Pat Watson – Senior Vice President & Principal Corporate Communications, Inc. Jeff Rosenthal – Chief Executive Officer and President Jared Briskin – Senior Vice President and Chief Merchant Scott Bowman – Senior Vice President and Chief Financial Officer

Stephen Tanal – Goldman Sachs Dan Wewer – Raymond James Rick Nelson – Stephens Camilo Lyon – Canaccord Genuity Peter Benedict – Robert W. Baird David Magee – SunTrust Mark Smith – Feltl and Company Anthony Lebiedzinski – Sidoti and Company Kristine Koerber – Barrington Research Associates Seth Sigman – Credit Suisse Chris Svezia – Susquehanna Financial Group Sam Poser – Sterne Agee Jim Chartier – Monness, Crespi, Hardt

Ladies and gentlemen, thank you for standing by. Welcome to the Hibbett Sports Third Quarter 2016 Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Friday, November 20, 2015. I would now like to turn the conference over to Mr. Pat Watson, with Corporate Communications. Please go ahead sir.

Thank you for joining Hibbett Sports to review the company's financial and operating results for the third quarter and first nine months of fiscal 2016, which ended on October 31, 2015. Before we begin, I would like to remind everyone that management's comments in this conference call that are not based on historical facts are forward-looking statements. Management may make additional forward-looking statements in response to your questions. These statements, which reflect the company's current views with respect to future events and financial performance, are made in reliance on the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and are subject to uncertainties and risks. It should be noted that the company's future results may differ materially from those anticipated and discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences have been described in the news release issued earlier this morning, and the company's annual report on Form 10-K, and in other filings with the Securities and Exchange Commission. We refer you to these sources for more information. I'd now like to turn the call over to Jeff Rosenthal, Chief Executive Officer. Please go ahead, Jeff.

Thank you and good morning everyone. Welcome to the Hibbett Sports third quarter earnings call. I have with me this morning, Scott Bowman, Senior VP and CFO; Jared Briskin, Senior VP and Chief Merchant; and Cathy Pryor, Senior VP of Store Operations. Third quarter comparable stores sales were up 0.6%. We were very pleased with our back-to-school sales, our margin performance and expense controls and we’re encouraged by the great progress we are making with our merchandising initiatives. Sales softened later in the quarter due to significant declines in our colder weather categories, although footwear remained strong due to the benefits from a strong assortment and an improved stock position. For the quarter, Hibbett’s opened 20 new stores expanded one high performing store and closed three underperforming stores bringing in the total store base to 1,031 in 33 states as of October 31. The company also opened its first store in the state of New York in the quarter. We see many opportunities to expand our footprint throughout the United States. We can operate over 1,500 stores as we expand throughout the country. And we will have a digital presence. Sales thus far, in the fourth quarter have been disappointing down double-digits. Continuing headwinds from weather as well as the difficult launch comparison had impacted our results. We expect as the third quarter progresses that our ongoing improvements in merchandising strategies execution replenishment capabilities will impact our results positively. We are moving forward with our strategic initiatives as we look forward to the revenue drivers that we will begin to see next year and for years to come. I would like to thank all our associates for their hard work and dedication to Hibbett Sports. And now, I’d like to turn the call over to Jared Briskin, Senior VP of Merchandise to talk about our merchandise trends.

Good morning, thank you, Jeff. The third quarter started off strong aided by the tax free ships and the later back-to-school selling season. As we move toward the latter part of the quarter business became more difficult as seasonal categories struggled due to a lack of cold weather. For the third quarter, our apparel business was negative mid single-digits. We were pleased to see that early quarter sales of our fall assortment were improved but the warm weather trying to impact categories, like fleece, base layer and cold weather accessories late in the quarter. The license business was also impacted by the weather patterns but also saw a negative impact due to difficult comparisons in our Mississippi stores from the year ago period. We’re working closely with our vendor partners to right-size our inventory based on the warm weather and limit our exposure as much as possible. Our team sports business was also down low single-digits. Cleated business was positive led by gains in football but equipment lagged. Some cold weather items for football have also been affected negatively by the warm weather trend. We’ve had a very strong quarter in footwear of high single-digits. All genders were positive, led by double-digit gains in our kid’s business. From a category perspective, we saw strong gains in lifestyle, basketball and casual footwear. Running was also positive, the lag of the other category growth rates. As our fall assortments have arrived in many of our new processes are implemented. We started to see improvement in our results. Our expectation is that as the weather patterns normalized we will continue to see improvement. I’ll now turn the call over to Scott Bowman, to discuss our financial results.

