ASO - Earnings call transcript Q2 2022 | Academy Sports and Outdoors, Inc.

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Operator

Good morning, ladies and gentlemen and welcome to the Academy Sports and Outdoors Second Quarter Fiscal 2022 Results 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. Questions will be limited to analysts and investors. Please limit yourself to one question and one follow-up question. now of call Sports Investor will Hodges, to and I President Vice Relations Instructions] turn over the Matt Outdoors. [Operator for Academy go please ahead. Matt,

Matt Hodges

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

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

Ken Hicks

us for today. and morning, Good thank you, Thank all you joining Matt.

the becoming vision This durability that supported priorities consistent and great everyday footprint and assortments our positions while levels, and and in our this outdoor plan I'm by announce, focused well second value our profitability a in forward. our expectations. achieve to excited growth store is deliver executing is our Our XXXX performance second our this XXth the our advancement. It retailer the bringing expanding Florida sheet, excellence, expansion, to Panama our our of of fun during strong country. stakeholders. is the on healthy vision was more City, this to opened we delivering for value quarter a to team omnichannel country, our in and We creating of achieve market store and going quarter. our operational Florida. Academy Part location to remain store best first us inventory growth of model and sports in balance for the new confident rest experience sales with the of customers strong The remains by in-line

we've two in and for far XXXX. we open Georgia, existing additional come one to opened five the market new bring total expected So an so in another third year in our a this us, out. four with stores, in market stores more to Virginia, continue to build far Richmond, quarter, stores, one Atlanta, These

return open making peer on Academy new nine productivity fiscal years. five group over XX the a year be in new to to is stores a assortment stores who Thanks mode While highly everyday have our investment. the store to this in stores customers XXX openings. execute capital national indication sales and an exceeding to a which and and brands good a in compelling with our private overall excited of initial our opened is value. are it stores We're all highest growth use to broad our the new successful expectations, these that expect our top team stores the high-quality drawn store are next members of at XXXX early, of helped high

our expansion call, distinct opportunities. I on last As the consist three mentioned plans of

Atlanta, like markets fast-growing stores existing in have scale locations. the now we've four Georgia, opened where XX and in months new two building past is First

we fall. Lexington, where markets Florida, as Second opening like City, Panama third opened we just a this store markets mid-August, and year. this West And later Virginia, adjacent Kentucky, such is is open opened Richmond, where into and new Virginia expanding where in a we new later will

The as As over buy due ability of and our expand to to sales. quarter omnichannel leading presented we provide penetration the the high of once our a market challenges tough continue we believe again will share growth online, team awareness in a I'll now their perform results. macroeconomic in-store base to environment. increase similar quarter to store second this overview first time, level quarter high brand as gains the pickup as well demonstrated

were Our X% our pre-pandemic strong levels in years results as continued versus with comp line XXXX were business the negative second outperform and These to expectations. reported sales sales quarter last XX% through versus profits. substantially the increase and our sales of

while Our the throughout offering to our best resonate. value customers continues remained environment, have challenging economic resilient

to XXXX hold the of XXXX. trend sales compared the to expect We for remainder

that While sales to grew their sports more each compared will each by decrease merchandise and by divisions in least and at remains the the footwear, XX% merchandise apparel, merchandise year-over-year call. when saw pre-pandemic sports in than outdoors in discuss higher quarter later and each over detail second Steve our of a XXXX. our division recreation, four with each results levels. than This of divisions recreation, our XXXX, increasing highlights outdoors XX% substantially fact and more of the merchandise

pleased performance, we were year. sales positive versus XX% very our During last the quarter, e-commerce grew which with

experience. seamless We invest continue create our omnichannel engaging in to accelerate customer to technology a and growth

payment launching app be example, year. this later Pay we added and full wayfinding store Pay (ph), Apple For Google mobile will new in options and on our we've like

our levels. in and customer see improve, and technology chain business as customer deploy we yielding increase, supply continue are We strong at store's, scores our store enhance to survey productivity omnichannel investments record and to continue invest and These experience. will omnichannel across assortment our the grow, to inventory in-stocks results

by Our and our adjusted was XX% gross margin earnings $X.XX. to our sustain above This control rate costs. per ability share effectively driven were

Our flow growth. to generation cash our leading with is profit to remain expected strong margin gross in and full rate guidance, line year

ahead Looking of to good go and sales remainder quarter had back-to-school hunting sports to year, move comparable as into the third through season to tailgating, a and sequentially we holidays. we follow and continue and improve the expect the the

Outdoors now our new guidance. Michael? As different efforts, provide capital results, company over our and poised more provide grow Michael details I've sheet and is second Sports update the on stated our XXXX omnichannel excellence its balance operational growth. I'll and strong financial discuss before, Academy expansion allocation from to turn is call and years profitably a and through store to quarter to on ago an to four utilize

Michael Mullican

the which offset result an once a by first X.X% comparable Thanks, everyone. environment. the over In the higher expected XX% second a Good On per the second was while share to transactions Ken. the by Academy potential declined to sales of to morning, delivered in our was compared decline, partially earnings pandemic. consistent year, with decline which call, compared our improvement was unit quarter by X%, per share an but prior our were discussed performance sales growth last increased demonstrating quarter. $X.XX deliver sales last to XX% decline Net compared strong benchmarking driven quarter, a average ability this billion, quarter, growth quarter, we reported XX% first year. earnings prior the of solid on year. how normalized last and earnings XXXX, versus sales second prices. results our ticket challenging last again in to we the an quarter XXXX, increase In increased year are sales approximately the in was of we fewer The

at XXXX volume neared levels. the sales addition, but In shape elevated overall trajectory, the of curve the

