Hibbett Sports Inc (HIBB) Q4 2021 Earnings Call Transcript

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Hibbett Sports Inc (HIBB)
Q4 2021 Earnings Call
Mar 5, 2021, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to Hibbett Sports Fourth Quarter and Year-End 2021 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Friday, March 5th, 2021. I would now like to turn the conference over to Mr. Jason Freuchtel, Director of Finance and Investor Relations. Please go ahead.

Jason Freuchtel -- Director of Finance and Investor Relations

Good morning. Please note that we have prepared a slide deck that we will refer to during our prepared remarks. The slide deck is available on hibbett.com via the Investor Relations link found at the bottom of the homepage. These materials may help you follow along with our discussion this morning. Before we begin, I would like to remind everyone that some of management's comments during this conference call are forward-looking statements. These statements, which reflect the company's current views with respect to future events and financial performance are made in reliance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to uncertainties and risks.

It should be noted that the company's future results may differ materially from those anticipated and discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences have been described in the news release issued this morning, in the company's annual report on Form 10-K, the most recent quarterly report on Form 10-Q, and in other filings with the Securities and Exchange Commission. We refer you to those sources for more information. Also to the extent non-GAAP financial measures are discussed on this call, you may find a reconciliation to the most directly comparable GAAP measures on our website.

Lastly, I would like to point out that management's remarks during the conference call are based on information and understandings believed accurate as of today's date, March 5th, 2021. Because of the time-sensitive nature of this information, it is the policy of Hibbett Sports to limit the archived replay of this conference call webcast to a period of 30 days. The participants on this call are Mike Longo, President and Chief Executive Officer; Bob Volke, Chief Financial Officer; Jared Briskin, Senior Vice President and Chief Merchant; Bill Quinn, Senior Vice President of Marketing and Digital; and Ben Knighten, Senior Vice President of Operations. I will now turn the call over to Mike Longo [Phonetic].

Michael E. Longo -- Chief Executive Officer and President

Good morning. Thanks, Jason. Good morning to everyone and welcome to the Hibbett Sports Q4 earnings call and if you're following along using the slide deck, I'm on the third slide titled Introduction. This quarter was a terrific outcome from a financial perspective for the company and as you saw in the press release, we reported a 22% sales comp. Our brick and mortar comp was almost 18% and e-commerce was almost 45%. This resulted in a non-GAAP operating income of just over $31 million and non-GAAP earnings per share of $1.40.

These results were made possible by the hard work of our 10,000 teammates in the stores, the store support center, and the distribution center. As always, they help lead us through another quarter in a challenging business environment. We're proud to represent our teammates today and wanted to make sure to thank them all for a job well done and as I'm fond of saying and have repeated often, retail is the ultimate team sport and I couldn't have picked a better team to compete with.

Moving along to the fourth slide entitled sales drivers. We wanted to give you some background on the factors that we believe drove sales in Q4 and continue to produce those strong results. As noted previously in earnings calls, we believe the increases in sales were driven by several factors including temporary closures of competitors earlier in the year, accelerating consumer adoption of e-commerce, rotation of spending from travel, leisure, and entertainment, and a boost from fiscal stimulus that gave consumers both new and existing even more reasons to shop with us and this manifested itself by driving traffic to the stores and to our website and yielded what we believe to be increased market share and higher sales.

This gave us an opportunity to attract and retain many new consumers and drove higher sales volumes. In fact, our data shows that we've done a good job retaining these new consumers so far. We also believe that we have tailwinds in the future. In Q3, we began to see the effects of the closure of J. C. Penney's and Stage Stores. We believe this presents an upside opportunities for us in both fashion and athletic categories. Additionally, we see what we believe is continued consumer adoption of the omnichannel experience. This plays to our strength with our best-in-class omnichannel experience coupled with a great consumer experience in the stores.

And finally, we believe that many of the new consumers we attracted last quarter and continue to attract will continue to shop with us in the future. In total, we believe these changes in the competitive landscape and changes to consumer behavior will result in a $20 million to $40 million incremental sales opportunity for Hibbett. For this and for a few other reasons, we are very confident in our future, but before we go into the future any further, I'm going to ask Jared Briskin to provide some detail about our merchandising performance, Jared?