Thank you, Jared, and good morning. For the third quarter, total sales increased $10 million to $228.3 million, an increase of 4.6% over the prior year. Comp sales increased 0.6%. By month comp sales were 3.4% in August, flat in September and negative 3.8% in October. Gross profit rate decreased 18 basis points in the quarter. Product margin increased 1 basis point as we effectively manage our markdowns while keeping our age inventory under last year’s levels. Warehouse and store occupancy increased 19 basis points as a percent of sales, which was due to deleverage of these expenses associated with lower comp sales. SG&A expenses increased 0.1% in the quarter, and decreased 94 basis points as a percent of sales. This was mainly due to a favorable legal settlement of $1.9 million which reduced SG&A expenses by 82 basis points. Depreciation and amortization decreased three basis points as a percent of sales in the quarter. The income tax rate for the quarter was 37.3%, compared to 36.8% last year. The increase was mainly due to a favorable true-up entry last year in the quarter. Operating income of $29.9 million increased 11.4% from last year, and was 13.1% of sales, versus 12.3% last year, an increase of 80 basis points. Diluted earnings per share came in at $0.79 per share, versus $0.67 last year, an increase of 17.9%. The favorable legal settlement mentioned earlier resulted in an increase of $0.05 per share for the quarter. From a balance sheet perspective, the company ended the quarter with $45.5 million in cash, versus $71.5 million last year, with no bank debt. Inventories increased 14.1% over last year, and were 7.2% higher on a per-store basis. We spent 3.6 million in CapEx for the quarter. Also for the quarter, the company bought back 1.3 million shares, for a total of $50.5 million, affected immediately the board of directors has authorized a new stock repurchase program of $300 million expiring on February 2, 2019. This program replaces the existing authorization due to expire on January 30, 2016. Based on these results for the quarter, I would now like to provide some updates to our full year guidance. We expect comparable store sales to be approximately flat for the quarter, which compares to previous guidance of flat to a low single-digit increase. We expect earnings per share to be in the range of 287 to 294 versus previous guidance of 280 to 290. This range does include the $0.05 per share benefit from the legal settlement mentioned earlier. We’re now ready for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Stephen Tanal with Goldman Sachs. Please proceed with your question.

Hi, good morning guys. Thanks for taking the question. The first one just real quick to clarify on the last point there, Scott, I think you said same-store sales would be flat for the quarter. Did you mean the year or is that the 4Q expectation?

Yes, for – updated guidance for the year would be flat, right.

Okay. So that's not – and is there a 4Q expectation?

Yes, I mean you can kind of imply the expectation based on the flat for the year.

Okay, fair enough. And I guess the most surprising element to us was the expenses, it investments that are going on. I'm sort of curious what enabled that and whether maybe healthcare is tracking better or anything that's unusual in that line and how to think about that going forward?

Yes, we actually saw a couple of things Stephen, healthcare expenses were though – little bit less than normal, that can fluctuate month-to-month, but it did turn out; they were slightly favorable in the third quarter. We also did watch our expenses quite a bit knowing that our sales will coming in the little soft; we pulled back on discretionary items where we could. We did not sacrifice however on our major initiatives, specifically the omni-channel initiative that we’re on, so we’re – we stayed on track there. So it’s kind of happened after we pull back some but we did see some favorability in couple of areas.

Okay. And how are you thinking about the fourth quarter from gross margin and/or an SG&A perspective? Like how should we think about the margin outlook there?

