Michael J. Newsome - Chairman of the Board, Chief Executive Officer Gary A.

Smith – Vice President, Chief Financial Officer Jeffry O. Rosenthal – President, Chief Operating Officer

Chris Svezia - Susquehanna Financial Group Dan Wewer - Raymond James & Associates Sam Poser - Sterne, Agee & Leach Rick Nelson - Stephens, Inc. Anthony Lebiedzinski – Sidoti & Co.

Reed Anderson - D.A. Davidson & Co.

Mitchell Kaiser - Piper Jaffray Elizabeth Montgomery – Longbow Capital Partners Jeff Mintz - Wedbush Morgan Securities, Inc. John [Purdy] – Principle Global Investors Jim Chartier – Moness, Crespi, Hart & Co.

Sean McGowan - Needham & Company

This is Mickey Newsome and I have with me Jeff Rosenthal, our President and Chief Operating Officer and Gary Smith, our VP and Chief Financial Officer. We appreciate you being on the call today and we appreciate your interest in Hibbett Sporting Goods.

Before we start, Gary Smith will cover the Safe Harbor language.

In order for us to take advantage of Safe Harbor rules, I would like to remind you that any projections or statements made today reflect our current views with respect to future events and our financial performance. There is no assurance that such events will occur or that any projections will be achieved.

Our actual results could differ materially from any projections due to various risk factors which are described from time-to-time in our periodic reports with the SEC.

Thank you Gary. As you know from our press release late yesterday, our fourth quarter earnings per share were $0.26 compared to $0.25 one year ago.

Also, we improved our cash position year-over-year. We ended the year with $24.7 million in cash and no debt.

Overall sales for the quarter increased 3.6% and same store sales decreased 2.8%. November was negative 2.6%.

December was negative 2.6%. January was negative 3.8%.

But January actually was stronger than was indicated. We had 350 days of closed stores due to the snow and ice in Kentucky and surrounding states.

Without that we feel January would have probably been a little bit better than November and December. The number of items per transaction were positive 1.2% and the average selling price of an item was up 2.3%.

Both of these indicate a little less traffic in our stores in the fourth quarter. Now I am happy to report first quarter sales have greatly improved through yesterday.

We are positive high single digits through yesterday. We are encouraged but cautious with these results.

There is lots of uncertainty in front of us and in front of the economy in general. The first quarter feels good to us obviously.

The second quarter could be more of a challenge because we have a 5% comp store sales in the second last year and we had the stimulus checks in the second quarter last year and those were very meaningful to our consumer. We do feel good about the third and fourth quarter but we are cautious because you never know what is out there in the future.

Now why have sales greatly improved in the first quarter? Number one, we have improved as a company at Hibbett Sporting Goods.

It is all about systems, systems, systems. We are in stock more with the right product in the right stores in the right quantity relative to last year.

Number two, our stores are selling each customer more items versus last year. Our items per transaction are up.

Number three, our merchant selection of the right merchandise has been great. We are really on target.

We are getting better vendor support as we grow. Vendors know we have cash on our balance sheet and that we are not a credit risk.

That is resulting in more of the best and most effective merchandise. In real estate last year we opened 69 new stores and closed 12.

Many of the 12 closures were in closed malls. This year we expect to open 65 to 70 new stores with 15 to 20 closures net of reloc’s.

We expect to open 40-50 new stores net of closures. Real estate is very uncertain in these times.

We are having fall outs from the landlord side. We are going to be conservative with our projections on new stores.

Most new stores will be in strip centers and not enclosed malls. We will do more relocations and expansions of our over performing stores this year.

We will probably to 10-12 of each of those. When the current economy improves we will grow our new stores faster.

There is no shortage of small markets that need us. Now Gary Smith will speak to you about our financials.

Fourth quarter sales were $147.9 million, a 3.6% increase from the previous year. Comps were down 2.8%.

Gross profit increased 260 basis points due to improvements in mark downs, inventory shrinkage and inbound freight. Also we levered occupancy and warehouse costs.

