- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Academy Sports and Outdoors Third Quarter Fiscal 2022 Results Conference Call. [Operator Instructions]. I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please -- please go ahead.

Matt Hodges

Good morning, everyone, and thank you for joining the Academy's. Merchandising are Vice Chairman, Steve President Vice and call Michael and Lawrence, the President Executive Mullican, and Chief on Ken President Hicks, CEO; Executive Participating Officer. CFO; and

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

Kenneth Hicks

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

operational and helped we've financial second anniversary and our solid initiatives year as of a organizational we performance. the I'm that As the our company, have public undertaken drive company transformed proud

allocation and our the to focus our stability. products while experience credit e-commerce compared improved significantly with Academy improving the on good, card, team of launch outstanding of of capabilities, our increasing customers our company aspect our our store modernizing customer meaningfully along financial loyalty merchandise through marketing processes, pre-IPO our when for assortment an including enhancing maintaining talented value, best leaders of Academy, have improving better, building every Our retail planning and our

store growth, of capital excellent enhancements, share omnichannel rewarding supply expansion, dividends. increasing all are in through include of capable and financial our health technology shareholders We and repurchase capacity self-funding new priorities, which chain

business third reported saw and X.X% increases net our is seen ongoing maintained line is in XX% billion, comparing believe We below third is this our decline XXXX, post sales pandemic, negative we year-to-date. our which outdoors $X.XX Steve sales experienced trend, quarter a comparable recreation. later sales the a growth category. The higher at in When and we what indicator a We sports sales discuss apparel, and strong were results in will challenging demand for was sales expectations. in that but there to quarter and of the have more sports in detail and sales and a call. with our much footwear outdoors consumer level baseline durable is

controlling Looking expectations. mix quarter at share gross improved but increasing with were margin merchandise $X.XX, in maintain profitability. with We rate and earnings margin year, Adjusted an products, a cost. XX% below is our of line our rates last per third which

categories in with shape. have but inventory looking to value customers we will is well product plan marketplace and everyday goals. competitive row, believe like held which our are holiday. XX%, be margin. key rate of We good end they X also this to of in year adidas EBIT our plans. our fiscal more in our be We activity is the of for in most as we double-digit positioning, There of Armour with across promotions holiday this margin prepared are amount above for what annualized is promotional a Under in-stock partners expect from a long-term the which right second own as EBIT likely Nike, very offer the season, freshness an And year financial and position our to The the our

have been still last participate that focused their hobbies and pressure wellness, winning had on their our health and in do are money know we under pursuing and While not inflationary customers their stimulus they activities. have kids and year, the to sports they

good, private of them top best at national continue value to Our do prices affordable to better, available brands assortment everyday price. that at strong and brands allows an

income. quintiles majority in the population such to an Carolina. ongoing middle reminder, country, the from Texas; currently of are operate in in X a the in annual States. As Southeastern customers to South the ranging and Austin, base Atlanta, Georgia; the markets migration fastest-growing Raleigh, We our some our household in There's $XXX,XXX $XX,XXX North and United of also as

this are uniquely the by opening positioned between on intend our of growth and XXX benefit new shift to executing from it stores and XX end XXXX. capitalize to to We of XXXX plan

X we stores Jeffersonville, opened Richmond, Lexington, in QX, During Georgia; Indiana. Kentucky; Virginia; Atlanta, and

here in us, existing, Bay, Houston, X in openings in and We store Tampa mix new in a West stores These locations have X QX, and of new state markets. a X X Florida Virginia. opened were also adjacent for Barboursville, in

store members beyond. big third the for assortment, on through on team market focused Michael XXXX want priorities optimize financial We customers turn all detail a we thanks measuring merchandising, I vision experience stakeholders. creating who for provide to value to more our great our quarter's more call will by providing understanding and through execute an to and approach the Academy to our over a provide The and best I to for delivering opening types our on and achieve and a process stores marketing, staffing are outdoors the of seasonality to the in become our even all localization, to Michael? new our value guidance. results, and team retailer of open stores now fun our while XXXX sports better country, update openings. the successful executing process, gain and helped remains analyzing and aspects and the of different our as give in all

Michael Mullican

good our consistently and going Since quarter and macroeconomic have delivered expanding public by another X profitable billion, more traffic comp have last cash to sales demonstrated over The earnings we and footwear, despite a overall, free flow step-up mix quarter transactions material apparel In strong ongoing than a resulting the more maintained everyone. We headwinds in years decline years we quarter, expenses. to soft with divisions. morning, net QX $X.XX past. share merchandise each compared Ken, achieved sales were a have comparable XX.X%. our sales balanced sales prudently third anniversaried controlling lighter shareholders generation Academy compared last years inventory, fewer gained of our that of ago, year. XXXX merchandise X.X% in this potential X we to of result share managing hard But compared market was for being and and Thanks, saw quarters. the we between the recent gains margins in goods and down of as

Our doubled. e-commerce the sales of has to than represented fifth sales. When QX more merchandise increased rate quarter XXX% grown growth XXXX, of XX.X%, the compared and consecutive double-digit has X.X% our penetration marking and e-commerce business

the growth future. a a we that very As stated in for foreseeable competitive academy.com future part invest us for in is our of we meaningful believe we intend to before, differentiator have

effective we our the making our highest our with of of an peer on completed openings store all return have a said, As group, Ken stores X store productivity stores new use for high investment. our Academy in planned capital have XXXX.

