Academy Sports + Outdoors Year End Reflect Tight Control

The outlook for Academy Sports + Outdoors is bright. While fourth quarter sales were down 3.4% over last year earnings increased 11.2% to $157.7 million compared to $141.8 million. They were on a fully diluted basis $1.97 compared to $1.57 per share in the previous year.

The full year was equally exciting. Net sales decreased 6.6% and comparable store sales dropped 6.4% (In the 4^th quarter they decreased 3.4% and comparable store sales dropped 5.1%). However, due to tight controls, net income decreased 6.5% to 628,0 million compared to $671.4 million and GAAP diluted earnings per share increased 5.2% to a record $7.49 per diluted share. Last year the company reported $7.12 per diluted share.

Fourth quarter sales were difficult since the consumer cut back on discretionary spending. The company offered a selection of value products which helped sustain sales. Better controls were in place and the company opened nine new stores. The company’s inventory increased 9.5% and at the year-end was $1.26 billion.

Notable was the fact that the company’s year-end cash and cash equivalent totaled $337.1 million with no borrowing from the $1 billion credit facility. During the year the company repurchased 1.9 million shares for $100 million and paid a quarterly cash dividend of $0.075 per share or $5.9 million. In addition, Academy utilized cash on hand to prepay $100 million borrowings under its service security loan. For the first dividend in fiscal 2023 the company raised the rate to $0.09 cents.

Ken Hicks. Chairman, President and CEO described the year as rewarding and challenging. He said “The company accomplished many of the strategic goals we set at the beginning of the year to build a strong foundation for the future. While our business faced pressures from the uncertain macro-economic environment throughout the year, our team effectively executed against our strategic plan, and as a result we delivered solid earnings, generated and returned a significant amount of free cash flow ad created value for our stockholders, even though we did not meet our sales expectations. Our focus for 2023 will be investing for growth by opening new stores, building a more powerful omnichannel business, strengthening our store base, and leveraging and scaling our supply chain”.

Management posted initial guidance for fiscal 2023. Net sales are expected to be $6.5 billion to $6.7 billion. This would mean that comparable store sales will between -2.0% to +1,0%. The company will open 13 to 15 stores in fiscal 2023. In the past year 9 stores were opened, some filling in areas already with Academy stores and new areas as well. GAAP earnings per common share are expected to be between $7.00 and $7.75 indicating that the company will continue to be a value retailer and attracting business through value promotions.

POSTSCRIPT: The strong performance is likely to be repeated during the current year. During the Christmas selling period the company did not sell much heavy outdoor equipment as customers focused on apparel and footwear. It was an unusual season and one hopes that the coming year will have a strong ending.