Earnings call transcript Q2 2023

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Operator

Good morning, ladies and gentlemen, and welcome to the Academy Sports + Outdoors Second Quarter Fiscal 2023 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 one question and one follow-up. Instructions] [Operator

turn Relations to Outdoors. for go now President Hodges, Matt, call ahead. Investor of Academy the will Matt over Vice please I Sports and

Matt Hodges

& for everyone, Officer. Participating call. Chief Mullican, call Chief the thank President; morning, Lawrence, the quarter you Steve Officer; Good Academy financial and on Sports Financial Executive Outdoors' are results and second XXXX Ford, joining Michael Carl

forward-looking statements our call filings. expectations that comments materially reminder, a Company considered to obligation These made may any factors our but in in undertakes are this forward-looking management during could risks limited revise to release subject the statements. As are today's and and by from uncertainties SEC be to and identified actual uncertainties and statements. include, statements and The projections. These release differ earnings the risks no the to, earnings results cause not our in

the Today's remarks GAAP to financial included certain measures at non-GAAP also Reconciliations refer today's release, available which most are investors.academy.com. is comparable in earnings to measures.

his turn now for Steve Lawrence Steve? over to will the call I remarks.

Steve Lawrence

three roles. you, since stepped morning to all been us for and and Michael Thank new our QX Matt. into call. It's you our for I earnings thank Good joining months

and the that building internal internal and the business excited which our has past planning. team to succession our couple years to the we've of I'm backfill expenses able roles a on bench to Over speaks done fill all past strong work key leadership rate worked the on key on promotions, while focusing team. the days, our over some improve sales and run trend XX hard to of the our we're current positions with of

milestones shape the will our joining and with I'm that, role Carl Carl that including achieving in for he in during that new achieve on of one long-range IPO plan. helping highlight our the X.X navigating To these has create objectives and us today's first played promotions, the several been our helping and Academy pandemic, call. years, new CFO, all earnings and be Company our Ford, is an time, integral he's long-range the supporting strategy, thrilled

to QX results. Turning our

achieved X.X% billion of quarter, $X.XX net comp. sales a negative we for the For

not that are during through decrease, improvements with What better. month each and our unlike in getting we call. happy we saw sales saw with moved with While results our guidance in were last shared a In we rates steady quarter these with the running first the was line margin line encouraging was QX, successively business in QX, decelerate the we we as both quarter. and trend

that progress is through this continue in belief into QX. the on selling we to as Our momentum holiday build season and QX can we

X.X% cooking at which & a furniture the outdoor business quarter. quarter by outdoor Looking was Sports ran during Sporting sales equipment, performed Recreation, all and goods our the division, best-performing decrease. during well

fitness bike business be the with and a division X.X% was decrease. equipment the tough. second However, performing Apparel best negative continue to

to of to businesses as perform business. licensed private NIKE label well men's our area. youth continue performance continues well us as solid our apparel out also see We with for along the and

The women's challenging for business has us. remained more

As business active Footwear a women's track. on during very we we're on decrease. X.X% QX getting move forward, back focused ran our

we business and were in Haydude we be to as The year strength by a as We versus continue private where cleated such work our brands Brazos. to much was better with apparel see in inventory strong brand, a also ago. and footwear boot driven national position casual a work continue

performing to continue and of is outdoor years. categories our Hunting ammunition continued and these couple saw QX down to were Our camping. remained categories business XX.X% expectations. which quarter was decrease a versus the but XXXX last most below but the still Better for decline the was for in from levels, was fishing trend both improvement QX an the we peaks above well challenged during the softness businesses. that perform firearms well of continue Both XX%,

forward, categories lap softer key expect in across moderate to move many declines year. start of various you see to brand we we an these Customers end As one demonstrated the sales. as called last in gravitate When increase the businesses, our we comparisons we that of themes QX forward quarter. look the in assortment to value into second the out our by on call the carry of penetration continue towards private from

slides not BOGG benefited time, that Mother's increased the Day, We've July. Memorial same the the categories long as Day, in of consistent to a their the also items. during as purchases also innovative cycles time seen surge with pandemic. during Day the were shopping from aggregating customer demand or replacement periods many natural and ticket are recovery which, of cases, the pattern along of customers Xth with such continue Bigger on be BAGS value focusing products many such At challenged, new and items Father's

