Edgar Filing: HIBBETT SPORTS INC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: February 1, 2014

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(For the transition period from: __________________________ to __________________________

Commission file number: 000-20969

HIBBETT SPORTS, INC.

(Exact name of registrant as specified in its charter)

DELAWARE		20-8159608
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2700 Milan Court, Birmingham, Alabama 35211

(Address of principal executive offices, including zip code)

205-942-4292

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.01 Par Value Per Share		NASDAQ Global Select Market
Title of Class		Name of each exchange on which registered

Securities registered pursuant to section 12(g) of the Act:

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ______

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	X	Accelerated filer

Non-accelerated filer		Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes

The aggregate market value of the voting stock held by non-affiliates of the Registrant (assuming for purposes of this calculation that all executive officers and directors are "affiliates") was $1,578,943,516 on August 3, 2013, based on the closing sale price of $61.30 at August 2, 2013 for the common stock on such date on the NASDAQ Global Select Market.

The number of shares outstanding of the Registrant's common stock, as of March 15, 2014, was 25,817,480.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Annual Report to Stockholders for the year ended February 1, 2014 are incorporated by reference into Part II and portions of the Registrant's Proxy Statement for the 2014 Annual Meeting of Stockholders to be held on May 29, 2014 are incorporated by reference into Part III of this Annual Report on Form 10-K. Registrant's definitive Proxy Statement will be filed with the Securities and Exchange Commission on or before April 24, 2014.

HIBBETT SPORTS, INC.

INDEX

			Page
PART I
Item	1.	Business.	5
Item	1A.	Risk Factors.	10
Item	1B.	Unresolved Staff Comments.	19
Item	2.	Properties.	19
Item	3.	Legal Proceedings.	20
Item	4.	Mine Safety Disclosures.	20

PART II
Item	5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	21
Item	6.	Selected Consolidated Financial Data.	23
Item	7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	25
Item	7A.	Quantitative and Qualitative Disclosures About Market Risk.	35
Item	8.	Consolidated Financial Statements and Supplementary Data.	36
Item	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	59
Item	9A.	Controls and Procedures.	59
Item	9B.	Other Information.	60

PART III
Item	10.	Directors, Executive Officers and Corporate Governance.	60
Item	11.	Executive Compensation.	60
Item	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	61
Item	13.	Certain Relationships and Related Transactions, and Director Independence.	61
Item	14.	Principal Accounting Fees and Services.	61

PART IV
Item	15.	Exhibits and Consolidated Financial Statement Schedules.	61
		Signatures.	64

A Warning About Forward-Looking Statements

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. They include statements preceded by, followed by or including words such as "believe," "anticipate," "expect," "intend," "plan," "target" or "estimate." For example, our forward-looking statements include statements regarding:

our anticipated net sales, including comparable store net sales changes, net sales growth and earnings;

our growth, including our plans to add, expand or relocate stores and square footage growth, our markets' ability to support such growth and the suitability of our new wholesaling and logistics facility;

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 cash needs, including our ability to fund our future capital expenditures and working capital requirements;

our analysis of our risk factors and their possible effect on financial results;

our ability and plans to renew our revolving credit facilities;

our expectations regarding our capital expenditures;

our seasonal sales patterns and assumptions concerning customer buying behavior;

our expectations regarding competition;

our estimates and assumptions as they relate to preferable tax and financial accounting methods, accruals, inventory valuations, dividends, long-lived assets, store closures, carrying amount and liquidity of financial instruments and fair value of options and other stock-based compensation as well as our estimates of economic and useful lives of depreciable assets and leases;

our expectations concerning future stock-based award types and our expectations concerning employee stock option exercise behavior;

the possible effect of inflation, market decline and other economic changes on our costs and profitability, and ability to secure suitable locations for new stores;

the possible effects of uncertainty within the capital markets, the commercial credit environment and the levels of consumer confidence;

our analyses of trends as related to earnings performance;

our target market presence and its expected impact on our net sales growth;

our expectations concerning vendor level purchases and related discounts;

our estimates and assumptions related to income tax liabilities, deferred taxes and uncertain tax positions;

the future reliability of, and cost associated with, our sources of supply, particularly imported goods;

the loss of key vendor support; and

our ability to mitigate the risk of possible business interruptions.

You should assume that the information appearing in this report is accurate only as of the date it was issued. Our business, 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 review the "Risk Factors" as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Our forward-looking statements could be wrong in light of these risks, uncertainties and assumptions. The future events, developments or results described in this report could turn out to be materially different. We have no obligation to publicly update or revise our forward-looking statements after the date of this Annual Report 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.

Introductory Note

References to "we", "our", "us" and the "Company" used throughout this document refer to Hibbett Sports, Inc. and its subsidiaries as well as its predecessors. Unless specifically indicated otherwise, any reference to the following years or fiscal years relates to:

Year	Related Fiscal Year End	Weeks in Fiscal Period
2015 or Fiscal 2015	January 31, 2015	52
2014 or Fiscal 2014	February 1, 2014	52
2013 or Fiscal 2013	February 2, 2013	53
2012 or Fiscal 2012	January 28, 2012	52

PART 1

Item 1. Business.

Our Company

Our Company began in 1945 under the name Dixie Supply Company in Florence, Alabama. Although we initially specialized primarily in the marine and small aircraft business, by 1960 we were solely in the sporting goods business. In 1965, we opened our second store, Dyess & Hibbett Sporting Goods, in Huntsville, Alabama, and hired Mickey Newsome, who is now our Chairman of the Board. The following year, we opened another sporting goods store in Birmingham and by the end of 1980, we had 12 stores in central and northwest Alabama with a distribution center located in Birmingham and our central accounting office in Florence. We became a public company in October 1996 when we had 79 stores and were incorporated under the laws of the State of Delaware as Hibbett Sporting Goods, Inc. We incorporated under the laws of the State of Delaware as Hibbett Sports, Inc. in January 2007, and on February 10, 2007, Hibbett Sports, Inc. became the successor holding company for Hibbett Sporting Goods, Inc., which is now our operating subsidiary.

Today, we operate sporting goods stores in small and mid-sized markets predominantly in the South, Southwest, Mid-Atlantic and the Midwest. As of February 1, 2014, we operated 927 stores consisting of 910 Hibbett Sports stores and 17 smaller-format Sports Additions athletic shoe stores in 31 states, opening our first stores in Delaware and Pennsylvania in Fiscal 2014. Our primary retail format and growth vehicle is Hibbett Sports, an approximately 5,000 square foot store located primarily in strip centers, which are usually near a Wal-Mart store. Approximately 80% of our Hibbett Sports store base is located in strip centers, which includes free-standing stores, while approximately 20% of our Hibbett Sports store base is located in enclosed malls. We expect to continue our store base growth in strip centers versus enclosed malls.

We offer convenient locations and a broad assortment of brand name quality athletic equipment, footwear, and apparel with a high level of customer service. Our merchandise assortment emphasizes team sports complemented by localized apparel, footwear and accessories designed to appeal to a wide range of customers within each individual market.

Available Information

The Company maintains an Internet website at the following address: www.hibbett.com.

We make available free of charge on or through our website under the heading "Investor Relations," certain reports that we file with or furnish to the Securities and Exchange Commission (SEC) in accordance with the Securities Exchange Act of 1934 (Exchange Act). These include our Annual Reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. We make this information available on our website as soon as reasonably practicable after we electronically file the information with or furnish it to the SEC. 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, 2014, at no charge, by writing to: Investor Relations, Hibbett Sports, Inc., 2700 Milan Court, Birmingham, Alabama 35211.

Reports filed with or furnished to the SEC are also available free of charge upon request by contacting our corporate office at (205) 942-4292.

The public may also read or copy any materials filed by us with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, DC 20549. Information may be obtained on the operation of the Public Reference Room by calling the SEC at 1-800-732-0330. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically at www.sec.gov.

Our Business Strategy

We target markets with county populations that range from 25,000 to 75,000. This strong regional focus enables us to achieve significant cost benefits including lower corporate expenses, reduced distribution costs and increased economies of scale from marketing activities. We use sophisticated information systems to maintain tight controls over inventory and operating costs and continually search for ways to improve efficiencies and the customer experience through information system upgrades. In addition, we establish greater customer, vendor and landlord recognition as a leading sporting goods retailer in these communities. We believe our ability to more effectively merchandise to local community sporting interests differentiates us from our national competitors.

We strive to hire enthusiastic sales people with an interest in sports. Our extensive training program focuses on product knowledge and selling skills and is conducted through the use of in-store clinics, DVDs, self-study courses, interactive group discussions and Hibbett University designed specifically for store management.

Our Store Concepts

Hibbett Sports

Our primary retail format is Hibbett Sports, an approximately 5,000 square foot store located primarily in strip centers, which are usually near a Wal-Mart store. In considering locations for our Hibbett Sports stores, we take into account the size, demographics, quality of real estate and competitive conditions of each market. Of these stores, 730 Hibbett Sports stores are located in strip centers, which include free-standing stores, with the remaining 180 stores located in enclosed malls, the majority of which are the only enclosed malls in their county.

Hibbett Sports stores offer a core selection of quality, brand name merchandise with an emphasis on team sports. This merchandise mix is complemented by a selection of localized apparel, footwear, equipment and accessories designed to appeal to a wide range of customers within each market. We strive to respond quickly to major sporting events of local interest such as the dominance of the Southeastern Conference and consecutive appearances in the Bowl Championship Series (BCS) National Championship games and similar sporting events in major league baseball, football and basketball.

Sports Additions

Our 17 Sports Additions stores are small, primarily enclosed mall-based stores, averaging 2,500 square feet with approximately 90% of merchandise consisting of athletic footwear and the remainder consisting of caps and a limited assortment of apparel. Sports Additions stores offer a more fashion-based merchandise assortment compared to our Hibbett Sports stores. All but four Sports Additions stores are currently located in enclosed malls or strip centers where a Hibbett Sports store is also present.

Team

Hibbett Team Sales, Inc. (Team), a wholly-owned subsidiary of the Company, is a supplier of customized athletic apparel, equipment and footwear primarily to school athletic programs in Alabama and parts of Georgia, Florida and Mississippi. Team sells its merchandise directly to educational institutions and youth associations. The operations of Team are independent of the operations of our retail stores.

None of our store concepts meets the quantitative or qualitative requirements of the Accounting Standards Codification (ASC) Topic 280, Segment Reporting.

Our Growth Strategy

We currently have identified markets for our Hibbett Sports stores within the states in which we operate to grow to over 1300 stores. Our clustered expansion program, which calls for opening new stores primarily within two-hour driving distance of an existing Hibbett location, allows us to take advantage of efficiencies in distribution, marketing and regional management. It also allows us to build on our understanding of merchandise selection for the local market. In evaluating potential markets, we consider population, economic conditions, local competitive dynamics, availability of suitable real estate and proximity to existing Hibbett stores.

In Fiscal 2015, we expect continued growth of our net store openings. In addition to new stores, we will continue our successful strategy of expanding high performing existing stores. See "Risk Factors."

Omni-channel development. Store growth will continue to be the cornerstone of our growth strategy. However, we recognize that our customer is evolving and looking to engage with us in multiple ways. In Fiscal 2014, we began to develop an omni-channel roadmap that will be used going forward as we focus on engaging our customer specifically in the digital commerce channel.

Our Distribution

We maintain a single distribution center in Birmingham, Alabama. In July 2012, we purchased land in Alabaster, Alabama (a suburb of Birmingham) and have since constructed a new wholesaling and logistics facility to replace our current facility. See "Risk Factors."

We believe strong distribution support for our stores is a critical element of our expansion strategy and is central to our ability to maintain a low cost operating structure. We also use third-party logistics providers to gain efficiencies of distribution costs to approximately 19% of our outlying stores. Our new wholesaling and logistics facility will be placed in service in early Fiscal 2015 and has been designed with significant automation and operation efficiencies. We expect the facility will support our growth over the next several years.

We receive substantially all of our merchandise at our distribution center. For key products, we maintain backstock at the distribution center that is allocated and distributed to stores through an automatic replenishment system based on inventory levels and sales. Merchandise is typically delivered to stores weekly via Company-operated vehicles or third-party logistics providers.

Our Merchandise

Our merchandising strategy is to provide a broad assortment of quality brand name footwear, apparel, accessories and athletic equipment at competitive prices in a full service environment.

The following table indicates the approximate percentage of net sales represented by each of our major product categories:

	Fiscal 2014	Fiscal 2013	Fiscal 2012
Footwear	45%	45%	44%
Apparel	32%	32%	32%
Equipment	23%	23%	24%
	100%	100%	100%

We believe that the breadth and the depth of brand name merchandise that we offer consistently exceed the merchandise selection carried by most of our competitors. Many of these brand name products are highly technical and require considerable sales assistance. We coordinate with our vendors to educate the sales staff at the store level on new products and trends.

Although the core merchandise assortment tends to be similar for each Hibbett Sports store, important local or regional differences exist. Accordingly, our stores offer products that reflect preferences for particular sporting activities in each community and local interests in college and professional sports teams. Our knowledge of these interests, combined with access to leading vendors, enables our merchandising staff to react quickly to emerging trends or special events, such as college or professional championships.

Our merchandising staff, operations staff and management analyze current sporting goods trends primarily through the gathering and analyzing of daily sales activity available through point-of-sale terminals located in the stores. Other strategic measures we utilize to recognize trends or changes in our industry include:

· maintaining close relationships with vendors and other retailers;

studying other retailers for best practices in merchandising;

attending various trade shows, both in our industry and outside as well as reviewing industry trade publications;

actively participating in industry associations such as the National Sporting Goods Association (NSGA);

visiting competitor store locations;

monitoring product selection at competing stores and online; and

communicating with our regional vice presidents, district managers and store managers.

The merchandising staff works closely with store personnel to meet the requirements of individual stores for appropriate merchandise in sufficient quantities. See "Risk Factors."

Our Vendor Relationships

The sporting goods retail business is brand name driven. Accordingly, we maintain positive relationships with a number of well-known sporting goods vendors to satisfy customer demand. We believe that our stores are among the primary retail distribution avenues for brand name vendors that seek to penetrate our target markets. As a result, we are able to attract considerable vendor interest and establish long-term partnerships with vendors. As our vendors expand their product lines and grow in popularity, we expand sales of these products within our stores. In addition, as we continue to increase our store base and enter new markets, our vendors increase their brand presence within these regions. We also work with our vendors to establish favorable pricing and to receive cooperative marketing funds. We believe that we maintain good working relationships with our vendors. See "Risk Factors."

Our Information Systems

We use technology as an enabler of our business strategies. We have implemented systems targeted at improving financial control, cost management, inventory control, merchandise planning, logistics, replenishment and product allocation. In recent years, we have focused on information systems that are designed to be used in all stores, yet are flexible enough to meet the unique needs of each specific store location.