Store occupancy cost is down mid single digits on a per store basis year-over-year due to more stores in favorable percentage rent and distribution costs in the fourth quarter were less dollars than the previous year. Selling and admin costs increased 138 basis points over the prior year due to increases in incentive compensation and the de-leveraging of store payroll.

Operating income was $12.7 million and 8.6% versus last year’s $11.8 million and 8.2%. Diluted earnings per share came in at $0.26 versus last year’s $0.25.

From a balance sheet perspective the company ended the quarter with $20 million in cash and zero short-term debt. Total inventories increased 7.3% over the previous year but decreased 1% on a store-by-store basis and 3% on a comp store basis.

Aged inventory as a percent of total inventory improved slightly year-over-year. We spent $13.4 million in CapEx for the year versus the $24 million budget.

We did not buy any stock back in the quarter but year-to-date we have repurchased approximately one million shares at $16.9 million and that was in the first quarter.

Thank you Gary. Now Jeff Rosenthal, our President and Chief Operating Officer will speak with you.

Our strip centers out performed enclosed malls. We have approximately 73% of our stores now in strip centers.

Our non-urban stores out performed our urban centers. The three major areas of business, apparel, footwear and equipment, apparel is broken into two areas of business; branded and license.

License was very disappointing, down double digits. However, top performing areas in license were mixed martial arts which was mostly Tap Out and MLB hats by New Era.

Branded apparel was off low single digits. Fashion urban apparel was off double digits.

However, athletic apparel led by Nike, Under Armour and North Face were up high single digits. Youth apparel, both boy’s and girl’s were up low to mid single digits.

Branded accessories and footwear accessories were up mid double digits. Footwear was up low single digits led by kid’s and men’s lifestyle products.

Women’s was off double digits. Key performers were Nike Shox, Air Force One’s and Jordan’s, Under Armour Training, ASICS technical running shoes, DC Footwear.

Equipment was off double digits. However, we are a much improved company going into this year.

Our results in the first six weeks have greatly improved. Strip centers are still out performing malls.

Highlight footwear is up double digits and women’s are comping positive. Apparel is up in the single digits.

Equipment is just slightly off, a much improved performance and we have less inventory. Inventory is in much better shape versus last year and the mix of product that we are carrying over.

E3, our new replenishment system, is a major factor in sales and inventory turns. Our marketing efforts with our MVP program and our visual presentations with Nike and Under Armour are greatly improved.

Our items per transaction and our excellent customer service will continue to improve for this year.

Thank you Jeff. Operator we are ready for questions.

When I look at your guidance and your thoughts here, could you just maybe talk about how much is a function of systems and merchandise planning versus the external environment? Obviously it seems like footwear is doing very well here early in the first quarter but maybe you can just talk about how much of your inventory is on E3 replenishment and kind of where you see that going throughout the year?

We have approximately 20% of our inventory on replenishment. We would like to grow it up over the 30% range at some point.

We are very excited, all of the buyers are anxious to put more and more on E3. Really this is something we think we are just beginning to get some of the fruit from, putting in the new system.

We have seen numerous occasions that we are doing a lot more business and have less stock out’s with less inventory. So we feel very positive about this and I think a lot of this there is a lot of low hanging fruit that we really didn’t realize until we have really gotten into having all these system upgrades.

What is on it right now? When you talk about 30% when do you anticipate getting that 30%?

Is that possibly by back to school? What is on it right now?

I think you had accessories on it. Maybe give some color on what is on it right now.

A lot of it is basic items. Most accessories like branded accessories and footwear accessories.

We have a hard goods items like athletic tape and baseballs and those accessories and gloves. We have a lot of apparel on it.

A lot of Under Armour, Nike, compression and shorts and those types of items. We have a little bit of footwear from ASICS and New Balance but we see that growing.

We are trying to get it up as fast as we can. We have a good challenge but the problem is we are just trying to keep up with the forecasts with our vendors and trying to keep that going.