key continually continue us space calendar. Customers moments promotional evaluated see our adjusting in in these expanding our while by assortment everyday future also shopping into during efforts and align will to buys trends. lean promotional are along our We with our leveraging the strong to with value our as offerings efforts position the

which outdoor towards Columbia key climates. footwear one on southern mean retail Outdoors Northern of become that and couple complement partnership new take in past We as and This QX a and focus ideas, with partners. with new of will L.L.Bean believe In their announced us appetite customers' their to I'd a brands like sensibility new fishing a and initiatives for perfect of highlight advantage more the Magellan week, help launching the newness. we apparel regards businesses, to to

American to bags Another our partnership is the of exclusive ACL with and Escalate seller League initiative for new become and this fall. Boards

share market fit the partnership us. this we perfect things have With is a in all tailgating, for strong

apparel. over years, license business our been we'll anchored partnership in offering suit us that been and Fanatics Later the leagues within with traditionally live a QX, a has online our geographic has team in This off our but expand and teams the strong help footprint. offering kick new to for

service grow of categories, to assortment dramatically a leagues new and forward. number to will allow moving our expanded us Our teams and greatly relationship

We remain Shifting ensuring best our business to profitability. track shareholders long-term while the our on we proactively to this goals. deliver year results possible focused to remain managing on and for achieving initiatives our

give QX Our a came the XX over over Beneath in a last point quarter around point over shortly. increase our basis XXX Carl down gross XXX stabilized rate surface, run financial year, XX.X% more versus XX margin for last our which improvement which was our points basis down you was color QX merchandise performance our at marked margin versus of XXXX. the with improvement will basis rate. a at year, points basis

quarter, in balance X% has past year. a The declined our continue basis, to years, was Turning couple At $X.X total. QX this compared approach in of last disciplined to through was plan in to lean of move and per-store of terms very exhibited X% flat into to the last a inventory. of we which units strength the billion, team forward. we inventory management On to down the units dollars year inventory end and as

business is We and are which us right at seasons. the well our current our the confident support should facing, to position and forward inventory fresh position holiday for the fall and that content is selling level

the the proactively help QX of a we've aggressive want as give action order in reminder this in addressing on remainder quick of the in June we're discussed year. we through sales and business. key the we taking trends that to to seen call, drive in profitability year move improve we're taking business our As to the I actions the

highlight to points. a all on and continue focus in the position as space value leader we'll First, customer our across touch

data capitalize to platform. customers' advertising experience. Holding for We're with be XXXX the and cross desire new customer enhancing Second, Fanatics, in stores a the expect functionality from our the continually up improving XX new opening effectiveness introducing opened features we we along as offerings L.L.Bean, XX in also targeted to on lastly, assortments better sales new we're fall. facilitated that by such our omni-channel stores new this our our boost marketing And improve newness, will American customer to

Now through walk I'd like the to turn Carl? you CFO, financials. over to to new our call the

Carl Ford

It and operating model. capital I the I to and XXXX, am proud is initiatives with as Academy I what Sports Good the believe Outdoors. Financial I of I the opportunity Steve. have since very was as into is everyone. Company long-term Michael growth finance same not been strengthen be and excited excited Officer honor is and our future. it to we improve work you, allocation about Chief to bright selected about am to organization company balance an the the our and our follow our morning, philosophy. a Thank lead have done then, Academy am sheet of

X.X% I $X.XX the sales the a were second transactions, an X.X%. will by sales X.X% results. of Net now impacted comparable walk Sales you of with decline compared ticket size. our details in increase quarter offset a X.X% by second through were negative to in quarter partially decline of XXXX, billion,

merchandise XXX active the increase were last offset higher sequentially of points XX basis of during improvement margins shrink. XX basis during last by improvement driven lower and periods points partially an than each quarter. points XX we points of year freight a compared was basis in During to comp costs, was holiday decline more year. an customers higher The rate basis Gross and XX.X%, the the quarter, in month XX of saw by margin and basis point

our benefited saw losses. taken and and system sequentially to basis-point margins manage as we in by merchandise to from XX driven efforts optimization actions a capabilities, shrink, Our localization. improvement ongoing improved price sequential We through inventory detect deter

operate We a be gross in higher environment. to rates margin substantially continue at to challenging even able

of is plan. quarter, $XXX.X net in second our This we an driven quarter basis the or XX.X% compared are primarily sales, increase SG&A of making the long-range of XXXX. deleverage million to expenses points by During were investments XXX

