Hibbett Sports (NASDAQ:HIBB) presented at CIBC World Markets' Consumer Growth Conference last week. CEO Mickey Newsome and CFO Gary Smith both spoke, and the themes were familiar to those who have been following Hibbett for some time.

Oldies but goodies
Hibbett operates 620 stores in 23 states, primarily in small markets across the southeastern region of the United States. The management team reiterated the advantages of operating in these areas. It may not be a new story, but it is not a boring one (unless you find making money boring).

To use their words, it chooses these areas based on need. Landlords need Hibbett stores, especially in locations where it is often the only sporting goods store in the area. This allows it to get better lease terms -- better rents, easier-to-break leases, good things like that. Vendors need Hibbett Sports, since it is often the only retailer that carries their high-end goods in that particular market (for example, Nike (NYSE:NKE) and its Shox shoes). Consumers, of course, need Hibbett Stores because it offers merchandise that's not readily available in their areas.

This is a great story. The company knows its markets very well, keeping its competitors, such as Dick's Sporting Goods (NYSE:DKS), at bay. For instance, its knowledge of its local markets allows it to concentrate on team sports. It is able to offer high-end products that its customers demand, such as $50 baseball gloves. Merchandise is tailored to the individual region. Knowledge is indeed power. (You get a little bit of everything at the Fool, even a little philosophy.)

Wal-Mart: friend, not a foe
Unlike many stores that just abhor having a Wal-Mart (NYSE:WMT) nearby, Hibbett actually benefits. Hibbett sells high-end products, while Wal-Mart focuses more on the low end. But since Hibbett often shares the same shopping center with the behemoth retailer, it helps drive the traffic. It makes sense, since in these small towns, very often there is only one centralized place to shop.

Of course, being high-end, it emphasizes customer service. This also differentiates it from not only Wal-Mart, but also its competitors. Hibbett puts time and money into customer service with its Hibbett Universities, where 15 to 20 managers per month go for training. HU -- what a great addition to anyone's resume.

As one would expect, given its emphasis on the high end and lack of competition, Hibbett's operating margins are also high. According to the company, they're the highest in the industry, growing to 12.1% last year from around 8% a couple of years ago. In comparison, Dick's Sporting Goods' operating margin was 7.1% in its latest year, and Big 5 Sporting Goods' (NASDAQ:BGFV) was 6.8%.

Growing, growing ... not gone!
Hibbett is seeking to open an additional 400 stores. Although this may seem aggressive, it has added approximately the same number over the past five years. To back up these plans, Gary Smith cited the tremendous population growth the Sun Belt has seen; the area's residents increased by 29% from 1990 to 2005, while the Snow Belt grew 7% in the same time period. From 2000 to 2030, the sunny southern states are expected to grow 35%, while the frigid north is expected to see its population increase at just a 9% rate. Second, management cites the Wal-Mart or Super Wal-Mart stores that don't have a Hibbett store nearby.

It plans on increasing its store base by about 15% per year, which would equate to about 90 additional stores this year. Stores are generally within a two-hour drive of each other. The company knows the market and can buy merchandise for each region, so in different markets, there will be different merchandise. There is no one-size-fits-all.

Historically, the investment in a new store pays for itself by the second year. However, if a store is not performing up to par, Hibbett can easily close it, since it negotiates favorable lease terms.

Can Hibbett Sports improve your game (or portfolio)?
Hibbett appears to be doing things right. It has stores in markets it knows well, and will expand with that in mind. Same-store sales have been rising at about a 5% clip over the past few years, and management expects this to continue. This is faster than the industry average, which is in the low single digits.

Its balance sheet is strong, with no debt, and its credit line unused. Despite investing in IT and increasing its store base, it still generates enough cash to buy back shares, repurchasing more than $100 million worth in the first quarter alone.

At almost 25 times trailing earnings, the stock isn't cheap. But, as with its merchandise, you must pay to play.

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Fool contributor Larry Rothman is happy to receive feedback, and promises to read it when not being wrestled by his three children. He doesn't have any positions in the companies mentioned. The Fool's disclosure policy left Japan to sign with the Red Sox this season.