For the SG&A piece, remember last quarter we did show some favorability, on couple of more one-time items last year. So we’re up against some favorability from last year. So I would expect the fourth quarter to be more similar to the first couple of quarters of the year, if you look at kind of a year-over-year increase. From a margin perspective, obviously a lot of that will be dependent on our comp, driving some of the favorability on our fixed expenses, from a product margin standpoint. I think we turn the corner in some respects and we’re getting much better managing our promotions and markdowns. A lot of that will be depend on the sell-through that we get on, some of the apparels that’s in our stores now that are waiting for the customers to come in when the cold weather hits, stack kind of comes through like we think it can. Then we should be in pretty good shape from a margin standpoint.

And just lastly to follow up there, inventory ended a little bit high. Any comments on that and then I will stop there and turn it over to someone else.

Hi, this is Jared. I think first and foremost we continue to make some pretty significant investments in the footwear business ensuring that we can leverage our ability to fill in by size from the DC. So significant portion of the overage was there and we’re certainly getting the results from that inventory. And then secondly, the seasonal declines, with the warm weather patterns have impacted some of the inventory to a degree as well.

Got it. Okay, thanks guys.

Thank you.

Our next question comes from the line of Dan Wewer with Raymond James. Please proceed with your question.

Thanks, good morning. So I just want to make sure I understood the same-store sales or total revenues were down double digits quarter to date?

That was comp sales, Dan.

So I guess the guidance implies that same-store sales in the fourth quarter will be maybe up 1% or 2% to get same-store sales back up to flat for the year. So perhaps if you could bridge the start that we're in the fourth quarter and to why business would recover so much.

The way that we’re looking at it, Dan is up until now for the quarter, we have about 15% of the business in right now. And we clearly see where the weakness is and that weakness is very, very focused on the apparel categories with the colder weather, not hitting us yet. If you look at some of the other categories, specifically footwear still remains very strong. So we feel like once the weather turns, we will start to sell-through that product very quickly. And we’re very comfortable with the assortment and the inventory levels we had to last us through the season. So, we think we’re just in a little bit of a low period right now, but fully expecting things to pick up.

Okay.

We saw Dan lots of, we saw lots of opportunity last year, and things that we missed going into the holiday season, so we feel very comfortable where we are at and, we know we had a lot of missed opportunity as we got closer to the holiday seasons especially on some key fleece items that that we should be in great stock in this year. So we still think that we missed business last year that we think that we'll capture at that time period.

You had noted that one of the reasons for the inventory build was the weaker sell-through on the cold weather product. Dick's talked about the similar problem earlier this week. Are you also looking to return excess inventory back to vendors or cancel future orders to help rectify the problem?

We’re doing a combination of all the above, whether maybe cancellations, returns, additional discounts markdown dollars, it will be a full combination. Again, we still feel very comfortable with where we are and still feel like there was a significant amount of business missed as we headed toward the Christmas holiday last year, so, we still feel very good, but we are daily having conversations to ensure that we mitigate some of the risk on the inventory of seasonal products.

This is the last question I want to ask. One of your vendors, Under Armour, was doing a 25% off all their base wear product earlier this week, I guess reflecting what's happening in the industry. Would you see vendors becoming more promotional on their own direct to consumer site, does that have any impact on Hibbett's business?

Yes, I think, typically when the vendors look to do that we're certainly notified about that and we try and follow suit if necessary when possible in certain categories that’s certainly a possibility, and certain categories, some of the promotions that the vendors are running their plan promotions that will be involved in as well. So, I think there will be a balance specifically for the base layer product, typically a football related business, and so we’re passed the football season now, as we move now from more of a need, period to more of a gift-giving period, but the base layer business strengthens for us as we head towards baseball season, which for the majority of our stores as early so. We still feel good about that business but we’ll follow suit from a vendor perspective when they get promotional as much as we can.

Okay, thank you.

Thanks, Dan.

Our next question comes from the line of Rick Nelson with Stephens. Please proceed with you question.

Thanks, good morning. Footwear has been an aggregate strength for you guys in the quarter. How is that comping fourth quarter to date and what proportion of fourth-quarter sales is footwear? I know it's 45% of the full year.

Yes, our footwear business continues to comp up and we see that as being a main – one of our main drivers. During the fourth quarter we expect that to even strengthen, even more hopefully through the fourth quarter, and even going into early spring. We see that our significant investments and our footwear categories are definitely paying dividends for us and we feel even stronger that it will continue through at least for the first half of next year.

