ASO - Earnings call transcript Q3 2021 | Academy Sports and Outdoors, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Academy Sports and Outdoors Third Quarter of Fiscal Year 2021 Earnings Conference Call. At this time, this call is being recorded and all participants are in a listen-only mode.

Following the prepared remarks, there will be a brief question-and-answer session. [Operator Instructions] I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please go ahead.

Matt Hodges

thank quarter joining XXXX and and Academy everyone, third Outdoors results morning, you the for Sports Good call today. call Executive CFO; the CEO; Merchandising Officer. Vice on are Chairman, Chief Hicks, Participating President President Michael and Mullican, Steve Vice and and President Lawrence, Executive Ken and

statements. results As our statements SEC. risks included Hicks, cause certain These statements. statements with I the to limited earnings subject to in is will differ in now release made in to identified could no the comments non-GAAP to Relations to forward-looking The a management be financial and the the during our the our to, measures. obligation over earnings uncertainties investors.academy.com. most actual today's projections. filings provided considered uncertainties are remarks any from Ken reminder, measures and our Today's on comparable CEO. that GAAP Investor risks call Reconciliations refer by earnings factors These undertakes not this include, release today's which expectations and forward-looking release, call materially the may in are company are to but and turn and revise website,

Ken Hicks

for the mission us vision morning, outdoors country continued you our and and members all. you, the the Thank Good hard in Matt. would to all today. for work become fun commitment and want by all their by thank and for best of team Sports retailer Outdoors joining thanking I and call start to to sports providing the Academy

as a have earnings efforts that sheet against merchandise omnichannel to develop chain. experience we've made much planning and XXXX, business, and we ago, to profits. the One shopping in expectations this success raised public growth improved continue and our building store new business support company. our enhancing progress improving stronger appreciate merchandise we Since You resulted increasing there for time, challenges and we online, continue a have hosted tremendous your key in of first our strengthening our targeted as company. stores as priorities exciting come These and customer open our year call our and and marketing balance the allocation our we to new drive in improve capabilities, is supply on and believe journey. enormous We capabilities more processes, met

provide expectations and more I'll overview present results high-level the and Michael the fourth details a quarter, then for Now our of and Steve about the third quarter. will

resilient supply product in was delivered lasting numerous healthy, market. the transportation During in and was challenges, our of categories customers experiences all demand making still results X with our as our bottlenecks centered severe major of the on team are quarter, record financial changes having storms third Consumer face across friends and fun including the family. lifestyle chain strong constraints, and and

and price by of quarter The and a We positive athletic our against of season $X.XX growth in Total included meet our last product of customer to are led record size they This existing continued positioned saw compared comparable a frequently X and diverse our back-to-school work and each ticket the transactions, in field, year. grew On We more to and to XX.X% strength represent as base shop our categories selling August across X-year of resulted more trip. sales in spent comparable September our for divisions more in sales. per growth products of Overall, XXXX, apparel, divisions results of a team outstanding needs X-year done their sales our and than E-commerce with On and footwear faster the quarter more compared basis, are across and stores. in a quarters entire with These grew sales leading outcome the increased direct grew brands. basis, priorities. high-quality in increased our October, QX sales XX.X%. billion sales well third value and XX.X%. significantly which consecutive from broad robust each to X assortment than XX.X%, gained a sales broad-based sports product was share e-comm regions XX% XXX.X%. we footprint. market average

season. the maintaining we feature traction promotional to retailers, our saw time. million. continue grow environment, gross freight to value customers. expect our both them margins in stores and a which functionality tempered both margin but achieved Apple Academy increase pleased everyday record we higher is We're for enhance more merchandise We continue perspective, We now By of this Android the effectively the further leverage to $XXX.X the especially site's capabilities, efficiently to operating customer back-end most will the an from Like new app, the feel cost, over than and to by consumer-facing faster and while a holiday selling early able absorb we're and users. of available our omnichannel with majority over in a proposition of

result were stock. income As milestone $XXX.X adjusted A we Sports and quarter, $X.XX. a of of million third significant remaining shares of adjusted Academy the and quarter offering, Outdoors during efforts its a the KKR reported earnings net completing selling was for our common secondary per share

program. the for repurchased share offering, of part retired $XXX company's As million as we this part X.X approximately and shares repurchase $XXX million million of

We to million market approximately in allocation retired one addition million. capital which Academy $XX is returning of to our capital growing $XXX shares during that open to worth signifies repurchased the the Year-to-date, the also shares approximately priorities and of shareholders X.X quarter, purchased million business. third has in

to it the and more functionality We've quarter easier We've quarter. but customer our staffing app than tailored more our several shopping to our are up team's shape appropriate meet create more vendors, We're that tremendous levels. put business of position be of XX.X% the and and mobile improved seamless of transactions website a the private Adidas, to has pleased and over year and prepared still Overall, and also local faster, with hard Armour, stores making key the in engaging as business makes the experience, Nike, in We're from Under quarter holiday Columbia is results good with for to next e-commerce roughly and for The which the improve prior in-store XX% North last weeks. season. ahead a Face sales. done demand fourth features added products far, work our also the label inventory conversion amount shop a strong to the with and and shoppers. such us perspective, thus satisfaction. up expected persistent customer quarter, Looking in holiday the our there's fun XX.X% total our platform higher From to

ready fourth guidance. us strong raising a QX our our I'll Michael customers and to turn optimism about Altogether, our to consumer final are our now we're Our to updated and give over store sales teams Christmas. during environment review channels, best-in-class quarter. the sales team, demand healthy paired and to engaging our push and serve and this the rational convenient with inventory Michael? Therefore, earnings websites call full position, year promotional results outlook. share