A communications network sends and receives critical business data to and from our stores, providing timely and extensive information on business activity in every location. Our information is processed in a secure environment to protect both the actual data and the physical assets. We attempt to mitigate the risk of possible business interruptions by maintaining a disaster recovery plan, which includes storing critical business information off-site.

We strive to maintain highly qualified and motivated individuals to support our information systems, which includes help desk staff, computer operators, programmers, system analysts, business analysts, project managers and a security officer. Our systems are monitored 24 hours a day. Our management believes that our current systems and practice of implementing regular updates position us well to support current needs and future growth. We use a strategic information systems planning process that involves senior management and is integrated into our overall business planning and enterprise risk management. Information systems projects are prioritized based upon strategic, financial, regulatory and other business criteria.

Our Advertising and Promotion

We target advertising opportunities in our markets to increase the effectiveness of our advertising budget. Our advertising and promotional spending is centrally directed. Print advertising, including direct mail catalogs and postcards to customers, has historically served as the foundation of our promotional program and accounted for the majority of our total advertising costs in Fiscal 2014. Other advertising, such as our MVP customer loyalty program, the Hibbett website, social media, Hibbett trucks and outdoor billboards are used to reinforce Hibbett's name recognition and brand awareness. By allowing us to reach and interact with our customers on a consistent basis through e-mail, the MVP program marketing effort has become the most efficient, timely and targeted segment of our marketing program. Digital marketing, including mobile, social networks, website and MVP program marketing, will become a more significant portion of our advertising budget over the next several years.

Our Competition

The business in which we are engaged is highly competitive. We have competition from national sporting goods chains in some of our large and mid-size markets. The marketplace for sporting goods is highly fragmented as many different retailers compete for market share by utilizing a variety of store formats and merchandising strategies. However, we believe the competitive environment for sporting goods is different in smaller markets where retail demand may not support larger format stores.

Although we face competition from a variety of competitors, including on-line retailers, we believe that our stores are able to compete effectively by emphasizing team sports and fitness merchandise complemented by a selection of localized apparel and accessories. Additionally, we differentiate our store experience through extensive product knowledge, customer service and convenient locations. We believe we compete favorably with respect to these factors in the smaller markets predominantly in the South, Southwest, Mid-Atlantic and Midwest regions of the United States. See "Risk Factors."

Our Trademarks

Our Company, by and through subsidiaries, is the owner or licensee of trademarks that are very important to our business. For the most part, trademarks are valid as long as they are in use and/or their registrations are properly maintained. Registrations of trademarks can generally be renewed indefinitely as long as the trademarks are in use.

Following is a list of active trademarks registered and owned by the Company:

Hibbett Sports, Registration No. 2717584

Sports Additions, Registration No. 1767761

Hibbett, Registration No. 3275037

Our Executive Officers

Our current executive officers and their prior business experience are as follows:

Jeffry O. Rosenthal, age 56, has been our Chief Executive Officer and President since March 2010. Formerly, he served as President and Chief Operating Officer from February 2009 through March 2010 and as Vice President of Merchandising from August 1998 through February 2009. Prior to joining us, Mr. Rosenthal was Vice President and Divisional Merchandise Manager for Apparel with Champs Sports, a division of Foot Locker, Inc. from 1981 to 1998.

Scott J. Bowman, age 47, was hired as our Senior Vice President and Chief Financial Officer in July 2012. Prior to joining us, Mr. Bowman was Division Chief Financial Officer – Northern Division (Division CFO) of The Home Depot, a large home improvement retailer. Previously, Mr. Bowman served The Home Depot as their Senior Director, Finance – IT for approximately three years. In prior retail experience, he has worked in various controller and accounting management positions.

Rebecca A. Jones, age 54, was hired as our Vice President of Merchandising in August 2009 and is currently a Senior Vice President of the Company. Prior to joining our Company, she served as Vice President/General Merchandise Manager-Crafts at Jo-Ann Fabric and Craft Stores from 2003 to 2009 and as Vice President/Divisional Merchandise Manager at Wal-Mart Stores from 1999 to 2003. In her prior retail experience, Ms. Jones served in various operations, planning, buying and merchandising positions.

Cathy E. Pryor, age 50, is currently our Senior Vice President of Operations and has been with us since 1988. She has been our Vice President of Operations since 1995. Prior to 1995, Ms. Pryor held positions as a district manager and Director of Store Operations.

Effective February 2, 2014, Michael J. Newsome transitioned from Executive Chairman to Chairman of the Board of Directors.

Our Employees

As of February 1, 2014, we employed approximately 2,900 full-time and approximately 5,200 part-time employees, none of whom are represented by a labor union. The number of part-time employees fluctuates depending on seasonal needs. We consider our relationship with our employees to be good and have not experienced significant interruptions of operations due to labor disagreements. We have implemented programs in our stores and corporate offices to ensure that we hire and promote the most qualified employees in a non-discriminatory way.

Employee Development. We develop our training programs in a continuing effort to service the needs of our customers and employees. These programs include DVD training in all stores for the latest in technical detail of new products and new operational and customer service techniques. Because we primarily promote or relocate current employees to serve as managers for new stores, training and assessment of our employees is essential to our sustained growth.

One of the most significant training programs we have is Hibbett University or "Hibbett U", which is an intensive, four-day session designed specifically for store management.

Seasonality

We experience seasonal fluctuations in our net sales and results of operations. Customer buying patterns around the spring sales period and the holiday season historically result in higher first and fourth quarter net sales. Our third quarter experiences higher net sales, during the back-to-school shopping period combined with tax-free holidays in many of our markets. In addition, our quarterly results of operations may fluctuate significantly as a result of a variety of factors, including the timing of new store openings, the amount and timing of net sales contributed by new stores, merchandise mix and demand for apparel and accessories driven by local interest in sporting events and significant weather events.

Item 1A. Risk Factors.

You should carefully consider the following risks, as well as the other information contained in this report, before investing in shares of our common stock. If any of the following risks actually occur, our business could be harmed. In that case, the trading price of our common stock could decline, and you might lose all or part of your investment.

Risks Related to Our Business and Industry.

A downturn in the economy could adversely affect consumer purchases of discretionary items, which could reduce our net sales.

In general, our sales represent discretionary spending by our customers. A slowdown in the U.S. economy or other economic conditions affecting disposable consumer income, such as volatile fuel and energy costs, depressed real estate values, employment levels, inflation, deflation, business conditions, consumer debt levels, lack of available credit, interest rates and tax rates may adversely affect our business. A reduction in customer traffic to our stores or a shift in customer spending to products other than those sold by us or to products sold by us that are less profitable could result in lower net sales, decreases in inventory turnover or a reduction in profitability due to lower margins.

A slower pace of new store openings may negatively impact our net sales growth and operating income and we may be unable to achieve our expansion plans for future growth.

The opening of new retail stores has contributed significantly to our growth in net sales. In light of the challenging economic environment that has faced real estate developers over the past several years, our new store openings have slowed compared to our historical rate. We expect that the pressure on the commercial real estate market will ease somewhat throughout Fiscal 2015, and we will be able to increase our overall square footage in Fiscal 2015.

We have grown rapidly, primarily through opening new stores, from 67 stores at the beginning of Fiscal 1997 to 927 stores at February 1, 2014. Our continued growth depends largely upon our ability to open new stores in a timely manner, to operate them profitably and to manage them effectively. Additionally, successful expansion is subject to various contingencies, many of which are beyond our control. In order to open and operate new stores successfully, we must secure leases on suitable sites with acceptable terms, build-out and equip the stores with furnishings and appropriate merchandise, hire and train personnel and integrate the stores into our operations.

We cannot give any assurances that we will be able to continue our expansion plans successfully; that we will be able to achieve results similar to those achieved with prior locations; or that we will be able to continue to manage our growth effectively. Our failure to achieve our expansion plans could materially and adversely affect our business, financial condition and results of operations. Furthermore, our operating margins may be impacted in periods in which incremental expenses are incurred as a result of new store openings.

Failure to adequately plan and manage the transition to our new wholesaling and logistics facility may interrupt our operations and lower our operating income.

The lease on our distribution facility expires in December 2014. In July 2012, we purchased land in Alabaster, Alabama and have almost completed construction on a new wholesaling and logistics facility to replace our current distribution facility.

The planned move of our distribution function entails risks that could cause disruptions in the operation of our business, delays and cost overruns. Such risks include potential interruption in data flow, shortages of materials; shortages of skilled labor or work stoppages; unforeseen construction, scheduling, engineering, environmental or geological problems; weather interferences or other casualty losses; and unanticipated cost increases. There is also the risk that we will not adequately adjust our business processes or appropriately manage our work force during the transition. Failure to adequately plan and manage the relocation efforts or delays and cost overruns in or outside our control, could cause a disruption in our operations and lower our operating income.

We rely heavily on information systems to conduct our business. Problems with our information systems could disrupt our operations and negatively impact our financial results and materially adversely affect our business operations.

The operation of our business is dependent on the successful integration and operation of our information systems. We rely on our information systems to effectively manage our sales, distribution, merchandise planning and replenishment, to process financial information and sales transactions and to optimize our overall inventory levels. We attempt to mitigate the risk of possible business interruptions through change control protocols and a disaster recovery plan, which includes storing critical business information off-site.

Most of our information system infrastructure is centrally located at our headquarters, but we rely on third-party service providers for certain system applications that are hosted remotely or in cloud-based applications. There is a risk that we may not have adequately addressed risks associated with using third-party providers or cloud-based applications including security issues such as adequate encryption and intrusion detection; user access control; data separation; the impact of technical problems such as server outages; their disaster recovery capabilities; and exit strategies. A service provider disruption or failure in any of these areas could have an adverse effect on our business.

We may not have the technology infrastructure to support our current and future information needs. Insufficient investment in technology, inadequate prevention maintenance, investment in the wrong technology, delayed replacement of obsolete equipment, shifts in technology and inadequate policies to identify our technology needs could have an adverse effect on our business.

Our estimates concerning long-lived assets and store closures may accelerate.

Our long-term success depends, in part, on our ability to operate stores in a manner that achieves appropriate returns on capital invested. We will only continue to operate existing stores if they meet required sales and profit levels. In the current macroeconomic environment, the results of our existing stores are impacted not only by a volatile sales environment, but by a number of things that are outside our control, such as the loss of traffic resulting from store closures by other nearby retailers.

The uncertainty of the economy, coupled with the volatility in the capital markets, affects our business and, ultimately, our revenue and profitability. To the extent our estimates for net sales, gross profit and store expenses are not realized, future assessments of recoverability could result in impairment charges. In addition, if we were to close stores, we could be subject to costs and charges that may adversely affect our financial results.

Our stores are concentrated within the South, Southwest, Mid-Atlantic and Midwest regions of the United States, which could subject us to regional risks.

Our stores are heavily concentrated in certain regions of the United States. We are subject to regional risks, such as the regional economy, weather conditions and natural disasters, increasing costs of electricity, oil and natural gas, as well as government regulations specific in the states and localities within which we operate. We sell a significant amount of team sports merchandise that can be adversely affected by significant weather events that postpone the start of or shorten sports seasons or that limit participation of fans and sports enthusiasts.

The occurrence of severe weather events, catastrophic health events or natural disasters could significantly damage or destroy our retail locations, could prohibit consumers from traveling to our retail locations or could prevent us from resupplying our stores or distribution center, especially during peak shopping seasons.

Unforeseen events, including public health issues and natural disasters such as earthquakes, hurricanes, tornados, snow or ice storms, floods and heavy rains, could disrupt our operations or the operations of our suppliers, as well as the behavior of our consumer. We believe that we take reasonable precautions to prepare for such events; however, our precautions may not be adequate to deal with such events in the future. If such events occur in areas in which we have our distribution center or a concentration of retail stores, or if they occur during peak shopping seasons, it could have a material adverse effect on our business, financial condition and results of operations.

Poor performance of college and professional sports teams within our core regions of operation, as well as professional team lockouts, could adversely affect our financial results.

We sell a significant amount of licensed team sports merchandise, the sale of which may be subject to fluctuations based on the success or failure of such teams. The poor performance by the college and professional sports teams within our core regions of operations, as well as professional team lockouts, could cause our financial results to fluctuate year over year.

Our inability to identify, and anticipate changes in consumer demands and preferences and our inability to respond to such consumer demands in a timely manner could reduce our net sales.

Our products appeal to a broad range of consumers whose preferences cannot be predicted with certainty and are subject to rapid change. Our success depends on our ability to identify product trends as well as to anticipate and respond to changing merchandise trends and consumer demand in a timely manner. We cannot assure you that we will be able to continue to offer assortments of products that appeal to our customers or that we will satisfy changing consumer demands in the future. Accordingly, our business, financial condition and results of operations could be materially and adversely affected if:

we are unable to identify and respond to emerging trends, including shifts in the popularity of certain products;

we miscalculate either the market for the merchandise in our stores or our customers' purchasing habits; or

consumer demand unexpectedly shifts away from athletic footwear or our more profitable apparel lines.

In addition, we may be faced with significant excess inventory of some products and missed opportunities for other products, which could decrease our profitability.

If we lose any of our key vendors or any of our key vendors fail to supply us with merchandise, we may not be able to meet the demand of our customers and our net sales could decline.

We are a reseller of manufacturers' branded items and are thereby dependent on the availability of key products and brands. Our business is dependent to a significant degree upon close relationships with vendors and our ability to purchase brand name merchandise at competitive prices. As a reseller, we cannot control the supply, design, function or cost of many of the products we offer for sale. In addition, many of our vendors provide us with return privileges, volume purchasing allowances and cooperative advertising.

We believe that we have long-standing and strong relationships with our vendors and that we have adequate sources of brand name merchandise on competitive terms. However, the loss or decline of key vendor support could have a material adverse effect on our business, financial condition and results of operations. We cannot guarantee that we will be able to acquire such merchandise at competitive prices or on competitive terms in the future. In this regard, certain merchandise that is in high demand may be allocated by vendors based upon the vendors' internal criteria, which is beyond our control.

We also rely on services and products from non-merchandise vendors. A disruption in these services or products due to the financial condition or inefficient operations of these vendors could adversely affect our business operations.

Our success depends substantially on the value and perception of the brand name merchandise we sell.

Our success is largely dependent on our consumers' perception and connection to the brand names we carry, such as Nike, Under Armour, Reebok, adidas, Easton, The North Face, etc. Brand value is based in part on our consumer's perception on a variety of subjective qualities so that even an isolated incident could erode brand value and consumer trust, particularly if there is considerable publicity or litigation. Consumer demand for our products or brands could diminish significantly in the event of erosion of consumer confidence or trust, resulting in lower sales which could have a material adverse effect on our business, financial condition and results of operations.

A disruption in the flow of imported merchandise or an increase in the cost of those goods could significantly decrease our net sales and operating income.