And is that, Jeff, a smaller proportion of fourth-quarter sales or how does that stack up seasonally to that category as a proportion?

Yes, Rick, early in the fourth quarter, the footwear business is a little smaller than the apparel business, as we get towards the middle and latter part of the quarter. The footwear business becomes a more significant proportion to our total.

Got you. Thank you for that. Also I'd like to ask you about the regional areas of strength and weakness. Particularly some of the non-weather affected markets, how those performed and the oil states, how they performed.

Yes, Rick. This is Scott. If you look at some of the core Southeastern states, we actually did really well. And so that is somewhat encouraging to see strength and kind of the core stage for us. We definitely did see some weakness in the Southwest Texas, Oklahoma, even Nebraska, Louisiana. So some of those states that are more affective to little bit by the oil activity. We did see some declines there.

Okay, thanks a lot and good luck.

Thanks, Rick.

Thank you.

Our next question comes from the line of Camilo Lyon with Canaccord Genuity. Please proceed with your question.

Good morning guys. I wanted to focus in on a little bit on the running commentary. I think you said the running lagged some of the better performing categories. And I was hoping to dig a little deeper into that, what are you seeing on the running sign, is it a mix issue with respect to parts of running that are outperforming that you're not as exposed to or are you seeing other things in the overall category that are driving the lag relative to everything else in the store?

Yes. I think some of it is the way that some shoes are classified between different retailers, so that's one part. But we feel from a running standpoint certainly the performance running category has been a little bit impacted by what's considered the fashion running category. We still have a little work to do to get that in balance. We've improved it significantly for the third quarter and we feel like as we head into now in the fourth quarter and first quarter that will improve even more. But it's really the offset of the performance categories, we need to see some additional revenue spikes within the fashion running category and we feel like we have that bought and planned appropriately.

Okay, and then we've heard that parts of signature basketball and I think specifically the Lebron piece have been slowing while other parts of signature like Kyrie or Kobe have been strong. Are you seeing the same differentials in trend and is the strength in the latter part of that portfolio strong enough to offset a deceleration in the Lebron piece?

Yes, I think, our basketball categories in the third quarter was excellent. We are absolutely seeing a shift to some of the newer players whether it be Seth Curry or Kyrie Irving versus some players that are more established like Lebron and KD. We're absolutely seeing that shift but also the strongest part of our business and largest part is the Jordan business. So we feel very confident in that business as well so there is a shift to a degree. We do feel that it is a temporary shift but we're certainly reacting to it and feel like we have reacted to it appropriately.

Okay great and then my final question relates to the weather impact. Clearly it's been warm for everybody. And I think that the way the weather pattern is supposed to unfold in the South and the larger part of your markets is it supposed to be a much wetter fall season once it does hit. How does that impact your consumers and your sales trends? What does a rainy season do to your business?

Yes, we're not so reliant on just outerwear. We sell a lot of fleece in that. So in the South the wet won't affect us that much, as long as we get cooler temperatures we should be fine.

Okay, perfect. Good luck guys with the holiday.

Thank you

Thank you.

Our next question comes from the line of Peter Benedict with Robert W. Baird. Please proceed with your question.

Hey guys, first question just on the store openings Jeff, what's the plan for the year? Is that still the same as it was and curious your initial thoughts on 2016 if you think you'll be doing more openings in 2016 versus 2015?

Yes. Peter we're still on plan to hit the number that we put out for the year. We're right on plan. As we look into next year even though we aren't giving that out yet we're really, we really want to make sure that we open good quality stores. So as we do that we will look at that number for next year but we still are having plenty of opportunities to open good stores.

Okay, that makes sense. Then on the CapEx front are you guys still thinking kind of low 30s there for CapEx this year? It would imply kind of a big step up in the fourth quarter but just curious what your view is on the CapEx right now?

Yes, that's still the view, Peter, in the fourth quarter and going into the first quarter of next year will be a pretty heavy deployment phase on hardware for our stores to get ready for the POS implementation. So that timing may flex a little bit between first and the fourth quarter and the first quarter but it should be in that range.