Michael Mullican

everyone. morning, Good Ken. Thanks,

which with double-digit consecutive is service I we very strong. excellent Our growth. on review a assortment of supports discuss quarter compared positive sales clearly on value-based will existing quarter quarter continued year healthy customer and for quarter is demand XXXX. that of the living sales X business Academy's to achieved customer X a our results third Net based strong positive of healthier and raising this including versus were active increase merchandise are the ninth a proposition this divisions based to were top position. broad XX.X% quarters. sales increase year's the fourth then XX.X% that P&L, record that new billion, XXXX record last third customers. updated inventory the Because guidance, increases remains comp. results, an sales, the consumer show XX.X% consecutive connect $X.XX and XX.X% on all also Comparable comparable last and our connection, last It continues

Our consistent rate X-year has relatively entire throughout the been growth year.

We This with even sports and the dollars lasting stimulus fewer shift more frequently competition shopping and travel less grow the market the and a increase of year. and because categories in restrictions brands we in and spending there been Customers share more for. more Academy remains business puts products, last have spending market, to are sector. looking across good believe more position value consumer outdoor Our retail compared into pre-pandemic. to strong dining and customers are has than

count ticket in transaction grow and continue reactivated and size result, a segments. to our customer existing, As new

higher In ticket. significantly our our transaction than was fact, average growth

personalization. direct We such of marketing, targeted are our the seeing improved adoption higher outreach, and customer website as Academy credit card benefits

business. we profitable in quarter, our progress the and also During growing omnichannel rapidly additional saw

to was Buy-online-pick-up-in-store a differentiator X.X% to compared when sales And be XX.X%. XXXX X.X% a in sales grew and QX us. sales XXX.X%. remains rate portion XXXX, business for omnichannel compared The XXXX. penetration QX increased to competitive e-commerce Our and our continues QX of e-comm X% significant in

our we continue strong $XXX.X $XXX.X As than XXXX have points XX.X% we as our third lower from strong, which very less compared invest in priority be sales full we growing will is stores, disciplined continue new XXXX. gross XXX projections, we is pricing with into X quarter and expected activity XX.X% This margins a than omnichannel record points and and This margin current said sales, will merchandise on XXXX in have were to key and growth. us, fewer of to margins are were before, for to XXXX, strategic expenses led million this omnichannel Based basis basis expected year omnichannel XXXX SG&A XXX or store seen resulted promotional to which growth rate XX throughout was business. expand gross management, to basis benefited again points markdowns. Like XXX to XXXX. lower complement by QX expansion million. of margin once of footprint

The increased million. points, Year-to-date, per share a or offering margin to of GAAP are to XXXX, last adjusted Pro which pretax of SG&A forma by last to per the year. the income XXX.X% to per share $XXX.X compared basis increase of $X.XX primarily year-to-date quarter proper per certain decreased results XX.X% income, QX to to of advertising cost SG&A from related $XXX.X and leverage impact share income increased the costs per million comparison, XX.X% an net management, share, excludes Excluding basis led sales $X.XX expenses for sales strong $X.XX -- SG&A to diluted Pro XXX increase initial million, and million. share expenses to earnings were XXXX. diluted year. extraordinary net GAAP the $X.XX per earnings was items, in share forma $XX.X XXX.X% compared to compared XXX efficiencies below get a from workforce $XXX.X public points sales growth. cost attributable XXX% XXXX. record QX

the $XXX Looking ended the healthy million financial cash and credit our in balance $XXX at position sheet. under Academy with in quarter facility. available a million

flow, the in the During a quarter, challenging This cash same generated inventory our company ending This inventory million to years X Academy improving is keep position adjusted in the flowing year the billion. balance team together the higher time the $X.X environment. while than quarter. working at our position. was to XX.X% $XX The despite is entire prior strongest inventory third and testament product free

Our benefiting vendor Savannah partnerships our vendor our and from and the our and assortment, Houston of extensive capabilities, broad a base strong partner, Academy status financial chain flexibility. supply valuable preferred improved position and diverse is planning Fort our with product as and

on updated our continued comparable up up into to of the Based are XX%. this to quarter range we our have full comp of growth to for our visibility basis, a Now to outlook XX% XX% XX% sales to the X-year QX, consumer for and strong raising third year XX%. fiscal XXXX. from a XX% trends represents On we on results, forecast

the outstanding XX% expenditures per margin the expected approximately based diluted Capital per for to share full XX.X is the diluted earnings chain, are year diluted potentially extraordinary average more impact impact on range for from for labor certain weighted share, Non-GAAP share items, $XX from from share and expected year $X.XX to share competitive year, per supply of gross $X.XX are excludes full $X.XX Our the the range per range market, year. share. the outcomes of $X.XX given and guidance of the to per earnings to GAAP million. for to are shares promotional This expected the now per the of inflation marketplace. full be million considers rate which the uncertainty XX%. to forecasted remainder to various