$X.X with store During once XX-month was productivity third were of best-in-class. operating QX, XX% XX-month dollars was points the foot per record last trailing Trailing rate store XX.X%. per and a our income $XXX million margin only quarter during existing million. basis below $XXX.X foot of again XX square sales were quarter year's per Gross

margin increased merchandise despite more margins various our compared As minute, a and opportunities. pressures allocation refined we processes Steve merchandise will external to year our in to tell continue planning as you about last generate

past soft that sales also quarter. These over-indexed mix saw our a fixed quarters. preopening stores. delivered associated last $XXX opening expenses Operating in point our the we the from sales earnings business in the or indicator and was has of offset by that compared we first e-commerce Since goods margins of and pandemic, soft side hard Academy. in more additional fiscal deleverage in of decline the a this X year, and have mix goods. during organizational gross rate enhanced shipping operating than XX% back quarters SG&A We XXX of which shrink The our to the increase Academy change million cost expenses income, primarily benefit. $XXX.X over X and shifts as Through few the basis for new with margin were income the sales. a changed the partially This XXXX of years earned were generated is the year. on company goods, towards operational the an clear of a gains million made XX% costs straight double-digit increase have all result improvements margin have operating sales, the structurally quarter for was and should of shift over XXXX to combined. now power of is

$X.XX share compared diluted per Third last compared $X.XX year. share earnings year. per per quarter were share earnings share $X.XX to per diluted share GAAP Adjusted to per per share were last $X.XX

facility. borrowings balance the million no billion in $X cash quarter with on and ended $XXX at outstanding the sheet. Looking credit had Academy our

in flow net cash from strong as positive remains million cash operating we activities. delivered $XX.X Our generation

During supply million shares repurchasing cash lastly, out on $XXX capital $X in and X.X our X the investing following: third balance. chain million, new we technology investing the opening allocation plan, in for approximately a enhancements stores, by and part quarter, executed dividends, maintaining in healthy in paying million

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

inventory, our XX% balance foot foot were QX per was managed dollars $X.X When illustrate, inventory XX.X%, inventory increase our only demonstrates on square increased to have XXXX. comparing while to per sales when at this QX square billion, significant by per foot QX XX% increased of sales a This Looking XX.X% while increase. compared inventory XXXX, while units ending up revenue declined that the versus effectively XXXX, our compared to XX%, has XX%. we quarter growth. revenue has square experiencing To inventory inventory

per sales with from range per us current the share. and turn capabilities on to give retail from our down that, of an expenses of trends, $XXX estimated GAAP such any full will details are range drive taxes remain Steve? range comparable expected share. using we sales this not authorization. Lastly, earnings results Steve, an per on of outstanding million $XXX narrowing excludes environment more earnings calculated you full our GAAP to expenses is share share and over transformed season, X% expected forecast raising the potential are and sales as driven share before confident will certain to and million profits. and $X.XX as who for and remaining gross expected positions diluted our from diluted year-to-date navigate our XX.X%. million. include X%. income long-term merchandising operations and million rate per million share diluted and to earnings to $XXX well expected our to this holiday to that now weighted and GAAP activity performance. $XXX value win XX% are earnings our $X.XX guidance XX preopening follows: year $X.XX earnings per per XXXX to share margin per by to around our The down between are to but store and updated everyday now call and stock per also the to uncertain With $XXX average our estimates business count of shares Adjusted net do of which repurchase share share, $X.XX We income I based year compensation million model, products

Steven Lawrence

Michael. Thanks,

hold saw at QX X large XX% was we're the in improvement up from couple our on 'XX, XX% billion, performing more than comp of got an $X.XX quarters, macroeconomic 'XX. that gains but which continue XXXX earlier, we carried the heard was but the were a start throughout back-to-school past environment. showing and is baseline. This X.X% our a last the the also and division XXXX, a you of We versus in to decline off years during X As trend which first to strong good see year versus It despite sales pleased of to quarter. during momentum challenging versus majority X quarter. versus And our up a Footwear was XX% third best the versus lower -- to came our little footwear divisions the

of leading categories some lot during a the that as the As shoes and spike performers such the you'd kids or quarter. expect, during back-to-school of cleats

and brands rebounded in trend. versus as to continue a our up sales dramatic with of stores. QX Brooks, sales White SKECHERS last versus with year, also in see across improvement We of Apparel increase in an launch Crocs was along footwear. such all a strong Haidu successful very key also spring X.X% our which