We believe many of our largest vendors source a substantial majority of their products from foreign countries. Imported goods are generally less expensive than domestic goods and contribute significantly to our favorable profit margins. We may experience a disruption or increase in the cost of imported vendor products at any time for reasons beyond our control. If imported merchandise becomes more expensive or unavailable, the transition to alternative sources by our vendors may not occur in time to meet our demands or the demands of our customers. Products from alternative sources may also be more expensive than those our vendors currently import. Risks associated with reliance on imported goods include:

disruptions in the flow of imported goods because of factors such as:

raw material shortages, work stoppages, labor availability and political unrest;

problems with oceanic shipping, including blockages or labor union strikes at U.S. or foreign ports; and

economic crises and international disputes.

increases in the cost of purchasing or shipping foreign merchandise resulting from:

foreign government regulations;

rising commodity prices;

changes in currency exchange rates or policies and local economic conditions; and

trade restrictions, including import duties, import quotas or loss of "most favored nation" status with the United States.

In addition, to the extent that any foreign manufacturer from whom our vendors are associated may directly or indirectly utilize labor practices that are not commonly accepted in the United States, we could be affected by any resulting negative publicity.

Security threats, including physical and cyber security threats, and unauthorized disclosure of sensitive or confidential information could harm our business and reputation with our consumers.

The protection of Company, customer and employee data is critical to us. We rely on third-party systems, software and monitoring tools to provide security for processing, transmission and storage of confidential customer and employee information such as payment card and personal information. Although we have security measures designed to protect against the misappropriation or corruption of our information systems, our systems may still be vulnerable to computer viruses, thefts, cyber attacks, acts of vandalism, programming and/or human errors, disruptions caused by unauthorized tampering or outages caused by natural disasters or other similar events.

Cyber security threats are persistent and evolving. They include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information, intentional or unintentional, whether by us or our providers, could damage our reputation, expose us to risk of litigation and liability and harm our business.

Pressure from our competitors may force us to reduce our prices or increase our spending, which would lower our net sales, gross profit and operating income.

The business in which we are engaged is highly competitive. The marketplace for sporting goods is highly fragmented as many different retailers compete for market share by utilizing a variety of store formats and merchandising strategies. We compete with local sporting goods stores, department and discount stores, traditional shoe stores and mass merchandisers and, on a limited basis, national sporting goods stores. Many of our competitors have greater financial resources than we do. In addition, many of our competitors employ price discounting policies that, if intensified, may make it difficult for us to reach our sales goals without reducing our prices. As a result of this competition, we may also need to spend more on advertising and promotion than we anticipate. We cannot guarantee that we will continue to be able to compete successfully against existing or future competitors. Expansion into markets served by our competitors, entry of new competitors or expansion of existing competitors into our markets could be detrimental to our business, financial condition and results of operations.

Our operating results are subject to seasonal and quarterly fluctuations. Furthermore, our quarterly operating results, including comparable store net sales, will fluctuate and may not be a meaningful indicator of future performance.

We have historically experienced and expect to continue to experience seasonal fluctuations in our net sales, operating income and net income. Our net sales, operating income and net income are typically higher in the spring, back-to-school and holiday shopping seasons. An economic downturn during these periods could adversely affect us to a greater extent than if a downturn occurred at other times of the year.

Customer buying patterns around the spring sales period and the holiday season historically result in higher first and fourth quarter net sales. In the past few years, we have also experienced higher than historical third quarter net sales resulting from the back-to-school period complimented by sales tax holidays in many of our markets. In addition, our quarterly results of operations may fluctuate significantly as a result of a variety of factors, many outside our control, including the timing of new store openings, the amount and timing of net sales contributed by new stores, merchandise mix, demand for apparel and accessories driven by local interest in sporting events, the disgrace of sports superstars key to certain product promotions or strikes or lockouts involving professional sports teams. Any of these events, particularly in the fourth quarter, could have a material adverse effect on our business, financial condition and operating results for the entire fiscal year.

Comparable store net sales vary from quarter to quarter, and an unanticipated decline in comparable store net sales may cause the price of our common stock to fluctuate significantly. Factors which could affect our comparable store net sales results include:

shifts in consumer tastes and fashion trends;

calendar shifts of holiday or seasonal periods;

the timing of income tax refunds to customers;

increases in personal income taxes paid by our customers;

calendar shifts or cancellations of sales tax-free holidays in certain states;

the success or failure of college and professional sports teams within our core regions;

changes in the other tenants in the shopping centers in which we are located;

pricing, promotions or other actions taken by us or our existing or possible new competitors; and

unseasonable weather conditions or natural disasters.

We cannot assure you that comparable store net sales will trend at the rates achieved in prior periods or that rates will not decline.

We would be materially and adversely affected if our single distribution center were shut down.

We currently operate a single distribution center in Birmingham, Alabama. While we plan to transition to our new wholesaling and logistics facility in early Fiscal 2015, we will continue to receive and ship substantially all of our merchandise at a single facility after the completion of the transition. Any natural disaster or other serious disruption to this facility would damage a portion of our inventory and could impair our ability to adequately stock our stores and process returns of products to vendors and could adversely affect our net sales and profitability. In addition, we could incur significantly higher costs and longer lead times associated with distributing our products to our stores during the time it takes for us to reopen or replace the center.

We depend on key personnel, the loss of which may adversely affect our ability to run our business effectively and our results of operations.

We benefit from the leadership and performance of our senior management team and other key employees. If we lose the services of any of our principal executive officers or other skilled and experienced personnel, we may not be able to fully implement our business strategy or run our business effectively and operating results could suffer.

The Compensation Committee of our Board of Directors reviews a succession plan prepared by senior management in consideration of the loss of key personnel positions on a regular basis. The goal of the succession plan is to have a contingency plan that minimizes disruptions in the workplace until a suitable replacement can be found, but no assurance can be given that we will be able to retain existing or attract additional qualified personnel when needed.

Provisions in our charter documents and Delaware law might deter acquisition bids for us.

Certain provisions of our certificate of incorporation and bylaws may be deemed to have anti-takeover effects and may discourage, delay or prevent a takeover attempt that a stockholder might consider in its best interest. These provisions, among other things:

classify our Board of Directors into three classes, each of which serves for different three-year periods;

provide that a director may be removed by stockholders only for cause by a vote of the holders of not less than two-thirds of our shares entitled to vote;

provide that all vacancies on our Board of Directors, including any vacancies resulting from an increase in the number of directors, may be filled by a majority of the remaining directors, even if the number is less than a quorum;

provide that special meetings of the common stockholders may only be called by the Board of Directors, the Chairman of the Board of Directors or upon the demand of the holders of a majority of the total voting power of all outstanding securities of the Company entitled to vote at any such special meeting; and

call for a vote of the holders of not less than two-thirds of the shares entitled to vote in order to amend the foregoing provisions and certain other provisions of our certificate of incorporation and bylaws.

In addition, our Board of Directors, without further action of the stockholders, is permitted to issue and fix the terms of preferred stock, which may have rights senior to those of common stock. We are also subject to the Delaware business combination statute, which may render a change in control of us more difficult. Section 203 of the Delaware General Corporation Laws would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the Board of Directors, including discouraging takeover attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

Increases in transportation costs due to rising fuel costs, climate change regulation and other factors may negatively impact our results of operations.

We rely upon various means of transportation, including ship and truck, to deliver products from vendors to our distribution center and from our distribution center to our stores. Consequently, our results can vary depending upon the price of fuel. The price of oil has fluctuated drastically over the last few years. In addition, efforts to combat climate change through reduction of greenhouse gases may result in higher fuel costs through taxation or other means. Any such future increases in fuel costs would increase our transportation costs for delivery of product to our distribution center and distribution to our stores, as well as our vendors' transportation costs.

In addition, labor shortages in the transportation industry could negatively affect transportation costs and our ability to supply our stores in a timely manner. We also rely on efficient and effective operations within our distribution center to ensure accurate product delivery to our stores. Failure to maintain such operations could adversely affect net sales.

We manage cash and cash equivalents beyond federally insured limits per financial institution and purchase investments not fully guaranteed by the Federal Deposit Insurance Corporation (FDIC), subjecting us to investment and credit availability risks.

We manage cash and cash equivalents in various institutions at levels beyond federally insured limits per institution, and we purchase investments not guaranteed by the FDIC. Accordingly, there is a risk that we will not recover the full principal of our investments or that their liquidity may be diminished. In an attempt to mitigate this risk, our investment policy emphasizes preservation of principal and liquidity. We cannot be assured that we will not experience losses on our deposits.

We face risk that financial institutions may fail to fulfill commitments under our committed credit facilities.

We have financial institutions that are committed to providing loans under our revolving credit facilities. There is a risk that these institutions cannot deliver against these obligations in a timely matter, or at all. If the financial institutions that provide these credit facilities were to default on their obligation to fund the commitments, these facilities would not be available to us, which could adversely affect our liquidity and financial condition. For discussion of our credit facilities, see "Liquidity and Capital Resources" in Item 7 and Note 5 to our consolidated financial statements.

Risks Related to Ownership of Our Common Stock.

The market price of our common stock, like the stock market in general, is likely to be highly volatile. Factors that could cause fluctuation in our common stock price may include, among other things:

actual or anticipated variations in quarterly operating results;

changes in financial estimates by investment analysts and our inability to meet or exceed those estimates;

additions or departures of key personnel;

market rumors or announcements by us or by our competitors of significant acquisitions, divestitures or joint ventures, strategic partnerships, large capital commitments or other strategic initiatives; and

sales of our common stock by key personnel or large institutional holders.

Many of these factors are beyond our control and may cause the market price of our common stock to decline, regardless of our operating performance.

Risks Related to Regulatory, Legislative and Legal Matters.

We operate in a number of jurisdictions. It can be cumbersome to fill needed positions and comply with labor laws and regulations, many of which vary from jurisdiction to jurisdiction.

We are heavily dependent upon our labor force. Our compensation packages are designed to provide benefits commensurate with our level of expected service. However, within our retail and our distribution operations, we face the challenge of filling many positions at wage scales that are appropriate to the industry and competitive factors. We operate in a number of jurisdictions which can make it cumbersome to comply with labor laws and regulations, many of which vary from jurisdiction to jurisdiction. As a result of these and other factors, we face many external risks and internal factors in meeting our labor needs, including competition for qualified personnel, overall unemployment levels, prevailing wage rates, as well as rising employee benefit costs. Changes in any of these factors, including a shortage of available workforce in areas in which we operate, could interfere with our ability to adequately service our customers or to open suitable locations and could result in increasing labor costs.

We cannot be assured that we will not experience pressure from labor unions or become the target of labor union campaigns.

While we believe we maintain good relations with our employees, we cannot be assured that we will not experience pressure from labor unions or become the target of labor union campaigns. The potential for unionization could increase in the United States if Congress passes federal legislation that would facilitate labor organization. Significant union representation would require us to negotiate wages, salaries, benefits and other terms with many of our employees collectively and could adversely affect our results of operations by increasing our labor costs or otherwise restricting our ability to maximize the efficiency of our operations.

Changes in federal, state or local laws, or our failure to comply with such laws, could increase our expenses and expose us to legal risks.

Our Company is subject to numerous laws and regulatory matters relating to the conduct of our business. In addition, certain jurisdictions have taken a particularly aggressive stance with respect to certain matters and have stepped up enforcement, including fines and other sanctions. Such laws and regulatory matters include:

· The Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas;

· The Patient Protection and Affordable Care Act provisions;

· Labor and employment laws that govern employment matters such as minimum wages, overtime, family leave mandates and workplace safety regulations;

· Securities and exchange laws and regulations;

· New or changing laws relating to state and local taxation and licensing, including sales and use tax laws, withholding taxes and property taxes;

· New or changing laws relating to information security, privacy, cashless payments and consumer credit, protection and fraud;

· New or changing environmental regulations, including measures related to climate change and greenhouse gas emissions;

· New or changing laws and regulations concerning product safety or truth in advertising; and

· New or changing federal and state immigration laws and regulations.

Increasing regulations could expose us to a challenging enforcement environment or to third-party liability (such as monetary recoveries and recoveries of attorney's fees) and could have a material adverse effect on our business and results of operations.

Our corporate legal department monitors regulatory activity and is active in notifying and updating applicable departments and personnel on pertinent matters and legislation. Our Human Resources (HR) Department leads HR compliance training programs to ensure our field managers are kept abreast of HR-related regulatory activity that affects their areas of responsibility. We believe that we are in substantial compliance with applicable environment and other laws and regulations, and although no assurance can be given, we do not foresee the need for any significant expenditure in this area in the near future.

Changes in rules related to accounting for income taxes, changes in tax laws in any of the jurisdictions in which we operate or adverse outcomes from audits by taxing authorities could result in an unfavorable change in our effective tax rate.

We operate our business in numerous tax jurisdictions. As a result, our effective tax rate is derived from a combination of the federal rate and applicable tax rates in the various states in which we operate. Our effective tax rate may be lower or higher than our tax rates have been in the past due to numerous factors, including the sources of our income and the tax filing positions we take. We base our estimate of an effective tax rate at any given point in time upon a calculated mix of the tax rates applicable to our Company and on estimates of the amount of business likely to be done in any given jurisdiction. Changes in rules related to accounting for income taxes, changes in tax laws in any of the jurisdictions in which we operate, expiration of tax credits formerly available, or adverse outcomes from tax audits that we may be subject to in any of the jurisdictions in which we operate could result in an unfavorable change in our effective tax rate.

Litigation may adversely affect our business, financial condition and results of operations.

Our business is subject to the risk of litigation by employees, consumers, suppliers, competitors, stockholders, government agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. The outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify. We may incur losses relating to these claims, and in addition, these proceedings could cause us to incur costs and may require us to devote resources to defend against these claims that could adversely affect our results of operations. For a description of current legal proceedings, see "Part I, Item 3, Legal Proceedings."

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We currently lease all of our existing 927 store locations and expect that our policy of leasing rather than owning will continue as we continue to expand. Our leases typically provide for terms of five to ten years with options on our part to extend. Most leases also contain a kick-out clause if projected sales levels are not met and an early termination/remedy option if co-tenancy and exclusivity provisions are violated. We believe this leasing strategy enhances our flexibility to pursue various expansion opportunities resulting from changing market conditions and to periodically re-evaluate store locations. See "Risk Factors."

As current leases expire, we believe we will either be able to obtain lease renewals for present store locations or to obtain leases for equivalent or better locations in the same general area. Historically, we have not experienced any significant difficulty in either renewing leases for existing locations or securing leases for suitable locations for new stores. However, in recent years, we have experienced some difficulty securing leases for new stores related to new construction due to the economic issues facing the commercial real estate market and landlords, thus reducing our ability to open stores at our historical rates. This trend has continued, but has improved to some extent each year and into Fiscal 2014. Based primarily on our belief that we maintain good relations with our landlords, that most of our leases are at approximate market rents and that generally we have been able to secure leases for suitable locations, we believe our lease strategy will not be detrimental to our business, financial condition or results of operations.