With initiatives. development over for While and performance merchandising XXXX and to and details not we fiscal are of guidance I prospects profit-driving operations. the continued our and we are the excited providing call that, today, around sales more our Steve turn about growth will

Steve Lawrence

Michael. job you covering third from around by the our color and quarter. now of little and Thanks, highlights performance Michael did financial month. a by more great give the a Ken I'll category

already inventory position. hard XX.X% the versus XX% increase a keep was with drove the improving year, We is the worked up we to XXXX. greatest versus As quarter last our of team inventory improved receipts flowing this enabler ensuring we comp quarter up XX% so covered, year. can Probably and fuel growth was while last holiday heading we're inventory sales The versus we the the in-stocks, result well with season. deliver the that positioned fourth that end within into started the quarter started

we're in stock versus that saw continued categories, across overall our year, of quarter We and this all positioned heading content last peak advantage take into we the importantly, More and the solid of fourth We're more of X growth much believe well is holiday divisions. in balanced our weeks. major to quality most back traffic. inventory

from timing, us quarter Our comprised prepared XXXX normalized and delayed highest soft driven XXXX. with last a versus and versus which of drive XX% key Adidas had footprint, Footwear set North Nike, most up comp compared with up XXXX. footwear the up growth. XX% starts in and Face, was businesses these goods XXXX branded into across when once of and to Both in apparel business again posted as of drove serviced XX% the inventory for We and by our positions, brands. double-digit each a versus August, well which were back-to-school quarter largest the such comp and The healthy these of comps versus partners up XX the our came the year. Apparel

these brands private the The and to in by as key both such propel August grew the factors increase combination FREELY in quarter. of also helped Our apparel double-digits. BCG, footwear, largest Magellan Outdoors

and As and pro we football moved into off. September as saw college the license kicked we October, business accelerate

softened September business October, comps accelerate store. the gears weather the into later positive, driven anniversaried still fleet Shifting auto we bit year's last While hard when sparked and started sales goods to were the as saw the got to that in break. a side back-to-school. We the again little we by of

Our business sports We all delivered sports return plus direct also comp including team our football, up also major being benefited and baseball as strong and participation all business markets. in from of the versus and a soccer X% across back-to-school comp The versus of and played double-digit sports XX% across sports, rates footprint. drove XXXX increase across XXXX. our use a the

key and of strong with double-digit our brands private brands, This Outdoors. coupled us as business solid Our stocks. growth, businesses XXXX generated as improved drive many national in in outdoor YETI, The driven interest such XXXX. versus plus versus during the third XX% in comps and outdoor generated our double-digit XX% both increased field plus including also Wilson growth helped as key quarter camping activities of Magellan by well Rawlings

quarter, higher margin drive covered was factors On we basis a plus the year. recap We of them. achieved growth quarter's than rate merchandise quickly last profit call the during points our XXX to key XX.X% which front, the in continue that gross to margin last many

driving First, has to our while price helped refine are strategies, us localization productivity we selling. better inventory better continue through improve regular AURs allocation This higher efforts. driving which

price, amount strategy regular and markdown with have. to of when do at margins coupled optimization Second, along AURs sell-through helped taking driving we the on clearance, reduce has clearance higher the stronger the our better we're with goods

continue the We not to allow and quarters of quarter. only back-to-school to spending. AURs offset have has allowed of The such during consumer quarter. we navigating quarter will ensure increased less team of as continue sales going along We we to next are momentum inventory year and the and discounts robust combination The year. develop of disruptions a forward deliver scale and X worked and sales to is and to first has hard worked our marketplace. as driven also take through to of improvement Third, margins keep that advantage remains and and into the flexible that the this hard the continued job into we're sports this in see continue fuel and these or improve categories inventories a rising well margin product gross into back seeing growth improvement. done and chain long-term will beyond. operating costs to time high-traffic shipping build in great the demand pipeline through fourth for carry supply to that profit improvements the elevated, fourth many and through and outdoor fourth the us all fourth Consumer us quarter carry in-stocks raise gross and factors in all promotional forward positioned believe periods has This back to a and the

as continue the the Whataburger brands strategies. quarter therefore, capture our continue categories, out attracting tighten many our we launch example new and consumer. collaboration, great Also, third well this Next, gaining consumers of and increased distribution for to Magellan with the a innovative along market which their demand partner, launched our us brand. to this positioned to our being sold shortly to Outdoors delivered. core leaves in preferred on And share brands resonate A products focus after and with plus of was that new

all we're is we so successful, season. we our the outdoor on outdoor go item during quickly after product new ovens. and such shows secured pizza high. product of QX expanding is hottest for One to of going after TV really business This this also to into as is categories the We're holiday new the of stores. were rollout inventory ideas the by for the on apparel one growing Yellowstone needed this demand customer this tests cooking Early

positive our us we Another is tailwind accelerating, a growth it expect to to on is a dot-com continue and basis. for long-term be

improve our overall driving overall of improving our yielding while sales marketing spend This through more higher top-line rates, conversion messaging. to continue Finally, productivity. is we is effectiveness which marketing refine the and targeted

and done can fourth carry a positioned And we've into well on tell, Academy. lot we're As you things exciting of to quarter we momentum the believe going here at beyond.

to comments. back some Ken Now, the for call like closing turn over Ken? to I'd

Ken Hicks

Thanks, Steve, Michael.

of believe are for quarter only X.X foundation company, strong successfully chain and challenges year-to-date over and and We've will a navigated We've this We capable the results disruptions. our momentum which last of the numerous proud built are pre-pandemic, ongoing believe we continue. supply the strengthened tackling years. has

call We are us prepared as experience ahead further now chain achieve and we Academy more and our on customer great of a in targeted excited are We'll enhancing about Thank focus the stores. you. customer growth online, up in stores we omnichannel, execute the and direct the opening for marketing and future, investing questions. to has open supply it. communication, overall to

Operator

[Operator Instructions].