We stores, marketing our growth are initiatives. projects and investing support in digital that omni-channel, IT new

to a Approximately basis growth percentage of dollar quarter's SG&A this XX% investments. XXX increase related as sales. were expenses lower of compared this is QX to SG&A points When year, of

aligning right-size during improvement with we sales organization the of our our spending. the reflects expenses our As work we to done and sequential sales focused discussed percentage revised our quarter of call, on as expenses first guidance across a our the hard

inventory receipt business current areas on back hours Examples projects on have revised flexing growth are long-term expectations. rightsizing scheduling times Targeted strategies sales during growth. on aligned the we or and focused distribution scaling store not and and year distribution sales labor that include with non-peak based of of

resulting Net $X.XX. of income share diluted was diluted adjusted XXXX, $XXX.X the from per a were earnings earnings $X.XX, sales, or quarter GAAP of of in per decrease share second million X.X% XXX basis-point

in million balance no $X operating in $XXX million on billion the $XXX the At for net we had a quarter. repurchase dividends. initiatives facility. activities of from and to quarter, This X second to of cash cash XX% our our cash second the invest during borrowings deployed and sheet. million million pay Academy this the We increase Moving approximately compared $X.X credit million the end outstanding to shares is $XXX.X to quarter in last growth year. and out in generated

has approved payable The September of XXXX. share Board XXXX, of to $X.XX were XX, XX, on October as of a million. Capital stockholders expenditures dividend record per $XX.X

still to we million year, and between full expect the $XXX million. $XXX spend For

I turn some year provide initiatives the full on key Michael of an call over that, With to guidance. and will Michael? update our to our

Michael Mullican

finance to morning, Academy's Financial organization He Officer. several his to years. I has the want say been last Carl. Chief Carl Good promotion everyone. congratulations for a member core to on of Thanks,

During Carl the that our and move excellent know key forward performance. his to with been long-range of I time, driver be as will financial that financial of continue team business we Carl our has plan. stewards a

progress we past drive update the time on some that growth I'd initiatives described will take during Investor like long-range April. Day few to plan of our to key everyone a the this

growth a reminder, of key the the As components plan are.

stores and to a improving business; in and base expand building markets; third, existing XX% by and second, by scale new store and service powerful team strengthening experiences; by attracting the and new engaging merchandising supply and open our chain more build achieve through best to stores, to content retail. the to these objectives our productivity to omni-channel business First, fourth, our to in customers existing our in drive leverage and communication,

next I'll years. over profit initiative, store we start will and the be our largest driver sales which expect with of growth new few the

though collectively As a and productivity reminder, in profitable group, contributing in We have they a are are, stores stores even of positively metrics. nine to as meeting And store sector-leading all a expectations economic environment, opened mature and opened EBITDA. our already XXXX. they challenging

the very and test said and we are As a innings of was in past, initiative. early XXXX I learn have the in year, this

time our new year the omni-channel stores may assumes brand in we market of current forma out of generally have new have while that pro sales, markets maturity existing build one, million stores inclusive need While sales longer learned $XX sales ramps, store and gate approximately faster. of awareness come to in

we Our than expectations is and the better the sample but current of learn the and processes store new continue limited with our challenging, one. each to size environment and is refine last opening goal economic making

are we implemented. So learnings with that pleased the far, we have

of Given the positive new in confident to Academy XXXX, model are many the preliminary that we business markets we brand, success. great results stores with take our we can opened concept and unique

was store one Peoria, Illinois, the opened this our in In second which quarter, store year. we second opening

last including first in openings We the have six Friday. our opened Indiana in store QX, Indianapolis, which area, scheduled