Gary, when you look at your guidance of $1.03 to $1.17 maybe just talk about the inputs into getting there. When you look at the bottom of this it is kind of a worst case scenario.

What kind of comp are you talking about? When you get to the higher end what kind of comps are you assuming in those numbers?

Mr. Newsome mentioned that the second quarter is going to be a challenge for us because of the stimulus checks.

That could be worth a couple million dollars. We think worst case scenario would be zero the rest of the way out and put us at the bottom end.

If we had a 2-3 we would be at the top end or maybe a little bit higher.

You mentioned you leveraged occupancy and distribution center costs seem to be coming down. How easy is it now given everything you are doing from a rent perspective to start leveraging the occupancy piece when you talk about a flat comp?

It would seem to be a slight positive. What do you need now to do that?

We leveraged occupancy and warehouse last year on a 0.5 basically a flat comp. We have approximately 15% of our stores in a favorable percentage rent factor.

We expect that to increase as we go through the year as more centers are in co-tenancy violations. So we would think that we could probably manage to lever both of those line items with just a flat to slightly positive comp.

The first question I had was trying to understand how the shift in Easter impacts your business. With Easter earlier a year ago I am assuming you ran some Easter promotions probably this time a year ago?

Yes, some of that will shift a little bit into April.

So just to make sure I understand we are running at high single digits even though you are probably at a disadvantage in terms of the promotional calendar a year ago?

You really start hitting that I believe next week when we go really against Easter. The next couple of weeks it is going to be up and down a little bit just because of the shift.

Gary, on the balance sheet it looks like your net property and equipment was lower than a year ago. Does that just reflect that you depreciated a significant amount of assets at a faster rate than what you are growing?

We took some impairment charges and expedited our depreciation. It had a little bit of effect in the fourth quarter but we are in pretty good shape.

Did you run those through in the fourth quarter or was that in a prior quarter?

We ran a few more through in the fourth quarter than we normally did but we do it on a quarter-by-quarter basis. We look at those stores that are not contributing and have a negative discounted cash flow.

So that went through the income statement? Or was it just a balance sheet adjustment?

It went through the income statement.

How much was that?

It was probably $600,000 to $700,000 in that line in the fourth quarter. Maybe $1 million for the year or so.

That would be before or after tax?

Before tax.

Jeff, given that business is a lot stronger now than what you were probably expecting two months ago how does this increased demand impact your purchasing plans?

We are still going to be very cautious. One of the strategies for this year is to really get inventory turn.

There is a lot of product out there to get if we need it but we are going to be pretty cautious just because we really don’t know where it is all going.

The inventory levels which look pretty much in line they were a little bit higher than what I expected to see. How much of that was equated to the Under Armour launches right at the end of the year?

It was a little over $1 million.

That was all? Only $1 million of Under Armour footwear for the launch?

A little bit over that.

I know you did the Under Armour shoes a little bit differently than others. What kind of performance are you seeing there right now?

It performed what we expected. Kind of a steady shoe.

It is doing very well.

When we look at the footwear business, you said the footwear business is running up double digits right now quarter to date. What is driving that one right now?

It is really all genders of footwear are running up. We are proportionately really the kid’s and the lifestyle piece running up the most.

What I am excited about is that the women’s for the first time we are starting to see some positive results that we haven’t seen in awhile.

Jeff you mentioned that E3 was running around 20% of your total right now. What percent was it this time last year?

I don’t have that off hand. I would say it would have been about half maybe.

How much can you bring your inventories down? You are opening stores and so on and so forth.

Or is this a matter of sort of keeping a constant and just being much more efficient?

Our average inventory per store will probably be in the $200,000 at cost level so that would probably equate to coming down another 3-4%.

Then the store openings you are planning for fiscal 2010 can you give us some order of when you are planning to open them?

Probably pretty similar to last year. More back end loaded.

We think we may have a few more first quarter because of some of the fall outs but every day we look at the list and some fall off because the landlord or developer wasn’t able to fill it out or get financing. So it is going to be a challenge throughout the year.