We quarter. This momentum, in and and the early such run fall position spark inventory coupled XXXX apparel XX%. that comps selling helped outerwear. of the on strong Back-to-school an carried of Carhart, remainder to and as also double-digit forward year, in such Columbia seasonal brands versus momentum improved baseline with last as results top started categories, Nike, fleece were continue for into and the up

trend year, it up spring and also While our business in versus XXXX. improvement direct our was QX was last sports to XX% versus was an X% and down

see key category home baseline. such as and golf. double our our with to which fitness baseball up continue has stabilized gains business, year XXXX sporting strength the this solid area versus at categories The over softest last in versus but goods XX% business declined We football, across remains the in digits

to XX.X% was challenge note half our with couple posted important picked to versus softened only on this the gains XX% which where QX category majority was up in continue versus up still during QX the biggest over XXXX. and rang sales business, we past first hold also the we of business that decline of Our the years outdoor outdoor the It's trend. an

of where hunting high year. from has sales stock anniversary the spike was up last driven from comps to that the across XXXX. consumers We get level slowing have Soft the the during overall ammunition receipts by back in activity by double-digit started drop-off, up lot demand. over struggled QX against goods large ammunition us stabilized of we a in year. in surge category helping Broadly We're resulted were see which speaking, to the stock industry inventory past

While it over the for by XXX% comps stabilizing and quarter. margins. XXXX, for last largely running comprised into up XXXX to outdoor, our up, in the To is versus to the we the lessen triple saw got driven clear we so us. year, versus the priority ammunition, of this as run deeper year-to-date negative business miss company, to a sum ammunition business drop Shifting versus digits declines start continues

of of coupled past the planning made a at years. continued of versus our basis with planned, sales As footwear. beneath continues we run the gross over year the XX points was the point for apparel of levels. quarters, to and of rate disciplines, came merchandise basis in over margin attribute in last up 'XX, years a decline the couple we've XX held couple the of was to categories of margin most couple mix up allocation strength well on gains basis XXXX. buying last and of XX%, the Gross QX hard past versus the ahead to combination XXX Similar points in the work which margin versus surface, is and XXXX and a higher-margin improved have We around done teams to favorable

hold years. promotions from Michael continue These most of And past on couple our that As expectation built stores traffic items. the customers will out cadence uptick additional QX. calendar this margin the giftable in in thought-out well the our discounting, we seasons on finish with driving by we holiday focused more gains we the X despite the to of for is for outstanding year, on in aggressive and to is past are earlier. is our this a deals providing discussed guidance than promotional accounted to This

our pricing, as and share our value strategy, promotional space position believe We leader will a us maintain allow with also everyday that value coupled to gain thoughtful QX. during our our market in

quarter ended quarter with In XX% to the in than the terms which an we environment. lower managing We the with. third entered a XX% continue is outstanding our increase inventory, teams versus of last do up challenging job inventory year, through

in past are the and of traffic advantage putting position the Our us best take prime levels fourth position holiday been of couple inventory a the in they've to over in content quarters surge.

adding outdoor lean ideas for FirePit target our to this into for our funding along couple is us new continuing initiatives sales holiday, put Another with core customers. place apparel, Christmas that and and resonate that ride-ons into gas in including launching driver Outdoors of brands Magellan heating. we with Coleman expanding into BioLite themed from powered

All these for ensure holiday. ideas inventory to the balanced and in is into team The and back the better position for that get this brands sports help customers has the categories best of all Academy should key stock stores much our outdoors. reinforce drive hard as worked things and will in our to destination

well-thought-out a we value this with pricing, desirable up assortment market our we to with holiday. winning allow continue combine Our believe of us our that strong broad cadence everyday and a brands strong proposition share. will the promotional most coupled to deliver a have strong experience, pick to When in-store that value formula you

Finally, the proper QX share the improve market continue time to drive much reacting reach broadcast closing, to pricing to and beyond. strategies business and important reliance are lean while This we overall traditional into believe helps and our positioned we we frame targeted us in to the gain In be more continue promotions. and in and that during on have well allowing to very while place also more also effectiveness digitally marketing nimble reducing our print. shift advertising,

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

Kenneth Hicks

diligently and and have made future resulting season. from weeks being stores plan. XXXX. There's of operational in have potential well but being few biggest and are to near- sales company, successful performance just lot improvements. questions. solid about, we've working largest retailer our This we the past outdoors macro past expanding financial the prepared of ago. we omnichannel, excited years to growth to close and profitability call That Thank Steve. We've trend existing you, for holiday is everyone up challenging best the toward than of higher all in I'd still the sales opportunities our We'll is improvements team be to our over a the vision XX%-plus a we year. like a history and sports open to operational achieve result thanking a from years, has are was the the team materially ahead our us, your improving in we our wishing This dedicated confident the members significant Thank Despite Friday execute long-term of are stores, X the Academy becoming and Academy year outdoors enormous the the maintaining sports several environment, by positioned season. a delivered the goals. day joyful said, holiday country. and of opening in you. Black new this of Academy the now to and compared

Operator

Instructions]. [Operator

the Our line John from first of question comes Heinbockel with Guggenheim.