Jared S. Briskin -- Senior Vice President and Chief Merchant

Yeah, good morning. Thanks, Mike. If you will, please turn to the fifth slide titled merchandising. Our strong comp sales performance was driven by apparel and footwear with significant gains across all genders. Team sports continues to be impacted by COVID-19 and was down in the high teens. Our toe-to-head merchandising strategy and consumer focus led to increases in average retail items per sale. As a result, we saw significant year-over-year dollar per transaction growth.

While increased demand and supply chain challenges continue to impact our inventory ownership, our merchants did an incredible job securing and flowing in-demand merchandise into our assortment. Apparel business was up in the high-30s. All apparel categories including branded apparel, fashion apparel, licensed and accessories were positive. All genders were significantly positive. From the athletic brands, we continue to see strong demand for athleisure, loungewear, and performance product as we capitalize on the casual and wellness trends.

Multiple fabrications, fits and patterns, and fleece tops and bottoms were exceptional during the quarter and drove our growth. We also saw strong results in outerwear tees and shorts. Our fashion brand performance continued to be exceptional. Denim and fleece were the stand out performers for the quarter. Our partners in this area are very nimble and we've been able to flow inventory to take advantage of the increased demand. License business continued its recent strong performance as our strategy of investment and toe-to-head connected merchandise was the growth driver for us offsetting declines in the traditional fan business.

Accessory business also remained very strong with socks, underwear, and sneaker accessories all significant gainers during the quarter. Footwear business was up in the low-20s. This increase was driven by gains across lifestyle, basketball, performance sandals and boots. All genders were significantly positive with women's growth outpacing men's and kids. While marketplace inventory in the supply chain remains a significant challenge, our merchants and vendor partners were able to deliver a strong flow of product.

Lifestyle and basketball were the standout categories in the quarter with classic footwear performing exceptionally well. Basketball business remained very strong with an exciting and robust launch calendar. Casual categories such as boots and sandals continued to perform exceptionally well as demand in these categories continues to be strong and supply remains very limited. Lastly, we continue to see strong results in technical running as health and wellness remain a key marketplace trend. Specific to footwear and apparel, our women's business was our fastest growing area with comp sales gains in the high-40s.

Men's grew in the mid-20s and kids grew in the low-teens. Inventory at the end of the quarter remained significantly down. Increased demand and supply chain disruption continued to put pressure on our inventory. Age levels at the end of the quarter are at historical lows. As we move throughout this fiscal year, year-over-year inventory compares will be very inconsistent due to the prior year disruption. Our expectation is inventory decrease will moderate during Q1 and will be positive at the end of Q2 with inventory closer to fiscal '20 levels. I will now turn the call over to Bob Volke to provide detail on our financial results.

Robert J. Volke -- Chief Financial Officer

Thanks, Jared and good morning. If you will, please refer to the sixth slide titled fourth quarter fiscal 2021 results. As a reminder, our results include both Hibbett and City Gear and are reported on a combined basis. For the fourth quarter, total net sales increased 20.4% to $376.8 million and consolidated comp sales increased 21.9%. This compares to fourth quarter fiscal 2020 sales of $313 million and a comp sales increase of 4% [Phonetic]. Brick and mortar comp sales remained strong and came in at a 17.7% increase. E-commerce comp sales increased 44.8% in the quarter, representing continued expansion in our omnichannel platform. For the quarter, e-commerce sales accounted for 17.1% of net sales compared to 14.2% in the fourth quarter of last year.

Our GAAP gross margin expanded significantly to 37.1% of net sales compared to 31.5% in the prior year fourth quarter. This approximate 560 basis point improvement was due to higher initial sell-through, a low promotional environment, and leverage of store occupancy expenses. There is a slight offset due to the higher volume of e-commerce sales, which carry a lower margin due to the incremental shipping costs associated with these sales. Our adjusted gross margin of 37.1% in the fourth quarter compared to a non-GAAP gross margin of 31.3% last year. Store operating, selling and administrative expenses excluding depreciation and amortization were 26.8% of net sales in the fourth quarter, which was consistent with the 26.8% reported in the fourth quarter of fiscal 2020.