store well, sales sales XXX% continues and penetration e-commerce sales X.X% QX to ending XXXX, The business increased making grown XX% it part of When important store. to consecutive approximately our the strategy long-term customer efficiencies. of the fourth to to will by Academy's experience, QX ship enhance investments our we the the operational to expand basis the improve quarter XXXX, to enhancements at XX% of further continue of has from compared as store, our in growth and These and omnichannel such to reach XXX rate points. is QX Our and rate and drive e-commerce further supported BOPIS, compared Omnichannel increased academy.com compared mobile ship app new growth. an XXXX. penetration and invest to sales has double-digit as customers

increase sales We and academy.com in brand open get in to also we an as awareness more adjacent markets. from new lift stores expect a

brands new demonstrates the The mentioned, ramping our national top of openings assortment opened tend stores economic customers. whole our early for times, based currently value broad store private a have of tough providing nine of resonates of family products As model seek with we four up. to stores business label out value. Year-to-date, In new are that and planned confidence for our customers the XXXX. the success Ken

believe we we with compelling products points. price that good, to selection broad our well meet at are So need positioned better, best of

expected model. the general operating are of stores All store new our meet to new

have on third, full four to years; least these maturity ramp XX%, opened. to anticipate we So in second, five first capital a stores year the will the accretive and after return EBITDA first invested at of being

per and strong. our store operating square quarter, trailing $X.X second sales the very $XXX XX-month once again were store month Trailing was productivity per During income million. existing was foot XX

existing stores our profitable accretive us which great are our to a gives future XXX% and As of potential. confidence growth reminder, earnings, in

to gross margin. Moving

This was a Through were our points The from percentage history. compared by was merchandise were margin of mix. XX.X% compared a which to our and private below by sales import our in freight and year. in increase driven only last label higher the $XXX margins XX increase the increase last e-commerce merchandising QX e-commerce efficiencies, sales offset higher with dollars was rate business margins gross also highest to in shipping XXXX. we growth year's million increased costs basis the costs company's XX.X% merchandise our Our total of as of an

sales, a share expenses XXXX. change expenses compared vesting associated quarter, QX XXXX. non-recurring a of to in quarter were the second result lapping primarily of The point the of the SG&A During the basis decrease accelerated XXX with XX.X% was

we year expense, points, was the XX.X% income this of to million net or quarter XXXX. million last in $XXX XX% cost basis, quarter income Operating second $XXX for In to million flat QX. year higher expenses SG&A making of this total, most fiscal income basis than non-recurring of Excluding the for adjusted increased deleverage. was delivered Academy's primarily On history. all fixed an profitable net XX $XXX.X or sales due quarter

diluted earnings share per $X.XX per in share compared share in quarter share per Adjusted per GAAP XXXX. of compared share QX earnings QX $X.XX to $X.XX $X.XX, to Second were diluted per were XXXX.

million $XXX outstanding in sheet update billion and balance for a Now We had on ended and the no cash with facility. $X on credit an position. our liquidity quarter borrowings

the $XXX During we net activities. and quarter, generated million from operating cash

priorities each maintaining strong a generation, Given share, to and of capital million execute and approximately were performance our for strategic we cash of on by per $XXX million shares our X.X priorities paying repurchasing a cash balance. $X.XXX in able strong growth investing dividend our

declared addition, $X.XXX share on In as dividend of stockholders payable XX, XXXX record per of recently the Board of XX, September a October XXXX.

have fall properly and value categories season. that Regarding initiatives the the all stocked for best with inventory, assortment allocation planning and are our across we ensured

expected from XX%, a effectively ending are to net updating updated full the current have our units guidance is us year. X.X% per sales year inventory and declined XXXX, Net $X.X our $X.X last managed on to XX% year the that we QX billion have billion, share brings we X% reiterating our That of while of to compared by XX% Based and compared $X.X comparable When results range Our up as guidance inventory. are significantly, was quarter to reduction guidance. count. increased increase and inventory on sales comparable increase still down while The our were in sales forecast balance our to dollars follows. sales with to earnings sales X%. share of billion, reflect demonstrating full a trends, to second

to repurchasing expected full expected for the still further merchandising an range is the from to $X.XX diluted for for outstanding to turn details year. the per $X.XX to share around net million stock share. per certain million. range calculated expenses to income include not still Steve? for are rate diluted Steve and earnings share. count operations earnings such share and year margin XX.X%. per estimates are share GAAP I excludes shares per estimated average will GAAP The $XXX is gross $X.XX million as $XXX now Our from the which share activity Adjusted range EPS compensation more store outlook expected full per updated year. to based does diluted range from to expected weighted XX% dollars from preopening expenses per are share per earnings any to $X.XX of The share performance. our over that, now on call With to now $XX

Steve Lawrence

Michael. Thanks,

earlier, sales best in heard decline QX our down at came is billion, the a our you As was which division in X% Breaking performing versus the XXXX. category, $X.XX quarter by sales recreation, and football, versus sports up to XXXX. golf, contributors. all was being The with versus which sports business soccer, be 'XX, XX% baseball down team X.X% key but extremely continued strong

couple HEYDUDE for levels. down as such expect versus we've sales year, driver saw in XX% X% it outpace this July and all brands the The back-to-school. a Other where last over quarter. to past We're up QX. remains Puma, early quarters such sports sports results strong excited to the XXXX. a continued the business apparel strength but Adidas second the quarter. challenging versus children's last strength spots recreation has sports saw as big ran in led improved pre-pandemic inventory of We're bright only were The but the of for shoes, area remainder furniture. versus to X% Crocs, sales the Apparel business footwear team XX% division seen Similar steadily and at in continues launch HEYDUDE and Fitness supply. Skechers, this division rec, but the to came in best time in most cleated also XX% XXXX license versus some included of increase versus Receipts was in over down business and demand over up year, categories year. stabilize some in stores outdoor also to our We the be our XXXX. we seeing versus category all during which levels of water course the business at way and outdoor increases of

sales the Our was mix we the a not having of as we quarter, believe primarily selling shorts the of athletic as in balanced lightweight tops see to year. corner entered which quarter. during inventory apparel back the we the into improve trend turn and business we optimal attribute better We and the to little inventories our half back-to-school are season, softer did the well positioned drive

categories X% category Our was Field last supply a in strongest XXXX couple had aggregate in-stocks The us but shopping advantage most last versus we of were holiday positions outdoor was business upcoming are past down years. continue with of higher but while the versus these run year, Both our improved outdoor totally inventory year, versus businesses the well and believe quarter. up the and has of along season back-to-normal, take both was position opportunity. levels. XX% and the much running comp improved business XXXX. inventory than We the seeing maintained Camping business gift to above across levels we our not earning in at Stream at this for chain our in over down been positive to