We moved our corporate office in Fiscal 2014 from a leased facility to a building owned by us. Our distribution center is leased under an operating lease which expires in December 2014. We own the Team facility located in Birmingham, Alabama that warehouses inventory for educational institutions and youth associations. We have completed construction on a new wholesaling and logistics facility that we expect to be in operation in early Fiscal 2015. We believe our new facility is suitable and adequate to support our operations in the coming years. See "Risk Factors."

Store Locations

As of February 1, 2014, we operated 927 stores in 31 contiguous states. Of these stores, 195 are located in enclosed malls and 732 are located in strip-shopping centers, which are frequently near a Wal-Mart store. Strip-shopping centers include free-standing stores. The following shows the number of locations by state as of February 1, 2014:

Alabama	87	Kentucky	56	Pennsylvania	1
Arizona	6	Louisiana	48	South Carolina	35
Arkansas	42	Maryland	2	South Dakota	1
Colorado	8	Minnesota	1	Tennessee	59
Delaware	1	Mississippi	62	Texas	89
Florida	49	Missouri	33	Utah	3
Georgia	92	Nebraska	9	Virginia	16
Iowa	9	New Mexico	11	West Virginia	11
Illinois	26	North Carolina	54	Wisconsin	8
Indiana	23	Ohio	20	TOTAL	927
Kansas	23	Oklahoma	42

As of March 15, 2014, we operated 931 stores in 31 states.

Item 3. Legal Proceedings.

We are a party to various legal proceedings incidental to our business. Where we are able to reasonably estimate an amount of probable loss in these matters based on known facts, we have accrued that amount as a current liability on our balance sheet. We are not able to reasonably estimate the possible loss or range of loss in excess of the amount accrued for these proceedings based on the information currently available to us, including, among others, (i) uncertainties as to the outcome of pending proceedings (including motions and appeals) and (ii) uncertainties as to the likelihood of settlement and the outcome of any negotiations with respect thereto. We do not believe that any of these matters will, individually or in the aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that one or more of these proceedings will not have a material effect on our results of operations for the period in which they are resolved. At February 1, 2014 and February 2, 2013, we estimated that the liability related to these matters was approximately $0.2 million and $0.3 million, respectively, and accordingly, we accrued $0.2 million and $0.3 million, respectively, as a current liability in our consolidated balance sheets.

The estimates of our liability for pending and unasserted potential claims do not include litigation costs. It is our policy to accrue legal fees when it is probable that we will have to defend against known claims or allegations and we can reasonably estimate the amount of the anticipated expense.

From time to time, we enter into certain types of agreements that require us to indemnify parties against third-party claims under certain circumstances. Generally, these agreements relate to: (a) agreements with vendors and suppliers under which we may provide customary indemnification to our vendors and suppliers in respect to actions they take at our request or otherwise on our behalf; (b) agreements to indemnify vendors against trademark and copyright infringement claims concerning merchandise manufactured specifically for or on behalf of the Company; (c) real estate leases, under which we may agree to indemnify the lessors from claims arising from our use of the property; and (d) agreements with our directors, officers and employees, under which we may agree to indemnify such persons for liabilities arising out of their relationship with us. We have director and officer liability insurance, which, subject to the policy's conditions, provides coverage for indemnification amounts payable by us with respect to our directors and officers up to specified limits and subject to certain deductibles.

If we believe that a loss is both probable and estimable for a particular matter, the loss is accrued in accordance with the requirements of ASC Topic 450, Contingencies. With respect to any matter, we could change our belief as to whether a loss is probable or estimable, or its estimate of loss, at any time.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded on the NASDAQ Global Select Market (NASDAQ/GS) under the symbol HIBB. The following table sets forth, for the periods indicated, the high and low sales prices of shares of our Common Stock as reported by NASDAQ.

Fiscal 2014:	High		Low
First Quarter ended May 4, 2013	$	56.54	$	51.00
Second Quarter ended August 3, 2013	$	61.50	$	55.00
Third Quarter ended November 2, 2013	$	61.64	$	51.16
Fourth Quarter ended February 1, 2014	$	67.73	$	58.74

Fiscal 2013:
First Quarter ended April 28, 2012	$	59.79	$	47.91
Second Quarter ended July 28, 2012	$	62.24	$	54.34
Third Quarter ended October 27, 2012	$	62.91	$	53.45
Fourth Quarter ended February 2, 2013	$	54.99	$	50.71

On March 15, 2014, the last reported sale price for our common stock as quoted by NASDAQ was $55.70 per share. As of March 15, 2014, we had 35 stockholders of record.

The Stock Price Performance Graph below compares the percentage change in our cumulative total stockholder return on our common stock against a cumulative total return of the NASDAQ Composite Index and the NASDAQ Retail Trade Index. The graph below outlines returns for the period beginning on January 31, 2009 to January 31, 2014. We have not paid any dividends. Total stockholder return for prior periods is not necessarily an indication of future performance.

	01/31/09	01/31/10	01/31/11	01/31/12	01/31/13	01/31/14
Hibbett Sports, Inc.	100.00	155.91	235.27	352.17	386.92	440.93
NASDAQ Composite	100.00	145.73	185.35	196.13	222.33	296.73
NASDAQ Retail Trade	100.00	176.03	231.96	262.10	333.70	401.19

Dividend Policy. We have never declared or paid any dividends on our common stock. We currently intend to retain our future earnings to finance the growth and development of our business and for our stock repurchase program, and therefore do not anticipate declaring or paying cash dividends on our common stock for the foreseeable future. Any future decision to declare or pay dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as our Board of Directors deems relevant.

Equity Compensation Plans. For information on securities authorized for issuance under our equity compensation plans, see "Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."

Issuer Repurchases of Equity Securities

The following table presents our shares repurchase activity for the thirteen weeks ended February 1, 2014 (1):

Period	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Approximate Dollar Value of Shares that may yet be Purchased Under the Programs (in thousands)
November 3, 2013 to November 30, 2013		9,500	$	61.58		9,500	$	230,352
December 1, 2013 to January 4, 2014		5,000	$	64.21		5,000	$	230,031
January 5, 2014 to February 1, 2014		7,000	$	59.76		7,000	$	229,613
Total		21,500	$	61.60		21,500	$	229,613

(1) In November 2012, the Board of Directors authorized a Stock Repurchase Program of $250.0 million to repurchase our common stock through January 29, 2016. See Note 1, "Stock Repurchase Program."

Item 6. Selected Consolidated Financial Data.

The following selected consolidated financial data has been derived from the consolidated financial statements of the Company. The data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our "Consolidated Financial Statements and Supplementary Data" and "Notes to Consolidated Financial Statements" thereto.

(In thousands, except per share amounts, Selected Store Data or where noted otherwise)
	Fiscal Year Ended
	February 1, 2014		February 2, 2013		January 28, 2012		January 29, 2011		January 30, 2010
	(52 weeks)		(53 weeks)		(52 weeks)		(52 weeks)		(52 weeks)
Statement of Operations Data:
Net sales	$	851,965	$	818,700	$	732,645	$	664,954	$	593,492
Cost of goods sold, including distribution center and store occupancy costs		542,700		519,818		470,237		434,552		397,292
Gross profit		309,265		298,882		262,408		230,402		196,200
Store operating, selling and administrative expenses		181,527		169,872		155,672		143,232		129,888
Depreciation and amortization		13,847		13,029		13,205		13,623		13,905
Operating income		113,891		115,981		93,531		73,547		52,407
Interest expense, net		188		168		217		105		57
Income before provision for income taxes		113,703		115,813		93,314		73,442		52,350
Provision for income taxes		42,826		43,231		34,254		27,042		19,801
Net income	$	70,877	$	72,582	$	59,060	$	46,400	$	32,549

Basic earnings per share	$	2.74	$	2.78	$	2.19	$	1.63	$	1.14
Diluted earnings per share	$	2.70	$	2.72	$	2.15	$	1.60	$	1.12
Basic weighted shares outstanding		25,870		26,132		26,978		28,426		28,629
Diluted weighted average shares outstanding		26,266		26,638		27,506		29,033		29,089

Note: No dividends have been declared or paid.

(In thousands, except per share amounts, Selected Store Data or where noted otherwise)
	Fiscal Year Ended
	February 1, 2014			February 2, 2013			January 28, 2012			January 29, 2011			January 30, 2010
	(52 weeks)			(53 weeks)			(52 weeks)			(52 weeks)			(52 weeks)
Other Data:
Net sales increase		4.1	%		11.8	%		10.2	%		12.0	%		5.2	%
Comparable store sales increase		1.8	%⁽¹⁾		6.9	%⁽²⁾		6.8	%		9.8	%		0.1	%
Gross profit (as a % to net sales)		36.3	%		36.5	%		35.8	%		34.7	%		33.1	%
Store operating, selling and administrative expenses (as a % to net sales)		21.3	%		20.8	%		21.2	%		21.5	%		21.9	%
Depreciation and amortization (as a % to net sales)		1.6	%		1.6	%		1.8	%		2.1	%		2.3	%
Provision for income taxes (as a % to net sales)		5.0	%		5.3	%		4.7	%		4.1	%		3.3	%
Net income (as a % to net sales)		8.3	%		8.9	%		8.1	%		7.0	%		5.5	%

Balance Sheet Data:
Cash and cash equivalents	$	66,227		$	76,911		$	55,138		$	75,517		$	49,691
Average inventory per store	$	244		$	254		$	234		$	219		$	221
Working capital	$	232,235		$	202,899		$	177,115		$	175,007		$	147,583
Total assets	$	416,345		$	377,331		$	313,696		$	314,265		$	276,704
Long-term capital lease obligations	$	2,889		$	2,138		$	2,072		$	2,245		$	152
Stockholders' investment	$	304,023		$	239,127		$	203,750		$	200,088		$	175,079
Treasury shares repurchased		366			904			1,897			1,461			-
Cost of treasury shares purchased	$	20,095		$	49,852		$	68,613		$	37,859		$	-

Selected Store Data:
Stores open at beginning of period		873			832			798			767			745
New stores opened		72			54			52			45			42
Stores closed		(18	)		(13	)		(18	)		(14	)		(20	)
Stores open at end of period		927			873			832			798			767

Stores expanded during the period		14			13			15			14			18
Estimated square footage at end of period		5,331			5,003			4,755			4,558			4,399

(1)	Represents the increase in comparable store sales for the period ended February 2, 2013 to February 1, 2014.

(2)	As originally reported for the period ended February 2, 2013.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with Item 6, "Selected Consolidated Financial Data" and our consolidated financial statements and related notes appearing elsewhere in this report. This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See "Forward-Looking Statements" and Part I, Item 1A. "Risk Factors."

Overview

Note: All references to comparable store sales in Fiscal 2013 refer to the 52-week comparison to Fiscal 2012 without consideration of the 53^rd week in Fiscal 2013. All other Fiscal 2013 financial information includes the full 53-week period.

Hibbett Sports, Inc. operates sporting goods stores in small to mid-sized markets, predominantly in the South, Southwest, Mid-Atlantic and Midwest regions of the United States. We believe Hibbett Sports stores are typically the primary sporting goods retailers in smaller markets due to the extensive selection of premium brand name merchandise, availability of local merchandise, an emphasis on team sports and a high level of customer service. As of February 1, 2014, we operated a total of 927 retail stores in 31 states composed of 910 Hibbett Sports stores and 17 Sports Additions athletic shoe stores.

Our primary retail format and growth vehicle is Hibbett Sports, an approximately 5,000-square-foot store located primarily in strip centers, which are frequently near a Wal-Mart store. Approximately 80% of our Hibbett Sports store base is located in strip centers, which includes free-standing stores, while approximately 20% of our Hibbett Sports store base is located in enclosed malls. Over the last several years, we have concentrated and expect to continue our store base growth in strip centers versus enclosed malls. We do not expect that the average size of our stores opening in Fiscal 2015 will vary significantly from the average size of stores opened in Fiscal 2014.

Hibbett operates on a 52- or 53-week fiscal year ending on the Saturday nearest to January 31 of each year. The consolidated statements of operations for Fiscal 2014 included 52 weeks of operations. The consolidated statements of operations for Fiscal 2013 included 53 weeks of operations and Fiscal 2012 included 52 weeks of operations. Fiscal 2015 will include 52 weeks of operations. We have operated as a public company and have been incorporated under the laws of the State of Delaware since October 6, 1996.

Fiscal 2014 experienced a total company-wide square footage increase of 6.5%. Our plan for Fiscal 2015 is to increase total company-wide square footage by 6% to 7%. To supplement new store openings, we continue to expand high performing stores, increasing the square footage in 14 existing stores in Fiscal 2014 for an average increase in square footage of 56%. We expect to expand an additional 10 to 15 stores in Fiscal 2015.

In Fiscal 2013, we began construction on a new wholesaling and logistics facility to support our expected growth over the next several years with an expected operations date in early Fiscal 2015. The expected total cost of the new facility is estimated at approximately $40.0 million.

We historically have had increases in comparable store net sales in the low to mid-single digit range. In Fiscal 2014, activewear, accessories and footwear experienced mid-single digit comparable store gains. Total comparable store sales percentage growth is expected to be in the low to mid-single digits in Fiscal 2015. We expect a flat to slightly positive increase in merchandise margin, but a slight decrease in overall gross profit rate in Fiscal 2015 due to additional costs related to our new wholesaling and logistics facility.

Due to our increased net sales, we have historically leveraged our store operating, selling and administrative expenses. Based on projected net sales, we expect operating, selling and administrative rates to increase slightly in Fiscal 2015, primarily due to increases in marketing, information technology and health care costs. We also expect to continue to generate sufficient cash to enable us to expand and remodel our store base, to provide capital expenditures for our wholesaling and logistics facility, technology upgrade projects and to repurchase our common stock under our stock repurchase program.

Due to the 53^rd week in Fiscal 2013, each quarter in Fiscal 2014 started one week later than the same quarter in Fiscal 2013. The chart below presents comparable store sales for Fiscal 2013 as originally reported and as adjusted to represent the same 13-week period as the Fiscal 2014 quarters:

	FISCAL 2013
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Full Year
Comparable store sales increase (originally reported)	11.1%	4.8%	6.4%	4.9%	6.9%
Comparable store sales increase (adjusted for week shift)	8.6%	12.5%	-0.7%	4.4%	6.0%
Impact of week shift	-2.5%	7.7%	-7.1%	-0.5%	-0.9%

Comparable store net sales data for the periods presented reflects sales for our traditional format Hibbett Sports and Sports Additions stores open throughout the period and the corresponding period of the prior fiscal year. 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 store base until it has been open a full 12 months.