We should be looking at 2010 and fiscal 2011 pretty similar with store openings and closings as we see it today?

Probably. If things improve we can probably get a little more aggressive in 2011 but right now you would have to say you are right.

You sound somewhat confident about Q3 and Q4. Besides the comparison with store closures and what not, what other reasons…what are you seeing out there that is giving you that confidence?

I think we are just a much better improved company. I think the systems piece has really taken us awhile to get going.

With E3 we will build history which will increase our sales so we see a lot of opportunity there. I just think we are a lot more focused and knowing what we are doing from an allocation standpoint.

I just see that we still have some low hanging fruit out there that we can improve on.

In addition to that we had that $4 gas in the third quarter last year. Hopefully we won’t have that again this year.

How much is Wal-Mart, Wal-Mart came out with some very good comps in February. I don’t know how they are running today in March but with your overlap with your strategy to be in or adjacent to the Wal-Mart centers how much do you think that has helped you for traffic in the so far quarter to date?

I think it has helped because our strip centers are out performing our enclosed malls and most of our strip centers are in Wal-Mart influenced centers.

Have you seen those levels change since fourth quarter in that regard or an acceleration in those stores versus the malls?

Slightly, yes.

I would like to ask about the gross margin improvement we saw in the fourth quarter with the systems initiatives really pulling together. What sort of gross margin would you expect in the New Year?

We planned certainly improvement in gross margin rate. If we can stay low to mid single digit comps and 25-50 bip increase is not unreasonable.

Can you talk about the geographic areas of strength and weakness? The Texas market in particular.

What are you seeing there?

Through the middle of the country, Texas, Oklahoma, Arkansas, Kansas, Nebraska and Missouri is sort of where the strength is. The weakness is more of the east coast.

The corollary is in a lot of our markets the unemployment rate is significantly below the national average.

The equipment category I didn’t catch the comp for the fourth quarter.

We were off double digits. We have seen a lot of improvement the first six weeks in a lot of our categories.

We are just slightly off for the first six weeks of this quarter. We were off double digits for the fourth.

What do you think is changing there?

I think we brought in some other buyers and I think just our direction has changed. I think the replenishment piece is being a big part of us getting better.

Your gross margin was up quite a bit in the fourth quarter. Can you quantify the reasons for the gross margin expansion?

How much came from better systems, how much from occupancy leverage and so on?

90% of it was due to the improvement in the retail product margin and the other 10% or so the increase was due in the leveraging of occupancy and warehouse.

The reasons for the retail product margin expansion, was that were you less promotional in the quarter? Also how much do you think was a result of the better systems?

I think certainly our inventories were in better shape during the holiday season. We didn’t have to liquidate them as quickly as we did last year.

Then I think as we move up on the replenishment side that is almost a guaranteed sale at full margin rate. So I think a number of good percentage of that is due to the systems side.

I was wondering if you are planning to do any other systems upgrades. I know in previous calls you had talked about price optimization.

What is your outlook on that?

What we are working on now is the planning system which gives us two important components. One is size scaling so we can do better pre-packs throughout the stage in the different demographics.

The other one is what we call store clustering so that we can put like-type stores together with our demographic information so we can compare like sales. We think that is the next leg in picking the low hanging fruit.

We will start that this spring.

How many leases do you have that are up for renewal this year and how do you feel about your ability to negotiate those to lower rents now?

We think we have a very good opportunity out there to lower rents. I would say with our kick outs and our five year and five year it is anywhere from 20-30% of our leases are probably eligible for some sort of negotiation.

It looks like you are going to again generate some good cash flow over the year and it looks like your CapEx is going to be fairly modest here. Would it be safe to say you are going to be just looking to accumulate cash or are you going to do anything else?

For your write up this morning we think we will have $2 worth of cash on the balance sheet by the end of the year.

Jeff, I was just curious if you looked at your footwear business what portion of that really comes out of the women’s category?

