Academy Sports and Outdoors, Inc. ASO reported third-quarter fiscal 2024 (ended Nov. 2) results, with both top and bottom lines missing the Zacks Consensus Estimate. Both metrics also declined year over year.

The sales decline for the fiscal quarter was largely caused by challenges in October, which proved to be a tough month for the company. Unseasonably warm weather persisted throughout the month across its operating regions, negatively impacting seasonal business performance and contributing to an estimated 140 basis point (bps) reduction in comparable sales.

The company’s shares rose 4.3% yesterday, despite posting disappointing results and lowering its 2024 guidance. ASO is gearing up for a significant milestone in early 2025, as it prepares to launch an expanded selection of Nike products in more than 140 stores. Scheduled for April, this launch will feature comprehensive assortments for men, women and children, spanning footwear, apparel, accessories and sporting goods. This initiative indicates the company's commitment to meeting customer demand for fresh and exciting offerings, particularly as it enters the holiday season with an array of new items and brands.

ASO’s Q3 in Details

Academy Sports reported adjusted earnings per share (EPS) of 98 cents, which missed the Zacks Consensus Estimate of $1.28. The metric also declined 29% year over year.

Quarterly net sales of $1.34 billion lagged the consensus estimate of $1.37 billion by 2.2% and were down 3.9% year over year. Comparable sales declined 4.9% year over year.

Operating Highlights of ASO

During the quarter, selling, general and administrative expenses (as a percentage of net sales) were up 250 bps year over year to 27.2%. The gross margin contracted 50 bps year over year to 34%.

Net income was $65.8 million, down from $100 million in the year-ago quarter.

Adjusted EBITDA declined year over year to $133.5 million from $174.5 million.

Academy Sports’ Balance Sheet

As of Nov. 2, 2024, ASO’s cash and cash equivalents totaled $296 million, up from $274.8 million as of Oct. 28, 2023. Net merchandise inventories at the end of the fiscal third quarter were $1.53 billion compared with $1.49 billion as of Oct. 28, 2023. Net long-term debt was $483.1 million, down from $583.4 million as of Oct. 28, 2023.

At the end of the first nine months of fiscal 2024, net cash provided by operating activities was $387.9 million, up from $301 million in the comparable period a year ago.

ASO’s Fiscal 2024 Outlook Down

For fiscal 2024, Academy Sports now expects net sales to be between $5.89 billion and $5.94 billion, down from the prior expected range of $5.89 billion to $6.08 billion. The company expects comparable sales to be between (6)% and (5)% compared with the prior expected range of (6)-(3%).

The gross margin is expected to be between 34.3% and 34.5% compared with the prior range of 34.3% to 34.7%. Capital expenditures are now anticipated to be in the range of $185-$210 million, down from $175-$225 million expected earlier. The company expects adjusted net income to be between $420 million and $445 million, down from the prior estimated range of $420 million to $480 million.

ASO anticipates adjusted EPS to be in the range of $5.80-$6.10, down from the earlier estimate of $5.75-$6.50.

ASO’s Zacks Rank & Key Picks

Academy Sports currently carries a Zacks Rank #4 (Sell).
    
Some better-ranked stocks in the Zacks Consumer Discretionary sector have been discussed below.

Cinemark Holdings, Inc. CNK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

CNK delivered a trailing four-quarter earnings surprise of 164.8%, on average. The stock has surged 152.3% in the past year. The Zacks Consensus Estimate for CNK’s 2025 sales indicates growth of 11% from the year-ago levels.

Norwegian Cruise Line Holdings Ltd. NCLH currently has a Zacks Rank #2. NCLH delivered a trailing four-quarter earnings surprise of 4.2%, on average. The stock has surged 55.7% in the past year.

The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS indicates growth of 10.7% and 134.3%, respectively, from the year-ago levels.

Royal Caribbean Cruises Ltd. RCL currently carries a Zacks Rank #2. RCL delivered a trailing four-quarter earnings surprise of 16.2%, on average. The stock has surged 115.2% in the past year.

The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates growth of 18.6% and 71.9%, respectively, from the year-ago levels.

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