ASO Reports Solid 2nd Quarter Earnings

Academy Sports + Outdoors (ASO) was in line with company’s expectations. Net sales were $1.69 Billon a decrease of 5.8% compared to 1.79 billion last year. Comparable sales declined 6.0% due to lower transactions, partially offset by an increase in the average ticket. GAAGAA
P net income decreased 0.9% to 188.8 million compared to $190.8 million in the second quarter of 2021.

Management was optimistic for the outlook of the current fiscal year projecting GAAP earnings of $6.50 to $7.25 per fully diluted share which was raised from a previous estimate of $6.30 to $7.00. Net sales are expected to be about the same $6,430 Million to $6,630 Million.

During the quarter the company opened their second store this year. It is 55,000 square feet in Panama City, Florida. They previously opened a 58,000 square foot store in Conyers, Georgia in the first quarter. Since the end of the second quarter, the company opened a 58,000 square foot unit in Richmond. Virginia and a 50,200 square foot unit in Atlanta, Ga. The company plans to open 9 stores this fiscal year and end with 268 stores. In the next five years plans are to open another 80 to 100 stores, which means the company will operate 339 to 359 stores by 2028. The sales in the newly opened stores have been strong and above expectations. Stores are only in 20 states so far, and management hinted that 800 stores is a possibility.

Aware of the competitive environment the company has intensified their private label assortment, giving customers a greater choice of price in major classifications. This has brought more business. Management feels that their private labels will be more competitive as manufacturers have reduced their promotions.

Management is now more comfortable with its merchandise inventory level, which is about 17% higher than in last year’s second quarter. Supply line problems have abated as deliveries are now on time and meet expectations. The company had a good back-to-school season which ended mid-August in ASO’s trading area.

Michael Mullican EVP and CFOCFO
stated “We continue our capital allocation strategy of investing in growth and increasing shareholder value by investing in new stores, repurchasing a significant amount of shares and returning cash to shareholders through our dividend program.”

POSTSCRIPT: The expansion of ASO stores will create a national company as customers continue to enjoy the recreational outdoors. Adding private label brands to the branded assortment gives customers a greater choice and more flexibility on prices. It is likely that Academy Sports + Outdoors will be a winner in a more hostile environment.