Academy Sports + Outdoors earnings were bolstered by the American enthusiasm for outdoor activities, sports, and recreation. $ASO beat top and bottom-line estimates for the sixth straight quarter and generated positive comparable store sales growth for the tenth consecutive quarter at +13.1% for 4Q22. The company also beat a very difficult yr/yr comparison of +16.1% in 4Q21. ASO’s diverse product line and flexible supply chain to mitigate many supply crisis headwinds.
Like major competitor Dick’s Sporting Goods ($DKS), Academy capitalized on a tight inventory situation across the sporting goods market by reducing promotions and achieving a higher rate of sales at full prices. ASO’s gross margin expanded by 110 bps to 32.3%, despite facing the extremely hot fierce inflationary pressures on the economy.
ASO Q4 2021 Earnings Highlights
2021 fiscal year ended: Jan. 29
- Q4 net sales: nearly $1.81 billion, up 13.2% year over year and a quarterly record for Academy
- Analysts’ average Q4 revenue estimate: $1.76 billion
- Q4 net income: $141.77 million, up 54.9%
- Q4 earnings per common share (diluted): $1.57 per share (or $1.61 on an adjusted basis)
- Analysts’ average Q4 EPS estimate: $1.37 per share
- Full-year net sales: $6.77 billion, up 19.1% and a record for Academy
- Analysts’ average 2021 revenue estimate: $6.74 billion
- Full-year net income: $671.38 million, up 117.4%, making it the most profitable year in the company’s history
- 2021 earnings per common share (diluted): $7.12 per share (or $7.60 on an adjusted basis)
- Analysts’ average 2021 EPS estimate: $7.23 per share
“2021 was an extraordinary year for Academy Sports + Outdoors. The team delivered the highest sales and profits in the company’s history while navigating the many challenges faced by the company and the retail industry,”
“We are proud of what our company has accomplished over the past three years, but even more excited about our future growth prospects. Academy is well positioned for substantial long-term growth in its existing stores with our broad assortment of great products from the best national and quality private brands, excellent customer service, expanding omnichannel capabilities, and multiple new store openings in our current and new markets.”said Ken Hicks, chairman, president and CEO
It will be a big ask to crush these results looking ahead. In 1Q23, ASO will lap a robust comparable sales growth figure of 39%, the most challenging yr/yr comp of the year. Keep in mind the year-earlier period benefitted from stimulus checks, which will make for unfavorable yr/yr comparisons throughout a good portion of this fiscal year.
While many companies use the supply chain crisis as an excuse ASO’s solid supply chain management, combined with ongoing momentum in the sports and outdoor retail space has led to the excellent earnings result. Of course, there is a risk that sporting and outdoor companies ASO, DKS, and HIBB have reached their peak and that a return to more normalized growth rates will be source of disappointment for investors. However, there is also the change in consumer trends may become a more permanent occurrence. We shall see and will watch the comps.
The COVID lockdown change in consumers’ lifestyles brought an accompanying surge in demand for fitness and outdoors products such as bikes, running gear, camping equipment, and grills. The shift does have staying power and ASO is anticipating a more normalized retail environment.
ASO is forecasting FY23 comps of (4)-(1)% on top of FY22’s increase of 18.9%, with total sales of $6.56-$6.77 bln merely inline with expectations.
This period is expected to filter through to margins and ASO is forecasting FY23 gross margin to fall by 120-170 bps yr/yr to 33.0-33.5%.
Significantly this guidance still represents a 250-300 bps improvement versus FY21, and the company’s FY23 EPS guidance of $6.70-$7.25 exceeded expectations.
About Academy Sports and Outdoors
Academy Sports + Outdoors went public in October 2020. ASO has now reported massive EPS beats in all of its quarters as a public company. E-commerce has become a big focus for sporting goods retailers since the pandemic began, and ASO is no exception. Over the last two years, E-commerce sales have increased 300%.
ASO’s key categories are outdoor, apparel, footwear, and sports & recreation, which are geared toward outdoor activities. Another benefit is that ASO’s 259 stores are mostly located in warmer weather areas in the southern US, where people can spend more time outdoors through much of the year.
About 40% of ASO’s stores are in Texas (106). Other key states include GA (18), LA (18), AL (15), NC (15), OK (13), and FL (12). ASO timed its IPO just as sales were booming from the pandemic and increased outdoor leisure. The IPO priced at $13, opened at $12.10, and has roughly tripled since then, so the early ride for investors has been a good one!
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