In terms of dollar spend, employee compensation and benefits, advertising, variable expenses associated with higher sales volume, and asset impairment charges due to the accelerating the closure of poor performing stores were the main drivers of the increase. City Gear acquisition integration expenses were significantly lower in the current year fourth quarter than in the same period last year. Excluding these acquisition and integration costs, adjusted SG&A was 26.7% of net sales in the current quarter compared to adjusted SG&A of 25.3% in the prior year fourth quarter. The increase was primarily driven by asset impairments, higher advertising costs, and expenses associated with increased e-commerce activity.

Depreciation and amortization increased approximately $670,000 reflecting increased capital investments on organic growth opportunities and infrastructure projects. On a GAAP basis, we generated $31 million of operating profit, which compares to last year's operating income of $7.8 million. Excluding all non-GAAP adjustments for the fourth quarter, adjusted operating income was $31.2 million or 8.3% of sales compared to operating income of $11.7 million in the fourth quarter of fiscal 2020.

GAAP earnings per share were $1.39 for this year's fourth quarter and non-GAAP earnings per share were $1.40 driven by strong profitability and a reduction in our inventory balance over the last three months, we generated operating cash flow of $52.5 million during the quarter. We also spent approximately $14 million in capital expenditures, which were largely related to new relocated and remodeled stores. In the prior year fourth quarter, operating cash flows approximately $17.2 million and capital expenditures were $6.3 million.

I'll now have you move forward to the seventh slide titled Full Year Fiscal 2021 Results. On a full year basis, sales increased 19.9% to $1.42 billion from $1.18 billion in fiscal 2020. Comp sales on a full year basis were 22.2% with brick and mortar comp sales expanding 13.3% and e-commerce comp sales growing 89.3%. In fiscal 2021, e-commerce sales represented 16.7% of our total net sales compared to 10.4% last year. Our GAAP gross margin in fiscal 2021 was 35.5% of net sales compared to 32.4% last year driven by the same factors noted previously for the fourth quarter.

Excluding City Gear acquisition integration costs incurred in both years, inventory reserve adjustments in the current year and strategic store alignment costs incurred in the prior year, adjusted gross margin was 35.8% this year compared to 32.4% last year. In fiscal 2021, SG&A expenses excluding depreciation and amortization, but inclusive of goodwill impairment were 26.5% of net sales compared to 26.9% last year. Leverage generated from increased sales revenue was the primary driver of this modest decline. Adjusted SG&A was 23.7% for the most recent year compared to 25.2% for fiscal 2020.

On a GAAP basis, we produced $98.4 million in operating profit for fiscal 2021 compared to last year's operating profit of $36.1 million. Excluding all non-GAAP adjustments in both years, adjusted operating income for the current year was $141.4 million equal to 10% of net sales compared to adjusted operating profit of $55.4 million last year or 4.7% of net sales. GAAP earnings per share for fiscal 2021 were $4.36 for the current year compared to $1.52 for the prior fiscal year and non-GAAP earnings per share were $6.12 this year compared to $2.33 in the prior year.

We generated $197.7 million of operating cash flow in fiscal '21 and spent $34.8 million in capital with a focus on new, relocated, and remodeled stores and other strategic initiatives that we believe will generate incremental sales and profitability opportunities. For fiscal 2020, operating cash flow was $92.3 million and capital expenditures were $17.3 million. Turning to the balance sheet, we ended the year with $209.3 million in cash and cash equivalents versus $66.1 million a year ago and we currently remain debt free. We have $75 million of borrowing capacity available to us, but do not anticipate the need to borrow under our secured credit line based on current cash projections.

Inventory ended the quarter at $202 million, a 29.9% decline from last year's ending balance. The continued strong sales in both the brick and mortar and online channels in addition to ongoing constraints in the supply chain drove the year-over-year decrease. We purchased approximately 150,000 shares during the fourth quarter under our authorized share repurchase plan and we have just over $136 million of remaining authorization through January 29th, 2022 for future share repurchases at management's discretion.

I'll now review our updated fiscal 2022 guidance on the eighth slide titled Future. Our anticipated results for fiscal 2022 are influenced by multiple factors. As Mike mentioned earlier, we have attracted and retained new customers throughout fiscal year 2021 due to pent-up demand, market disruption, and government stimulus payments. Continued consumer adoption of e-commerce will continue to drive growth across our best-in-class omnichannel platform. Our strong vendor relationships and targeted purchases by our merchandising team will allow us to take advantage of the expected resulting increase in business.