Steve five economic of these that able growth mentioned our to open to challenges, are existing store track fund want and QX. we but strong on spite are environment, Carl to I in to emphasize six challenging stores flow. the cash in We with another

today, XX states, of runway only are for of us. front large As so we have in in we growth a

other their that markets many In favorable share addition, offerings, there are retailers are market scaling outdoor gains. with product for back

successful market past and stores where confirmed diligence be due locations term. identified research that experience the Our our long will has for

our to aggregate by to tool cohorts, have customers. interest, a This will create growth. behaviors, our our July a sources customer many other launched drive creating comprehensive this shopping customer sales fandom sports new segmented platform we new and robust organization, view further valuable allow in to outdoor of customer multiple portfolio With us ability from data within We filters. develop will and perspective, the data

campaigns exciting drive we traffic, new targeted We level in and refined and refine specific loyalty. customer use look and to marketing updating We conversion it you We increase that to anticipate can our deeper this capability this will customer with behaviors as to on this highly customers further. data design proactively connecting forward an tailored rates interests. about develop

Day chain. update brief of a EBIT we is in productivity, generate our costs. increasing April, Finally, discussed on intend leveraging costs, margin lowering unit this XXX to supply distribution from as improvement of supply points times Investor our basis initiatives, our leveraging fulfillment do transportation our existing adjusted chain our part decreasing by e-commerce long-range and plan We lead at to our capacity,

the management achieving partnership A major component of in implementation warehouse of this with is goal a system new Manhattan.

to one XXXX. to convert our of centers are track new the We on distribution system in

logistics procedures, of contribution multi-store We other and are productivity also the taking steps processes improve to I improve to consistent in by the cross-stocking and achieve flow. end EBIT of product goal us deliveries investing expect chain and to our margin long-range visibility increasing supply and plan. implementing technology by

our expected sales from billion to negative while sales our half to billion it are share range and sales results, comparable back the sum to ranging with guidance share reiterating full forecast on in updating up, negative Net from To X.X%. to earnings all X.X% year current our second $X.XX based still are net expectations, income reflect repurchase per trends quarter. we the activity $X.XX and

taxes per Gross $XXX income range million. $X.XX $X.XX share million million XX.X%. to to margin share rate GAAP to from net and to GAAP earnings earnings share. diluted and range is per per still are share million to from range Adjusted expected between per $XXX $X.XX XX% $X.XX $XXX from share. income expected per diluted to GAAP share between and $XXX now expected per are before

not potential diluted share activity. are count calculated per on include XX.X shares the future The for and million repurchase weighted any full average share do of outstanding estimates a year earnings

million $XXX flow. million Finally, we expect cash $XXX to free adjusted of generate still to

will Steve back With the now turn that, I over for his to closing remarks. call

Steve Lawrence

Michael. Thanks,

much move that we we As pandemic. some think despite company note the forward, short-term I it's a headwinds, to important is were than Academy before stronger

few structurally over gross improvements significantly have levels sales made margin operational enhanced driven that our power. and the Our XXXX remained past the earnings rate by above years

a balance and operating and executing team of model and strong we multiple ways a into our and we solid drive markets. have growth expansion core productive a and strategy very results with market adjacent flexible record delivering a existing is Longer and new a growth share customer have affinity sheet, compelling within term, believe capture through high scalable new with to four-wall track We that markets. store transportable,

of of value and returning flow an have refine repurchases. We and share importantly we shareholders base. our by our to Most significant growth all, the improving from dot-com through upside, this the business the free productivity more with dividends cash store business ability out can while to have also to strategic be generated funded drive and continue existing

like members I'd all deliver thank hard for their helping closing, to customers. outstanding team our to work Academy of experience and in In the an dedication

there. ahead out Now fun let's go

now We'll questions. call the your up open for

Operator

questions. the question comes from of you. The open Imbro will Thank go Company [Operator first your Please the ahead. call Daniel for Stephens. with line Instructions] Our

