Academy Sports & Outdoors, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Quarterly Sales: Fourth quarter net sales were $1.68 billion, a 6.6% decline. Comparing 13 weeks this year vs comparable 13 weeks last year, Q4 net sales were flat, and comp sales excluding new stores were down 3%, exceeding midpoint guidance. Navigated compressed holiday calendar with consumer spending power constrained, but saw strong rebound in November, continued momentum into holiday season and early January, with every division running positive comp sales in December.
• Margin: Gross margin rate in Q4 was 32.2%, a decline of 110 basis points. Merchandise margins up 10 basis points on shifted 13 week basis, with drivers including increased penetration of hardlines business and additional markdown actions for apparel seasonal transition.
• Long-Term Initiatives: 2024 saw opening of 16 new stores, expanding to 19 states; 2022 vintage stores outperformed existing store base with positive comp; rolled out new warehouse management system to Georgia Distribution facility; made progress on customer journey including identity resolution project and launching My Academy Rewards with over 11 million enrollments; private brands grew to 23% of total net sales.
• 2025 Growth Strategy: Plan to open 20-25 new stores in 2025, with first three opened in early 2025; focus on improving .com business through site fundamentals improvement, endless aisle concepts expansion, and fulfillment option expansion; laser-focused on improving existing store base by accelerating new items and brands flow, increasing investments with Nike, holding prices on key items, growing private brands faster, leveraging customer data platform, and rolling out RFID and handheld devices for stores.

Segment Performance

• Outdoor: Best-performing category with total net sales growth of +2% vs last year. Hunting, Fishing, and Camping businesses saw solid increases. Key national brands like YETI and Stanley drove the giftable business, while private brands Monarch and Redfield delivered strong value messaging. Contributed significantly to overall sales.
• Apparel: Second-best performing category with net sales down 1% vs last year. Rebounded during holiday driven by Youth Apparel, Fleece, and Workwear. Key national brands like Nike and Carhartt had strong performance during holiday.
• Sports and Recreation: Net sales improved vs prior year-to-date trend, with Q4 finishing down 1%. Well-thought-out promotional cadence in key giftable categories like Kids, Bikes, Grills, and Ride-ons resonated with consumers. Fitness business improved, and Footwear business had net sales down 2% driven by key categories like Men's Athletic and Work Footwear. Key national brands like ASICS, New Balance, and Crocs performed strongly during holiday.
• Private Brands: Saw strong growth across all divisions. Represent the value end of the assortment, and customers sought out these products during the fourth quarter to stretch gift buying budgets. Private brands accounted for roughly 23% of total net sales in 2024, up from 22% in 2023.

Guidance

• 2025 Net Sales: Expected to range from $6.1 billion to $6.3 billion with comparable sales of negative 2% to positive 1%.
• Gross Margin: Expected to range from 34.0% to 34.5%.
• Net Income: GAAP net income between $375 million and $410 million; adjusted net income (excluding certain estimated expenses) forecasted to range from $400 million to $435 million.
• Earnings per Share: GAAP-diluted earnings per share of $5.40 to $5.85; adjusted diluted earnings per share of $5.75 to $6.20. Based on revised share count of 70 million diluted weighted average shares outstanding for the full year.
• Quarterly Outlook: Expect Q1 to be most challenging from a comp sales and earnings per share perspective, with Q2 expected to be the strongest. Benefits of investments and internal initiatives to bear fruit in Q2, with back half of year better than first half.

Risks

• Macro Economic Uncertainty: Consumer spending power constraints and overall economic uncertainty could impact sales.
• Tariff Impact: Increased tariffs on imports, including those on China, Mexico, and Canada, could affect costs and pricing.
• Supply Chain Disruptions: Ongoing supply chain issues, such as those experienced in 2024 with the Georgia distribution facility, could impact operations and margins.

Question and Answer

Q: Anthony Chukumba asked about the drivers of gross margin expansion in 2025.

A: Carl Ford responded that it includes recapturing supply chain headwinds, soft lines penetration, and promotional effectiveness.

Q: Christopher Horvers inquired about whether consumer issues were weather or uncertainty and Q1 expectations.

A: Steve Lawrence said weather and macro factors were intertwined, with Q1 expected to be most challenging and Q2 strongest.

Q: Brian Nagel asked about the Jordan launch details and relationship with Nike.

A: Steve Lawrence explained Jordan's first introduction and expanded partnership with Nike, including new product assortments.

Q: Kate McShane asked about higher-income cohort shopping and drivers.

A: Carl Ford stated higher-income cohorts were seeking value, shopping more and with larger baskets.

Q: Greg Melich asked about tariffs and category recovery.

A: Steve Lawrence responded on diversified sourcing and some categories starting to recover.

Q: Michael Lasser asked about macro environment and毛利率, and reciprocal tariffs.

A: Steve Lawrence and Carl Ford addressed new brand margin contribution, price optimization, and fluid approach to reciprocal tariffs.

Q: Simeon Gutman asked about SG&A per store and base store trends.

A: Carl Ford talked about SG&A per store management, and Steve Lawrence discussed base store improvement efforts.