Our supply chain and selling initiatives should help drive sales growth as well. While we continue to experience challenges posed by the ongoing COVID-19 pandemic and uncertainty regarding the business environment, further stimulus payments and potential labor and tax legislation, we are confident in our business model and feel we can continue to capitalize on the trends we experienced in fiscal '21. As a result, we are providing this limited GAAP guidance for fiscal '22 in comparison to fiscal '21.

First, we forecast comp sales will range from negative low-single digits to positive low-single digits. Relative to last year, the first quarter should represent the easiest comp and as a reminder, the benefit we expect to experience from the closure of J.C. Penney and Stage Stores will lap during the third quarter. Gross margin performance will face some headwinds as the year progresses and we expect to see a decline of approximately 130 basis points to 170 basis points on a full year basis. We also anticipate that we can generate modest SG&A leverage over the course of the year with the anticipated decline as a percentage of sales ranging from 5 basis points to 45 basis points.

Diluted EPS is forecast to be in the range of $5.00 to $5.50 with an assumption that the effective tax rate will be approximately 25% and the weighted average diluted share count will be approximately 17 million. We do not anticipate the difference between our GAAP results and our non-GAAP results will be material throughout the year. From a capital allocation perspective, we plan to invest $45 million to $50 million on organic growth opportunities that we believe will lead to incremental sales and profitability and also on strategic infrastructure projects that will enhance our distribution and back office efficiency.

We believe that these investments will attract new customers, enhance the consumer experience in stores and online, and modernize our technology and processes. In addition to our capital expenditure plans, we intend to opportunistically allocate capital to share repurchases and currently have approximately $136 million remaining under our share repurchase authorization. We will be providing longer-term financial and operational targets and additional insight into our compelling product offerings and customer-centric culture during our first formal Investor Day that will take place on June 24th. We look forward to your attendance at that event. That concludes our prepared remarks. Operator, please open the line for questions.

Questions and Answers:

Operator

[Operator Instructions] And our first question comes from the line of Sam Poser from Susquehanna. Please proceed with your question.

Sam Poser -- Williams Trading -- Analyst

Well, Sam Poser from Williams Trading. Good morning everybody. Thanks for taking my questions. I've got a handful. Number one, can you give us the comps -- can you give us an update of what your comps were by month? Hello?

Robert J. Volke -- Chief Financial Officer

Hey Sam, it's Bob. Yeah, we're not going to get into the details of month-by-month. So next question I guess.

Sam Poser -- Williams Trading -- Analyst

All right, so you talked in your -- in the press release and you mentioned again in prepared regarding your confidence in retaining new customers. Can you talk about how many new customers you have, you've got during the year. What drove that? Any way you can give it to us and what's giving you the confidence that you're going to retain those customers? Have those customers -- those new ones come back and shop with you most of the times, those kinds of things. Can you just help us out there, please.

William G. Quinn -- Senior Vice President of Digital Commerce

Yeah, hey, Sam, this is Bill. So yes, we've continued to see the number of new customers grow during the quarter and during the year. Besides the number of new customers, we've also looked at their behaviors. We look at them on a 60-day mark and 120-day mark and what we're finding is that new customers are shopping more often with us. We also have less one-and-done new customers. So our customers are buying more frequently than they normally do and they are spending more than prior years new customers. So we're very happy with the behavior of new customers that we're seeing.

In terms of our confidence around what we're going to do to keep them, three things. The first one is just really good service both from a store perspective and from an online perspective. From surveying the new customers, we are providing that and will continue to provide that. The other thing is just communicate with them. So we do have all of their information whether it's their text number, phone number or push, email etc we're able to communicate with them instantaneously. And then the last thing is really around rewarding them. So a lot of these new customers are part of our loyalty program and they are rewarded for continuing to shop with us.

Sam Poser -- Williams Trading -- Analyst

And that's actually a great segue. Can you can you talk about how the rewards are working? Could you explain some of the reward levels and what the customers get, your highest however you want to talk about it?