Daniel Imbro

talked the from you're I store, shopping customers you of any about looking a start Do maybe signs new value. in just on within Or the the whether the marketing was within the broadly of then down for new customer, benefiting any want was consumer the cadence? trends that to year of going back when seeing. sales it half that you discerning trade on see is the the this past about the quarter's plan? attributable that the We've Academy to quarter, really improvement, that any of comp kind to And be think for store? also more

Steve Lawrence

a reflected couple ways. Dan, first Michael under jump with gravitating see about I'm pressure. and this the talked customer is will in. customer of towards part. see definitely stress value. We that We sure start I'll the We Steve. under different

value taking also of them our or assortment. deals in in growth clearance of which see end sell of that label, We a represents that. of we private We terms bigger when the advantage see kind

move definitely customers there So, a seeking is value. towards out

out we them excited we're this On after between right? like also the about innovative Fanatics seeking we new ACL. the talked L.L.Bean We them why and brands That's see going about and our or fall launching side, some that we're flip BAGS slides. BOGG to new the that newness, and see things market of

a definitely So that's seen. trend we've

back get time a the promotions how kind key pull the during there. the past appointment the and We've also purchases shopping and through seen we've that's when the time And aggregate those periods, seen marketing, key year. them customer also kind planned of QX we remainder shop all periods throughout then bit, way shopping our our little we really and the of of

In the regards in put really to place the that targeted market quarter. the in from CDP, late really was

So any in of half we'll the benefit the didn't we of of that some benefit out We think year. seeing really get that. start back

Michael Mullican

on it. this will or meaningful fly little that a propeller And driver will bit but year. jet. come fighter CDP, Danny, jets And of this should in dog in come a our out We been holding we've the Most of three years. fighter four the own comp year. see flying a learning be own The Yes. we're plane a start our have benefit benefit next year, not we now it for past years. will the against to fight to big

Daniel Imbro

margins. a maybe then peers was just And on there helpful. around maybe higher Obviously, promotions. from Super follow-up discussion gross

bit to granularity there back there? driver to the worth Academy a backdrop? on little improved, coming where certain your out they tied I priced? What think, undercut Anything I'm for on down calling actually items? you any competitive pricing was look main in shrink And are when promotional Your in that changing you Just then analysis, the half? to is or the peers margins at held curious, quarter-over-quarter. trying well. Are that,

Steve Lawrence

half the into the past and and half really then then was marketplace it started first out year on year of start have Yes, question Definitely, promotional ago Carl we seeing it's about year year. time. of more on the last answer promotions promotions talked in at this there back into in We call, we'll in where shrink. the jump and carried the I'll than this a forward this creep

we're That as definitely moments. those said, seeing being during effective key those earlier, promotions most just I said shopping

that best leaning that that we're did promotions. have probably our is from So in move we to some the into certainly done point additional forward. merch thing erosion as We XX that a came inventory margin help through we've basis manage But management.

strong not maybe things disciplines that assortment the put allocation, all terms us those have the people about and inventories we see erosion planning our seen. and have same of planning, place think you control in and in When other control really all helped margins

Michael Mullican

Let gross compared faced said, Steve a from me we -- headwinds of spite margin to were take real It's our higher meaningfully In which confidential we year. gross can't issue. Shrink. of sequentially margin I'll improved taken able rate but are last shrink, to the expand many we We've frankly, working. about nature, them, and clandestine our quarter. many lot talk We from in of last they're and a actions, of as

that One regularly thing that the throughout some we is process a store some chance in do count And perhaps again. we year. our the them them our to year adjust inventories count us standpoint stores we to take and actions and from early high-strength gives take

I what so, And year. trends into It's tell good have a and environment. done. throughout that's we've would adjust, leaders difficult we that you the visibility

to great to is prevent shrink in customers We help because the in stores, are that all way that do the so And to they more manage provide of best blue significantly our the labor customer to members the what and thank the in do helping attentive our us to shirts take want the issues. best, They Academy team do stores fun. more I have service and have service time these can have more than stores. been in folks do customer and peers. our productive that's provide

have in customers. stores So, can the helping people we

partnerships helped We've with down that to, hard frankly, intervene have take enforcement. shrink. and rings department worked very law got we've LP Our been And enforcement. organized has help with some able law great crime

is on I'll a thing last big issue. So issue this here because it mention

it. about people talking of lot a heard We've

few start If the retailers with on we'll facing challenges past over back COVID pandemic. reflect the you years, many

community believe manage During the COVID We help more of got quickly. back quickly. I the crisis, their We our peak better more than anybody else. get opened feet to on able the that stores we were

If at in freight the the other ballooning years, few than space. managed that you most past look better we've over folks costs

many look didn't their were the well, others. with you when better to and back shrink. overbought ago, manage retailers did inventory We're If at do we a same to year that than going

We an have to We're team. a it. going excuse going it our great we're manage not use and not hit nimble to to We're gross margin goals.