John Heinbockel

I X. right, the midpoint about of sort to the implied trend wanted is think same That's down quarter, comp fourth right with the as you start line. the at

based But right, of do you merchandise on improvement. your sequentially not for improvement, multiyear the X, X opportunities, the about the behavior see you So the think X those divisions, and in and -- each content the you the right, of prospect biggest a where about customer? of think when categories how

Kenneth Hicks

and been as question. continue footwear lines, us. John, sports, they with as very seen in opportunity our an well business We strength has have good the a provide thanks which good apparel to categories, team soft and for obviously

have still some opportunities that So X areas. businesses provide good of a more those there's color. of in let there said, are we challenges I'll I with. out the little outdoor But Steve That think the

Steven Lawrence

Yes.

than where supply goods, weather better you pretty If we look Christmas, disarray. of a year sitting terms we're a seasonal shape today were go chain ago, in in our When a much back still cold we're at for to categories, the way year giftable ownership and in you items ago. was

that as about category biggest negative, confident all that So versus we get starting really called well I our we're like early us it category our it's is is It's feel the was starting composition was there. We there. a challenging quarter, it's the in challenge good and less still feel the X little news under the inventory for negative and to and stabilize. outdoor see business out is the line control inventory across beneath The better. being areas. balanced but we're see than it's that, trend pretty The to

is probably be a to we in going strength challenge categories, the year. throughout some that's of seeing like But for that. of So other which the we're feel remainder us offset do this helping

Michael Mullican

addition a more to John, categories. And the couple of in points

We December. recent have our provided good XX% which builds, and with consistent we are with is going trends. we're to line to usually of be guidance expect performance. a indicator our . implies up XXXX, quarterly to that that The monthly a to finish pretty reliable which That's in

better being we're looking as how to and mentioned, behaving. consumer stock programs, key and are the they at addition Steve In holiday in

dropping scarcity the you of We year, market, of year And planned abundance last have in there lot we because goods. inventory. year, which goods led a position some last do have early and an was a in This recall, were of purchasing. there's the that didn't a to if not to we promotions, traffic

some with shopping warm the before so see that, calendar, been terribly an to sales. this we'll the think helpful season. favorable a It's And pretty late Christmas, we probably start been weather there's to holiday coupled year extra hasn't Saturday a

buy-online-pick-up-in-store our of think lot last we'll the sales couple as business. a a see late. of a lot coming weeks, we've we And reminder, invested So in

and leaning stretch. a be good for are deliver the down to going spot into in them customers to we're Our that,

John Heinbockel

DCs being. a know and the had then you'll a for distribution And on And sit Where in point, about I that? on chain, do at little for north. right, further do this you the guess think X initiative DC, capacity, we next I got years? supply I then you've guess, But about network bit. time maybe as as fourth when the you the out a you've capacity or follow-up, need How X over you look X capacity some think

Michael Mullican

correct. to some some And probably we'll a potential reach fifth. need we fourth DC the and a we need need point, of at as point. then Xth company, At You're a we'll grow the

a next For years, shape. in the plenty costs -- capacity. the we're business, and be several for frankly, think adding speak we incur XXXX, distribution sit facility. start fourth of several of We'll But we're about in position. good about got next more X will a next think about we until that probably XXXX, years to the the later. years, good is We've It

Operator

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

Daniel Imbro

to following line, I Congrats. last of questioning. the want top the on line on start up maybe

brand, mean, merchandising initiatives to growth new year? you pre-COVID XX% if your of know about you year? with we next it's we new I qualitatively I thinking as XXXX, where laid Steve, fourth on but early you in of versus base? I implied So quarter. growth is that possible grow to you about talk to mean, your next you're kind a continuation maybe think point rebased about Have this in can how execute out could the the I look out guess you on

Steven Lawrence

a that have I higher of confident that X think rebaselined we is level. we're at the things pretty

XXXX. If year, that in of low performance you each versus this terms to quarter it's mid-XXs go been the in back

this going us, give too higher it's to for building a time. we're point being to base. I think, like feel early in do guidance still That for off said, be XXXX we So at

Michael Mullican

Yes.

to exceptionally stronger are quarter categories, And were of during and of really the people were that I reverted strong they A of the As most and those XXXX. and rest not to the of XXXX. last cooking categories, categories soft guidance Many despite year. collectively XXX% furniture, Steve were expect position haven't great business categories they're this we the to considerably we very will market, in the that call which them clearance a provide drop, in goods COVID our beyond. than as for of We've took said, maintain The up categories. quarter XXXX that this hunting in winters. at say, example XXXX whole some COVID healthy. to have actually outdoor time. in business COVID a namely lot got against categories this and prepared comprised this -- frankly, a outdoor inventory outdoor and most share in is the higher Those look, year quarter of healthy. gain few We is being

We to to drastic sector and in dramatic take the got in measures retailers flow generation. like cash We've haven't free others, had have. space best inventory clear

our store productivity income continue We to in deliver best-in-sector higher and EBIT the net rates are sector. many than

into So about good we're a strong think position is to strong, for in finish I think year this we next the beyond. plan year as next year and

Daniel Imbro

from you are have you but past to data of offering saw could Really like guys of helpful the during you benefit of color. maybe everyday the Recession, case value you've any color helped And on see It guys quantify Can just you the what the then I seen that? guess were just kind provide sounds your private during downturns bullish you you a trade that I great down? know follow-up on share. you'd study that. take in Mike, help