William G. Quinn -- Senior Vice President of Digital Commerce

Yeah, yeah, absolutely. So we've got two levels in our loyalty program. We've got an MVP level and a VIP level and the great thing about this year and the quarters is we've seen more people shift to VIP, which is a larger spending bucket and you get -- you accrue awards at a much greater rate, but the way we start is for every $200 you spend, you get a $10 reward. We're seeing redemption of those awards go up year-over-year. So in terms of all of those operational metrics in the loyalty program, we're seeing very positive results.

Sam Poser -- Williams Trading -- Analyst

Thank you. And then I guess this is for Jared. You talked about the delays -- the shipping delays, some catching up. Can you give us some details on what's going on there and also I guess, in general, can you give us some color, you are up against pretty easy compares in the first quarter. Can you give us -- can anybody give us any color on how we should think about Q1 given that the compares sort of change dramatically after Q1?

Jared S. Briskin -- Senior Vice President and Chief Merchant

Yeah, hey, good morning, Sam. So obviously, we've seen some pressure from a supply chain standpoint without question. Our merchants, our logistics teams, our vendor partners continue to work incredibly hard to get product here. So certainly with the increased demand and the pressure we've had on the supply chain, we've seen some delays. Largely appears to be anywhere from two to three week delays on those products, but very inconsistent. So something we're certainly working through, something we're looking at every day, but we do feel very confident in the pipeline as far as our order book goes, we just need to continue to work to get it delivered.

Sam Poser -- Williams Trading -- Analyst

Thanks.

Jared S. Briskin -- Senior Vice President and Chief Merchant

I guess I'll take the comp question. Obviously, we said that Q1 is our easiest compare. We came off last year with close to a minus 20% [Phonetic]. So we certainly would expect that Q1 will come in fairly strong, but over the course of the year, it's pretty difficult to predict the ups and downs from period-to-period. Again, that's why we've kind of given the full year guidance, which is, you know, low-negative single digits to low-high single or low-positive single digits. Again, I think we'll say after Q1 it's going to be really difficult to predict, but we would expect that over the course of the year, it will kind of normalize into that range.

Sam Poser -- Williams Trading -- Analyst

I understand that, but how should we think about the first quarter, I guess, I mean that's the question. How should we think about that given the compare for -- the rest of the year I understand, but I mean I'm really talking about the first quarter by itself. I mean, are we looking at sort of I mean given the compare and everything else, I mean -- I mean you're planning on beating -- I would assume you're planning on beating fiscal '19 or fiscal '20 levels, excuse me, from a pure revenue perspective and then given the current trends and everything else, I mean should we just think of this as sort of somewhere in between what Q2 was and what Q3 and Q4 were as far as the comp anyway?

Robert J. Volke -- Chief Financial Officer

Hey, Sam, this is Bob, you know, we love the question. We're very comfortable with the full year guidance. You have pointed out and we agree that first quarter is the easiest compare, it was a negative 20% [Phonetic]. So I think that's about as comfortable as we're going to get and about as far as we'll go in terms of guidance.

Sam Poser -- Williams Trading -- Analyst

All right, thank you guys very much and continued success.

Robert J. Volke -- Chief Financial Officer

Thank you.

Operator

Our next question comes from Alex Perry with Bank of America. Please proceed with your question.

Alex Perry -- Bank of America -- Analyst

Hi, thanks for taking my question and congrats on a great quarter. Just a two-part question and I guess a little bit of a follow-up maybe asked in a little different way. Can you talk through how you're thinking about the delays you're probably seeing in the tax refund dollars, the potential for additional stimulus and then can you just remind us the stimulus is not included in the current guidance, right? And then just a follow-up on the inventory levels. Have you seen that improve at all in recent weeks and how do you feel about the flow especially with potential stimulus hitting and then could we see some sort of pent-up demand effect once the inventory normalizes given there's been some shortages in the channel?

Benjamin A. Knighten -- Senior Vice President of Operations

Hey, Alex, it's Ben Knighten, yeah. I'll take the first part of your question around tax and what that flow is looking like. I think as everyone has seen out there, the IRS has come out and said they're running about two to three weeks behind from processing refunds relative to last year, you know, it's pretty much what we're seeing in the street also now the magnitude and the duration of tax after that, not going to speculate at this point, but we are starting to see a little bit of flow out there right now. So again about a two to three week delay relative to last year.