Turning to margins.

points came allowed XX versus our XXXX XXX to continue years. we've the quarter surface, Gross of to still our All the the hold during on the promotions allocation versus up merchandise margin approved We over was years ran basis down couple XXXX year, us the was the have uptick disciplines the XX increase teams which for have basis most in up the around and to in points which we increases work basis XX.X%, rate was past at of Beneath in our absorb planning past QX, same seeing hard of couple and buying in while versus points margin was QX. made last merchandise gains the baseline. over done margins.

and couple first more our strategy, than and as space. promotional That confident expect the us that we Michael guidance forward, discounting very years past year the coupled our position our of half most value leader of maintain the accounted expect discussed in is gains everyday to we our in value to allows we've we're competitive of pricing said, the maintain promotional margin be for for Hicks being and this the earlier. Looking with second increased the the to half

Moving on to inventory.

inflation. the done delta sales Our year, dollars grown increase ticket X% as business XXXX. Outdoors, have variance expansion last dollars rec along best teams some Reminder XXXX of through of up in XX% improvements businesses have We year, and time a driven continues compared challenging hard the the of quarter the better of offerings various and of year stock much across sports our this of categories Heading XX% terms in the total the into versus in balanced in units second up inventory the and to of mix. are only back down inventory is ended in XXXX versus inventory XX% part an outstanding the the what and in Similar to the job driver to our over by versus XX% assortments inventories managing cost be of the is goods every to with sales across of better between with half quarter, last category. our and units. bigger primary environment.

when later inventory than much and such receipts of late YETI. year Armour categories that is the take XX to XX the overall ready you Adidas, a key our the landed days liked. last these polar better to advantage quality to year for initial that will for Under of will fire shopping pits. and last in as natural Additionally, fleece fall the we stores, of hunting Many in holiday businesses brands we're We year we many you such with outerwear, this the walk moved timeframes tailgating traffic back ran position sets come our traditional days have fall in of and our along and would Nike, see as

to new Another sales brands markets. into lean and that with driver continuing customers resonate our outdoor for is us sports in initiatives the and

out Plus our across new to Magellan stores, at ideas pits. it distributed Shiner across fun is [indiscernible] In popping inspired initiative as extensive limited launched capsule to collaboration our Texas, We such in which with real the products. is our that chairs, it’s season. idea the Categories stores fire to Shiner deliver second and and as a HEYDUDE brands launched, rolled headquartered co-branded several We ago collection also collaboration We're kick-off partnered which excited footprint cross TikTok brand in time the of we position to major front couple you'll koozies, widely but we this (ph), canopies, the Brewing, Probably most just this such SplatRBall trends ever. t-shits of back-to-school, such help tailgating coolers. addition even all shirts, the included up hats, stores. see we're a aforementioned the about, craze our most by grills and fishing items weeks which

category able much be a moving So that has with the collaborations across into initiative we’ve inventory stock in we to Sports the of playbook virtually building extremely supply for a can holiday. a worked with heading been Teams Now be forward. that resonate and full brands back throughout and it well. but We should the to sold to on couple floor have we better chain traffic our add drive and consumer weeks, maintain get every believe hard stabilize position

as in our continues seasonal from when on our offering coupled the value the leader key softwood cadence set Our categories. promotional and with our everyday value to reinforce competition position apart us categories

distribution more key that for controlled looking will by best to be believe tailwind us in a continue and partners also vendor outdoors following sports brands stores. for into the shoppers We by national our

reach on share well positioned year. advertising remix during our in will comments. to have Ken broadcast believe and lean that I'd pick continue the turn of reducing the into marketing closing, This and closing over and more Finally, back In and print. strategies the to now digitally continue to we to the traditional our business, reliance Ken? we we marketing place spend while remainder are drive up proper for to overall the call effectiveness. improve market some like targeted

Ken Hicks

which improvements strong Thanks, In Steve. and COVID-XX consistent before retailer put operational the the of to direct achieve sequential outdoors retailer financial positioned be with pleased pandemic profitability in the the in many result country. is is the our and of to that our place versus we've closing, demonstrated in environment, and of best we value vision improvement performance and long any sales QX Academy everyday in comp believe well I'm sports the choice. the becoming

operational excited members with hard opportunities flows or to the growth tremendous remain have new Academy's and the country. of our vision like And thanking improvements future it. Outdoors in cash whether up avenues all close commitment questions. open support and about Academy call and for would and the work your for of of team also the outdoors us, Thank appreciate We retailer stores omnichannel their confident to We ahead best becoming support. you. now growth I your we'll and of continued sports to numerous the stores, and existing from by Sports

Operator

question Our call Chris open JPMorgan. line Horvers the proceed now company from your questions. with will for first questions. of with Please Instructions] [Operator come The the

Chris Horvers

quarter-to-date had Thanks spiked good trade XXXX good also about did then versus receded? you that terms gas stay on true Can you've morning. basis? consumer and over when You the seen you how back-to-school talk a season, trend little a in down? bit around mentioned consistent is a behavior what but and about quarter and behave prices consumer that Did the of

