• Revenue: Third quarter sales of $1.34 billion.
• Comparable Sales: Declined 4.9% in the third quarter.
• Gross Margin: 34.0%, a decrease of 50 basis points compared to the previous year.
• Net Income: GAAP net income of $65.8 million.
• Diluted Earnings Per Share: GAAP diluted EPS of $0.92; adjusted EPS of $0.98.
• Adjusted Free Cash Flow: Generated approximately $97 million in the third quarter.
• Store Openings: Opened 16 new stores year-to-date, bringing the total to 298 stores.
• Inventory: Inventory balance of $1.52 billion, a 2.2% increase compared to last year.
• Share Repurchase Program: New $700 million authorization over the next three years.
• Guidance for Fiscal 2024: Net sales expected to range from $5.89 billion to $5.94 billion; GAAP net income between $400 million and $425 million.

• Warning! GuruFocus has detected 5 Warning Signs with OLLI.

Release Date: December 10, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Academy Sports and Outdoors Inc (NASDAQ:ASO) announced a new $700 million share repurchase program, reflecting confidence in the business.
• The company successfully opened 16 new stores in 2024, contributing to a 6% unit growth and expanding its footprint into new markets.
• Academy Sports and Outdoors Inc (NASDAQ:ASO) reported positive adjusted free cash flow for the 20th consecutive quarter.
• The company experienced strong sales growth in its Outdoor division, with a 4% increase driven by camping and hunting businesses.
• Academy Sports and Outdoors Inc (NASDAQ:ASO) is expanding its omnichannel capabilities, including a partnership with DoorDash for same-day delivery options.

Negative Points

• Comparable sales declined by 4.9% in the third quarter, impacted by unseasonably warm weather and the absence of the Texas Rangers World Series run.
• Gross margin decreased by 50 basis points due to increased supply chain costs and a mix shift in outdoor merchandise.
• The apparel division saw a 9% decline in sales, affected by warm weather and a lack of demand for fall seasonal categories.
• SG&A expenses increased by $19.3 million, primarily due to investments in new stores and strategic initiatives.
• The company narrowed its full-year guidance, reflecting a cautious outlook due to macroeconomic uncertainties and consumer behavior.

Q & A Highlights

Q: Can you provide commentary on Black Friday and Cyber Week performance and how it compares to your guidance? A: Steven Lawrence, CEO: Black Friday was the largest selling day in our history, and the weekend was the largest weekend. We saw an acceleration in business from the third week of November, aided by cold weather. Despite five fewer selling days this year, we are tracking at or ahead of our forecast using 2019 builds as a model. We remain mindful of the significant business ahead in the next three weeks, which include three of the four largest weeks of the year.

Q: What were the drivers of the gross margin decline in Q3, and how do you expect freight impacts to differ in Q4? A: Brad Morris, Director of Strategic Initiatives: The 50 basis point decline in gross margin was primarily due to a 30 basis point decline in merchandise margin, driven by a mix shift towards outdoor products. Additional costs came from international freight and increased resources at our Georgia distribution center. We expect gross margins to improve by 50 basis points in Q4 due to cleaner inventory, higher apparel mix, and fewer promotional days.

Q: Were there any notable changes in consumer behavior in Q3 compared to the first half of the year? A: Steven Lawrence, CEO: We observed some trade-down behavior, with market share gains among customers earning over $100,000. Episodic shopping continued, with strong performance during key events like back-to-school. Buy now, pay later usage increased, particularly online, where average order value rose due to these transactions.

Q: Can you provide more details on the upcoming Nike product launch in April? A: Steven Lawrence, CEO: The launch will be significant, featuring a broad assortment across men's, women's, and kids' apparel, footwear, and sporting goods in over 140 stores. While I can't provide more specifics now, it will be a major event for us, and we will share more details in the future.

Q: How do you view the potential for market share gains in 2025 and beyond? A: Steven Lawrence, CEO: Our goal is to be the best sports and outdoor retailer, and expanding our store base is key to gaining market share. We see significant opportunities, especially in areas where 80% of Americans don't live within 10 miles of an Academy store. Our strategic initiatives, including e-commerce and customer data platforms, are designed to capture more market share.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.