Jared S. Briskin -- Senior Vice President and Chief Merchant

Hey, Alex. It's Jared I think relative to the second part of your question, we have seen some improvement. It seems to get a little bit better every day, but certainly still a challenge. I would agree and do you feel that as the marketplace does get caught up based off the demand that we're seeing, there could be some pent-up demand for the products that we sell.

Alex Perry -- Bank of America -- Analyst

That's really helpful. And then just my follow-up is, I think in the guidance you said and outlook for labor cost increases is sort of not contemplated. What is sort of your I guess outlets there and like is it possible that the support that a wage increase would provide to the consumer would be able to offset the potential payroll increase?

Michael E. Longo -- Chief Executive Officer and President

This is Mike. Certainly, we're all watching those debates with a great deal of interest. Where it all comes out is anyone's guess so far and I think you know that there are no significant federal minimum wages coming through. We have seen and Ben has spoken to a number of states continue to inch there's up and we handled those in stride. We haven't seen much evidence that would suggest that increases in minimum wage have a follow-through effect on revenue. Again, a great topic to debate with economists, but what we're seeing is it all comes out in the wash eventually.

What we don't know is what would happen if the step change function happened in minimum wage and it moved substantially in a short amount of time. We just don't know what you would imagine we're doing is exactly what we're doing like every other business and every other retailer in the world. We're going to make sure that we're investing judicious amounts of capital into projects that limit our exposure to that risk.

Alex Perry -- Bank of America -- Analyst

That's super helpful and best of luck going forward.

Michael E. Longo -- Chief Executive Officer and President

Thank you.

Operator

Our next question comes from Peter Benedict with Baird. Please proceed.

Peter Benedict -- Baird -- Analyst

Hi guys. So the June investor meeting, it sounds like that you're planning that to be an in-person event, it sounds like, is that right?

Jared S. Briskin -- Senior Vice President and Chief Merchant

It's going to be a virtual event at this point.

Peter Benedict -- Baird -- Analyst

I thought you were going to be the first one on the take with that, but anyway, makes sense. I guess our first question just is around the inventory and Bob, you made some comments on the flow moderating declines in the first quarter. I was a little confused on the second quarter. Are you saying that you think inventory will be flat year-over-year by the second quarter or it will be up versus those depressed levels last year and then how you are thinking about the back half. I apologize if maybe you already went through this, but I just to make sure we have our numbers right on that.

Jared S. Briskin -- Senior Vice President and Chief Merchant

Yeah. Hey, Peter it's Jared. Commentary around the first quarter, we expect it to be up. Second quarter, we expect the inventory to be up as well. The comparison that I referenced was back to two years ago from a normalization perspective.

Peter Benedict -- Baird -- Analyst

Oh OK, you think you [Speech Overlap]

Jared S. Briskin -- Senior Vice President and Chief Merchant

Last year, the inventory levels are very choppy. So we do feel like we'll normalize somewhere closer to two year ago levels as we get through the second quarter.

Peter Benedict -- Baird -- Analyst

Got it. Okay, got it. That's why I asked that. In terms of the higher capex, any way you can you maybe break down that $45 million to $50 million. Maybe some buckets where it's going and then as we think about what's that going to mean for kind of the DNA profile of the business as we think about this year?

Jared S. Briskin -- Senior Vice President and Chief Merchant

I think again our focus is, obviously, mostly on trying to continue to enhance and improve the store experience as well as on our online experience. So I would say we're obviously opening new stores and we've talked about that before low-single or low-double digit doors in each of the two brands. We will continue to kind of touch a lot of the stores when it comes to refresh and remodel. I want to make sure that that's a great experience for the customer that comes into the brick and mortar location. We've got a few other things that we're going to do in the back office and kind of in the distribution side to enhance some of the efficiencies within the process, but again I'd say probably the lion's share of that $45 million to $50 million will be focused on kind of the front of the house so to speak.

Peter Benedict -- Baird -- Analyst

Okay and then maybe one for Mike, just can you talk a little bit about kind of the M&A environment that's out there kind of in your channel there's been some activity just curious and obviously you guys are in great capital position here too. Just how are you thinking about that, what are you seeing different players kind of making moves in the sector. Just kind of curious what your latest thoughts are on that?