Executive Summary

Following is a highlight of our financial results over the last three fiscal years:

	Fiscal 2014 (52 weeks)			Fiscal 2013 (53 weeks)			Fiscal 2012 (52 weeks)
Net sales (in millions)	$	852.0		$	818.7		$	732.6
Operating income, percentage to net sales		13.4	%		14.2	%		12.8	%
Comparable store sales increase		1.8	%		6.9	%		6.8	%
Net income (in millions)	$	70.9		$	72.6		$	59.1
Net income, percentage (decrease) increase		(2.4	)%		22.9	%		27.3	%
Diluted earnings per share	$	2.70		$	2.72		$	2.15

During Fiscal 2014, Hibbett opened 72 new stores and closed 18 underperforming stores, bringing the store base to 927 in 31 states as of February 1, 2014. Inventory on a per store basis at February 1, 2014 decreased by 3.6% resulting from planned later receipts of spring inventory to better coincide with the timing of sales. Hibbett ended Fiscal 2014 with $66.2 million of available cash and cash equivalents on the consolidated balance sheet and full availability under its $80.0 million unsecured credit facilities.

Recent Accounting Pronouncements

See Note 2 of Item 8 of this Annual Report on Form 10-K for the fiscal year ended February 1, 2014, for information regarding recent accounting pronouncements.

Results of Operations

The following table sets forth the percentage relationship to net sales of certain items included in our consolidated statements of operations for the periods indicated.

	Fiscal Year Ended
	February 1, 2014			February 2, 2013			January 28, 2012
Net sales		100.0	%		100.0	%		100.0	%
Costs of goods sold, including distribution and store occupancy costs		63.7			63.5			64.2
Gross profit		36.3			36.5			35.8

Store operating, selling and administrative expenses		21.3			20.8			21.2
Depreciation and amortization		1.6			1.6			1.8
Operating income		13.4			14.2			12.8

Interest (expense) income, net		-			-			-
Income before provision for income taxes		13.4			14.2			12.7

Provision for income taxes		5.0			5.3			4.7
Net income		8.3	%		8.9	%		8.1	%

Note: Columns may not sum due to rounding.

Fiscal 2014 Compared to Fiscal 2013

Net sales. Net sales increased $33.3 million, or 4.1%, to $852.0 million for Fiscal 2014 from $818.7 million for Fiscal 2013. Furthermore:

We opened 72 Hibbett Sports stores while closing 18 underperforming Hibbett Sports stores for net stores opened of 54 stores in Fiscal 2014. Stores not in the comparable store net sales calculation accounted for $19.9 million of the increase in net sales. We expanded, remodeled or relocated 17 high performing stores. Store openings and closings are reported net of relocations.

We achieved a 1.8% increase in comparable store net sales for Fiscal 2014 compared to Fiscal 2013. Comparable store net sales contributed $13.4 million to the increase in net sales.

During Fiscal 2014, 799 stores were included in the comparable store sales comparison. The increase in comparable store net sales was broad-based with gains across activewear, accessories and footwear. Product performances were led by positive trends in youth and fleece activewear, branded accessories and youth footwear. Basketball shoes were the highest performer in our footwear categories while our running business under performed in Fiscal 2014. The majority of our comparable store sales increase was from increased sales per transaction primarily due to a continued trend towards premium product.

Gross profit. Cost of goods sold includes the cost of inventory, occupancy costs for stores and occupancy and operating costs for our distribution center. Gross profit was $309.3 million, or 36.3% of net sales, in Fiscal 2014, compared with $298.9 million, or 36.5% of net sales, in Fiscal 2013.

Gross profit rate decreased slightly as a percentage of net sales due to increased markdowns to liquidate aged inventory. We expect gross profit rate to decrease slightly in Fiscal 2015 due to increased expenses as we transition into our new wholesaling and logistics facility.

Distribution expense as a percentage of net sales decreased 16 basis points resulting primarily from decreased labor costs, which was due to improvements in labor efficiency and product flow through the current facility. In Fiscal 2015, with the transition into our new wholesaling and logistics facility, we expect this expense to increase as a percentage of net sales due to the transition to the new facility, higher on-going operating costs of the new facility and duplicate expenses from the current facility until the lease expires in December 2014.

Store occupancy expense as a percentage of net sales increased 23 basis points due to weakened sales resulting from closed store days caused by the unusual winter weather in a large portion of our markets in January. The largest increase as a percent to net sales was rent expense.

Store operating, selling and administrative expenses. Store operating, selling and administrative expenses were $181.5 million, or 21.3% of net sales, for Fiscal 2014, compared with $169.9 million, or 20.8% of net sales, for Fiscal 2013. Expense trends we experienced included:

Total salary and benefit costs increased in dollars and as a percentage to net sales by 32 basis points due to Company growth, higher health care costs, annual pay rate increases and as a consequence of weaker sales growth. As our store base grows, we expect an increase in salary and benefit dollars, but believe these costs as a percentage to net sales will remain relatively stable.

New store costs increased 6 basis points as a percentage of net sales resulting from an increase in new store openings. We expect these costs to increase slightly in Fiscal 2015 as we continue to increase new store openings.

Stock-based compensation decreased by 8 basis points as a percentage of net sales due to the achievement of certain performance awards at a lower level than those achieved in the prior year and the expectation of future awards being achieved at less than the goal established.

Expenses associated with our new corporate headquarters contributed an increase of 10 basis points as a percentage of net sales. We expect these costs will increase in Fiscal 2015 as we record a complete year of expense related to the new building.

Depreciation and amortization. Depreciation and amortization as a percentage of net sales was 1.6% in Fiscal 2014 and in Fiscal 2013. In Fiscal 2014, the addition of our new corporate headquarters and inventory markdown optimization system resulted in an elevated depreciation expense in both dollars and in percentage of net sales. This expense will increase in Fiscal 2015 as we place our new wholesaling and logistics facility into service.

Provision for income taxes. The combined federal, state and local effective income tax rate as a percentage of pre-tax income was 37.7% for Fiscal 2014 and 37.3% for Fiscal 2013. The increase in rate resulted primarily from less deductible stock option expense and fewer federal employment tax credits compared to Fiscal 2013.

Fiscal 2013 Compared to Fiscal 2012

Net sales. Net sales increased $86.1 million, or 11.8%, to $818.7 million for Fiscal 2013 from $732.6 million for Fiscal 2012. Furthermore:

We opened 54 Hibbett Sports stores while closing 13 underperforming Hibbett Sports stores for net stores opened of 41 stores in Fiscal 2013. Stores not in the comparable store net sales calculation accounted for $37.7 million of the increase in net sales. The 53^rd week contributed $11.9 million of the increase in net sales. We expanded, remodeled or relocated 18 high performing stores. Store openings and closings are reported net of relocations.

We achieved a 6.9% increase in comparable store net sales for Fiscal 2013 compared to Fiscal 2012. Comparable store net sales contributed $48.4 million to the increase in net sales.

During Fiscal 2013, 763 stores were included in the comparable store sales comparison. The increase in comparable store net sales was broad-based with strong performances across accessories, activewear and footwear. Strong product performances were led by positive trends in footwear accessories, branded headwear, youth activewear and all categories of footwear. Basketball shoes were the highest performer in our footwear categories while our running business moderated in Fiscal 2013. The majority of our comparable store sales increase was from increased sales per transaction primarily due to an assortment change mix to premium product.

Gross profit. Cost of goods sold included the cost of inventory, occupancy costs for stores and occupancy and operating costs for our distribution center. Gross profit was $298.9 million, or 36.5% of net sales, in Fiscal 2013, compared with $262.4 million, or 35.8% of net sales, in Fiscal 2012.

Gross profit percentage improved as a percentage of net sales due to continued improvements in assortments by market, tight controls over markdowns and promotions and improved inventory shrinkage. Strong sales performance and improved aged inventory negated the need for liquidating promotions and resulted in higher initial sell-through of inventory at regular prices.

Distribution expense as a percentage of net sales increased 9 basis points resulting primarily from increases in data processing, third-party services and labor expenses. In Fiscal 2012, we initiated broadband service in the majority of our stores and experienced its full cost impact in Fiscal 2013. We also experienced an increase in freight costs due to higher gas prices.

Store occupancy expense as a percentage of net sales decreased 53 basis points due to strong sales and careful management of occupancy costs. The largest decrease as a percent to net sales was rent expense as we continued to experience rent savings through lease renegotiations and from co-tenancy violations by our landlords, offset somewhat by a decrease in construction allowances.

Store operating, selling and administrative expenses. Store operating, selling and administrative expenses were $169.9 million, or 20.8% of net sales, for Fiscal 2013, compared with $155.7 million, or 21.2% of net sales, for Fiscal 2012. Expense trends we experienced included:

Total salary expense increased in dollars due to Company growth and annual pay rate increases but decreased 21 basis points as a percentage of net sales due to strong sales results. Salary costs in our stores decreased 20 basis points as a percentage of net sales. As our store base grows, we expect an increase in salary and benefit dollars, but believe these costs as a percentage to net sales will remain relatively stable.

Credit card fees decreased 13 basis points as a percentage of net sales resulting from lower debit card transaction fees.

Stock-based compensation decreased by 6 basis points as a percentage of net sales due to the achievement of certain performance awards at less than the rate of those achieved in the prior year. We also experienced a larger than average forfeiture of restricted stock units compared to prior year.

Expenses associated with preparing our new corporate headquarters contributed an increase of 2 basis points as a percentage of net sales.

Depreciation and amortization. Depreciation and amortization as a percentage of net sales was 1.6% in Fiscal 2013 compared to 1.8% in Fiscal 2012. We attributed the decrease in depreciation expense as a percent of net sales to a decrease in the investment in leasehold improvements in recent years as more of the build-out work was being done by landlords offset somewhat by changes in estimates of useful lives of leasehold improvements in underperforming stores.

Provision for income taxes. The combined federal, state and local effective income tax rate as a percentage of pre-tax income was 37.3% for Fiscal 2013 and 36.7% for Fiscal 2012. The increase in rate resulted primarily from lower federal income tax credits as a result of the expiration of the Work Opportunity Tax Credit program and the resolution of an income tax matter with a state taxing authority in Fiscal 2012.

Liquidity and Capital Resources

Our capital requirements relate primarily to new store openings, stock repurchases, facilities and systems to support company growth and working capital requirements. Our working capital requirements are somewhat seasonal in nature and typically reach their peak near the end of the third and the beginning of the fourth quarters of our fiscal year. Historically, we have funded our cash requirements primarily through our cash flow from operations and occasionally from borrowings under our revolving credit facilities. Due to the low interest rates currently available, we are using excess cash on deposit to offset bank fees versus investing such funds in an equity market or in interest-bearing deposits.

Our consolidated statements of cash flows are summarized as follows (in thousands):

	Fiscal Year Ended
	February 1, 2014			February 2, 2013			January 28, 2012
Net cash provided by operating activities	$	53,301		$	87,124		$	54,921
Net cash used in investing activities		(50,990	)		(22,318	)		(13,375	)
Net cash used in financing activities		(12,995	)		(43,033	)		(61,925	)
Net (decrease) increase in cash and cash equivalents	$	(10,684	)	$	21,773		$	(20,379	)

Operating Activities.

Cash flow from operations is seasonal in our business. Typically, we use cash flow from operations to increase inventory in advance of peak selling seasons, such as winter holidays and back-to-school. Inventory levels are reduced in connection with higher sales during the peak selling seasons and this inventory reduction, combined with proportionately higher net income, typically produces a positive cash flow.

Net cash provided by operating activities was $53.3 million for Fiscal 2014 compared with net cash provided by operating activities of $87.1 million and $54.9 million in Fiscal 2013 and Fiscal 2012, respectively. The decrease in net cash provided by operating activities for Fiscal 2014 compared to Fiscal 2013 and Fiscal 2012 was impacted by the following:

The change in accounts payable used cash of $27.5 million, provided cash of $28.3 million in Fiscal 2013 and used cash of $2.3 million during Fiscal 2012. The decrease in Fiscal 2014 resulted from a later receipt of inventory in advance of the spring season. The increase in Fiscal 2013 resulted from an earlier receipt of inventory in advance of the spring season. The fluctuation in cash provided by accounts payable in Fiscal 2012 resulted from the anniversary of payment term extensions initiated in Fiscal 2011 with the use of corporate purchasing cards.

Ending inventory declined 3.6% and increased 8.2% on a per store level basis at February 1, 2014 and February 2, 2013, respectively, compared to the prior year. This was primarily due to the later receipt of spring inventory compared to the prior year. The increase in inventory used cash of $5.2 million, $26.3 million and $20.2 million during Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively.

Net income provided cash of $70.9 million, $72.6 million and $59.1 million during Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively.

Non-cash charges included depreciation and amortization expense of $13.8 million, $13.0 million and $13.2 million during Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively, and stock-based compensation expense of $5.8 million, $5.6 million and $5.5 million during Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively. Depreciation expense increased in Fiscal 2014 due to investments in facilities and information technology systems and will continue to increase as all facilities and systems are placed into service. Fluctuations in stock-based compensation generally result from the achievement of performance-based equity awards at greater or lesser than their granted level and fluctuations in the price of our common stock.

Investing Activities.

Cash used in investing activities in the fiscal periods ended February 1, 2014, February 2, 2013 and January 28, 2012 totaled $51.0 million, $22.3 million and $13.4 million, respectively. Gross capital expenditures used $50.5 million, $22.0 million and $13.0 million during Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively. Capital expenditures in Fiscal 2014 included our new corporate headquarters, our inventory markdown optimization system and construction costs on our new wholesale and logistics facility.

We use cash in investing activities to build new stores and remodel, expand or relocate existing stores. We opened 72 new stores and relocated, expanded and/or remodeled 17 existing stores during Fiscal 2014. We opened 54 new stores and relocated, expanded and/or remodeled 18 existing stores during Fiscal 2013. We opened 52 new stores and relocated, expanded and/or remodeled 18 existing stores during Fiscal 2012.

We estimate the cash outlay for capital expenditures in the fiscal year ending January 31, 2015 will be approximately $25.0 million to $30.0 million, which relates to expenditures for our new wholesaling and logistics facility, the opening of 75 to 80 new stores, the remodeling, relocation or expansion of selected existing stores, information system upgrades, and other departmental needs. Of the total budgeted dollars for capital expenditures for Fiscal 2015, we anticipate that approximately 43% will be related to the opening of new stores and remodeling and/or relocating of existing stores. Approximately 19% will be related to the completion of our new wholesaling and logistics facility. The remaining 38% relates primarily to expenditures in information technology, but also includes store fixtures, transportation equipment, automobiles and security equipment for our stores.

The lease for our existing distribution center expires in December 2014. We expect to relocate our new wholesaling and logistics facility in early Fiscal 2015 at a total cost of $40.0 million of which $33.2 million was expended by the end of Fiscal 2014.

Financing Activities.

