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01/10 22:44
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals: strong brand expansion and technology implementation are positive, but financial performance is lackluster with a slight sales decline and increased SG&A. The Q&A reveals cautious optimism for higher-income customer retention and gross margin maintenance, but concerns about consumer pressure and tariff impacts persist. The stock repurchase and dividend payments provide some shareholder value, but overall guidance and market conditions suggest limited short-term upside, leading to a neutral sentiment.
Net Sales $1.35 billion, down 0.9% year-over-year; primarily due to soft sales in February driven by cold temperatures and winter storms.
Comparable Sales (Comp) Negative 3.7% comp; sequential improvement throughout the quarter with a positive comp in April.
Gross Margin 34%, up 60 basis points year-over-year; driven by 40 basis points of merch margin expansion and 10 basis points of favorable shrink.
SG&A 28.8% of sales, an increase of $36 million or 290 basis points; primarily due to growth initiatives for new store support, higher labor for Jordan Brand launch, and investments in digital and supply chain technologies.
Operating Income $69.3 million; reflects the impact of increased SG&A and lower sales.
Diluted EPS $0.68; adjusted EPS was $0.76.
Inventory per Store Units per store up 6.5% and dollars per store up 7.8%; elevated due to strategic actions taken to mitigate tariff impacts.
Free Cash Flow Approximately 8% of sales; allowed for continued investments and returning over $100 million to shareholders.
Share Repurchase Approximately $99 million repurchased under the current program.
Dividends Paid approximately $8.7 million in dividends.
Capital Expenditures Invested over $50 million in strategic initiatives including store openings and RFID rollouts.
Jordan Brand Launch: Launched the Jordan Brand in 145 stores and online, focusing on sports products at accessible price points. Initial customer reaction has been strong, with expectations for it to become a top 20 brand by year-end.
New Store Openings: Opened 5 new locations in Q1, including first stores in Pennsylvania and Maryland, with plans to open 20 to 25 new stores in total for the year.
eCommerce Growth: eCommerce sales increased by 10%, with penetration growing to over 10% of total sales.
Inventory Management: Elevated inventory per store with a 6.5% increase in units per store, utilizing a strong balance sheet to pull in domestic inventory at pre-tariff prices.
RFID Technology Rollout: Completed rollout of RFID scanners to all stores, improving inventory accuracy and enabling better customer service.
Tariff Mitigation Strategies: Implemented strategies to mitigate tariff impacts, including reducing exposure to Chinese imports from 9% to 6% and partnering with suppliers to share cost burdens.
Marketing Campaign: Launched a new marketing campaign with the tagline 'Fun Can't Lose' to enhance brand awareness and support new product launches.
Tariff Impact: The company is navigating through additional tariffs, including a 10% reciprocal tariff on most countries and a 30% tariff on goods from China, which has created complexity in forecasting and managing business operations.
Supply Chain Challenges: Academy Sports is working with factories and suppliers to find tariff offsets and has paused shipments from China during high tariff periods, which affects supply chain dynamics.
Inventory Management: The company has elevated inventory levels due to strategic actions taken to mitigate tariff impacts, including pulling forward $85 million in domestic inventory at pre-tariff prices.
Economic Factors: There is a fragile state of the U.S. consumer and inflationary pressures that could impact discretionary spending, leading to a wider range of outcomes in sales guidance.
Competitive Pressures: The company is focused on maintaining its position as a value leader in the market, especially as customers seek value during periods of economic uncertainty.
Construction Costs: The company has slowed the pace of signing new store leases for 2026 to better assess the impact of tariffs on construction costs.
Sales Guidance Uncertainty: The company has updated its sales guidance to account for multiple tariff scenarios, reflecting uncertainty in demand and potential impacts on sales.
New Store Expansion: Academy plans to open 20 to 25 new stores in 2025, having opened 5 locations in Q1, including in Pennsylvania and Maryland. The company is applying learnings from previous store openings to improve future sites.
eCommerce Growth: Academy.com achieved a 10% sales increase, with penetration growing to over 10%. The focus is on improving the online shopping experience and expanding the endless aisle offering.
Jordan Brand Launch: The Jordan Brand was launched in 145 stores and online, with strong initial sales performance. The goal is to expand key items into all stores by summer.
Technology Integration: RFID technology has been rolled out to all stores, improving inventory accuracy and customer experience. Handheld devices with POS functionality are also being utilized.
Marketing Campaign: A new marketing campaign was launched with the tagline 'Fun Can't Lose', supported by a 10 basis point increase in advertising spend.
Loyalty Program Expansion: The goal is to add 2 million customers to the myAcademy rewards program in 2025, increasing membership to over 13 million.
Sales Guidance: Sales are expected to range from $5.97 billion to $6.26 billion for the year.
Comp Sales Guidance: Comp sales are projected to be between negative 4% to positive 1%.
Earnings Per Share Guidance: Earnings per share is expected to be in the range of $5.10 to $5.90, with adjusted EPS between $5.45 and $6.25.
Gross Margin Guidance: Gross margin is expected to remain unchanged.
Dividends Paid: Approximately $8.7 million in dividends were paid during the first quarter.
Share Repurchase: Approximately $99 million in shares were repurchased under the current repurchase program.
The earnings call reveals strong e-commerce growth, successful store openings, and a strategic focus on high-income customers. Despite some challenges like ammo sales, the company shows resilience with positive comp guidance and a robust capital allocation strategy. Management's optimistic outlook and effective promotional strategies further support a positive sentiment. Given the market cap, a 2% to 8% stock price increase is likely.
The earnings call presents a mixed picture. While e-commerce growth and new store openings are positive, the overall financial performance is tempered by negative comp sales guidance and potential gross margin pressures. The Q&A highlights uncertainties, such as wide Q4 comp guidance and ammo sales impact. Despite some positive elements, like high-income customer growth and strong private brand performance, the lack of detailed guidance on buybacks and mixed financial outlooks suggest a neutral sentiment for the stock price over the next two weeks.
The earnings call reflects mixed sentiments: strong eCommerce growth and successful product launches (e.g., Jordan) are positives, but the lack of specific guidance and flat gross margin guidance temper enthusiasm. The Q&A highlights concerns about higher prices affecting demand and a promotional environment. Market cap suggests moderate volatility. Overall, the balance of positive and negative factors leads to a neutral prediction for the stock price movement.
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