It is the smallest portion. I’m trying to think of the percentage.

I don’t have it right in front of me. I believe it is about 10-20% but I can get you that number.

I am just curious, seeing that start to perform is a nice turn here even though it is a small piece. Are you doing anything different there whether it is from a marketing standpoint or assortment standpoint that would account for why that might be starting to work a little bit better right now?

I believe we are trying to focus a little bit more on technical running. We are doing a lot more of that on replenishment.

We really had to almost start over because the last 2-3 years have been extremely tough. I think it is starting to pay some dividends.

Shifting gears a little bit obviously there is a lot of opportunities out there with some good name products to get some good deals. Are you doing more from a, I don’t want to necessarily call it a close out, but just to take advantage of what is probably some good buying opportunities?

Do we see that reflected at all in the fourth quarter or is that something you are going to be doing more of near-term here?

We are always looking for good deals. I would think that we are seeing a lot more product available so we are working out much better pricing going forward.

With a lot of people that don’t have the means to pay for inventory we are taking advantage of that.

Curious also, Nike you report that as a percent of your business. Did that go up or down last year versus what it was in the prior fiscal year?

It went up.

Order of magnitude?

Slightly up. It is probably over 50% of what we buy.

Was that a function of just your expanding more or less the assortment or was it more pricing units? What would have been the dynamic for why that would have gone up?

We look at it just because of the demand from the consumer. We didn’t really strategically say they were going to be X percent of our business.

It is just more for the demand from what our consumer wants.

Gary, if you just look at the first quarter and you look at what you did in the fourth quarter and the trends for margins, I am going to presume that if you did a flat comp in the first quarter you could even see EPS up from what they were last year. Does that make sense?

Or am I too positive on that assumption?

It makes sense.

Could you help us remember how the first quarter trended last year? I think you had a pretty negative March if I remember correctly and then April bounced back.

Is that right Gary?

That is fairly correct. The first quarter of the last two years have been fairly flat.

So March is an easier compare and then April becomes a little more challenging then?

That was Easter.

On the product margin side I know two years ago you had some pretty significant mark downs so I am just trying to extrapolate just maybe an easier compare and then really just some benefits from the E3. If you could just talk about that a little bit.

I believe our inventory is in much better shape. A year ago fourth quarter we came off a pretty negative fourth quarter which we had some carry over from especially apparel which we do not have this year.

The bigger percent we put on E3 should drive our margins up because it is merchandise we won’t have to mark down.

Thinking longer term I know a lot has changed over the last couple of years but I think a few years ago you were talking about potentially getting to mid-teens operating margin. Could you just help us think about where you think the longer term operating margin might be?

It certainly seems you might be getting some traction from E3 and it looks like rent is going to provide an opportunity for you and the product side seems to be going pretty well.

We’d like to think this year we get closer to double digits and hopefully next year if we have the same sort of momentum we can be in the double digit range again.

I wonder if you could talk about compression sales and whether you have seen any change in terms of the sell through in any of those items over the past several quarters.

I would say the compression business in general has matured. There isn’t a lot of expansion there.

I think it is a pretty mature business. There are a lot of items around compression but in general the compression business is a pretty mature business.

What are the key brands that you have within that category?

The two main brands would be Nike and Under Armour.

Jeff can you talk a little bit about what was driving the AUR up? Was that more of a mix shift or was that just kind of higher AUR’s across the board?

It really came from footwear and apparel. We are selling higher footwear.

Apparel we have picked up North Face which has done pretty well.

On the Under Armour running shoes can you give us a sense of how many of your doors that are in currently and is that expanding going forward?

We are expanding Under Armour footwear. We played it a little differently than most.

We looked at the training piece as being a big part of it. With Under Armour athletic shoes we are over 400 locations.

Gary, can you talk a little bit about how your CapEx ended up coming in so low compared to plan or budget in 2008 and also what the plans are for 2009?

The reason it came in so low we really had penciled in we were going to open store count of 764 so that was almost 20 stores we didn’t open up. Another part of the CapEx was in the IT part.