Net cash used in financing activities was $13.0 million, $43.0 million and $61.9 million in Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively. The financing activity cash fluctuation between years is primarily the result of repurchases of our common stock. We expended $15.8 million, $45.9 million and $67.5 million on repurchases of our common stock during Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively.

Financing activities also consisted of proceeds from stock option exercises and employee stock plan purchases and the excess tax benefit from the exercise of incentive stock options. As stock options are exercised and shares are purchased through our employee stock purchase plan, we will continue to receive proceeds and expect a tax deduction; however, the amounts and timing cannot be predicted.

At February 1, 2014, we had two unsecured revolving credit facilities that allow borrowings up to $30.0 million and $50.0 million, and which renew in August 2014 and November 2014, respectively. The facilities do not require a commitment or agency fee nor are there any covenant restrictions. We plan to renew these facilities as they expire and do not anticipate any problems in doing so; however, no assurance can be given that we will be granted a renewal or terms which are acceptable to us. As of February 1, 2014, we did not have any debt outstanding under either of these facilities.

The following table lists the aggregate maturities of various classes of obligations and expiration amounts of various classes of commitments related to Hibbett Sports, Inc. at February 1, 2014 (in thousands):

	Payment due by period
Contractual Obligations	Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years		Total
Long-term debt obligations	$	-	$	-	$	-	$	-	$	-
Capital lease obligations (1)		331		741		854		1,285		3,211
Interest on capital lease obligations (1)		288		514		405		406		1,613
Operating lease obligations (1)		50,162		71,540		40,428		29,941		192,071
Purchase obligations (2)		4,497		933		21		-		5,451
Other liabilities (3)		515		-		-		2,437		2,952
Total	$	55,793	$	73,728	$	41,708	$	34,069	$	205,298

(1)

See "Part II, Item 8, Consolidated Financial Statements Note 6 – Leases."

(2)

Purchase obligations include all material legally binding contracts such as software license commitments and service contracts. The table above also includes a stand-by letter of credit in conjunction with our self-insured workers' compensation and general liability insurance coverage. Contractual obligations that are not binding agreements, including purchase orders for inventory, are excluded from the table above. Store utility contracts, including waste disposal agreements, are also excluded.

(3)

Other liabilities include amounts accrued for various deferred compensation arrangements. See "Part II, Item 8, Consolidated Financial Statements Note 7 – Defined Contribution Benefit Plans" for a discussion regarding our employee benefit plans.

Non-current liabilities, primarily consisting of deferred rent and unrecognized tax benefits, have been excluded from the above table to the extent that the timing and/or amount of any cash payment are uncertain. Excluded from this table are approximately $1.5 million of unrecognized tax benefits, which have been recorded as liabilities in accordance with ASC Topic 740, Income Taxes, as the timing of such payments cannot be reasonably determined. See "Part II, Item 8, Consolidated Financial Statements Note 1 – Deferred Rent" for a discussion on our deferred rent liabilities. See "Part II, Item 8, Consolidated Financial Statements Note 9 – Income Taxes" for a discussion of our unrecognized tax benefits.

Off-Balance Sheet Arrangements

We have not provided any financial guarantees through February 1, 2014. We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. We do not have any arrangements or relationships with entities that are not consolidated into the financial statements.

Inflation and Other Economic Factors

Our ability to provide quality merchandise on a profitable basis may be subject to economic factors and influences that we cannot control. National or international events, including uncertainties in the global financial markets, U.S. government policies, the Middle East and Asia, could lead to disruptions in economies in the United States or in foreign countries where a significant portion of our merchandise is manufactured. These and other factors could increase our merchandise costs and other costs that are critical to our operations. Consumer spending could also decline because of economic pressures. See "Risk Factors."

We do not believe that inflation has had a material impact on our financial position or results of operations to date. However, we are experiencing increased prices and a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross profit and selling, general and administrative expenses as a percentage of net sales if the selling prices of our merchandise do not increase with these increased costs.

Our Critical Accounting Policies

Our critical accounting policies reflected in the consolidated financial statements are detailed below.

Revenue Recognition. We recognize revenue, including gift card and layaway sales, in accordance with ASC Topic 605, Revenue Recognition.

Retail merchandise sales occur on-site in our retail stores. Customers have the option of paying the full purchase price of the merchandise upon sale or paying a down payment and placing the merchandise on layaway. The customer may make further payments in installments, but the entire purchase price for merchandise placed on layaway must be received by us within 30 days. The down payment and any installments are recorded by us as short-term deferred revenue until the customer pays the entire purchase price for the merchandise. We recognize revenue at the time the customer takes possession of the merchandise. Retail sales are recorded net of returns and discounts and exclude sales taxes.

We offer a customer loyalty program, the MVP Rewards program, whereby customers, upon registration, can earn points in a variety of ways, including store purchases, website surveys and other activities on our website. Based on the number of points accumulated, customers receive reward certificates on a quarterly basis that can be redeemed in our stores. An estimate of the obligation related to the program, based on historical redemption rates, is recorded as a current liability and a reduction of net sales in the period earned by the customer. The current liability is reduced, and a corresponding amount is recognized in net sales, in the amount of and at the time of redemption of the reward certificate. At February 1, 2014 and February 2, 2013, the amount recorded in current liabilities for reward certificates issued was inconsequential.

The cost of coupon sales incentives is recognized at the time the related revenue is recognized by us. Proceeds received from the issuance of gift cards are initially recorded as deferred revenue. Revenue is subsequently recognized at the time the customer redeems the gift cards and takes possession of the merchandise. Unredeemed gift cards are recorded as a current liability.

Gift card breakage revenue is recognized to the extent not required to be remitted to jurisdictions as unclaimed property and is based upon historical redemption patterns and represents the balance of gift cards for which we believe the likelihood of redemption by the customer is remote. Based on our analyses of redemption activity, we have determined the likelihood of redemption for gift cards 5 years after the date of initial issuance is remote. For Fiscal 2014, Fiscal 2013 and Fiscal 2012, $0.2 million, $0.3 million and $0.2 million of breakage revenue, respectively, was recorded as other income and is included in the accompanying consolidated statements of operations as a reduction to store operating, selling and administrative expenses. The net deferred revenue liability at February 1, 2014 and February 2, 2013 was $4.5 million and $3.9 million, respectively.

Inventory Valuation.

Inventories are valued using the lower of weighted average cost or market method. Items are removed from inventory using the weighted average cost method.

Lower of Cost or Market: Market is determined based on estimated net realizable value. We regularly review inventories to determine if the carrying value exceeds realizable value, and we record an accrual to reduce the carrying value to net realizable value as necessary. We account for obsolescence as part of our lower of cost or market accrual based on historical trends and specific identification. As of February 1, 2014 and February 2, 2013, the accrual was $2.2 million and $2.3 million, respectively. A determination of net realizable value requires significant judgment and estimates.

Shrink Reserves: We accrue for inventory shrinkage based on the actual historical results of our physical inventories. These estimates are compared to actual results as physical inventory counts are performed and reconciled to the general ledger. Store and distribution center physical counts are performed on a cyclical basis. As of February 1, 2014 and February 2, 2013, the accrual was $1.3 million and $1.5 million, respectively.

Inventory Purchase Concentration: Our business is dependent to a significant degree upon close relationships with our vendors. Our largest vendor, Nike, represented 52.3%, 48.9% and 48.3% of our purchases for Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively. Our second largest vendor in Fiscal 2014 represented 15.6%, 12.8% and 9.3% of our purchases while our third largest vendor in Fiscal 2014 represented 8.6%, 10.9% and 11.4% of our purchases for Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively.

Consignment Inventories: Consignment inventories, which are owned by the vendor but located in our stores, are not reported as our inventory until title is transferred to us or our purchase obligation is determined. At February 1, 2014 and February 2, 2013, vendor-owned inventories held at our locations (and not reported as our inventory) were $1.1 million and $1.6 million, respectively.

Accrued Expenses. On a monthly basis, we estimate certain significant expenses in an effort to record those expenses in the period incurred. Our most significant estimates relate to payroll and payroll tax expenses, property taxes, insurance-related expenses and utility expenses. Estimates are primarily based on current activity and historical results and are adjusted as our estimates change. Determination of estimates and assumptions for accrued expenses requires significant judgment.

Income Taxes. We estimate the annual tax rate based on projected taxable income for the full year and record a quarterly income tax provision in accordance with the anticipated annual rate. As the year progresses, we refine the estimates of the year's taxable income as new information becomes available, including year-to-date financial results. This continual estimation process often results in a change to our expected effective tax rate for the year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual tax rate. Significant judgment is required in determining our effective tax rate and in evaluating our tax position and changes in estimates could materially impact our results of operations and financial position.

We account for uncertain tax positions in accordance with ASC Topic 740, Income Taxes. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of operations. See "Part II, Item 8, Consolidated Financial Statements Note 9 – Income Taxes" for additional detail on our uncertain tax positions.

Legal Proceedings and Claims. Estimated amounts for claims that are probable and can be reasonably estimated are recorded as liabilities in the consolidated balance sheets. The likelihood of a material change in these estimated accruals is dependent on new claims as they may arise and the favorable or unfavorable outcome of a particular litigation. As additional information becomes available, we assess the potential liability related to pending litigation and revise estimates as appropriate. Such revisions in estimates of the potential liability could materially impact our results of operations and financial position. See "Risk Factors."

Impairment of Long-Lived Assets. We continually evaluate whether events and circumstances have occurred that indicate the remaining balance of long-lived assets may be impaired and not recoverable. Our policy is to adjust the remaining useful life of depreciable assets and to recognize any impairment loss on long-lived assets as a charge to current income when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment is assessed considering the estimated undiscounted cash flows over the asset's remaining life. If estimated cash flows are insufficient to recover the investment, an impairment loss is recognized based on a comparison of the cost of the asset to fair value less any costs of disposition. Evaluation of asset impairment requires significant judgment and estimates. See "Risk Factors."

Stock-Based Compensation. We measure stock-based compensation for all share-based awards granted based on the estimated fair value of those awards at grant date. The cost of restricted stock units and performance-based restricted stock units is determined using the fair value of our common stock on the date of grant. For stock options granted, we use the Black-Scholes valuation model to estimate the fair value at the date of grant for options granted under our equity incentive plans and stock purchase rights associated with the Employee Stock Purchase Plan.

Stock-based compensation is expensed over the service period of the awards. Performance-based awards are expensed based on the probability of achievement of the underlying target, which is estimated and adjusted as financial results dictate during the performance period. The Black-Scholes valuation model requires the input of assumptions and estimates which are regularly evaluated and updated when applicable. These include estimating the length of time vested stock options will be retained before being exercised (expected term), the estimated volatility of our common stock price over the expected term and the risk-free interest rate based on the annual continuously compounded risk-free rate with a term equal to the option's expected term. In addition, we estimate the number of awards that will ultimately not complete their vesting requirements (forfeitures).

Changes in these assumptions and estimates can materially affect the estimate of fair value of stock-based compensation and consequently, the related expense recognized on the consolidated statements of operations. Our stock option grants have a life of up to ten years and are not transferable. Therefore, the actual fair value of a stock option grant may be different from our estimates. We believe that our estimates incorporate all relevant information and represent a reasonable approximation in light of the difficulties involved in valuing non-traded stock options.

Insurance Accruals. We use a combination of insurance and self-insurance for a number of risks including workers' compensation, general liability, property liability and employee-related health benefits, a portion of which is paid by our employees. The estimates and accruals for the liabilities associated with these risks are regularly evaluated for adequacy based on the most current available information, including historical claims experience and expected future claims costs.

Leases. We lease all our retail stores, our distribution center and certain equipment, including transportation and office equipment. We evaluate each lease at inception to determine whether the lease will be accounted for as an operating or capital lease. The term of the lease used for this evaluation includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured and failure to exercise such option would result in an economic penalty. The majority of our retail stores and our distribution center are operating leases.

Many of our operating lease agreements contain rent holidays, rent escalation clauses and/or contingent rent provisions. We recognize rent expense on a straight-line basis over the expected lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty. We use a time period for our straight-line rent expense calculation that equals or exceeds the time period used for depreciation on leasehold improvements. In addition, the commencement date of the lease term is the earlier of the date when we become legally obligated for the rent payments or the date when we take possession of the building for initial setup of fixtures and merchandise.

We make judgments regarding the probable term for each lease, which can impact the classification and accounting for a lease as capital or operating, the escalations in payments that are taken into consideration when calculating straight-line rent and the term over which landlord allowances received are amortized. These judgments may produce materially different amounts of depreciation, amortization and rent expense than would be reported in a specific period if different assumed lease terms were used.

Dividend Policy

We have never declared or paid any dividends on our common stock. We currently intend to retain our future earnings to finance the growth and development of our business and for our stock repurchase program, and therefore do not anticipate declaring or paying cash dividends on our common stock for the foreseeable future. Any future decision to declare or pay dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as our Board of Directors deems relevant.

Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (see "Part II, Item 9A, Controls and Procedures").

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Investment and Credit Availability Risk

We manage cash and cash equivalents in various institutions at levels beyond federally insured limits per institution, and we may purchase investments not guaranteed by the FDIC. Accordingly, there is a risk that we will not recover the full principal of our investments or that their liquidity may be diminished. In an attempt to mitigate this risk, our investment policy emphasizes preservation of principal and liquidity.

We also have financial institutions that are committed to provide loans under our revolving credit facilities. There is a risk that these institutions cannot deliver against these obligations. See "Risk Factors."

Interest Rate Risk

Our net exposure to interest rate risk results primarily from interest rate fluctuations on our credit facilities, which bears interest at a rate which varies with LIBOR, prime or federal funds rates. At the end of Fiscal 2014 and Fiscal 2013, we had no borrowings outstanding under any credit facility, nor did we have any borrowings against either of the facilities during Fiscal 2014 and Fiscal 2013.

Quarterly and Seasonal Fluctuations

We experience seasonal fluctuations in our net sales and results of operations. Customer buying patterns around the spring sales period and the holiday season historically result in higher first and fourth quarter net sales. Over the past few years, our third quarter has experienced higher than historical net sales, resulting from back-to-school shopping combined with tax-free holidays in many of our markets. In addition, our quarterly results of operations may fluctuate significantly as a result of a variety of factors, including the timing of new store openings, the amount and timing of net sales contributed by new stores, merchandise mix and demand for apparel and accessories driven by local interest in sporting events.

Although our operations are influenced by general economic conditions, we do not believe that, historically, inflation has had a material impact on our results of operations as we are generally able to pass along inflationary increases in costs to our customers.

Tax Matters

We do not believe that there are any tax matters that could materially affect our financial condition, results of operations or cash flows.

Item 8. Consolidated Financial Statements and Supplementary Data.