Okay, that makes sense, Scott. And then just related to that last question on the D&A I know sequentially it ticked down ever so slightly but given the level of spend we would have expect it to start picking up sequentially. Was there anything one-time in the third quarter in terms of D&A and how should we think about the annual D&A this year? And then early thoughts on I guess some 2016, maybe a range of growth rates or something that we can think about on that line. Thank you.

Yes, there wasn't really anything that unusual about D&A recently. I think as you think about next year kind of this first deployment of all the hardware for the stores for the POS implementation we've kind of said that in the first half of next year we should be pretty well fully deployed and once we do that then the depreciation will start after that. So that's kind of the way to think about it.

Okay, that's helpful. Thanks very much.

Sure.

Our next question comes from the line of David Magee with SunTrust. Please proceed with your question.

Hi everybody. Jared, I had a question regarding the better in-stocks, is it possible at this point to quantify the benefit that you're seeing? And do you still feel pretty good about the potential there as we go into next year?

Yes, we are quantified and we are starting to see the in-stock rate tick up. I think a lot of the initiatives we've had are starting to pay off. Unfortunately some of the seasonal challenges have offset that opportunity but again we're heading into a period where we felt like there was a significant opportunity. We left some business on the table and we do expect that that improvement on the in-stocks is going to pay off for us throughout the rest of the quarter.

At what point do you think it will be done as far as the initiatives in that regard?

I think a lot of the initiatives are in play. A lot of the initiatives are ongoing, so I don't know if we'll necessarily say we'll ever be done. But we do feel very good about where we are. Certainly we will continue to refine those as they start to deliver and we start to see the results from them. But at this point we do feel very good about where we are. We are hopeful for some normal weather where we can start to realize some of the benefit of what we've done.

Is it mostly a footwear benefit or is it across apparel as well?

It's really both. The largest benefit from a volume perspective will certainly be on the footwear category just because of the average price points and the opportunities for us to fill in by size that we have not been able to execute in the past. But across all categories there certainly will be an impact from the improved in-stock position and our ability to fill in.

Thank you. And lastly, how do the launch comparisons look for December this year versus last year?

Yes, so we had a launch on earlier in the quarter that we knew was going to be somewhat of a concern. For the rest of the quarter we feel very comfortable with the schedule currently.

So you had a tough comparison in November right? You had a good launch last year.

Yes.

Early November was a tough comparison. Certainly as we head to next week the holiday launch calendar starts to get very robust and we feel very good about where we are.

Do you think you've got as good allocation this year?

We feel good about our allocations and we continue to work with our partners on a daily basis to try and improve those every day. But we do feel good about where we stand today.

Okay great. Thank you, good luck.

Thank you.

Thanks David.

Our next question comes from the line of Mark Smith with Feltl and Company. Please proceed with your question.

Hi guys. First, Scott can you just walk through the cadence of comps again?

Yes, sure. In August our comp was 3.4%, we were flat in September and then we were down 3.8% in October.

Okay. And can you remind us fourth quarter of last year what that cadence of comps looked like?

Yes, sure. We started off really strong in November. We had an 8.9% comp, December was 1.4%; and January was 11.3%. And one of the things to think about for January, 11.3% was on top of a negative 9.8% the prior year. So, in kind of our thinking January last year was just getting back to where the normal run rate is.

Okay, that's helpful. And just second – any change in tax rate expectations here going forward?

Yes, I think the tax rate should be fairly similar to what we saw in Q3.. So I don't anticipate any big changes there.

Okay, excellent. Thank you.

Sure.

Our next question comes from the line the Anthony Lebiedzinski with Sidoti and Company. Please proceed with your question.

Good morning guys. Thank you for taking the questions. So I was wondering if it would be possible for you to quantify what the same-store sales would have looked like if you were to exclude the colder weather categories?

Yes. We took a very hard look at that and feel like the seasonal categories impacted us by about 130 basis points.

Okay, great, thank you for that. Also, Jeff you had mentioned that you see lots of opportunities to do a better job with key items. You mentioned fleece, are there any other products that you can mention as to you feel like you have an opportunity to do better in the holiday season versus last year?