Our Ohmes first of question Robbie of with line America. comes Bank from the

Robert Ohmes

Really X questions.

not the talk back terms maybe continuing might you think give can But anniversarying? you're Ken, one, and rolling quarter how you XXXX, into out? half about thinking and how think, second half first in for guidance thoughts that off, on about any you on the fourth of giving things Michael. were then know I play should I here. And but maybe stimulus got about like I the us we what maybe know you're of on lot a things takes puts momentum could you've

of or may gross fourth in through versus of last outlook where contraction bit gross I fourth a guidance the margin margin XQ? be a quarter. versus implies the you different think year pressure kind Could quarter the talk little

Ken Hicks

last year. half. years be through that like first issues challenging chain it number seeing a supply a challenging, least the couple be continuous factors There year are still inflation. will at We're make will of Next the of will

ability be hard retail. we've hard position in well programs properly to we the that the in for working value to continue usually, to more interested inventory whatever worth the -- this paying improve and make said, price put may want we is that. we and chain health on no the the time We've the inflation product sure make number ensure it early place a forward. to more to be However, And that that will to making challenges. to the team deliver. product importantly, the strong achieve results. labor giving at that and and really the as we to feel us if make need sure There's fun. of focus And and the have providing think that do period that worked that we We're at fun, to in our and different consumer, future. what world, customer the that through points we more feel supply in the pressures we're to is will good in that key And priced consumer be of That just that thing continues they wellness. I that's We We issues. consumer to for their making key time, have execute doubt and that the continue do we issues And same the go to the sell challenged. overcome then demonstrated items the a

So we're optimistic. very

hard got marketing. we supply faster as targeted the business, and also next are our other We improvements begin most that grow than omnichannel stores merchandising significant the allocation seeing of in continued opportunities. faster also such planning have competition. than working our We'll you're our improved and growth have store chain, operations, initiatives year. and numerous opening We've And our and that on and the

confident XXXX be that a very beyond. and competitive at and we will have future So strong feel we

Michael Mullican

street that marketplace our want diverse been the about been inventory it's products our In our to With last has quite there's spoke Certainly, we were not stores. And a got Michael. only to to be but there. build challenges chain move able being ability that quarter, sales frank. in vendor our the position. the the Robbie, the tough. to gross they it's supply tough. those quarter, base fight We're question to into margin look, to table consider. strong fourth our winning the to the we've it's still do in the respect products customers, still said, That we around get with But chips

We health potential promotion. the consumer to on for of and impact consider also more inflation the need

generally other is goods. add us the that hard The more for mix thing I'd is fourth quarter

a And the in occurs remainder issue we quarter throughout that up the mix to the fourth so there's make that year. of tend for

Operator

Our next with comes Greg ISI. line question the from Melich of Evercore

Gregory Melich

really over getting I had One gross we margins. years, back larger. If X the on look questions. X is the keeps expansion just

quarter, any think, hundred changed Could of Michael, points sort that I where again, thoughts would -- in few last have normal you a rate, your talked settling you be if a if lower. that on way? basis about frame any

Michael Mullican

No, that I had it drive about didn't way, and would the same progress anything expected. thinking mean, sustained have that a we we're full planned, there. the the I still third update different we're mix on get same to don't we our we new initiatives quarter think we the still that seeing in that benefit than on basis. of little shift a was One thing the help

us So going should help that forward.

Gregory Melich

then allocation. is And capital on second it. the Got

you million XX So buyback? we Do is the guess million thinking are how you've flow $XXX expect a about million the allocating year, what, it stores and more the thing, have whatever normal buyback. the that of I next now? And to become XXX-some X you free done, cash of to XXX

Michael Mullican

$XXX it's deployed. -- that in we've it evaluate to million continue We'll

to and the still continue it have it of business develops. we'll about as we So evaluate half left

Ken Hicks

Yes.

number make continue to we're stable. got will sure investment opportunities. financially of a We've We

could we the future. that, to in of year. One stores, -- -- open XX or this see is number as will them next and we're And we stores X we going stated, and up this evaluate to the go year

We will be also grow We've investing stores, both hand-in-hand growth our dot-com. go that and build in improve very things that and allocation the help the growth our and and planning we such work supply our growth continues systems, dot-com to as us will and seen in that operations chains the dot-com opportunity. help business are much top store those as bottom -- good the a and will line. And our on line

Gregory Melich

X how about costs you we Got the of terms that to should store start stores CapEx and year, do P&L it. P&L impact and And opening a obviously, in the as think of capital? to XX in the