The following consolidated financial statements and supplementary data of our Company are included in response to this item:

· Report of Independent Registered Public Accounting Firm

· Consolidated Balance Sheets as of February 1, 2014 and February 2, 2013

· Consolidated Statements of Operations for the fiscal year ended February 1, 2014, February 2, 2013 and January 28, 2012

· Consolidated Statements of Cash Flows for the fiscal year ended February 1, 2014, February 2, 2013 and January 28, 2012

· Consolidated Statements of Stockholders' Investment for the fiscal year ended February 1, 2014, February 2, 2013 and January 28, 2012

· Notes to Consolidated Financial Statements

All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Hibbett Sports, Inc.:

We have audited the accompanying consolidated balance sheets of Hibbett Sports, Inc. and subsidiaries as of February 1, 2014 and February 2, 2013, and the related consolidated statements of operations, stockholders' investment, and cash flows for each of the years in the three-year period ended February 1, 2014. We also have audited Hibbett Sports, Inc.'s internal control over financial reporting as of February 1, 2014, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Hibbett Sports, Inc.'s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on Hibbett Sports, Inc.'s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hibbett Sports, Inc. and subsidiaries as of February 1, 2014 and February 2, 2013, and the results of their operations and their cash flows for each of the years in the three-year period ended February 1, 2014, in conformity with U.S. generally accepted accounting principles. Also in our opinion, Hibbett Sports, Inc. maintained, in all material respects, effective internal control over financial reporting as of February 1, 2014, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ KPMG LLP

Birmingham, Alabama

March 31, 2014

HIBBETT SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share information)

ASSETS	February 1, 2014			February 2, 2013
Current Assets:
Cash and cash equivalents	$	66,227		$	76,911
Trade receivables, net		3,798			3,346
Accounts receivable, other		4,602			2,608
Inventories, net		226,545			221,378
Prepaid expenses and other		13,429			8,603
Deferred income taxes, net		9,048			8,768
Total current assets		323,649			321,614

Property and Equipment:
Land and building		6,280			245
Buildings under capital lease		3,247			2,662
Equipment		61,604			58,660
Equipment under capital lease		501			510
Furniture and fixtures		29,717			28,041
Leasehold improvements		72,216			68,661
Construction in progress		37,639			11,781
		211,204			170,560
Less accumulated depreciation and amortization		125,190			121,484
Net property and equipment		86,014			49,076

Deferred income taxes, net		3,497			4,085
Other assets, net		3,185			2,556
Total Assets	$	416,345		$	377,331

LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable	$	74,532		$	102,021
Capital lease obligations		322			714
Accrued payroll expenses		8,464			8,112
Deferred rent		3,792			3,492
Other accrued expenses		4,304			4,376
Total current liabilities		91,414			118,715

Capital lease obligations		2,889			2,138
Deferred rent		13,803			12,006
Unrecognized tax benefits		1,738			3,027
Other liabilities, net		2,478			2,318
Total liabilities		112,322			138,204

Stockholders' Investment:
Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares issued		-			-
Common stock, $.01 par value, 80,000,000 shares authorized, 38,202,486 and 37,846,321 shares issued at February 1, 2014 and February 2, 2013, respectively		382			378
Paid-in capital		154,533			140,423
Retained earnings		492,471			421,594
Treasury stock, at cost, 12,389,531 and 12,023,834 shares repurchased at February 1, 2014 and February 2, 2013, respectively		(343,363	)		(323,268	)
Total stockholders' investment		304,023			239,127
Total Liabilities and Stockholders' Investment	$	416,345		$	377,331

See accompanying notes to consolidated financial statements.

HIBBETT SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

	Fiscal Year Ended
	February 1, 2014			February 2, 2013			January 28, 2012
	(52 weeks)			(53 weeks)			(52 weeks)
Net sales	$	851,965		$	818,700		$	732,645
Cost of goods sold, including distribution center and store occupancy costs		542,700			519,818			470,237
Gross profit		309,265			298,882			262,408

Store operating, selling and administrative expenses		181,527			169,872			155,672
Depreciation and amortization		13,847			13,029			13,205
Operating income		113,891			115,981			93,531

Interest income		11			14			25
Interest expense		(199	)		(182	)		(242	)
Interest expense, net		(188	)		(168	)		(217	)
Income before provision for income taxes		113,703			115,813			93,314

Provision for income taxes		42,826			43,231			34,254
Net income	$	70,877		$	72,582		$	59,060

Basic earnings per share	$	2.74		$	2.78		$	2.19
Diluted earnings per share	$	2.70		$	2.72		$	2.15

Weighted average shares outstanding:
Basic		25,870			26,132			26,978
Diluted		26,266			26,638			27,506

See accompanying notes to consolidated financial statements.

HIBBETT SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share information)

	Fiscal Year Ended
	February 1, 2014			February 2, 2013			January 28, 2012
Cash Flows From Operating Activities:
Net income	$	$ 70,877		$	$ 72,582		$	$ 59,060
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,847			13,029			13,205
Deferred and unrecognized income tax benefit, net		(73	)		(1,507	)		(46	)
Excess tax benefit from stock option exercises		(4,357	)		(4,002	)		(1,834	)
Loss on disposal and write-down of assets, net		173			68			151
Stock-based compensation		5,838			5,649			5,453
Changes in operating assets and liabilities:
Trade receivables, net		(452	)		577			(633	)
Accounts receivable, other		(1,993	)		(408	)		(105	)
Inventories, net		(5,167	)		(26,307	)		(20,193	)
Prepaid expenses and other		36			34			3,146
Other assets, net, non-current		(475	)		(115	)		(157	)
Accounts payable		(27,489	)		28,286			(2,251	)
Deferred rent, non-current		1,798			435			(1,245	)
Accrued expenses and other		738			(1,197	)		370
Net cash provided by operating activities		53,301			87,124			54,921

Cash Flows From Investing Activities:
Purchase of investments, net		(704	)		(530	)		(481	)
Capital expenditures		(50,507	)		(21,970	)		(12,997	)
Proceeds from sale of property and equipment		221			182			103
Net cash used in investing activities		(50,990	)		(22,318	)		(13,375	)

Cash Flows From Financing Activities:
Cash used for stock repurchases		(15,807	)		(45,938	)		(67,484	)
Net payments on capital lease obligations		(268	)		(181	)		(311	)
Excess tax benefit from stock option exercises		4,357			4,002			1,834
Cash used to settle net share equity awards		(4,288	)		(3,914	)		(1,129	)
Proceeds from options exercised and purchase of shares under the employee stock purchase plan		3,011			2,998			5,165
Net cash used in financing activities		(12,995	)		(43,033	)		(61,925	)

Net (decrease) increase in cash and cash equivalents		(10,684	)		21,773			(20,379	)
Cash and cash equivalents, beginning of year		76,911			55,138			75,517
Cash and cash equivalents, end of year	$	66,227		$	76,911		$	55,138

Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest	$	195		$	178		$	238
Income taxes, net of refunds	$	42,276		$	39,878		$	30,788

Supplemental Schedule of Non-Cash Financing Activities:
Property and plant additions under capital lease	$	1,086		$	1,040		$	-

See accompanying notes to consolidated financial statements.

HIBBETT SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT

(in thousands, except share information)

	Common Stock									Treasury Stock
	Number of Shares		Amount		Paid-In Capital			Retained Earnings		Number of Shares		Amount			Total Stockholders' Investment
Balance-January 29, 2011		37,130,646	$	371	$	114,568		$	289,952		9,223	$	(204,803	)	$	200,088
Net income		-		-		-			59,060		-		-			59,060
Issuance of shares through the Company's equity plans, including tax benefit of $1,834		367,482		4		6,995			-		-		-			6,999
Tax shortfall on release of restricted stock and option exercises		-		-		(51	)		-		-		-			(51	)
Adjustment to income tax benefit from exercises of employee stock options		-		-		814			-		-		-			814
Purchase of shares under the stock repurchase program		-		-		-			-		1,897,002		(68,613	)		(68,613	)
Stock-based compensation		-		-		5,453			-		-		-			5,453
Balance-January 28, 2012		37,498,128		375		127,779			349,012		11,120,040		(273,416	)		203,750
Net income		-		-		-			72,582		-		-			72,582
Issuance of shares through the Company's equity plans, including tax benefit of $4,002		348,193		3		6,997			-		-		-			7,000
Adjustment to income tax benefit from exercises of employee stock options		-		-		(2	)		-		-		-			(2	)
Purchase of shares under the stock repurchase program		-		-		-			-		903,794		(49,852	)		(49,852	)
Stock-based compensation		-		-		5,649			-		-		-			5,649
Balance-February 2, 2013		37,846,321		378		140,423			421,594		12,023,834		(323,268	)		239,127
Net income		-		-		-			70,877		-		-			70,877
Issuance of shares through the Company's equity plans, including tax benefit of $4,357		356,165		4		7,364			-		-		-			7,368
Adjustment to income tax benefit from exercises of employee stock options		-		-		908			-		-		-			908
Purchase of shares under the stock repurchase program		-		-		-			-		365,697		(20,095	)		(20,095	)
Stock-based compensation		-		-		5,838			-		-		-			5,838
Balance-February 1, 2014		38,202,486	$	$ 382	$	$ 154,533		$	$ 492,471		12,389,531	$	(343,363	)	$	$ 304,023

See accompanying notes to consolidated financial statements.

HIBBETT SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Hibbett Sports, Inc. is an operator of sporting goods retail stores in small to mid-sized markets predominately in the South, Southwest, Mid-Atlantic and Midwest regions of the United States. References to "we," "our," "us" and the "Company" refer to Hibbett Sports, Inc. and its subsidiaries as well as its predecessors. Our fiscal year ends on the Saturday closest to January 31 of each year. The consolidated statement of operations for Fiscal 2014 includes 52 weeks of operations while our consolidated statements of operations for Fiscal 2013 includes 53 weeks of operations and Fiscal 2012 includes 52 weeks of operations. Our merchandise assortment features a core selection of brand name merchandise emphasizing athletic footwear, team sports equipment, athletic and fashion apparel and related accessories. We complement this core assortment with a selection of localized apparel, footwear and accessories designed to appeal to a wide range of customers within each market.

Principles of Consolidation

The consolidated financial statements of our Company include its accounts and the accounts of all wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Occasionally, certain reclassifications are made to conform previously reported data to the current presentation. Such reclassifications had no impact on total assets, net income or stockholders' investment in any of the years presented.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (U.S. GAAP) requires management to make estimates and assumptions that affect:

the reported amounts of certain assets, including inventories and property and equipment;

the reported amounts of certain liabilities, including legal and other accruals; and

the reported amounts of certain revenues and expenses during the reporting period.

The assumptions used by management could change significantly in future estimates due to changes in circumstances and actual results could differ from those estimates.

Reportable Segments

Given the economic characteristics of the store formats, the similar nature of products offered for sale, the type of customers, the methods of distribution and how our Company is managed, our operations constitute only one reportable segment. Revenues from external customers by product category are impractical for us to report.

Customers

No customer accounted for more than 5.0% of our net sales during the fiscal years ended February 1, 2014, February 2, 2013 and January 28, 2012.

Vendor Arrangements

We enter into arrangements with some of our vendors that entitle us to a partial refund of the cost of merchandise purchased during the year or reimbursement of certain costs we incur to advertise or otherwise promote their product. The volume-based rebates, supported by vendor agreements, are estimated throughout the year and reduce the cost of inventories and cost of goods sold during the year. This estimate is regularly monitored and adjusted for current or anticipated changes in purchase levels and for sales activity.

We also receive consideration from vendors through a variety of other programs, including markdown reimbursements, vendor compliance charges and defective merchandise credits. If the payment is a reimbursement for costs incurred, it is recognized as an offset against those related costs; otherwise, it is treated as a reduction to the cost of merchandise. Markdown reimbursements related to merchandise that has been sold are negotiated by our merchandising teams and are credited directly to cost of goods sold in the period received. If vendor funds are received prior to merchandise being sold, they are recorded as a reduction of merchandise cost. Vendor compliance charges and defective merchandise credits reduce the cost of inventories.

Advertising

We expense advertising costs when incurred. We participate in various advertising and marketing cooperative programs with our vendors, who, under these programs, reimburse us for certain costs incurred. A receivable for cooperative advertising to be reimbursed is recorded as a decrease to expense as advertisements are run.

The following table presents the components of our advertising expense (in thousands):

	Fiscal Year Ended
	February 1, 2014				February 2, 2013				January 28, 2012
Gross advertising costs		$	8,980			$	9,554			$	8,329
Advertising reimbursements			(3,335	)			(4,002	)			(3,748	)
Net advertising costs		$	5,645			$	5,552			$	4,581

Cost of Goods Sold

We include inbound freight charges, merchandise purchases, store occupancy costs and a portion of our distribution costs related to our retail business in cost of goods sold. Costs associated with moving merchandise to and between stores are included in store operating, selling and administrative expenses.

Stock Repurchase Program

In November 2012, the Board of Directors (Board) authorized a Stock Repurchase Program (2012 Program) of $250.0 million to repurchase our common stock through January 29, 2016. The 2012 Program replaced an existing plan that was adopted in November 2009 (2009 Program). Stock repurchases may be made in the open market or in negotiated transactions, with the amount and timing of repurchases dependent on market conditions and at the discretion of our management.

Under the 2012 Program, we repurchased 0.4 million shares of our common stock during Fiscal 2014 at a cost of $20.1 million, including 0.1 million shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements of $4.3 million. Under both the 2012 Program and 2009 Program, we repurchased 0.9 million shares of our common stock during Fiscal 2013 at a cost of $49.9 million, including 0.1 million shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements of $3.9 million.

Historically, under all stock repurchase authorizations, we have repurchased a total of 12.4 million shares of our common stock at an approximate cost of $343.4 million as of February 1, 2014, and had approximately $229.6 million remaining under the 2012 Program for stock repurchase. Shares acquired from holders of restricted stock unit awards to satisfy tax withholding requirements do not reduce the authorization.

Cash and Cash Equivalents

We consider all short-term, highly liquid investments with original maturities of 90 days or less, including commercial paper and money market funds, to be cash equivalents. We are exposed to credit risk in the event of default by our financial institutions where we maintain deposits to the extent the amount recorded on the consolidated balance sheet exceeds the FDIC insurance limits per institution. Amounts due from third-party credit card processors for the settlement of debit and credit card transactions are included as cash equivalents as they are generally collected within three business days. Cash equivalents related to credit and debit card transactions at February 1, 2014 and February 2, 2013 were $3.5 million and $3.6 million, respectively.

Investments

We hold investments in trust for the Hibbett Sports, Inc. Supplemental 401(k) Plan (Supplemental Plan) and the Hibbett Sports, Inc. Executive Voluntary Deferral Plan (Deferral Plan). These are trading securities. At February 1, 2014, we had $2.6 million of investments of which $0.5 million was included in prepaid expenses and other and $2.1 million was included in other assets, net. At February 2, 2013, we had $1.9 million of investments included in other assets, net. Net unrealized holding gains for Fiscal 2014 and Fiscal 2013 were $0.2 million and $0.1 million, respectively.