Yes, definitely footwear we have that opportunity. There are also many things in equipment just in accessories that we can fill in such as socks and headwear and some of those other types of products, some of the denim that we carry and other things that are very size oriented we will be able to do that which we think is a huge opportunity.

Okay. Thank you.

Our next question comes from the line of Stephen Tanal with Goldman Sachs. Please proceed with your question.

Hey, thanks for taking the follow-up. So just two more quick ones, the same-store sales popped into my mind after that question. Can you talk about the tax holiday shift what you think the impact was on the overall quarter and then just traffic ticket would be helpful as well? Thanks.

Sure, Stephen. As we mentioned in the second quarter we did see a detriment there of about 200 basis points or so on our total comp for the quarter. As we got into Q3, Q3 is a higher volume quarter so it impacted us favorably by about a point and a half.

And traffic?

Yes, the traffic and the ticket, very similar story to what we've seen in recent quarters. The ticket was up mid-single and the transactions were down mid-single. We started off the quarter where our transactions were improved over the second quarter. September actually had a little bit better transactions than the second quarter as well. The big shortfall was in October.

Understood. Okay, thanks.

Sure.

Our next question comes from the line of Kristine Koerber with Barrington Research Associates. Please proceed with your question.

Good morning. Just a quick question on the apparel, the cold weather apparel. So have you held off on taking markdowns at this point?

Yes. To this point we feel like we're not in a place where we need to take significant markdowns. Certainly some items that we're not comfortable with we'll address as needed as we already have, as we always have. But at this point we still feel with some of the missed opportunity from last year and the lack of weather that we've had so far there's a little bit early to start with significant markdowns over and above what we've historically done. done.

So I guess how long are you going to hold off? I mean if the weather doesn't improve, we don't get the winter weather in certain markets in the next couple of weeks when do you plan to step up and start marking down product?

I think, obviously this week with the Thanksgiving holiday coming up will be a real telltale for us. This is the season where we start to move from a little bit less need and more to gift-giving. So we feel like we need to really see the impacts of next week and the Thanksgiving holiday to then start to make those determinations of what we realistically need to do.

Okay. And then just lastly, can you give us a read, an early read on the New York stores? Was the opening, did it meet or exceed expectations at this point?

Sure. We are only open for a couple of weeks but we feel very good about the way it opened. And it's actually performing above our expectations but it's early, it's only the first two weeks but we're excited about how it performed.

Great, thank you.

Our next question comes from the line of Seth Sigman with Credit Suisse. Please proceed with your question.

Thanks and good morning guys.

Good morning.

So SG&A was obviously a source of upside this quarter. As we think about the fourth quarter, guidance implies a pretty significant acceleration in your SG&A growth. Can you remind us what happened last year, what you're up against and then how do you think about the balance between investments this year versus more controllable areas as we saw in the third quarter?

Sure. If you take a look at last year's fourth quarter we did have some favorability. The bulk of that favorability was in benefit cost and we also had some benefit on gift card breakage which we true-up once a year. Those were the two main contributors. So I think that will be closer to normal this year. So I think that's a piece of it. And I think the other piece as we get into the fourth quarter we'll continue to keep a pretty tight rein on the more discretionary side of SG&A but we're going to fund the major initiatives and really not slow down there. So that's the other piece of it that we want to make sure that we keep going. So as I look at more of the investment versus controllable, the controllable side will be a little bit tighter but the investment side of our SG&A spending will kind of remain as planned.

Okay. And so as you look out over the next year, can you just remind us of specific investment plans you have, the timeline there and how we should be thinking about normalized SG&A growth?

Yes, we will provide more detail on that when we give out next year guidance on the next call. But I would anticipate next year that SG&A, the investment side of SG&A will be slightly above what we saw this year. I would say that there would be a fairly even spread next year and we'll provide more details in the next call but I would say it would be a fairly even spread and slightly more than this year.

Okay and then just one final question on new store productivity, how is it tracking relative to your expectations? When we cut through the numbers it looks like it's running at about 60%, a little bit lower than what we've seen historically. Anything changing about the markets that you're moving into? Anything different on the competitive front that you could speak to?