Michael E. Longo -- Chief Executive Officer and President

Yeah, it's been an active last quarter for sure. We are in those conversations. We will always look at every strategic alternative. We think it's a good practice. We have vetted many opportunities. I think everyone's seen the two press releases that came out recently. So at least in the traditional environment of M&A, those two are off the board. We'll continue to look at other opportunities as they arise.

Peter Benedict -- Baird -- Analyst

Okay, fair enough. Good luck in the first quarter, guys. Thank you.

Operator

Our next question comes from Jim Chartier with Monness, Crespi & Hardt. Please proceed with your question.

Jim Chartier -- Monness, Crespi & Hardt -- Analyst

Good morning, thanks for taking my questions. First, could you talk about what kind of improvement in performance you're seeing in the stores that have been already updated. And then, Mike, where are you in terms of changing the selling culture and how much more opportunity do you see in that initiative?

Jared S. Briskin -- Senior Vice President and Chief Merchant

Hi, good morning. It's Jared. So I'll start, so obviously two major emphasis projects last year, first being our remodel program and our new store design for the Hibbett brands. So thrilled with those results so far and the increases we've seen from an AB testing perspective. So very happy there. From a refresh perspective, results are very strong. Incredible feedback from our teammates out in the field as well as from customers. So really excited about what those have done and what those have brought. I think, Ben, I think if you want to comment on our sales culture perspective.

Benjamin A. Knighten -- Senior Vice President of Operations

Yeah, Jared, I'd like to say, I think we have the best-in-class team out there in the stores and in-field management and we've really focused over the last year really around two things. One, developing leaders in the field, right and really taking ownership in the stores and at the DSM and RVP levels. And the second piece is salesmanship and really understanding how to satisfy that customer out there and we've put a lot of investment there, a lot of training in there and obviously that's starting to pay off, but we're just tapping into that quite honestly and I think we've got a long runway ahead of us to continue to kind of accelerating the gains that we have available to us there.

Jim Chartier -- Monness, Crespi & Hardt -- Analyst

Great and then the press release mentioned increase in advertising. I guess was the company's historical level of advertising, do you think that was sufficient. Is this year the right level of spend or do you see additional opportunities for incremental advertising investments going forward?

William G. Quinn -- Senior Vice President of Digital Commerce

Yes, hi, this is Bill. I'll take that question. In Q4, we took the opportunity to make some incremental investments twofold. The first one was to acquire more customers. So we did some customer acquisition efforts, particularly around our mobile app that we're very pleased with the results of. Also in certain local markets, there were displaced customers because of market interruptions, competitive closures etc. So we took an opportunity to test acquisition programs in those local markets. So we spent more money in Q4 as a result of those two things.

From a marketing investment standpoint, digital in particular social continues to be a very large investment for us and one that has very good returns. We're also going to continue to invest in our loyalty program. So we have a lot of plans around that. And then lastly we're going to invest in local engagement and that comes in the form of local social media as well as partnering with local schools and our Soul School program.

Jim Chartier -- Monness, Crespi & Hardt -- Analyst

Great. And then in terms of the comp performance, the apparel outperformed the rest of the business and I believe you said that the $20 million or $40 million incremental sales opportunity from competitor close-ups was primarily in the apparel category. Is that the primary driver of the outperformance there or is there something else going on?

Michael E. Longo -- Chief Executive Officer and President

Yeah, I mean, our apparel business was excellent for the quarter. Certainly we saw where we had some of that opportunity with regard to closures, it impacted the business overall. It is absolutely a little higher penetrated in the apparel categories, which is what we expected, but our apparel business was quite robust outside of those markets as well. So we're very pleased with our strategy around being very focused on our consumer ensuring that our product tied back to our sneaker business and that paid pretty handsomely for us with regard to apparel.

Jim Chartier -- Monness, Crespi & Hardt -- Analyst

Great. Thank you.

Operator

[Operator Instructions] And our next question is a follow-up question from Sam Poser with Williams Trading. Please proceed.

Sam Poser -- Williams Trading -- Analyst

Thanks. I just -- thank you for taking my follow-up. Was there, can you tell us any kind of difference between your mall-based stores and your off-mall stores. So if you saw any kind of -- what kind of differential you saw from the comps there?

