasing at 2.3% to total industry revenue of ~$42b in 2013 • Why growth? • Increased health awareness • Participation in sports • Increases in household disposable income • Top Performers: • Dick’s Sporting Goods • The Sports Authority • Footlocker The Industry Source: www.ibisworld.com

22. Increased competition not only between sporting goods stores but also with departments stores and online merchandisers • Increased store overhead (ex: rock-climbing walls, putting greens) • The fight for exclusive contracts with vendors • Analysts expect a slight decline in revenue of .1% per year through 2018. External Drivers Source: www.ibisworld.com

23. Minimal market concentration as mergers were required to keep up with Dept. store and online merchandisers • Purchases are the largest cost and represent 70% of industry revenue • New entrants are rare and globalization is also low Source: www.ibisworld.com Competitive Landscape