Academy Sports And Outdoors, Inc. ((ASO)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Academy Sports And Outdoors, Inc. revealed a mixed sentiment among company executives. While there were notable achievements in new store expansion and eCommerce growth, as well as a successful launch of the Jordan Brand, these positive developments were tempered by challenges such as a decline in overall sales, increased SG&A expenses, and the impact of additional tariffs. Despite these hurdles, the company remains optimistic about future growth, although it is cautious due to external economic pressures.
New Store Expansion Success
Academy Sports And Outdoors, Inc. has made significant strides in expanding its store footprint. In the first quarter, the company opened five new locations, bringing the total number of stores to 303 across 21 states. The 2022 and 2023 store vintages contributed positively to the company’s growth, adding low single-digit comp growth in Q1.
eCommerce Growth
The company reported a 10% increase in eCommerce sales, with penetration growing by 100 basis points to over 10%. This growth highlights the company’s successful efforts to enhance its online presence and capture a larger share of the digital marketplace.
Jordan Brand Launch
Academy Sports And Outdoors successfully launched the Jordan Brand in 145 doors and online, with initial sales exceeding expectations. Notably, over 25% of Jordan sales were generated through eCommerce, showcasing the brand’s strong appeal and the effectiveness of the company’s digital strategy.
Positive Customer Traffic with Higher Income Households
The company experienced a significant increase in foot traffic from households earning over $100,000, with double-digit growth in this demographic. This trend suggests that Academy is successfully attracting higher-income customers to its stores.
Sales Decline
Despite some positive developments, the company faced a decline in sales during the first quarter. Sales totaled $1.35 billion, down 0.9% from the previous year, with a negative 3.7% comp. This decline highlights the challenges the company faces in maintaining its sales momentum.
SG&A Increase
The company’s SG&A expenses increased by 290 basis points, driven by the need to support new stores, higher labor costs, and investments in technology. These increased expenses have impacted the company’s overall profitability.
Tariff Challenges
Academy Sports And Outdoors is navigating additional tariffs, including a 145% tariff rate on China, which is impacting its cost structures and strategic decisions. The company is actively working to mitigate these challenges through strategic actions.
Forward-Looking Guidance
Looking ahead, Academy Sports And Outdoors has provided updated guidance for the full fiscal year. Sales are projected to range between $5.97 billion and $6.26 billion, with comparable sales expected to vary from a decline of 4% to an increase of 1%. The company anticipates maintaining a gross margin of approximately 34%. Earnings per share are forecasted to be between $5.10 and $5.90, with adjusted earnings per share expected to range from $5.45 to $6.25. The company plans to open 20 to 25 new stores this year and aims to add 2 million new members to its loyalty program.
In conclusion, the earnings call for Academy Sports And Outdoors, Inc. reflected a mixed sentiment, with both achievements and challenges highlighted. While the company has made significant progress in areas such as new store expansion and eCommerce growth, it continues to face obstacles such as declining sales and increased expenses. However, with strategic actions and a focus on future growth, the company remains optimistic about its prospects.