Ken Hicks

Thank you. Chris. Hi,

be some the buy in effect label. somewhat the of consumers that sports are interesting are to But the to consumers seeing private our barbell what end. in at We a enthusiast the we and and are those interested of and category to outdoors that seeing are consumer our that continue there's higher buying we continue shift interested seeing, is are

think quarter as consumer But so our the why the see that's private sometimes said, better think important that's to talk and that have, of baseball consumer, kids shopping And and soccer. discretionary that we what's that one times, is not to still who's for we looking businesses fishing outdoors about business the that's I and The of the the is what's we many Steve in the was families still I so are And sell play things, the to camping for offering. person in even label and the value they barbecue. go and continue to discretionary. tough or into the going that's categories said going are still we going

they so pre-pandemic. we're a strong lot continue And a seeing and be higher than those categories at much level of to were

Steve Lawrence

This is a add of just couple color. of pieces Steve. I'll

label very one So the stronger point, to private see quarter. hand be Ken's you on in

brand On is the like brands assortment. business, in that YETI, see flip side, the our really a more you which strong one of premium

of a little things forecast forward. also would of of there. of you bit really month asked I quarter it bit as shape result of than the that month to below quarter, increase around kind keeps back month as kind average, versus maybe we returning little how one that maybe see is that's variance, that, one and it look XX% XXXX a the the we through roughly business quarter, but a better of another by by kind certainly is bifurcated you little month, the a say So go we XX%

Michael Mullican

Yes. This is Michael.

has A driven that quick Freeleaf, by label Pro newness really in private label others. with of been the one Away, strength in add. Right Just lot (ph) some Magellan private and to

happy with the So that business. that we're way managing certainly we're

Chris Horvers

for Got Michael. it. is And then, my you follow-up

of how into probably about maybe a free about working would As as we but seasonally low a point, you we share Obviously, cash funds -- full year the of balance would think balance year repurchase a this point flow one at additional becomes share inventory, the about cash potential that think expect potential back we to for from source capital just and year. half for think -- repurchases? probably generation. think cash And so you're the this -- and one should about perspective, additional later about cash so minimum you this a thinking got try do the of think

Michael Mullican

Yeah. think things. A of others I full Look, are couple of inventory.

right Look, that inventory positive the our a well in good We've tough environment have illustrated again I is of this as we in many it tremendous the quarter comparisons. XXXX. think tough earning that a compare one amount We some level. potential managed and to of really

In standpoint. addition to profitable net and per had the we've share able earnings the that having led ever rates quarter post income most were to We EBIT sector. from an

think retailer certainly I hasn't to we yield, of fact, have cash approach free capital a possible. our specialty In allocation these that the on flow We in at there tip top have the the makes double-digit head, which With discussions changed. cash mind, invest. in

to capital generating everything allocation. to cash do approach enough are We

thing point to around stability. want environments. maintain you The of the to that cash flow that nimble a We is be in a us consider that variety we first mentioned allows

manage debt years done ago. that a there less billion $X we've and a I few we We're that. think plan Then got to had than we way.

five Conyers that Secondly, XXX we we've our growth add hundreds opened we can City we we years. than fund could initiatives. of in more second had the stores. have the want within find. last make announced the best We Panama And back and conservatively, sure to We store was to Conyers. go mentioned the topped quarter plans that that ability next out quarter

evaluate XXX% continue to double return the IPO. growth, shareholders, it, we We look Board going continue going we're opportunistic. to figured in a do announced times quarter has row opening do have value, bought got We second we'll can did last of at The can a grown we digit to out past $XXX years. those certainly We XXXX fair want which million three. like which to all there make quarter. an to to things. X in be feel sure and program back five and fourth it’s why what hitting -- next few and over We're our since punch left think additional a we've take quarter cash of the in repurchase raised certainly fund the we years store the the we So to we is posted and that for targets amount good that. The we're academy.com. to we've academy.com is XXX the stock purchased in is authorization still all line

Chris Horvers

much. very luck. of Thanks Best

Ken Hicks

Chris. Thanks

Operator

you. Thank

proceed question next from Please Simeon your of Our Morgan with line coming is questions. with Gutman the Stanley.

Simeon Gutman

you're Hope good. Good environment. everyone. Hey. promotional morning, wanted about I the to ask

bit despite uptick. you that then dig Can you pre-COVID? well to anything that's there's magnitude point is still little And a why helping? So it this continue? talk the can way to it did -- about markups higher? because mentioned a in if category the You just about the or to backdrop it, changed that is Is could each structural initial maybe mix think in

Steve Lawrence

Steve. take stab is This I'll at the answering first question. Yeah.

cadence us So business, Structurally, of has work share we've surface really cross be talked lot think dramatically a of flow, a current managers much our management, inventory localization the more beneath initiatives we've better planning in allocation We've inventory. to better merchandising, process, improved multiple and efforts. our calls. given done previous the increases. our markdown to I better in timing lion's had and about We've with lot which better terms of get the of

certainly very, to think don't the think inventory overhang inventory sustain quarter ribs So help that we're to we've I the is to structural are margins. things say we the are kind have deal of within stick the year. think smart another those with. lot we would thing helps how been and to I'd say versus managed and about We've also last XX% up going of a I that I

think units, down X% and where it's units. X% about I were we 'XX actually dollars up in versus XX% were

about thoughtful normal chain been more really we've supply starting those get normal, sure we So to control inventories. as to a the making back not is little quite although

certainly half we So offsets in We to And think to the year, it. putting that into it around We've got more thoughtful are be last us improvements going the back I allowed guidance to be made than have certainly I it promotional very as that think we've as think we holiday. promotions of the that our was mentioned. structure about back is about baked competitive. be then year the

You a and good about goods mix side of percentage feel us. we're of with But that of environment we the to soft see our bit little a mentioned helps deal ability business where becomes we the the promotional out positioned bigger mix, really as ahead total.

