Academy Sports and Outdoors (ASO) is set for growth in Q4 and 2025 as supply chain benefits are expected to increase, while pressures from weather and warehouse management system rollout should ease, Wedbush Securities said in a note Wednesday.
Analysts, including Seth Basham, said the company's weaker-than-expected Q3 results were partly due to unseasonably warm weather, which negatively impacted sales by about 1.4%. Despite this, sales trends improved compared to H1, partly because of Black Friday and the following weekend due to cooler weather and promotions.
The company also continued its expansion, opening 16 new stores year to date and seeing stronger sales trends at these locations as it focuses on mid-sized underserved markets.
Academy Sports and Outdoors plans to expand its Nike (NKE) assortment in 140 stores by April, which should help it stand out, despite concerns about Nike's brand strength and its wider distribution. The company also lowered its new store opening guidance for 2025 to 20 to 25, down from 30 to 35. which is a disciplined approach.
The firm reiterated its outperform rating for Academy Sports and Outdoors with a $65 price target. Its shares rose 6% in recent trading activity.
Price: 55.46, Change: +2.88, Percent Change: +5.48
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