Michael Mullican

Well, update next had year. there than X XX new to our nothing, the prior I to think, target for is Again, we discussed.

kind infancy stores the though even vintage, store, I That vintage. last those Greg, the you and it's that square per store, store XXXX be sales we're market, are Conyers, know information in what its a the chain round out Georgia, vintage we our helping excited First will we in productive so it. footage of haven't standpoint out previously -- of the come one did that I of XXXX, in the and have from most will in salient is mirror about The format Atlanta the negative in provided years. kind XX

very potentially. XXXX, we're looking as XXXX. capital of capital said, million track about for roughly $X.X a only deploy optimistic locations it accelerate per identified locations store. but about and have the is them. for how not Ken So we're think picked from We're that spend We've And we many to that on to

Operator

Our UBS. from Michael question comes next Lasser of the with line

Michael Lasser

those for down out a outlook bunch a Are outlined you tried period. along a Or margin Michael, step alternatively, guided mindful of the of stack that a frame fourth factors So expectation factors the some see starting quarter, the you're you already for of play your to fourth which your conservative to guidance implies sizable basis. what on quarter. And those in multi-year lines, P&L? the you is for just gross

So what driving that? would be

Michael Mullican

quarter roughly go year to in out have We the still to still lot there. the still a go. half there's of the Well, of quarter the of XX%

weeks what variant, Delta were So all and inflation in we're the we to talking ago, past a we cautious and the I done in a marketplace. about mean, view about that's we've X do take changing way. were going with the talking different in much

left to to we're maintain want we started, cautious quarter the but outlook way when a We start. go. so off So like strong much to there's the a has still

Michael Lasser

third My declined $XX follow-up question million the is your in about dollars SG&A quarter.

quarter, SG&A while significant this that -- given to customer workforce of a ensure top all in you according you experience a you fourth rate growth sales you've management. further? leverage lot that P&L? trying manage to And coming of the your how is is do in the describe what maintain from You're some and customers had, Can

Michael Mullican

Yes.

to initiatives tell I development Johnson deployed expected We few were the past have talent faith to that operations think, very been and are able Sam we you deliver with of to the I'd is hours than challenging the We've team labor in has same time, able stores perform that environment, ever a better and fully our customer take organization store that they well benefit reducing great and about years management of number one them the in the we scores and best the team, service be by the at spoken, the staffed, staffed. delivered over have. members delivered them. we out the of ensure tasks we've frankly,

the best do we've got we're confident very all and in shirts the doing that's We it's the business, we're the on blue team in think about. So there. what folks what

workforce we been noticed the a was delivered you it, little we've because glad managing I'm that leverage better. So the G&A but

Ken Hicks

Yes.

new it, are think them. scheduling our people there If with need are system, scheduling done. schedule that different One we've several we is things labor about you when we

they And the historic some quite members rather team than team we they So like. the that other frankly, we've able of when them process. ability and their that time with to hours things also scheduling and there to in their notification have adjust terms the in for have shifts put need people members during just we're

happier the members So are team that. about

doing other -- operational Michael the and used not to areas as stores people that another of by the the we're key focus the stores, or customer. assistance also, areas overstocking the are that And who we enthusiast the program done with is in flowing more the thing we've our force and require things able by merchandise staff that on with better more to. really of said, on also some in the We experts the different have than labor

time. hours right at customer-facing we've So got the more

Michael Lasser

question follow-up more If Understood. quickly. add one I could

Your expectations going not that but low would implying your don't be XX% next at pretty to categories, maybe next sales recognize Would to outcome laps, year are specific be surprised you Would year? stock assumes XXXX? sales that a earnings movement you can outline surprised if be the surprising that to down Ken, valuation more just the the and your are after. you? want down, other or year stimulus trades you to a you market for given be

Ken Hicks

times. and our has to the that I'll of demonstrated first to our we start during quarter. PE. your times We go don't control Well, quarter quarter control to after comps challenging of after we now performance, performance difficult the We've and question. comps deliver all, back What is can comp

hard to thoughtful be continue and plans make We what will sure we our that in are move thoughtful in we working to And forward. forecast. we

deliver the make don't that sure going our same to captured, that we overextend So to results already At territory to do the up we quarter give we we're forward. appropriate dandiest ourselves. time, we've like each don't and going

Michael Mullican

more as couple things XXXX. we about a think Michael, of just

First, sports consumer category the very strong. outdoors demand and remains in

even We've take quarter growth quarter the quarter started stores, delivered on which probably second X-year basis. taking confident new with share developing omnichannel. about and lined that about a We've there. And and most very a third probably we're year, optimistic years and and in utilizing how we need and merchandise step initiatives we omnichannel, we're to expect X to both haven't there. we what that about better for in and take we and importantly, they're holds mean, share. deliver better for And markdown and X-year more next expand us gross Second, marketing, spoke been margins to we We've continue learning operating to targeted machine first the some for while steps talked to what we and in the we do margins for and think back supply the things, discipline. in our Ken We've were localized they I about talked talked to basis several planning this I we're relevant product taking more initiatives mix, a deliver. that able those clears talked our really due tools, the to we a them. functions, delivered chain. future have ability forward, the up

in we've environment, the look regardless a prior So when performing to macro was what got got of resilient years few to. company XXXX, consumer the the strained. the best And a we've in forward happens very to had business lot were to that model, the XXXX past XXXX

environments. believe is on in be being good the to we So a equation of all end place the value