Michael Mullican

No doubt, tough exactly years. for different none the years XXXX great heck these other, for look XXXX the it. in to some relatively were a of we're still This to value were lot up parallels sheets obviously like of comp if a longer you we XXXX, economic bit cycles won't inflation a draw a little that strong and to some rise and because company, very collectively last position healthy. are cycle the That that is but those balance pick and and occurs, from share are market go rates continue consumer player. into if recession, try

of our are we've what variety a our resilient business think economic is cycles. incredibly our I shown customers and team, through

Daniel Imbro

Great. appreciate best all I luck. color of and the

Operator

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

Christopher Horvers

weather at It's all for that earlier an quarter well trend up Maybe a in into on holiday You little of on a of helpful. not XX% there's gotten this And shopping it like mentioned X-year colder. wanted I and improved Has cadence does It's to being follow Megan just that bit question, November versus then normal Alexander Chris. year. as seem the December? throughout XXXX. more

move was So as you to Black strong? trying which I'm that get better does especially understand, mentioned Friday, just through you any

Kenneth Hicks

Yes. actually been this low the in the trend for to consistent The mid-XXs XX% -- has past year. pretty all

is So lead we pattern. shifting have thing early X moving year later of X seen last somewhat The Michael through this scarcity, because of from, are for where it a times because you to stomach we they're people calendar a say not is to shift. shopped I holiday back multiple lived a having as and have big will purchase said, that need

So with -- and quarter. now with this I But for trend purchase pattern continue. probably our so think far that that right in this we're year should trends line

can to continued future. as talked about The at to first the will part that still in able turmoil. the at develop of economy growth and Michael challenging we said the some base, as in the business a be so but next perform a time, continue is be lot We'll year of start to a -- we challenging Steve near be should higher well that point

Christopher Horvers

capital that should fourth then helpful. really think the in working funds fourth That's for are quarter. on cash would flow for cash about and the Michael. maybe source based And a you How the become thinking one it. a free follow-up of Got quarter, seasonality generation

think a in for about we potential how fourth So share quarter? repo balance we additional should the more cash as minimum think about

Michael Mullican

No. Great question.

so balance, quarter, generate a have case nitpick of cash, think, typically quarter, will for X able I to in I a the and repurchases through that we to where hasn't that I other We make We've a thing source cash. is cash or been to the rates while think approach given been improve got There's business enough approach. get which like of in retiring our was potentially grow performing should to cash and been interest us take certainly business, going well, But and every can change that's generated here. are us, not the decisions lot capital we quarter, historically. little before retailers no a we and third in if then to we it for Fourth I the invest can correct. We were either on been and right some initiatives portfolio should saying. the debt some have allocation fund we we've was that our headed. we'll do thought

Christopher Horvers

Great. Best luck. of Really helpful.

Operator

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

Kate Fitzsimons

switch margins. to gears to wanted I

the full raised You margin gross year outlook.

then, views Michael, we're margin the on how some spoken some any margin of as takes we between year, into maybe you've thinking and the XX.X% its should chain, about held drivers margin promotions, to think XX% Just the that just the gains? next opportunity gross updated to versus of supply previously, has on to on longer-term mix, gross and how range business puts well about just given

Steven Lawrence

higher hold we're put to be couple so hold we on margins from first clear, think a gains a our to think being we We're are majority don't management year I'll it how different out lot planners and which and do goods. people baked already on on to we pretty going a allocate the guidance. part, and in the far, And that versus said, in. gains. be of past of of I with being take the so -- the to that we generated attribute bit place later flow accounted our lot those coming margin years. seeing still terms already decline the holiday, it's we're better But our have. Mike That's goods of think based then in vast will in just planning to places. promotional those the But pleased being more in and We couple other margin a we That have overhang to sure managers We of there more jump performance ability for better the of and business. gross is over I'm we mentioned parts. that disciplines will last holiday. QX, we of going inventory some off promotional allocation We of a expect to of just the in that little

a that So for to a be pressure us for going headwind is us. not certainly or

bigger a goods us back the to a which to that's us the a business, as total. had well. that's pandemic to lower more was become And happened to the of definitely margin during for profile a XX-XX percent things has soft mix hard One normalize that starts hard goods tailwind of goods, as

a are those that. for in So all that is that's probably getting headwind disruption Certainly, the the think I something chain supply some tailwinds. us. there's could better, but And be still

back more marketplace. to or we're to business I prepandemic, to going in be I kind the think think seems more creeping promotions cadence moving trend of see as the

certainly headwind. the vast ability hold good picked years. the couple navigate those gains on But bit we've and the over we be So a little those feel of really about going of margin then past majority our up to of we're would a through to

Michael Mullican

Okay.

experiencing One love really we thing everybody than they pretty the stuff been First, don't we margins on lot who higher Steve look, law the you the I of continue laid the welcome years planned. that our and they back. tell in to that the partners been add. many, sell partners has crime ago else. to organized to like shrink enforcement well. in would you and along our has retail. Good been Merchandise continue to lot want stores. a a from that fruit do that. and have we little call many to initiatives great a because in with answered We're I that have There with again. We're I X as have the that groundwork are to harvest working say, shop hero part

opportunity have going that that to So forward. we think we improve an

want if as we have preserve to promotional. to stick to far the flexibility long-term largely what flexibility. As that algorithm, We because preserve with become need we I'd and want more you