Operator

Our Melich from of your the next Please proceed comes question line Greg question. with with Evercore.

Greg Melich

to average counts Were First, better I want drive us it the negative ticket? and more or sequentially look was comp let comp. at transaction that getting X.X% the did

Steve Lawrence

also So how and quarter slightly the transactions, slightly. which up traffic down better high was the comps successfully as progressed. for per us proxy single got did We transaction is digits, for quarter down about a talk for AUR the

quarter. as You through got the we got traffic negative can steadily improve less defer we as

Greg Melich

you of the the running it of like guess, negative given would half, comp we're the X.X, sort I in now? And have is back where that -- the sounds a midpoint now guide X

Steve Lawrence

the but don't we've to So guidance, continues within obviously give we the that shared. be guidance performance inter-quarter the range of business

Greg Melich

an us to or you're that the helped back Could supply to Freight pretty the it. gross half? thinking I benefit that hold give stabilize was -- idea that? how you want of on as it. holistic. and sort was into follow Got or benefits answer up grow thanks And a shrink And about this on then that margin for quantify chain good maybe

Carl Ford

Greg, Carl. this Yes, is

a So during freight points of improvement. quarter-over-quarter basis was tailwind the XX quarter,

XX%. freight negative the XX%. shrink a was points up the was in a as to guidance we and positive, margin, throughout a gross within tailwind continue So takes basis that XX XX%, was puts negative Merch a that were fall. on see And

Operator

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

Christopher Horvers

are can you talk winning that business in you and such business as Or of the and improvement about so the forward start bike to look then you're categories, about seeing seasonally? the to hunt in we ultimately bottom to relative think it's Are like things and the we out positive comp are you forth? or in think key can stabilizing some XXXX, the seeing whether exercise basically equipment, to about what form start those year? Can COVID more

Steve Lawrence

basis, mean be the Yes. challenge, some our On just in comparison continues businesses, to the fitness pretty fitness about business, business -- Y-o-Y equipment, I categories there's to a at particular, talked look business firm will to hunt of the of when about, be big-ticket a challenged. between challenged. we've continues talked you you continue right? be search bigger and The

we the year. through further the less through daunting year, comps little get get a get As this the we

So we're counting on that some we of the year. improvement as move through

But are it going really in was And when question, like versus of you really, they're XXXX, to It's businesses you still if category your up these still latter like all back Amol, where a part versus 'XX. healthy. look the the the When still at surface look versus in at it's up like take beneath hunt 'XX. the mid-XXs in you XX% business.

a seen business stabilize, growth little in versus at to to back pre-pandemic. company and total couple I is where healthy higher think bit from perspective. falling So of we'll once it's kind we've move a a when really level being certainly 'XX, spread still we more to it it stabilize than see able start this of was start but I years, that's in going think activity from a the last towards maintaining And the

Christopher Horvers

on guess I focusing just So that.

visibility quarter than to have forward? seeing of we that okay, you feel look these in and confident getting better a do you in as categories business, are a we're today you the more that point So ago broadly bottom form

Steve Lawrence

lot terms closer They're running mislead are that. becoming get running They're you want a -- certainly not year, I for But mean more to as mislead to we these They're though. getting of I predictable still pen little businesses. the negative on forecasting or start a us. can through bit. We don't those in negative. to diminish headwinds

counting that's what our really on as so part guidance. And of we're

Michael Mullican

term. were long again, we're I thing, this other space one we more term, the than and if ago. long on We're looking years few Chris, out we're a think differentiated in focused

there's of and from think away competitors have fewer largest really some I space. the backed competitors this

we're some is of term, running said, categories. short stabilizing. as definitely, So It those down Steve still in

term, lean long pick really and think customers we've new share I got support as into opportunity category. a great up to and we this meaningful