Operator

line JPMorgan. comes Horvers question next with from Our of Chris the

Christopher Horvers

-- terms much the drive So I rehash first going talked few weigh talked impact, question as to you initiatives my to just traffic, I sort you were of And of would rate a rank And initiatives. total drive in those to you that, about in about you traffic of how if those? how you comp? don't did guess order is, different the ability know

Ken Hicks

existing who major traffic the to driver a very actually the results. That's sold group customers about because people back. while. we're traffic more customers, also have -- excited new lot returning shopped was we Well, customers, people, the We've a haven't come increased the and -- both they've that of us for for but we

much last so not that this stock I foremost, traffic. and about say, talked and we've in good only would we're on feel year at better much want, time product last call. about and the first we stock. got but products, the they stock, than And that better Steve probably, quarter. we were We're

dot-com moves have have of We both are Those helped. our helped. operational BOPIS. capabilities, We that's The have business on the The marketing. We ship our also put app addition been site targeted of very we've and addition now that made to place. in And helpful. that with the store. --

improvements people we've mentioned, going to sites, The The whether a really store and highest bring challenging it a store. doing can ever that are on find a the service other environment, in search job, the had the to so stores as go scores great our things they're in Michael level service And know or online. buy the customer back.

they So the great all working this I to customers are value concert them say in one. difficult -- a give that assortment. and It's experience, think to our is it's of

Christopher Horvers

really sounds you this maybe It sounds question. that. I'll the big on and and a sort to -- clear. it you're other And some good show earlier this January. Ken, haven't to talking that are consumer like in season a And December about. January, comment like sort January. prior love of last your Would in-stock, there hear year, pull And started not forward it. retailers holiday bad Got to ran you the month of out show mean me the of I was you of nothing you decelerated comps said a seeing

Could sounds how are a So December? how you given the you quarter could And half of that a much good? first still and a we have have could good -- of so far slowdown? contextualize feeling very maybe the good we January

Steve Lawrence

answer quarter, still Yes, over we're this think, is on little a Steve. try November pretty how Michael's ahead us. in It's have I'll call, I the jump I said to mean half still and point, To out. start. as good with we we a pleased that. of started about a

of that or still depending disruption what sales to difference to last flex But year the with team supply last some and flex were are. been lot upon building year And the in So between the quite year was. really demand big a pipeline us over how played. down high is we has this resilient was dealing year I ago, we've proven, still up game allows not a think, the where pretty of certain chain a the probably be inventory

anticipation our better to into position. we're heading year, would be a next inventory So be going in

categories. and equipment about went spring broken overall the those going think really for up we us And Those really inventory well in our think businesses a stock year. summer year of You or we else like and and content. have happy we last and categories fishing. into set probably in levels the or got back We're as spring heading near out not fitness we bikes into surged it's with in lot had then holiday, to anywhere sold last

Christopher Horvers

any as last of you played commentary And then from it year? cadence out? us remind sort Could

Steve Lawrence

the primarily in by it's same our called were you it. and of that probably the this I think in mean, on anticipate it we and goal would being perspective, an inventory running from driven November, little year, -- be, really strong. I position month last a was year. fees just don't softest January quarter, December was

Operator

with Our Kate next of Fargo. question Fitzsimons comes line from Wells the

Kate Fitzsimons

the like and in the that to XXXX spring on sounds just bit just product Just secondly, ones. just X on quick maybe on reads curious you're how a the maybe receipts, is you good availability if any season, the chain ahead future commentary And obviously just wanted seem a level, when your I side. to normalization out X But next goods up you into can frame Ken, some margin next on more looking just about feel about we follow the the comments category, give were footwear then you hard looks in higher athletic years? the feeling some side? in to some perhaps category made, supply that XXXX, the here front that control, the guys the are X on contrast, looking looking think key drivers whatever few them in would of when seeing you the productivity the drivers outsized like you pandemic, of beyond guess, ultimately, I demand out sort see under end. have through of and lot the years how a maybe

Steve Lawrence

Michael Steve. ability feel around around obviously, the to for up XX%, part, mean, pretty some of inventory to try to first we're our ended part. is supply well second pleased with let I'll with start I'll XX%. disruptions. holiday. through up the I We the I This positioned quarter and answer mean, answer Ken On manage the chain, and we're

you X down I almost with athletic a As the you At probably of point, move point, it. your being on we is are Vietnam big mean, this yes, shut hit out that, months. impacted the footwear biggest most challenge that our suppliers. worked forward to was for was most I there mean, that one. And categories

got we've really sure the and have inventory to to plans out visibility coming. the to what's what's alternative that's sales. go allowed make try to We And coming, not work us other with to good fuel really

So would Academy have we that's know one we've beneath we great pretty the I is or businesses coming say that of feel also things though got that coming, surface, diversified brands. really about is a the good not we balanced what of and and offsets. portfolio

where if big little in workwear And we'd we to like light an footwear, we're have a so footwear, be athletic a even business.