Kenneth Hicks

Kate. adds, proposition. Two One continue is, to we our want value

do for growth margins. And we so to not want forfeit

and views the So work that will very to market. maintain hard worked proposition that customer to us within the we've get value we

the promotions, I the done, in a vendors thing, we talk of think of about our some had have a put the vendors the And back sense people just what not apparel, better favored and more on we them And more and and in operational seen talk about afford other couple in I think, to make it and in several some positioning to support can different it's and is drive they've the in and traffic. their that two, it's place. the the One, that of thoughtful in most for when a back for one, as in maintain to is they rational and improvements of some vendors the be The other are that position market key about but to ones -- the have have reasons. helped places had process sensibility seeing promotions done the more, margin past also retailer that we've over the the cut distribution how but years. addition we improvements thoughtful

Michael Mullican

that a add, getting One just of more as are the improve thing work just chain. a is we reminder, multiyear And really efficiency effectiveness and our to to embarking on underway. the initiative supply

provide normalizes and chain good now, But we the into from with and from to past, years. in that number But think think a got on I I hopefully, a for we've that's in margin X I and supply perspective. market good work work the benefit run out think a to so provided you've a a our things that the And to should with. a have perspective, environment logistics

Kate Fitzsimons

up but kick others let I'll the happy it holidays. queue, in Great.

Operator

Bank line next with of America. the Our from question Robby Ohmes of comes

Robert Ohmes

a Just follow-ups. of quick couple

but is are quarter drag not That answered, a of coming able on the guys kind the versus down. on thinking gross highs. of the the guys or of in promotions of to been less to about question, the just as of you how similar margins and hard up And potentially see the to back back you margin promotions environment which sort on the have a transactions confidence get quarter? not -- maintain come visibility of some And in the there? just out is the expectations put guidance, What's you're somewhat quarter. helps follow-up with you've -- fourth have expectations all-time in third transaction Just flat quarter you fourth and kind third being hunting, the the risk usually gross you

Kenneth Hicks

Steve Yes, then start part. I'll let pick on second the up and

on ammunition. customers the created bit taken literally put that of And number to have in we and limitations aren't we while limits But and that those Our longer and had actually a were consumer we read And of in took last that we lot we've difficult up and transactions of a happening a had it seeing how we've of limits no people day on is year, as those. we And sold could little is many lot, environment. levels coming it's coming been -- artificial those of a year-to-year multiple off, part part more transaction times we because now lining day. because in buy every high transaction we we makes what's it had a said have there in significant off. because and the that the also part some actions limits on,

Steven Lawrence

us it. over the And you've I pre promotions, make of the was of like on run you just trampoline a And that, heard be about sense. and big I look then close cost those back something item bulky were, talk we Ken shipping. they to of where to promotions that and like free here. on promotions. think to I time -- providing didn't lot they we'd alluding When And Yes. a think selling a at they the management top some cases, some being used team to point current go in mean irrational you

those kind kind benign, happened to layering decks been and it's X over think not only of thoughtful us the I for clear promotions. where so to when landscape couple past whole in is years that's promotional but us is the be the allowed has the it's us the of about and and how we're of And of things allowed industry, really for

a also have maps. there the their better much over having You lot vendors of control out

in I think of So that kind check. them keeps

there. to line compelled don't we're that us line, feel the bottom combination up better drove maybe So rational that against not it's controlled distribution promotions we coupled not anniversary but I a that with think having out of top

X we're gains. be that more the year, going we than year to certainly going still think we're allow see things able to I those margin that majority to know on but us a promotions of did hold last to this

Robert Ohmes

vendors follow-up. certain quick just size, price raised sales? like average are supporting Or are items the So inflation ticket is And you're basket? you per fleece like categories more that And seeing there a things transaction have In same-store seeing that, any you in bigger like seeing the on purchases. somewhat -- items? or are

Michael Mullican

you don't demand a detail. I'll Last Robby, we units. remember, we were you generally against if bit of surge ammunition color. I would tremendous say for just give and lot a of drove year, basket little a up give the that in that

a you so noise little provide but a our basket. little there's bit And will color internally, that of about of kind

Steven Lawrence

And some seeing increases increases we are there. seen that based AUR we've of cost out just off

Operator

of line with Markets. the Our Loop next Anthony Chukumba question comes . from Capital

Anthony Chukumba

I get working. an they is equipment didn't call, take my hear earlier into to question. glad to I'm my try

So here I Anyway, nor there. a thought end. Yes. either my was there problem maybe on

I these time. it's other early, openings. but you've opened in some a your fairly had first question new actually quite know I about stores new So store

so just see relative wanted any reads how on expectations? early to -- those stores to you if And performing are your