Not really. I think a lot of that is in some ways under our control where as we continue to make improvements in our assortment and replenishment and allocation I think we'll see some benefit there. The new store productivity does always kind of ebb and flow with our overall comp number, so that is a big part of it. So as we see our comp numbers improve typically our new stores come right along with that.

Okay, and then just following up there, as traffic has declined across retail can you talk a little bit about how your own real estate strategy maybe is changing where you would have co-located with some other retailers in the past? Is there an evolution in your thought process on store openings where those should be long-term opportunity? Thanks.

I think we continue to look at that and the biggest driver is really what is the demographics and the traffic patterns of the area, especially since most of our stores are in strip centers. So that one, three, five mile radius of the store from a demographic standpoint and traffic counts in those particular markets, so that's probably how we look at it a little bit stronger. So the better the demographics are and the better the traffic count and how close people are proximity to our centers is a big driver of it.

Thank you.

Yes.

Our next question comes from line of Chris Svezia with Susquehanna Financial Group. Please proceed with your question.

Good morning everyone. Thanks for taking my question. I guess first just to walk back to the comp to date and your implied outlook for the fourth quarter, which I think fourth quarter is implying sort of flat to up maybe 2 at best comp in the fourth quarter. Kind of close that gap, from down double-digit I guess what have you seen so far that gives you that confidence that you can close that gap either in certain stores that have seen colder weather that have seen a massive comp turn or just kind of walk us through a little bit about why you feel that comp you can close that much of a gap?

Yes. Some of the areas that the weather has gotten cool we definitely have seen the increase in sales, especially in the apparel area. We also feel very good about what the launch calendar looks like the rest of the year, especially in late November and all of December. And then also as we go into January just last year if you remember we had some delivery delays with the port strike, so we think we will be able to have goods in earlier for our tax season. So we feel very comfortable that we’re going against some really soft numbers and then being able to fully utilize our distribution center on filling in on sizing and all that should pay some dividends. So as we’ve seen some of those things in certain areas we think when we get that across the rest of our states that we’re in a well-positioned because the assortments that we have in our stores.

Okay, fair enough. Thank you for that. And I guess Jeff an update, or whoever wants to take this, just an update on the e-commerce rollout. I know you’re doing the point-of-sale systems I guess first half of next year. Just any color updates, timing, anything you can share with us about how that’s unfolding?

Yes, we’re actively seeking a VP of e-commerce currently. We are evaluating what platforms we want to do within the next four to five weeks and we’re looking at everything possible we can to move up the timeline as soon as possible. So we have also we hired consultants and are spending the money and all the initial laid work to put in the core systems are going as planned and we are moving quite rapidly.

Okay. Would you want to share at all what that original timeline about launching e-commerce is or was that you’re trying to move up by any chance? Or no?

I can give you a little bit of details on that.

Thanks Scott.

The first thing we’re working on is the initial deployment of all of the hardware required for the POS implementation. So that’s the stage we’re working on now and first half of next year we expect to have that deployed. The back half of next year most of that time will be spent on the capability to ship from store to home. So if one store doesn’t have a particular item we can have another store ship it to the customer’s home. The following year is really the work that will be done on the website and mobile or app, so more of the e-commerce work will be done that following year.

And Chris we are doing things simultaneously. We are actively getting our distribution center and all that all set for e-commerce. So there is a lot of work being done as we continue to go through the year.

Okay. All the best on the holiday. Thank you.

Thank you.

Our next question comes from the line of Sam Poser with Sterne Agee. Please proceed with your question.

Chris, just asked the one question I had so good morning. I was wondering could you give us a more detail as to what exactly double-digit negative means? Are you down 10? Are you down 12? Could you give us be a little more specific as to where you are quarter to date?

Very low.

Low doubles, okay. And then did you have any store closures in October, November with all the floodings that came across Texas and into Louisiana and so on and so forth?

We had very minimal but obviously there was some flooding and some of those type things but very minimal closures. But when the weather is that way sometimes people can't get to stores.