Mostly with PCI. The planning system and some of that is going to fall into this year.

The plan next year is $17 million gross but I would expect we will only spend $11-12 million.

In terms of store openings in 2009 can you talk a little bit about where you are opening them in terms of your core markets versus some of the newer markets? How do you see those opening?

We are in 24 states and we are going to open new stores probably some in all of them. Most of them are going to be in the sun belt.

We even have some new stores in Alabama and that is our most mature state. So there are a lot of places we need a Hibbett Sporting Goods store.

We just have to wait until things get a little better, wait until landlords get their money and get them built so we can accelerate our store growth. There is opportunity in every state we operate in.

The number one store state we opened in last year was Texas that had a plus of eight and Louisiana with a plus of eight. We are still finding numerous opportunities in our core states to open new stores.

I wanted to know what caused the tick up in the tax rate in the fourth quarter and what kind of a rate we should be using for the upcoming year.

The tick up in the rate in the fourth quarter was really just due to an adjustment. We were at 37.8% for the year.

I think 37.7% the year before that. I am using 38% for budget purposes going forward.

Could you talk a little bit about what additional developments you will be doing on the systems front this year? What will be rolling out and maybe an anticipated timeframe for some of this stuff to become operational?

From the merchandise side we are enhancing the planning piece so that we can deal more with size and detail level. We are looking at the store clustering piece from an assortment standpoint.

We are going to be cutting over on that piece this weekend and we will start planning going forward second, third, fourth quarter and next year on that. We would expect to see some benefit for that towards the end of the year.

Is there much in the CapEx budget for systems this year that is delayed from last year to this year?

I think it is probably in the $3-4 million range. Yes.

I was wondering if you could talk about the impact of Footlocker and Finish Line having a greater or more doors with Under Armour apparel in it and how that is impacting your business.

I’m sure it has to affect us some where we compete but we only have 27% of our stores are in enclosed malls and some of those malls we are the only ones because we are in small towns. So I would say it would be minimal.

How many doors are you carrying North Face in and what is the plan to expand that going forward?

We worked really closely with North Face and we are working on how many stores it is going to be right now. We are still working on it and we really don’t know.

How many stores had North Face in the fourth quarter this year?

We just don’t really want to give it out for competitive reasons.

Can you tell us what percentage of your sales was done on automatic replenishment in the fourth quarter and then what the plan is for first quarter in FY09?

I would say it is probably in the fourth quarter 10-12%. Jeff thinks we are at 20%.

We will probably want to get to 30% by the end of the year.

Mickey looking at the issue of store openings and how it is affected by real estate development I wanted to ask if you could have opened all the stores you wanted how many more would it have been? If that were not a factor, the lack of development in some markets?

We would like to have another 20-25.

Were there any particularly noteworthy weather issues in the fourth quarter that we might want to be aware of going towards the end of this year?

We had the snow and ice in Kentucky and surrounding states in January that impacted our January sales. Other than that…

We had snow in the Southeast in March.

We had snow in the Southeast in March but it didn’t last but about two hours.

About 5” in Atlanta, right?

It didn’t last long.

Outside of Kentucky ice, nothing you think will have an impact next year?

I don’t think so. Gary just mentioned we had some storms in the third quarter.

Three.

Those seem to be pretty common that time of year. Gary, what do you expect depreciation and amortization to be in 2009?

Probably in the $15 million range.

Thank you. Obviously we are encouraged with our start in the first quarter.

We have improved as a company year-over-year especially in the systems area and most of the benefits from these improvements in systems are in front of us. Our small market approach is sound and solid and it has a lot of potential for a lot of growth in the future.

We have identified more than 400 additional markets in our 24 state area, mostly in the sun belt where the population is expected to continue to grow. We think we can be a very large company in the future.

We have a great future. We appreciate you being on our call today and we look forward to May 22, at 9:00 CST when we will discuss our first quarter results.

Thank you for being on the call.