Michael Mullican

a ask call, us couldn't we'll if ask the Anthony, question you let off, First you X. on last

us test ask this We're So stores. was I X. really would year say capability in about new happy. and can you building Yes, learn.

different And takeover want a learned and the testing better, overall. whole we'll and different you're do There's the capability, things and you and always that to We stores when We next we performance happy X We're do did as are learnings all stores with all year. different open. those tried year. a apply a we we learning did X so tested spaces. urban lot we and and markets. did traditional build-to-suits have we lot this We opened formats, build stores,

stores So we more in in opened QX. X QX, new X

our targets we year, year. than We but did more this be announced haven't next it will

Kenneth Hicks

winners. pleased Michael the I that's some with really have and important, overall thing, are said, we performance, good think as Anthony, One we

there. us markets good some to we've the We the markets. like But and have better, for of We've it's be actually a that that it store. we learning completely both new or some very really were things that's entered store for results would of is adjacent good pleasing X new that seen a

got on for us grow potential in is in block So just we're with to able last That ability new social shows white to lot you some sure us and the -- not there's a Mid-Atlantic. be X if that where of enter bit seen a with little around I'm followed the market. we opened as our store last of new tell pleased to some Virginia, places exciting people state. I being media, the West a in the the we're in you've to And snow. of where ability only Barboursville, It's region, not you, market. to only space familiar might getting on not that. a a that line But

Anthony Chukumba

a up it. as to for question to fact helpful. Very call. the And make that ask wasn't question I Got second able on any the then earlier

quick yes, So one. a real just

there? was last the had some to that warehouse and spoken, management in what chain your improvements going when supply if was that you confirm mentioned XXXX. would correctly, if we still or said that recall making Michael, I to you the system I be installed You wanted just thought case there. you're of be thought the

Michael Mullican

I that That's think going to to towards the be online. a we'll end multiyear, start XXXX, bring but of yes,

Anthony Chukumba

helpful. Very Okay.

Michael Mullican

DCs. across will that our in of We all phase

doing once. So we're all anything not at

other -- 'XX and start distribution then at to roll end out but it So facilities. we'll the of

Anthony Chukumba

guys. Got work, up good the it. Keep

Operator

of comes the Our line with Brian Nagel Oppenheimer. from next question

Unidentified Analyst

Chazen ASO longer-term And Andrew specific thinking call term -- is in term how a nature just of I all? X for pre-COVID? as the term. you then describe This changed other quick the dynamics you growth brick-and-mortar on your has trends traffic Black Can X can trends have any Brian in in and you Nagel. is the questions. in is longer longer -- nature, pandemic decided shorter towards at off Cyber Monday algorithm specifically, near the One the Friday, versus out

Steven Lawrence

Michael. part. the give second first to take I'll I'll part the

seen we've that kind blend in things Friday the candidly, shopping started week in a the pre-pandemic return and of One early to Black November is patterns. of this Christmas,

-- by what Friday The we really waited in that So last until week early particularly what pull customers demand where X is there bigger some scarcity years, was mean to categories of Black of pre-pandemic, ticket you of the in off. seen the back kick forward supply. if is, we've go month,

of kind year. seen that we've so back revert this And

we to over back week, crowds month. they thing for we more was the we're So softer Friday Black earlier this company's little week. history really was trying the a big people bit And past got years, the already, avoid it when is much the the couple Black as another to our ticket from in where trend and on Then of then seen early we've reverted a the Friday demand shop tended into over large to year. that's sales itself, saw And weekend Ken largest day softer mentioned weekend, important in in perspective.

sales But the biggest have say seen kind which more seen pre-pandemic days would also drive soft to seen more I been. we've it they shopping reversion believe big We've where we well. thing big they're back the we've is that, early of of ticket shift to the that's back as pre-pandemic to than goods closer on going So the in, business. on

Kenneth Hicks

customer the willing the did to was One of right for item was buy the other big though things the see ticket. we

Black Friday not we categories of number that. big that Michael of cooking, our the just was the and was driven very some well But not also event. in the -- performed like -- we like very by also So outdoor not a did items, during saw out, We this it apparel. is -- called ticket well sports

Michael Mullican

great Where had value. we

Kenneth Hicks

had value. Where we good

Michael Mullican

still net changes overall at to algorithm, sales low we're growth the plan. growth growth EBITDA and long-term respect there. in throughout single income comp Total teens. digits, planning I high high growth single-digit high digits of growth no long-range the With mean the single

here, which grow operations. will at in continuing on double run investing new out We do a existing the to our real is digits dot-com of improving stores for business, and quarter-over-quarter XX growth that our addition XXX to

Operator

with of comes last Zodolis Quo question from line Vadis. John the Our

John Zolidis

I have two with stick here I'll questions, but since just last X the it's one.

You that you had... mentioned

Kenneth Hicks

You two. can ask

John Zolidis

you. right. All Okay, thank

two my So here's then. questions

on is unit average question sales. First

about million for store, that's average $XX So per $XX at in previous full -- million we're from over year. the the looking year, a believe, and I little under, just down

expect And first on, coming the annualize do are in to new so what the first is for those units question their that you year?