Steve Lawrence

they Yes, that of we're across through Company. retailer. cross diversified a pull player how you're in more the we believe outdoor we footprint. of shop talking ultimately, the short-term the the back become And major the about space, and and the with maybe nature people out is us to this, categories We're And crash businesses, the this assortment, space the right only candidly, some place though lot large complementary sports chop be. as on have a from even for a outdoor fighting

Christopher Horvers

And it. margin as help on question perspective a half we is here any in cadence follow-up the terms gross back think of my then about from models. the top and Got line

Michael Mullican

a XX.X% variability health. about feel Yes. perspective, we newness. No, down to we're as to is comfortable the to down comfortable We're It's value. that. into lean lean -- I think from The annual flexibility think you guidance the X.X. consumer of our X.X We're on with consumer that continue down margin to going guidance health. XX.X%, to going completely the on continue guide with And from into related to to or

to we those We've of kind two delivered that through of points this basis the past over that since -- disciplines pre-COVID and It's Steve business consistently. XXX buy enhancements, doing what leadership planning walked and we're up all team consistently of years. coming and back the and management, in planning allocation, buy discipline, execution, merchandise XXXX life to systems cycle open having those doing markdown that started really

day business. day managing That's what the doing out we're is in and

guide, the we've and with years. the delivered comfortable feel past it two we margin so for And

Operator

proceed McShane the Our next question of comes with Kate Please Goldman line Sachs. question. with from your

Emily Ghosh

Emily sounds for were how is second This We impact half wondered year. and thinking Ghosh marketplace we and into overall are might Academy. Kate. the that on the wondered areas currently heavier of like you the some of there about there's inventory where health how the It

Steve Lawrence

inventory is. I our we've where talked certainly, position very with about we're comfortable Yes. mean,

product. liquidate problems can problems our some know also out they sometimes We competition that and has there issues become those as

said, about, you under some been. the about right? is the fundamental than of are of Inflation some that's there, that who you're gravitate value continue tailwinds and the towards credit And think real. customers will pressure, core mentioned promotions headwinds higher we definitely card got everyday is heavy being But have, there's inventories other There's think it's That are. the out and customers when we you positioning talking I of kind this to increased we've value. to

We've a really with. label strong brands and private customers new business of got strong offerings resonate that

as feel We the combination we're So, things much gave scenario. guidance done thoughtful new year. both encompasses we've situation go like upside in things. those some I've all and got react just read an is the the we coming and and downside to all we a of going And been

Michael Mullican

was our inventory value where management. Reiterating ago, to that there going it strength we ago, the positioned to Yes. certainly weren't be in that. number said, what and is than year year was, think a best from inventory than based an and a we're environment it own we're Steve a future we on back I their certainly that the able And hold of more important time, we more think, believe our happy with we're positions of than today retailers to the at will in benefit

Steve Lawrence

store of leaned like been our inventory a we've feel risk basis. the We doing per we've really up, are At down into And thing. units on management this it tripling consistently. X%

Operator

you. Thank

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

Alex Perry

Perry This on for Robbie. is Alex

repeated? of sort could an buckets you of same-store that sales, in Is are that what not Has us based acceleration then then I continued? you're you Can give how back I then acceleration sort half. also, color And And headwind on the up? the to momentum lapping seeing? more back well. July first, that is in high seen driving how same-store you've the could much trends you're on just of remind think the Just win were half? as Astros think if And the currently that's end that implies back-to-school a be the us some shaping