Ken Hicks

us. There promotions promotional is are become a our were the longer who think more they're have cases of cut and I people therefore of the back One in helped couple other have have promotional in no from more things, some and business suppliers rational. some that

said, Steve level But AI to operations to improve ribs your those to that that's times to that not is the pricing We and the beneficial. what to thing use been allocation, that they so our the Steve And stick prior said that value over seen have improve a key But was that actions pandemic and most as will also the are factor. and out continue we've I time, proposition promotions react our competitively. planning think will we have there utilize but last. at are to taken in are there to continue those promotions bigger important the

We from come. to some continue them to for get will time improvements

Simeon Gutman

a maybe and consensus it's And demand thinking rebasing year. for and digesting category the rebasing year either then this or next the in backdrop then grows follow-up, about that models the basically

some at big winners? in you're of example out. can grow category the again? fitness clear category is to we starting You that see units, say, see a you're that as mentioned a to seeing start an COVID fair flatten I as it that all And think, as that Can we then stabilization that to look

Ken Hicks

Simeon. Yeah,

really it It's -- important normalization, it's people is I talk realize not normalization. stabilization. think about to it's

right exact word. the use You

pick it's we buy at that we they up so forward. in a And a And higher categories anticipate again. thought buy didn't in XXXX as XXXX People pick were treadmill those because to going believe that one level. go pick like and and do stabilized stabilizing we those they a that we'll starting will grow has up level at higher to up

Steve Lawrence

to all Ken's point, certainly during color that, They and ‘XX. think trampolines make a piece categories of kind pandemic. you that and categories searched fishing stabilizing fitness and to average additional aggregate, COVID wider the I are and so They're were dropping versus all those that and well One we're is of those take and the winners. categories ammo of bikes to firearms like at point But In that versus number. level. XX% about above on off

Michael Mullican

Ken XXXX Yeah. They've much than the at and of higher analogy to higher from used going kind of substantially has his Denver on Galveston levels. somewhere between Colorado Denver. and Plateau. re-baseline

Ken Hicks

use Plateau everybody The just that where me Colorado relevant. let won't I not it's is. because anymore He [indiscernible] knows are think is, Yeah.

Simeon Gutman

Thanks Good guys. luck.

Ken Hicks

Thank you.

Operator

you. Thank

of from line your question Please is Lasser with the UBS. next with proceed questions. coming Our Michael

Michael Lasser

that rate to for think In for the previously you taking long-term does about now? Good gross sustainable light change it how the performance higher size (ph) run XX%. margin morning. Thanks margin you XX% gross business my this quarter, of the that Is question.

Michael Mullican

very year stick be. it past. But any I Well, things managing depends, XX% we've said feel the stronger can we with be into this in frankly I where XX.X% there's the that. We to right now, -- and playing comfortable certainly I But mix. perspective. think good mean our don't think merchandise in our could is certainly we we'll long comes feel very can that of that that's it out, what promotion we level the control with our change about inventory term around It than on and the marketplace.

Michael Lasser

modeling trended the stacks. fourth by going three Is that And for us to and out comp is the have over the suggest follow-up next a geometric business the projecting we if be then is, the way It to flat question few Thanks. right would my quarters? Academy year quarter. that

Michael Mullican

provided and improvement I we sort we to stand the see that some of throughout through Yeah. But kind you sequential would we'll that. can mean, year. certainly, expect by guidance the

Michael Lasser

Thank you very much. Good luck.

Michael Mullican

Thanks, Michael.

Operator

you. Thank

is next with question. Stephens. from Our Please of Daniel Imbro coming proceed with question your line the

Daniel Imbro

a for Hey. wanted morning, guys. Yeah. to inventory. Thanks ask on I the taking different one questions. Good

lack think to be -- the of I my left are versus efficient guess much of XX%. maybe or you reflective is of ‘XX, more maybe like Where that up where to I inventory? up headroom inventory X% inventory you And guys mentioned just running sales You or should you strategically, (ph)? maybe a inventory that how you is due table versus is how sales much stores? that want would of on

Michael Mullican

more I'll very it just let strategic. has about we've the take we're we But working been to this our I'll from about it have. on. team with with I Steve mean, that his have one talk some managed stuff because be and comfortable for opportunity kind very speaking Yes, Steve that's the the and several we years, say of been but inventory inventory take been is I'll that's that efficient -- of let it. quickly, here they're the

Steve Lawrence

Yeah.

actually very where we dollars, X% It's we're down So today. think up I XX% units. sitting with feel it's in I comfortable think

was come boxes. it goods into very We cardboard back If stock know where ‘XX, The was you runs. the we stock. gondola lot to stores much were We (ph). in a of on didn't inefficient. went go the back written that call top inventory stacked you boxes It would ‘XX, inventory because what what was in, the was top carrying our have all seen inventory. brown too top would was, There in of corrugated

came of that So that out top really units reduction XX% in stock.

that goes situation. the And going back efficient dock, is out through or sort into sales more top a distribution think, so seeing I of much to the of onto what some goods back you're center the stock flow it stock hits now, versus floor the store

So really feel appropriate now. unit inventory to with good carrying. we're we that right it's where feel We we the are

Ken Hicks

with couple drive managing jam to of of of efficiently. profitable you the and business going inventory out play the we're game. operate the but always comp how Look, the way it. We're a going and to flow more equation, and that's can points squeeze basis stores a not we're We're comfortable

Steve Lawrence

And a just probably be. of But little not a still stock light We we're the that could and there's in one and more and there terms perfect a like where we're in to in ammo back our categories calibers I firearms inventory. last general, use in we'd where of most and on. cleated mean little were inventories, thing, still couple here of

Daniel Imbro

wanted then as And That's on helpful. a follow-up, to I new Great. Okay. the ask stores.

it for cost on Just City the even strategic categories? store is upon thought? on trying efficiencies the improve you are curious outperforming think the I learning the what spend? you next what I'm in you we guys Are Atlanta. about Are we years. than over to build forward, marketing? cadence as outperformance you think more as terms I marketing move -- seeing in you to guess, room accelerating how opening you of think And able in to mentioned certain of Panama one kind be Can