We have casual a business. big

other obviously, mean, we hard category to we then So have can lean and footwear into. into. I have outside lean And we apparel, the categories of goods

pipeline we got category, little have light of and it's may we've So other even to a we in we're sales, the be inventory if a businesses. have offsets to offsets particular that we confident feel enough in confident drive the

now, right good feeling we're pretty about that. So

Michael Mullican

a challenges in did of reminder, stock one And customer's to between had in the when quarter might again, trade as see brands last willingness brands. things we that have we in is the some the

So footwear perspective, from help should that a us.

Ken Hicks

quarter year question With second there that matter. appropriate in first and best to of feel feel that will positioned. be the Yes. There I regard to -- steps so we -- we next the are no But challenges. is be that for the taking quarter we

not in they there a think, are question to is grow when wellness, that last that experience. health, that be customers’ positioned low That is actually could this a while be it's your mean the in will long where that's There will that. terms the time necessarily well normal. term, single-digits. fun, And XXs. can for -- important at some pullback be be the to understand be for one time of long-term looking good. giveback. we trend, But always still doesn't in grew to trend I'm there may used of a enough a things bad. can period To so of And old long in the And high I I the teens, didn't things, remember

with XXX that stores. of physical are things So we We've we we're the addition the have doing XX got in that -- with from stores. We've states outside. got

We even haven't the in states stores. several XX X, X have X, states, only of those

works as within beyond current And that this footprint format format area. an has then just for our have growth our we proven opportunity beyond. So well we've core physical and grown our

past that more and with goods we in and stores, new dot-com the the right have site. growth marketing content we is have Operational And improvements the we as have good that over growth, that years we of like staffing, how terms talk the sure targeted right then business in put customer. a right sure communicating we BOPIS the the in customers, here the the in underpenetrated, have what we good staff to make We and we're of making X that customer, XXX% are right that seeing store. the terms operational that the our methods talk to stages ship of we to early focus the

the the that our very, when I we're think good you what future so to And physical company. at in customer our customer, the and look opportunities the we as about ability place I doing have, improvements and feel very operational a with communicate put we that

Michael Mullican

run excited still extends we're the expansion. for we earnings to point, just it do but pandemic and consistent anniversarying And growth during expectations Ken's about, now the lot and what Kate, we're certainly future. on, pandemic, unit And that's where reminder, sales, have pre-pandemic, this big have we passed margin and to that a a as

Operator

Our next question Imbro comes with from the Stephens. line Daniel of

Daniel Imbro

to ink your plays ask the be I'd out industry into on great mentioned, Ken, it. But I that distribution? seems inventory obviously, environment, longer position, do narrower there's apparel you think improves. some the inventory distribution. you that when And curious an are of the wanted not think companies hear sticks gets term. to on if one as how like way -- it it given you over narrowing enough plays production out this In do through to do how a

Ken Hicks

we're they outlet because we benefit that. benefit They them, vendors both feel growth plays place their we're like because base him. support the from them we themselves. customer sports may are their and, developed can. as and grow as do outlets longer our is to from them view to more his And will many they know strategy, I to need -- they're all, different our on outlets, are us term, an And team Well, we bring seeing be out can cut all key think good present whether grow strategy. relationships, have they strategy some realize but with so And Steve I their promotional. they and those of support achieve well a and back to important the Academy because as don't as the where Academy continue and it the They very people. assuming continue cases, and need, to goals, for they should. have some will implementing can't others tendency their of for well customer branded so as they think reach don't they us. long-range people product we are goals. we that first But I have benefiting don't develop in they for it they From happy important to it to work a they will that And execute with And they all and perspective, they hard But our can't There not I'm as will great they perspective, begins them. their do. we answer. with their

our appreciate For we strategy, it.

Daniel Imbro

previously? that opened that is maybe up of could years a new last Steve. that I label that, maybe you national? private initiative follow-up brands your you Has Academy get your merchandising quick And any guess on X.X the success versus the how That's changing national helpful. of in couldn't store

Steve Lawrence

more Flask, obviously, always I year. talking I about we're assortment earlier Hydro mean, mean, when our that I was we is good, that mean, a business some in to spent we've mean, in. before, launched vendors. new conversations. I So receptive added this we yes, time are couple to wasn't when people talking them

excited been we're that. Performance good. has there So about pretty

all where aren't more yet, to in categories to limited them other like categories. but It's I share out we expand stores ready mean some there. to stores when allowed bring to brands we talk We to continue into we Face was North probably it in. will us

robust for our customer there's definitely know shown up it's And is So has a newness, us. ideas, what opening you new new appetite things. doors for

that So definitely brought that's now. about we brands on why we're continue talked selling Magellan getting ovens there or right things pizza to with we, collaboration to work the and on Whataburger Yellowstone the we'll and or call talked our those product those. out about It's some or of the table,

private that it of from cited In settles private availability brands, ratio. that national new label around terms mean perspective. of shift and in. always terms it ideas. for over we'll I to sense right in something our don't see bookends, new within looking definitely it's anything going to we've But if be And an it that fits makes suppliers, our national We've we're changing longer customer, now seen talking bring for XX-XX private we've number. in XX% in down. XX% right It's somewhere I that term and brand. brand, percentage between talked see brand about don't maybe the time, I the of going

Operator

and time for Ladies X we questions. gentlemen, have more

Our next question comes Basham of from line with Seth the Wedbush.