Michael E. Longo -- Chief Executive Officer and President

Yeah, thanks Sam, this is Mike. We're having very good performance in both mall-based stores as well as strip-based stores. I would characterize it as the strips doing slightly better.

Sam Poser -- Williams Trading -- Analyst

And then -- thank you. And then with that -- this applies for Jared. Are you -- how much has there been a change in sort of the multiple sales involving both footwear and apparel. I mean how success -- as part of the overall success that you're going head-to-toe or toe-to-head more often than you did a year ago and how did that work out, if I'm correct, how did that work out and so on.

Jared S. Briskin -- Senior Vice President and Chief Merchant

Yeah, hi, thanks, Sam. So yeah, I mean, we're seeing some pretty incredible results in the strategy, I mean our measurement of the strategy certainly comes from items per sale and what we're selling from a unit perspective in the basket. So we're seeing very strong connectivity within apparel, very strong connectivity with apparel and accessories and then strong connectivity with the full tied back to sneakers. So I think a lot of work being done certainly with our assortments and the way we're positioning those, but I also think from a consumer perspective around our sales culture and the way we're making that come to life both from a digital perspective as well in the stores. So I think I'd like to open up for Ben to kind of comment because I do believe it's a direct result of the improvements we're making within our sales culture out in the stores and a result of what Bill and team are doing from a marketing perspective.

Benjamin A. Knighten -- Senior Vice President of Operations

Yeah, I think what Jared said is absolutely right. It's that connectivity between the omnichannel shopper, then online shopper in digital, the buy that we're making in Jared's team and then connectivity all the way down in the store level and the training that we're doing, it's really tied to that strategy from the buy all the way down to how it's presented in stores and how it's approached and presented to the customer and so it's that key between all three of those that we think is really helpful and that's been our focus.

William G. Quinn -- Senior Vice President of Digital Commerce

Yeah and [Speech Overlap] this is Bill, just talking about the digital real quick, but we've built tens of thousands of outfits that we have displayed on our website. So that's part of the toe-to-head strategy. And then on top of that from a marketing perspective if someone buys a sneaker in the store or online, we're going to send them an email as well as other communications with a suggested outfit. So we're tying that through from a digital and from an in-store perspective.

Sam Poser -- Williams Trading -- Analyst

Thank you and then lastly, just to clarify, the $20 million to $40 million incremental revenue from the closures that you talked about is a fiscal '22 opportunity. You benefited from that in this past year, but you feel there's $20 million to $40 million within the guidance that you provided for fiscal '22. Is that correct?

Jared S. Briskin -- Senior Vice President and Chief Merchant

Yeah, thanks for the clarification. We have said $20 million to $40 million. We began to talk about that in Q3 of last year. The effects of it really began toward the end of Q3. I would say that it's effect on Q4 was relatively minimal. So we're sticking with that $20 million to $40 million throughout fiscal year '22. We feel pretty confident in that rolling forward in this fiscal year.

Sam Poser -- Williams Trading -- Analyst

But more leaning toward the first half, I assume just based on when it started?

Jared S. Briskin -- Senior Vice President and Chief Merchant

Yeah, it would be more of a first three-quarter effect than the last quarter for sure.

Sam Poser -- Williams Trading -- Analyst

Great, thanks very much and again continued success.

Operator

Mr. Longo, there are no further questions at this time. I'll turn the call back to you for closing remarks.

Michael E. Longo -- Chief Executive Officer and President

Well, thank you so much for everyone's participation today. Again, we're incredibly proud of what the team has accomplished and we look forward to the next call. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Jason Freuchtel -- Director of Finance and Investor Relations

Michael E. Longo -- Chief Executive Officer and President

Jared S. Briskin -- Senior Vice President and Chief Merchant

Robert J. Volke -- Chief Financial Officer

William G. Quinn -- Senior Vice President of Digital Commerce

Benjamin A. Knighten -- Senior Vice President of Operations

Sam Poser -- Williams Trading -- Analyst

Alex Perry -- Bank of America -- Analyst

Peter Benedict -- Baird -- Analyst

Jim Chartier -- Monness, Crespi & Hardt -- Analyst

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