Ken Hicks

up, we and I'll Michael learning. Yeah. start let pick but are

people that up. catch lines open store mix you quite new year all the then getting a of more reasons and learn stores lines store, soft the the we usually open One of with starts of fewer two, why open to the a out we had. of started one, and of we understanding do the on we the are was as aspects frankly hard the number on this this fall better about what we'll When us and

in are seeing most So that we of continue trend the stores.

of the some stores, portion. lines better soft a in have Although been

to the to is and are going and helping that getting place work appear overall, because not to way good stores, we we marketing the about mentioned getting a do it's and to are Bank, before been going Shore which was. opening they're is a people a like we and to -- of of the not had our a an that which pump, issues say, how marketing and area marketing. look performing in why presence good of I area we news evolve where is smarter versus short And new We where to is into work mean had Atlanta we vary people stores, and want said, understand as what store. us we the improve opened an having go where people we the store The we knew to be area are we're expectations. in in we those working one the thing we're reasons another Academy in forward And ahead

one the I Michael had the of but a pretty is that that from so of reviews each them. can lot improve. good are take can really after though we things think learn intensive openings and to still a Steve there's we openings good So are lessons result, they we've action that were seeing we And the learned after of things doing even

Steve Lawrence

add on working there to lot it most and a Not XXXX team since keep other haven't is new. this we the in that's mind, of done than

test in got much So going We've existing for into This the to going good is time we've a a learn stores got an it. in decade. very a from first learn. in We've everything got more and spaces got adjacent learn markets. and new space we takeover do, We're appetite area We've about of takeover City markets. town. We've we're got markets. a environments early was to here. Panama a got that's team urban

success the we across we're a key this all on maximize So the together using of we're year we forward. goes got ramp. as said, these one every team learnings And of going can focused things year We've marketing, a to learning that that Ken merchandising gets and as the after our and board.

Michael Mullican

biggest openings we year store 'XX things. in this the change opened would be between say two versus I'd what

localized First, assortments.

we're think at ago. than were or three we I four assortments localizing better years

I'd four others? fishing if was years perform doing blasted, And not we're we heck good the versus did back and Conyers, look focus targeted broadcast, marketing of a process, broadened, bigger like it second newsprint our it's we store because assortment that's City more and studied had and would customers. go Yeah. for right? a lot three than ago Conyers. for a better at categories really marketing our is, efficient is, would seating do in you our into the built go a so the the and certain question store you you sister heck Panama fishing, lot mean, in, market asked or when that there we say piece And I market went see spend a

currently those I what so years than ago. in of a really we're of our things couple different doing both playbook are And think

Daniel Imbro

guys. Great. Good Thanks much forward. luck so going

Ken Hicks

Thanks, Daniel.

Operator

you. Thank

Greg the line your from Our questions. is proceed coming of question with Melich next with Evercore. Please

Greg Melich

of much quarter? margin give was number? a Hi. first in just was decline, but supply about drove I question headwind realize chain. Could the Thanks. gross My a quantify it the you that how

Michael Mullican

headwind label to I'll basis is between increase the call a thing. The XX related really private penetration, Yeah. was in XX points. and which good

the was private the headwind. really like due that. which of It's to of that grew. the So container label, anything penetration It cause wasn't or costs

Greg Melich

Got it.

So there mix, but… there's sort of a net offset terms in of

Ken Hicks

Exactly.

Greg Melich

it. You of ownership take

Ken Hicks

with There's that. margins also

Michael Mullican

Yeah.

Greg Melich

as or long as guess I Is the chain, And could supply label is diesel on costs container continue else costs? that there private mix improving. anything

Steve Lawrence

is, some I anytime year Again, way but it's don't we there better. looked getting better contracted year. last line Worse -- the than year, think last we it, it. better punch last The No. than last we than planned planned than It's soon. we're back But rates. certainly, worse going to

in We're like feel cost. spot the we've anymore. got all not pretty visibility good we really to market the at So

a it. So to we've got of sight we that line feel like

Greg Melich

you market then Got it. I'd know increased about the talked I for bit guess a that to risk little planning which a more love color more at think promotions? you categories for promotionality? is most on And

Steve Lawrence

we years down the the to versus narrow quarter over it could prior. you them a specific all. category. were a lot if promotional will quarter of seen of in most promotions the I obviously two is I I What and We've is don't tell in know fourth year every XXXX past pullback where

in something didn't forward it when starts to or better early December in promotion of closer in chain as to Our going incentivize saw November a the to anticipation be it there demand they were bought people -- year stocks a a two We because wasn't buy in afraid holiday. the it and they have and saw they place. to in years is last pull better candidly last get little supply

people full, in are place where back think they're seeing I shelves used stock. starting into to the people the to get

forecast about lie. It's a category. probably how we're and for So We've our earlier going that's one I be It's incentivize accounted to on. little it. people in isolated to to not promotional that more think thinking where promotions

we of themselves our go value in. underlying of that's have business categories We out that tend we be kind and little underlying bake and to that base don't proposition. But and in come value our to that everyday off promote of promotional we do that CECL lend have more an a

Greg Melich

Got it. good and luck. Thanks

Steve Lawrence

Thank you.

Ken Hicks

Thanks, Greg.