Seth Basham

the My first and how and do quarters? to expect you around inflation quarter over inflation much the question comp to just next contributed much thinking about of to comps couple is third contribute how

Steve Lawrence

space. there traffic of We're I have the it's positioning, majority sure price very focused So the we call We upfront. how our cost customer are where as I on we are value also us was in the to vendors mean, I been they're own on by mean, private ourselves we very making thoughtful the increases. to increases comp being about and brand. definitely view very quality don't sure the make and we're cited think along we that laser providing the publicized. for. our taken stores. we passed the on seeing that great widely provider have the keep that and looking And driven we that that increased see value focused, We've

traffic on gains sales So majority getting increases. we're us. margin some than stronger But The the call regular suppliers has actually now, I there. We've and items less of a candidly. where was pullback sell-throughs in clearance seeing we're which vast through and promotions anything couple earlier the of has surgical places an overall that less from what more there's been been come right environment kind for promotional or of moves. quite of there. seeing up an out means asked And has the AUR mean, taken price, else, really we're position distribution healthier the at here rationalized

we're candidly So the that's seeing AUR where most increase. of

Seth Basham

to That's retail. the that, early the Got And it. just point that is do in good When helpful for inflation as perspective. turning you a period might be? follow-up mentioned Ken, really think usually thing a you

Ken Hicks

impact. problem. we've had it was a when and had call for Depends period. high-growth big inflation, out of on it how taken that did years, old, it But we've on through I it, think that's I for extended said, vocabulary. during not period and the high a how of gets. has actually went transitional if lived time, I'm like long intermediate a If where have That let's periods I and been usually But goes so an

really depend it So how will long. it on -- high if how and

Operator

line Our final Vadis Zolidis from Capital. the John question of Quo with comes

John Zolidis

you a you've that but the doing not about as case addressed vendors talked drive excitement irrespective be business the the a of next going simplistic margins. consumer. And little coming the we've customer. and standpoint why help lower you believe and recedes, and a from internal you and of might you distribution we year of maybe you a ways, repeat think that that if as from I kind customer an your number this know drive are of will a are categories specific on beneficiary are here, bit think incremental what wondering or talk what kind from couple it sales to that therefore, purchases specific get angles pandemic as a of view sat to then, and next categories also pandemic about about standpoint pandemic been could was purchases, goes the has is year think I of for with down in in innovation Academy

Ken Hicks

give thing one those little were And the John, Yes, the to who our difficult market, it's of before performing the most see. us is we which open. of more it's for confidence. Oklahoma, other not is are well Mississippi, to But to the been our pending, have a Carolinas or outside in Alabama. part, but Florida, Arkansas, Texas areas They, in the market if just you've reasons for been and

because of call -- them so And still pandemic are here. I post-pandemic they won't

seeing did those they in as growth the pandemic, operating significant before are and areas. all they of So we're

So confidence. that's us the one of things gives that

In things been very, help well. We've connected very they've habits people of exercise and on doing the got terms that some iFit, hobbies of doing with exercise continue build categories, them things are -- that that's and the new going to equipment. will things new to in and

camping. got improved things up bring a in will going that fishing stepped Magellan we've get also who camping. and number equipment of mentioned, North so we in campaign customer added that more of will In and Coleman see in our of we outdoors a a people new have Face. Steve with in And number efforts that with we've to the are customer fishing, in and We've that a upgrade have. also stores, that some but

those have you pizza, their a stake, grill Everybody pizza oven, should item. areas oven. pizza Steve who cooking It's minute. a mean grilling, has can cook so a And in in It's everybody is you're the kids a phenomenal mentioned your X I so pizza have the happy. phenomenal.

apparel. And well of what seeing in categories will that big some are things we're those important as drive so the as

is the Armour. things, with with We we're Nike but what some vendors, also FREELY vendors continue our apparel adding of will some new private things be to Under new working -- that Adidas of label, that and from doing Steve new Yoga the

got about what Steve, I closer newness. am. excited it we've you are And I'm in of to So than terms

Steve Lawrence

Blade, No, new within you it. across on we into brand hit or expansions the and I Googan a brands which diet categories are from multiple got categories, We've Bubba like have categories, other brands coming Fishing. great mean, fishing. steady in newness [Kamp-Rite], extending new in some some a We've in cooking, backyard new We've the in on of camping doing brand whole got stuff outdoor Ken got living, private mentioned got label. in bringing and our a for innovation private we're there. Mosaic. coming innovation some relaunch spring. of lot we've extensions a We're brand

business newness So to think, with there's coming, a of keep the and customer the propel engaged I forward us. lot really

Ken Hicks

I the to will Well, look questions, answer all the interest good hopefully, those the we to term. comments a a to in support And for everybody a We're we're it Michael We appreciate terrific said. the as that -- We the got new good very, Academy academy.com. from we've lot helped and holiday chance And happy And said, our at has and start. future. a questions. you as hope questions. got things anticipate a season. and And forward bright continue a or shareholders. holidays a we get very have year, Thanks. appreciate working, to Happy good to we've I long we shop very off I of that good holidays. gave you

Operator

your Thank This a you participation, at and this Thank concludes lines time. you conference, and may for today's have wonderful your disconnect day. you.

Academy Sports and Outdoors (ASO) 10 Dec 212021 Q3 Earnings call transcript