Right, right. And last year in January you had the problem with the port delays, the prior year you had a bunch of store closings because of the weather and then you had that in February this past year. Can you talk about the guidance that you’re giving, are there store closures, seasonal store closures built into this guidance recovery or top-line recovery?

Whenever we put guidance out there it’s more of what we would call a normal season. And so that would include minimal store closures, and that’s usually how we try to guide is kind of normal middle-of-the-road.

And you had I think, I forget, I mean it was 1,500 store closing days in February and I think the prior year it was like 1,200 store closing days in January. So what’s normal?

Well, both of those are clearly not normal. But I would say if you look over the last four or five years excluding this past year that was more of a normal cadence I would say. And so that’s why when we talked about January our assumption is it will be kind of getting close to normal, not including this past couple of years.

Okay. And then where do you expect the inventory to be – how are you looking for inventory position at the end of the year, relative to sales growth?

Yes I mean, I think we still have some work to do to get the inventory a little bit more balanced appropriately with the sales growth. We are expecting obviously more inventory than last year due to some of the port delays and the opportunities that we have around the tax and the season at the end of January and early February. So we’ll balance what we feel are the appropriate investments to ensure that we’re driving revenue during that holiday which we consider Taxmas a holiday. But then we also know we need to get some balance between the sales and inventory.

Thank you very much – I’m sorry?

I was just going to say on a per store basis Sam, we're up 7% and we feel like we need to be up a little bit per store, especially with the work that we're doing on in-stock and making sure that we have product to replenish those stores. So we want to be higher than last year on a per store basis.

All right. Thank you.

Thanks, Sam.

[Operator Instructions] And our next question is a follow-up question from the line of Peter Benedict with Robert W. Baird. Please proceed with your question.

Hey guys, one quick follow-up on capital allocation. Scott, it looks like the buybacks for this year will probably approach $100 million or so. Is that a sustainable annual level if comps are kind of call it flat to – low single-digits? And can you just talk about your willingness to dip into the revolvers you have out there and anytime going forward? Thank you.

Sure. $100 million of buybacks is not sustainable through the long-term unless we do some borrowing. And so as we look forward we will continue to look at where we are, cash availability and where the stock price is and be opportunistic. If we see an opportunity that makes sense then we will go into the revolver. That's really what it's for and so we will use it if we think it makes sense.

Okay, that's fair enough. Thank you very much.

Sure.

And our next question comes from the line of Jim Chartier with Monness, Crespi and Hardt. Please proceed with your question.

All right, thanks for taking my questions. First on the guidance, I just want to clarify does it exclude the $0.05 from the legal settlement benefit?

No, it includes the $0.05.

Okay. So third quarter is $0.79 in your guidance?

Correct.

Okay. And then does your guidance include any additional share repurchases?

Minimal for the fourth quarter. Obviously we have made a big buyback in the third quarter, so you should expect that to moderate quite a bit in the fourth quarter.

And then on the comp sales to date trend you mentioned weather and then a launch shift impact. Was the major impact from the launch or was it primarily weather, could you quantify what the impact of the launch shift was?

Yes, about 75% of the current decline is weather related.

Great. And then finally last quarter you talked about opportunity in bottoms as well as wearables. Just curious how that played out in third quarter and how you’re feeling of about those initiatives for fourth quarter?

The bottoms category was excellent during the third quarter. We still see it as one of our fastest-growing categories. It was impacted to a degree by weather but we still saw really nice growth. Our deliveries on wearables we are in business now with our first vendor with two more vendors delivering within the next 10 days to two weeks. So we expect that category to perform overall and we’re going to certainly looking forward to having that in our stores.

And then on both of those how much benefit do you expect from those in 2016?

The bigger driver will certainly be us moving our apparel business forward. Without question we would expect the wearable business to have less of an impact than the improvements in apparel.

Great, thanks and best of luck.

Thank you.

And Mr. Rosenthal, there are no further questions at this time. I will turn the call back to you. Please continue with your closing remarks.

Thank you for your interest in Hibbett Sports. I want to thank our customers for their loyalty, I want to thank our employees for their dedication and I look forward to having all you guys back on our fourth quarter results in March. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.