Operator

you. Thank

from coming of your of is proceed question Ohmes with Please next Robbie with the America. questions. Bank line Our

Robbie Ohmes

Hey. increases guys. last price items of Thanks. on are on unit Could we also Good the it morning increases about anniversary think we unit significant supporting I increases or and price versus mix the about on how ticket sustaining follow-up the ticket. like you how color changes reflecting is are sort price wanted that and prices the much any to like a them? start year? as And is lot driving to give do of categories commentary

Steve Lawrence

couple say that. things I'd of a to

-- of unit biggest you average rec. our XX% we outdoor, dollars sports that in that is more and at down inventory higher down, implies higher inventory the If ’XX, things, cost. ticket is units, versus up we look X% When which said mix change having obviously a in break that the chunk the

building The second best an layer and assortments. of one is we our a also some called investment better to out and

category makes the now in changes up of and we by that have say piece and increases baseball north cost contributor that past, the smallest I'd a You business chunk productive side. very the reflected would delta of been that our business. way really take price our $XXX be probably in bigger a retail didn't a And sell like our on or gloves of it's to bats

increases thoughtful has. very everybody been So marketplace like the we We've the price about those goods. cost taken how in else have certainly just we

we haven't to far, so seen really resistance And that.

feel Our the lot out out AURs competition day the for space better than as making a I'll and is really price we in our basis. time those are accounted not increases. day spent digits that if and of prices out our are important out, point in mid-single we sure good up in we also leader being value -- like our the day

will scraping that or increases to we're price the make in looking going monitor thoughtfully, pass leadership seeing this and this have all We but ourselves to that value the not lose we're our cost proposition that let tools. constantly at we're we space. sure We along have committed time

Robbie Ohmes

That's really helpful.

guys the out quick a shift you have was called lot the thing? back-to-school Just of Are third there follow-up. that a in of A same kind seeing benefiting quarter. that's other retailers

Steve Lawrence

certainly that on period. do the being anchoring We very we I well inter-quarter continue we the keep give would guidance. back is But tail have that not to one through. at of say heading back-to-school end categories the that range. versus time XXs try We've kind into seen things seen back-to-school the trend of of July that 'XX

Ken Hicks

in may them west by Day. And middle almost Robbie, them end east things, coast to our to of like of I any the to East back school the is July. were literally August. mind, of on they're of had you of the think all going the markets Coast. back in don't that Labor to school back And school earlier are you is most We where what have are kids in after than keep to have One it the of

Robbie Ohmes

helpful. really That's Thanks.

Ken Hicks

Yeah.

Operator

Thank you.

the of your next Oppenheimer. is Our proceed coming question with with line Brian Nagel from Please questions.

Brian Nagel

this and have, a lot Hi. nice we Thanks for question quarter. taking The Good on demand my just know Congratulations I the have questions. environment. focusing of stepping I morning. back -- on

level step -- a at basically -- you pre and than level. higher and which stabilization business your look pandemic higher As how now this at -- back and

label, better much consumer of label. case now should that have but we to just that other as -- question, the merchandising? then some I consumer about more more think stronger made label Is a for the with the And that is in a regard Academy? whole company? or consumer your to people's that function built of a of in in your Is is seeing alterations you're the and private function and changes private it from down is You of you've offering it substantial behavior as questions, think the just out trading company that -- other and demand the private a follow-up or reacting --

Ken Hicks

about the consumer Well, is shift private to a I we've label. of actually It's I'll a behavior. areas put with I are situations done the what there. interested desire in regard health this let consumer in you forward the don't health, do in is and experience wellness. with that Steve definitely consumer and and the are There it trend those with both more And long and talk the both think we has and to term for and is -- people's of their

systems and important. trend got more much business, to as and all sell was that [indiscernible] sell, people out that So the that time, a trends. interested to sports in and best on that keep and Steve we're improve better in And they're years merchandise things we with what the better, than focus became on. to active made the about same said consumer said, that earlier good, done be outdoors and many operate experience being we they're going with said business to with the categories That go we that, that and offers regard sure ago we fundamental that's interested are and the at we've to We of times, we the able us. that were categories the different how business. making we the that we companies I've changes and of four is that

So you that. people together, perfect things put a from the storm. use We I guess benefiting were those as two term

Steve Lawrence

is the competitive I would one, different. environment add third a

than ago. more the some look You of three distribution two we there's at years carry, brands was it or controlled

pulled of You that of look of categories carry really have out those we categories. the or categories at some those competitors some downplayed

mean, the the to hold the trade down as I and range our us indicate best in health lot better to also time could is of the to I in high our provider structural strength national to Terms we I some hold us we that space talking mean, term. what can customers that. three But they that on those customer to trade having we probably brands was believe and certainly, of as things position believe strength because allows of a and long our on positions well and down, do and private better, value there spent about so trade a up existing in a of combination label trade in it's going that this the down. think of it's And lot trade customers that assortment. as capture and good well of saw the good, to we're

Ken Hicks

the But label. ask, the to done with questions private we've what to

Academy our [indiscernible] and BCG wagon, continue our and and values addition of assortment. liver and with has And terrific chair also we've a offer we did things for the But (ph), that's that private We didn't we're have have that's And Magellan in we and of volume our brand the the that in Whataburger doing customer. continued which some support what been exciting Shiner, the like done the chop our of what a private to things what are and ideas terrific Pro added. niches big brand. nice like not with have brand to that value the added strength really of fill to we've

Brian Nagel

again. all Appreciate Thank you the you. color. got Congrats very I much.

Ken Hicks

Brian. Thanks, Okay.

Operator

Thank you.

comes with question of next Our Heinbockel with Guggenheim. from proceed line John question. the your Please

John Heinbockel

let by curious, opportunity have I'm share? to is you guys, You Is cohort, enthusiast, their with maybe still pretty how what even casual at your wallet with And work with, big significant? do different better start some you So know, customer. done looking think me of regard the with that wallet? customers,

Steve Lawrence

competitors, we know relative wallet back think base we higher that to our goes our of think share within we our a to that value. existing customer I capture and

is of a think and that one shopping we offer as to the stop that same wallet continue more always who of broad to think convenient the for experience. there's do opportunity pick opportunity customers' strive are up a complete a the deliver share assortment up that into higher I that, we to And opens So things one the other on store. trading across customers the we our get and [indiscernible] time at store

Ken Hicks

Yeah.

