The Banc of America Securities Investor Conference in New York last week gave many an opportunity to get the first post-Q4 outlook from a number of companies we follow on a regular basis. As usual, much of the presentations is boiler-plate stuff we see daily, but there are always a few minor revelations that can provide new insight into the market.

Hibbett Sports provided just enough of hint of future expansion plans to give attendees the sense that the retailer is ready to make a westward push. The company may look to Texas or Oklahoma for its first Distribution Center outside of Birmingham, which would certainly give it reach into Arizona and the plains states if HIBB sticks with their current strategy of requiring all stores to be within a days drive of the DC.

As we reported in SEW_0411, Nike appears to becoming even more important to the retailer as Hibbett sees doubling the number of Nike shops in 2004 from its current base of 40 to 45 doors. The brand is now 36% of overall business and 50% f footwear, but has become the retailer’s fastest-growing vendor in Equipment. Baseball/Softball is the largest Equipment category.

Hibbett does about 40% of its total business in Footwear, 40% in Apparel and the balance in Equipment and is narrowing their vendor list in all categories. HIBB sees Apparel slowing and Footwear growing share due to an increase in allocated styles. Equipment is expected to improve on personnel changes.

Echoing comments he made in the Q4 conference call, chairman and CEO Mickey Newsome said they are looking at some of the Footaction stores, but the JFF sites were a bit too large for their format.

Word from some vendors also points to Hibbett’s move into a couple of urban malls in some mid-size southern cities, a real departure from the traditional “small-town operator” format. Footaction real estate could give them additional motivation there, especially if Nike expands allocated product enough to put it in the win column.

Dick’s Sporting Goods turned its inventory 3.7 times in 2003 versus an industry mean of 2.6X. Still, the retailer looks at best-of-class retailers outside of the Sporting Goods space to measure its performance and sees hitting still higher benchmarks.

The quicker turn rate has its obvious benefits as it frees up working capital, improves margin rates, and creates comp store growth.

Aside from claiming the largest number of Nike shops in the U.S., Dick’s now claims the title as the largest Under Armour account in the country as well.
The retailer believes they are taking market share away from TSA.

For their part, The New Sports Authority is not interested in replicating the Dick’s successful formula, indicating that they aren’t as heavy in the Outdoor or Golf business. Management said that Dick’s is part of the competitive focus, but “not all of it”. Strange they would mention the differential in Golf since they play up the growth of their own Golf Day shops in most every presentation.

CFO Tom Hendrickson said “We’re not going to get Dick’s sales per sq. foot, but then we don’t have their occupancy costs.”

Only 60 to 70 of TSA’s 385 doors compete head-to-head with a Dick’s store, but that number is growing each month.
In a move that has been floating around the market for over a month, the TSA announced they had hired former Footacton and Footlocker footwear merchant Jack Bellini as VP/DMM of Men’s footwear.

TSA Plans to grow chain square footage by 5% this year through the opening of 50 new stores most of which will be backfills. Stores in New Jersey are undergoing first mini-renovations.

Foot Locker focused some of its presentation on its growth across the pond, indicating that they will do a billion dollars in business in Europe this year. The market is said to have the potential for 850+ doors and could be a $2 billion market for Foot.

In the U.S., Foot Locker said they expected to grow their business with Reebok, a relationship that is getting a lot of attention now that Nike and foot Locker have made up. FL did say the Licensed Apparel segement was “softening”. As for Nike, Foot Locker said that, “We are always happy with Nike.  There are just degrees of happiness.”

Management said the Footaction closings would have bigger impact on Foot Locker than on others and also indicated that GOB events had “some impact” so far.

Still, the largest-athletic-specialty-retailer-in-the-world stuck to its forecast of earnings growth in the 10% to 20% range for the first quarter, which would EPS between $29.70 and $32.40 versus last year’s diluted EPS of 27 cents per share. Analysts are expecting 33cents per share this year. Reflecting growth in excess of 22% for the quarter.

The Direct-to-consumer business is now 48% catalog and 52% online.  The business produced $366 million in sales last year, or roughly 7.7% of sales, and contributed nicely to net income growth with a 14.5% operating margin.
Sales/sf goal for 2004 is $350. Long term $400/sf.

The Finish Line plans to improve its sales/sf to $338/sf this year from $325/sf last year and said they “continue to take market share from our competitors”. Share could increase this year as they predict a dramatic reduction in square footage in the industry.

First quarter ASP is up low single-digits, held back by faster growth in women’s and kids footwear as was the case in Q4. FINL is making a bigger investment in high margin accessories and expects “significant” growth in the category for the year. They also see a comeback in Branded Apparel in an Olympic year.

Nike was 56% of overall purchases last year, up from 54% in the prior year, and represents 60% of Footwear purchases.  FINL sees Nike growing to 57% of the business this year with a slight increase planned in the Footwear category.

Reebok gave some insight into the shifting tide in Licensed Apparel, revealing that they shipped 3 million units of FL jerseys last year versus a peak output of 6 million jerseys for the category.

Management appeared to reiterate the positive position with Foot Locker and said that they represented 20% of purchases at Foot Locker U.S. They said they do not expect to lose shelf space at FL this year, but instead said that “business will grow” this year.

Sell through on ATR was said to has “just okay”.

Reebok, focusing on its push into performance to draft off of the tremendous exposure for the Vector in the NFL on Sundays this fall, said they tested 8,000 pair of football shoes at Dick’s Sporting Goods and now have a 90,000 pair order for BTS.

>>> All in all, nothing earth-shattering here, but it was interesting to hear of the increased share that Nike will be taking in a number of retailers this year. Will others run to Foot Locker and the Mid-Market for help as Nike moves to replace the Footaction/JFF pairage…