Michael Mullican

piece question. I'm last your John, I sorry, of the missed

John Zolidis

about you're the mentioned, So sales should the annualizing at we haven't stores that new open from year-to-date, open But contribution opening up, newer stores, in be we've the X got first they as what year yet. been a they full as their year? you've think

Michael Mullican

year months X into them be some accretive underwrite the accretive few do at them end a expect around first year collectively Again, year opened, million these opening. of whole on average of to sales more We X X even $XX but of year the a to just We as EBITDA sales. after just were earnings X

Steven Lawrence

Then on ramp up day they obviously, the rate basis.

Kenneth Hicks

significantly higher a typical than Yes, store.

John Zolidis

Okay.

We higher than bit, you particular, question down you still will winter then relates with might still triple these, something they mentioned about dramatically levels even little be though talked pandemic to second number are up digits. of a and monitor that. example, And a And in categories. pre-COVID for that ammunition the

but that's still of and this going might into more just go we favorable pressure. consumer downward the next reversion are kind year demand haven't for as I less we really what where cautious view So okay, think continued you're or in categories seen the And yet. potentially hey, a performing suggest, environment, these these to see

you And positioned my is, to occur? to so what's were happen. to you are can't how predict But obviously, going that we manage inventory are if -- question how able

Steven Lawrence

you. several that be Well, buying past process. certainly into the over build our We I think years, we've plans to honest with demonstrated contingency

see happening. have activate upon demand dates We depending trigger that we we where

great had partners. We And our both was sides chase on think have as we of to I it. scarce inventory with vendor it and partnerships

lot And the of definitely just think better, some has sales a goods, actually, this gotten getting I drove we we 'XX caught think them. that think seen them And the and happen. way outperformed think lot in reflected in trend and have other in supply our as 'XX. was been supply which of inventory of with that a ballooning chain I I we've people for terms year, up, lot of a competitors don't I caught

strong got got that's a So it. allocation basis, to good on allowed who's I think strong us a of nimble both And and partnerships very management. and we've team, relationships, open-to-buy planning sides manage really

of next So the this, that. or I at don't cases, we we of what higher company say In performed XX% stabilize about gives volumes talked another I if on But slowdown being see X we're animal that those confidence, fitness at And year. or or the being changing the trend levels. higher I see stabilizing they're all X levels. them. these that seeing that a several them, things at. and search a lot And the us think track Michael is categories, would you things we hit mentioned these of is like than cooking

volume, the average the thing just weekly at, another monthly versus year, trend that's not So looking we're volume. but the last average

in new been baseline is the because that consistent so off confidence they've giving quarters And this that's those row. building us of multiple a for we're levels kind of at that maintaining

Michael Mullican

Two other category are think things inventory. about and very important that the I this

as apparel take does. But bearish doesn't than a what not in if inventory the Steve view we inventory inventory demand think the not seasonal I predict as mentioned, you we have better if bad. in can demonstrated seasonal drop It and categories toxic nature. space. doesn't the go a well, It's absolutely most become you anybody First, off, manage like where

walked they're shouldn't they Secondly, away to like they be challenged in to. support you it in a be if demand while for space of used because and going these categories, share believe it have this lot they folks challenged, don't

the share we even -- if inventory fashion because should things. those to to demand it's subject doesn't of category And becomes or seasonality will remain challenge. continue And the healthy types or not so take again, it

Kenneth Hicks

Steve not has they're ability of in the key put X or demonstrated -- line John bananas. My to the team what But here, Yes. multiple position. One scenarios things manage in a X the us inventory, mentioned that -- is not things. these the key is

got we've markdowns. announced an haven't retailers that We and to having we're have problem, as take other excess inventory

Michael and those levels. made second that maintain -- And X about thing continues those we We is on we've the are managing up those comments categories. was of higher in carefully also share to the downside. that the are are, improve both of some where just demonstrated that even are And many categories declining, at able of we to our

to has pick a or -- level, higher So able offered. market and the situation, a or back while up in declining hold we're pulled that assortment at in either that competition declining value we've and share because

with job done years, good, Our the excellent better, over our in past multiple categories. of putting in an best us couple has place a strong team brand good assortments

forward economy. and And as just next retail, yes, year But first of the also growth markets. things going our both we're but be for go entire that times, enter so yes, we existing X we to is part not the a that challenging of confidence that in the be positioned stores gives time but new us online, for will is we with tough as

very our position feel and we about So Academy. about confident future for excited going forward, we're the

John Zolidis

holidays to everyone families. happy And and your

Kenneth Hicks

holidays new investors as but a got I interested year. Academy. the future. We're in the everybody's Okay. company. support also of who said, on and want and great Thank team terrific people of the terrific, to of all appreciate time, ending the much. I on our happiest We question. call. That you everybody a was members, very right Appreciate last I we've to thank want wish our participation I feel, our and everybody's are

thank So Goodbye. holidays, you. and happy

Operator

for does this you and your today's participation. Ladies gentlemen, Thank teleconference. conclude

disconnect lines your a time, have this and day. You at wonderful may

Academy Sports and Outdoors (ASO) 7 Dec 222022 Q3 Earnings call transcript