We are customers. seeing both new

us with more we're day bats, in have and product to customers, you about based didn't a our continue But I camping. spending our this thing better. and the kids same able better past, to retain couple as did with in of And okay, last with as other was starts well, have pit used bought but tents. we spend now frequently. and for looking We because year. to be, core that's in in at north campers, up, new we to the more the them was selling we much they a want we shops are a And same as it more and us out the t-ball, Magellan something Steve them, year but Marucci said, I is existing customer the said are number customers we gloves, the continues store move now

able So to with assortment. we're our customer offer that more to

Steve Lawrence

thing, it. here don't want key on lose pile other to because One I I'll

more popular with are families peers. are We than

the we our only the of not assortment, family different store store. categories categories trade into across because so in we can the diverse individuals can whole And trade different across

So we think that's a big advantage for us.

John Heinbockel

when have ‘XX. what's right, rise Is imagine, levels model? four three I'm the opening secondly, or higher changing then curious, the limit wall I just year? but XX than true, point, imagined as Long up XX% I that AUV going Yeah. are but was gating And got right, if the you this do Like, direction? growth, about capital, think can the XX new at or that's simple two significantly, to store factors people at ago. on happening add you've maybe up that whether gating to factor what because economics you stores you might is know right over in would the a right, years since

Steve Lawrence

profit to Yeah. category. the it's per in in your to most want the best profitable the growth. wall had before the four productive have of success the business most model We we've We've sales We capital our accelerate square foot the and just, now certainly amplified got of course, category, and run in the point.

some And do a to appetite This We a the we're to taking we've step it is it to XXX question. we're that's earlier And certainly it. do do is the ability up add time we I'll manner. back country before stores measured go well. in have certainly why an to We to studies put and test there very want on But we're to learn to Again, do point. year. that taking the gas. in that the the And an a together responsible going at approach. all

Ken Hicks

of X,XXX If the increase five math continue open you (ph) stores number that the going the stores the we through progress year period, we're on as each year. to do will to

Steve Lawrence

we're have cash to the able grow doing want to that still sure well. can tell flow We and certainly we we be And like we're just that's yield to free growing make do more. that deliver you

Ken Hicks

That's the key it. to

John Heinbockel

you. Thank

Ken Hicks

John. you, Thank

Operator

you. Thank

of Our Chukumba your next proceed the questions. Capital has line Please Loop come question Markets. with with Anthony from

Anthony Chukumba

me it to card? the had thanks a I more about was particularly Congrats Are question you credit strong going in. marketing expect do more about shift to your that? guess I of Like to thinking your morning. are your just you I continue strategy said marketing on -- quarter you Good fact I like are fitting the in Academy how digital? and more that be just you you given holiday you lean terms thinking promotional. mean into spend going are to to how for

Steve Lawrence

of time look X% preponderance over we XXXX, the mean are say a we to was has as may to mentioned marketing think centric, at like were, been And look our four the all marketing We at years. I at evolving it's we you time back past the very today, X% marketing are be looked is at earlier, approach where And very where lot today, I'd broadcast targeted of when digital. above. at it spend you I three of yes targeted. when the to centric going and print our to I XXXX. the that

into think that us I see forward. move ongoing been that continues has in And you'll spend holiday. as and shift So we lean we go into really as

Ken Hicks

of have on items couple to months in things and react going that proposition your sure does to and the to and print we what's have. specific advance. market everything pricing done same away you had when aren't to at that and do category, we a can value a maintain you literally respond time of things the actually to now One that that use the make don't we down to giving good is, new We in that's that have

Steve Lawrence

efficient more us more makes nimble It and just overall.

Anthony Chukumba

Very it. guys. work up good Got Keep helpful. the

Steve Lawrence

you. Thank

Ken Hicks

Anthony. Thanks,

Operator

Thank you.

from come with question Basham Seth with Our next proceed has the line of your Wedbush Securities. Please questions.

Seth Basham

good XXXX clearance has think well, and of clearance versus morning. about of driver gains, think merchandise industry the your bigger margin about guys which margin of and been lot in promotions lower a those gains and [indiscernible] improvement business, gains of our less When a because Thanks improvement? and components you

Ken Hicks

That of promotions I would the say terms biggest say, it's would would disentangle lower I of said, of the structural the clearance, share the But is in the being share try marketplace. or to is to it two. definitely in of it, management it's structural smaller management go when that inventory, we it. sometimes of and lion's gains. do piece improvement of work kind improvements it be hard through better the better

Seth Basham

Got it.

merchandise the bigger going be then your when margins the would clearance of normalization you negative go from in the marketplace? forward. forward potential you of And levels Okay. inventory impacting to Do in promotional it impact potentially would be think it terms about think normalization or

Steve Lawrence

Yeah.

could what that to be look of the point respond and on depending environment looks potentially We That's XXX We it there it, internally. XXX way points we back gain from how the like, to does improvements quantify. we what basis at at our we promotion. believe greater structural XXX give the that have look roughly basis we it that competition have how we've the we think could had. of think I

Seth Basham

Got it.

to it clearance As back relates levels? get from of normalization

Steve Lawrence

Yes.

Ken Hicks

Both.

Steve Lawrence

share you've to It's keep maintain to kind a up of others. counterpunch yes, exactly competitive. got where with Again,

I'd It's normalized gotten where performed it to still is from Seth, mix. good 'XXand impact a The outperforming haven't has other thing historically the hard in that we 'XX. still to add, full merchandise

and So the should from margin of until mix, parallel becomes a greater private piece label we that benefit exactly. a

Seth Basham

and a Understood. of luck. Thanks lot best

Steve Lawrence

You got Thank you. it.

Ken Hicks

hopefully you fun there. feel and hard much, Seth. that some out we around will you future and all everybody's And think be bit strong about little working very we're over, very went I a Thank the the interest. forward too. appreciate excited the story And moving as and head We a all have you last season, into question. we have our are fall and and appreciate We time

Operator

That you. conclude does teleconference. participation. We Thank appreciate your today's

disconnect this lines may rest of your the time. You at Enjoy day. your

Academy Sports and Outdoors (ASO) 7 Sep 222022 Q2 Earnings call transcript