Trade and Other Accounts Receivable

Trade accounts receivable consist primarily of amounts due to us from sales to educational institutions for athletic programs. We do not require collateral, and we maintain an allowance for potential uncollectible accounts based on an analysis of the aging of accounts receivable at the date of the financial statements, historical losses and existing economic conditions, when relevant. The allowance for doubtful accounts at February 1, 2014 and February 2, 2013 was $42,000.

Other accounts receivable consists primarily of tenant allowances due from landlords and cooperative advertising due from vendors. We analyze other accounts receivable for collectability based on aging of individual components, underlying contractual terms and economic conditions. Recorded amounts are deemed to be collectible.

Inventory Valuation

Inventories are valued using the lower of weighted average cost or market method. Items are removed from inventory using the weighted average cost method.

Shrinkage: We accrue for inventory shrinkage based on the actual historical results of our physical inventories. These estimates are compared to actual results as physical inventory counts are performed and reconciled to the general ledger. Store and distribution center physical counts are performed on a cyclical basis. As of February 1, 2014 and February 2, 2013, the accrual was $1.3 million and $1.5 million, respectively.

Inventory Purchase Concentration: Our business is dependent to a significant degree upon close relationships with our vendors. Our largest vendor, Nike, represented 52.3%, 48.9% and 48.3% of our purchases in Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively. Our next largest vendor in Fiscal 2014 represented 15.6%, 12.8% and 9.3% of our purchases while our third largest vendor in Fiscal 2014 represented 8.6%, 10.9% and 11.4% of our purchases in Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively.

Property and Equipment

Property and equipment are recorded at cost and include assets acquired through capital leases. Depreciation on assets is principally provided using the straight-line method over the following estimated service lives:

Buildings	39 years
Leasehold improvements	3 – 10 years
Furniture and fixtures	7 years
Equipment	3 – 5 years

In the case of leasehold improvements, we calculate depreciation using the shorter of the initial term of the underlying leases or the estimated economic lives of the improvements. The term of the lease includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured and failure to exercise such option would result in an economic penalty. We continually reassess the remaining useful life of leasehold improvements in light of store closing plans.

Construction in progress has historically been comprised primarily of property and equipment related to unopened stores and costs associated with technology upgrades at period-end. At February 1, 2014, approximately 94% of the construction in progress balance was comprised of costs associated with our new wholesaling and logistics facility. Information technology costs not associated with the new facility accounted for approximately 5% and unopened stores accounted for approximately 1% of the construction in progress balance on February 1, 2014.

Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold, retired or otherwise disposed of are removed from property and equipment and the related gain or loss is credited or charged to net income.

Deferred Rent

Deferred rent primarily consists of step rent and allowances from landlords related to our leased properties. Step rent represents the difference between actual operating lease payments due and straight-line rent expense, which we record over the term of the lease, including the build-out period. This amount is recorded as deferred rent in the early years of the lease, when cash payments are generally lower than straight-line rent expense, and reduced in the later years of the lease when payments begin to exceed the straight-line rent expense. Landlord allowances are generally comprised of amounts received and/or promised to us by landlords and may be received in the form of cash or free rent. We record a receivable from the landlord in accordance with the terms of the lease and a deferred rent liability. This deferred rent is amortized into net income (through lower rent expense) over the term (including the pre-opening build-out period) of the applicable lease, and the receivable is reduced as amounts are received from the landlord.

In our consolidated statements of cash flows, the current and long-term portions of landlord allowances are included as changes in cash flows from operations. The current portion is included as a change in accrued expenses and the long-term portion is included as a change in deferred rent, non-current. The liability for the current portion of unamortized landlord allowances was $3.1 million and $2.9 million at February 1, 2014 and February 2, 2013, respectively. The liability for the long-term portion of unamortized landlord allowances was $10.5 million and $8.8 million at February 1, 2014 and February 2, 2013, respectively. We estimate the non-cash portion of landlord allowances was $2.1 million and $1.1 million in Fiscal 2014 and Fiscal 2013, respectively.

Revenue Recognition

We recognize revenue, including gift card and layaway sales, in accordance with the Accounting Standards Codification (ASC) Topic 605, Revenue Recognition.

We offer a customer loyalty program, the MVP Rewards program, whereby customers, upon registration, can earn points in a variety of ways, including store purchases, website surveys and other activities on our website. Based on the number of points accumulated, customers receive reward certificates on a quarterly basis that can be redeemed in our stores. An estimate of the obligation related to the program, based on historical redemption rates, is recorded as a current liability and a reduction of net retail sales in the period earned by the customer. The current liability is reduced, and a corresponding amount is recognized in net retail sales, in the amount of and at the time of redemption of the reward certificate. At February 1, 2014 and February 2, 2013, the amount recorded in current liabilities for reward certificates issued was inconsequential.

Gift card breakage revenue is recognized to the extent not required to be remitted to jurisdictions as unclaimed property and is based upon historical redemption patterns and represents the balance of gift cards for which we believe the likelihood of redemption by the customer is remote. Based on our analyses of redemption activity, we have determined the likelihood of redemption for gift cards 5 years after the date of initial issuance is remote. For Fiscal 2014, Fiscal 2013 and Fiscal 2012, $0.2 million, $0.3 million and $0.2 million of breakage revenue, respectively, was recorded in net income as other income and is included in the accompanying consolidated statements of operations as a reduction to store operating, selling and administrative expense. The net deferred revenue liability at February 1, 2014 and February 2, 2013 was $4.5 million and $3.9 million, respectively.

Store Opening and Closing Costs

New store opening costs, including pre-opening costs, are charged to expense as incurred. Store opening costs primarily include payroll expenses, training costs and straight-line rent expenses. All pre-opening costs are included in store operating, selling and administrative expenses as a part of operating expenses.

We consider individual store closings to be a normal part of operations and regularly review store performance against expectations. Costs associated with store closings are recognized at the time of closing or when a liability has been incurred.

Impairment of Long-Lived Assets

We continually evaluate whether events and circumstances have occurred that indicate the remaining balance of long-lived assets may be impaired and not recoverable. Our policy is to recognize any impairment loss on long-lived assets as a charge to current income when certain events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment is assessed considering the estimated undiscounted cash flows over the asset's remaining life. If estimated cash flows are insufficient to recover the investment, an impairment loss is recognized based on a comparison of the cost of the asset to fair value less any costs of disposition. Evaluation of asset impairment requires significant judgment and estimates.

Insurance Accrual

We are self-insured for a significant portion of our health insurance. Liabilities associated with the risks that are retained by us are estimated, in part, by considering our historical claims experience. The estimated accruals for these liabilities could be affected if future occurrences and claims differ from our assumptions. To minimize our potential exposure, we carry stop-loss insurance that reimburses us for losses over $0.2 million per covered person per year, limited to a lifetime maximum reimbursement of $2.0 million per covered person. As of February 1, 2014 and February 2, 2013, the accrual for these liabilities was $0.8 million and $0.7 million, respectively, and was included in accrued expenses in the consolidated balance sheets.

We are also self-insured for our workers' compensation, property and general liability insurance up to an established deductible with a cumulative stop-loss on workers' compensation. As of February 1, 2014 and February 2, 2013, the accrual for these liabilities (which is not discounted) was $0.3 million and $0.2 million, respectively, and was included in accrued expenses in the consolidated balance sheets.

Sales Returns

Net sales returns were $30.5 million for Fiscal 2014, $28.8 million for Fiscal 2013 and $25.7 million for Fiscal 2012. The accrual for the effect of estimated returns was $0.4 million as of February 1, 2014 and February 2, 2013, and was included in accrued expenses in the consolidated balance sheets. Determination of the accrual for estimated returns requires significant judgment and estimates.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

We continuously monitor and review all current accounting pronouncements and standards from the Financial Accounting Standards Board (FASB) and other authoritative sources of U.S. GAAP for applicability to our operations.

Proposed Amendments to Current Accounting Standards. The FASB is currently working on amendments to existing accounting standards governing a number of areas including, but not limited to, accounting for leases. In August 2010, the FASB issued an exposure draft, Leases, which would replace the existing guidance in ASC Topic 840, Leases. When and if effective, this proposed standard will likely have a significant impact on our consolidated financial statements. However, as the standard-setting process is still ongoing, we are unable to determine the impact this proposed change in accounting will have on the consolidated financial statements at this time.

NOTE 3. STOCK-BASED COMPENSATION

At February 1, 2014, we had four stock-based compensation plans:

(a)

The Amended 2005 Equity Incentive Plan (EIP) provides that the Board of Directors may grant equity awards to certain employees of the Company at its discretion. The EIP was adopted effective July 1, 2005 and authorizes grants of equity awards of up to 1,983,159 authorized but unissued shares of common stock. At February 1, 2014, there were 651,869 shares available for grant under the EIP.

(b)

The Amended 2005 Employee Stock Purchase Plan (ESPP) allows for qualified employees to participate in the purchase of up to 204,794 shares of our common stock at a price equal to 85% of the lower of the closing price at the beginning or end of each quarterly stock purchase period. The ESPP was adopted effective July 1, 2005. At February 1, 2014, there were 77,253 shares available for purchase under the ESPP.

(c)

The Amended 2005 Director Deferred Compensation Plan (Deferred Plan) allows non-employee directors an election to defer all or a portion of their fees into stock units or stock options. The Deferred Plan was adopted effective July 1, 2005 and authorizes grants of stock up to 112,500 authorized but unissued shares of common stock. At February 1, 2014, there were 48,675 shares available for grant under the Deferred Plan.

(d)

The 2012 Non-Employee Director Equity Plan (DEP) provides for grants of equity awards to non-employee directors. The DEP was adopted effective May 24, 2012 and authorizes grants of equity awards of up to 500,000 authorized but unissued shares of common stock. At February 1, 2014, there were 473,235 shares available for grant under the DEP.

Our plans allow for a variety of equity awards including stock options, restricted stock awards, stock appreciation rights and performance awards. As of February 1, 2014, we had only granted awards in the form of stock options, restricted stock units (RSUs) and performance-based units (PSUs) to our employees. The annual grant made for Fiscal 2014, Fiscal 2013 and Fiscal 2012 to employees consisted solely of RSUs. We have also awarded PSUs to our Named Executive Officers (NEOs) and expect the Compensation Committee of the Board will continue to grant PSUs to our NEOs in the future.

As of February 1, 2014, we had only granted awards in the form of stock, stock options and deferred stock units (DSUs) to our Board members. Under the DEP, Board members currently receive an annual value of $75,000 worth of equity in the form of stock options or restricted stock units upon election to the Board and a value of $100,000 worth of equity in any form allowed within the DEP, for each full year of service, pro-rated for Directors who serve less than one full year. The Chairman of the Board, Mr. Newsome, will receive an annual value of $150,000 worth of equity in any form he chooses allowed within the DEP beginning in Fiscal 2015.

The terms and vesting schedules for stock-based awards vary by type of grant and generally vest upon time-based conditions. Under the DEP, Directors have the option with certain equity forms to set vest dates. Upon exercise, stock-based compensation awards are settled with authorized but unissued company stock. All of our awards are classified as equity awards.

The compensation cost for these plans was as follows (in thousands):

	Fiscal Year Ended
	February 1, 2014		February 2, 2013		January 28, 2012
Stock-based compensation expense by type:
Stock options	$	358	$	805	$	460
Restricted stock units		5,250		4,715		4,857
Employee stock purchases		100		93		76
Director deferred compensation		130		36		60
Total stock-based compensation expense		5,838		5,649		5,453
Income tax benefit recognized		2,154		2,082		1,987
Stock-based compensation expense, net of income tax	$	3,684	$	3,567	$	3,466

Stock-based and deferred stock compensation expenses are included in store operating, selling and administrative expenses. There is no capitalized stock-based compensation cost.

The income tax benefit recognized in our consolidated financial statements, as disclosed above, is based on the amount of compensation expense recorded for book purposes. The actual income tax benefit realized in our income tax return is based on the intrinsic value, or the excess of the market value over the exercise or purchase price, of stock options exercised and restricted stock unit awards vested during the period. The actual income tax benefit realized for the deductions considered on our income tax returns for Fiscal 2014, Fiscal 2013 and Fiscal 2012 was from option exercises and restricted stock unit releases and totaled $6.5 million, $5.9 million and $3.2 million, respectively.

Stock Options

Stock options are granted with an exercise price equal to the closing market price of our common stock on the date of grant. Vesting and expiration provisions vary between equity plans, but options granted awarded to employees under the EIP typically vest over a four or five-year period in equal installments beginning on the first anniversary of the grant date and typically expire on the eighth or tenth anniversary of the date of grant. Grants awarded to outside directors under the DEP and Deferred Plan vest immediately upon grant and expire on the tenth anniversary of the date of grant.

Following is the weighted average fair value of each option granted during Fiscal 2014. The fair value was estimated on the date of grant using the Black-Scholes pricing model with the following weighted average assumptions for each period:

	Quarter Ended
	May 4, 2013				August 3, 2013		November 2, 2013		February 1, 2014
Grant date		Mar 19	Mar 31		Jun 30		Sep 30		Dec 31
Exercise price	$	54.06	$	56.27	$	55.57	$	56.11	$	67.15
Weighted average fair value at date of grant	$	17.50	$	17.98	$	17.40	$	21.51	$	26.10
Expected option life (years)		4.71		4.71		4.71		5.18		5.18
Expected volatility		36.96%		36.47%		34.38%		41.03%		40.95%
Risk-free interest rate		0.74%		0.72%		1.31%		1.43%		1.79%
Dividend yield		None		None		None		None		None

We calculate the expected term for our stock options based on the historical exercise behavior of our participants. Historically, an increase in our stock price has led to a pattern of earlier exercise by participants. Grants made to our Directors have a contractual term of 10 years, while grants made to our employees have a contractual term of 8 years. We have not awarded a stock option grant to employees since 2009. With the absence of option grants to employees, we anticipate the expected term will remain relatively stable.

The volatility used to value stock options is based on historical volatility. We calculate historical volatility using an average calculation methodology based on daily price intervals as measured over the expected term of the option. We have consistently applied this methodology since our adoption of the original disclosure provisions of ASC Topic 718, Stock Compensation.

In accordance with ASC Topic 718, we base the risk-free interest rate on the annual continuously compounded risk-free rate with a term equal to the option's expected term. The dividend yield is assumed to be zero since we have no current plan to declare dividends.

Activity for our option plans during Fiscal 2014 was as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value ($000's)
Options outstanding at February 2, 2013	342,173	$	27.34		5.29	$	8,875
Granted	19,928		54.74
Exercised	(118,075)		22.34
Forfeited, cancelled or expired	-		-