Steve Lawrence

do that We'll it. up wrapped best Lot to in question. our tackle

As is a we of guidance. said, back-to-school lot don't we other said earlier inter-quarter being give people. That our than before,

happen hydration, August footwear, saw at we in quarter youth July in starts backpacks the our We trends us. strong lot back of best back-to-school or of the the apparel, key of end the carried strength like in really performing into really already July. were half of our things us. of of best July that areas So those A terms you back-to-school all back-to-school those for was told for month kind quarter for

in get the get back season have We've kind of a holiday the we have Right about key kickoff shop quarter said, periods. still part a tailgating to you customer bit lull talked during appointment-time we've seen school. until the lot us. now, those of hunting we shopping of being a how go of But the pass we a to period. little we ahead time latter the once quarter into of the then That

our So that forecast. got we into certainly modeled

terms counting out time. we we in as the at this have win. still as In the in place, this way, hunt. still I yet. think, Astros not well point And against up the hope are braces, Astros the Ranger the Astros, of for also, I first are in you're tied I by We're think,

kind So series, to into do of that to the we've we one those get that's there's happens, teams we got a when still license And in right? of while what one the always forecasting. that that is the know things teams something of of be about take to upside the And that the those fun get we're hunt. try of our would we business world certainly out world forecast, and lot series the if

Michael Mullican

more that. the that we're take license local be. for one No but seasons and we they play we thing plan odds really don't field like on game. business, may think the have We how not makers can teams don't Alex, the we when the And win, strong, and matter the

the So that's is to anything us to forecast. beneficial there beneficial

Steve Lawrence

the us XX, somewhere focus we a have give the up that kind start as the we've we on think about falling should We And store year. the your we in value the another the call XX is store of for tailwind on our year. new the into to new is XX going we've between start -- be We open of question, then to talked year. things leaning the the back remainder XX, stores openings of have, where got of to some the forecast anniversary us. half newness initiatives this have, That's They comps. back into a from that last that belief achievable business that

different us that forecast the the of is our belief of for give a lot a there's So, things that back half solid pretty year.

Michael Mullican

stores to I XX put XX it to the say out year. non-comp, we forecast total just want in includes that this new there, although

Alex Perry

That's really And on to there. follow just margins all Perfect. then helpful. up

of guidance the back gross increases there color implies us sort XH what end versus high shrink thinking environment. be improvement? of Maybe margin of year-over-year versus the you're terms the just think for would of some the half I the how about give drivers in in promo buckets freight

Carl Ford

still from It's to last It's Yes. in I basis little a XX.X% back the points give that bit year. we've annual up XX% to had general represents range. a same XXX what pre-pandemic. actually mean of

the the in shrink fourth third previous seeing anything quarter 'XX going shrink We're last in merch of the are We the to think third FY etch margins, turn freight year up the the to XX be third start not buckets quarter year. and saw quarter, in going We that throw beginning players. quarter. the three I new quarter. main points to this or you were started basis to

second ends merch options standpoint, talking was got our being that tailwind Michael and think that change, XX I saying a think approximately of quarter stated, inventories, With had providing rate. environment already baked From really just of this I a we they begins fall. about year-round a that's taking bit. and ahead management, we as on previously up but to the customer some be little that with of it's physical And it those to I'm is with want. going stuff kind So, not points. freight, for basis going inventory accrual into the XX%, said, value margin I the

embedded what's within the that's guidance. So

Steve Lawrence

price think 'XX back about And were Yes, now We this company, a it, in than on right really allocate we've said and that better we terms point. to about question just optimization sustaining of you getting quarter operational that's how the XXX in work regular pre-pandemic. of changes we -- where of and We're meaningful I you when we're back strong of we profiling margin that in to The margin. we basis size a and look couple from as different a the times built perspective. is the about we where higher. points the right at we And would buy around lot do reiterate XX% markdown a do, company are business the our goods were think sales get every a really made right we I we stores.

a gross of benefit business also of tailwind. that margin the and business starts think the percentage provides that should the normalized to as a percentage become a provides business kind tailwind. soft mix goods bigger margin brand be of us bigger becoming We Private

an made moves is the term on we've core, price, or improve during time certainly everyday which going promotions retailer call roughly the previous our are to to margin. driven And our to of sales about a participate Promotions like be. right we XX% by at be feel long we pricing, in So regular going structurally come our value But we those periods. they're talked that value from right? what

hold So, to feel structural and going promotions certainly the going be going to They're We like is it. strength planned there. like margin to they're we the are out we've we're of the But on feel to foundational what appropriately. got be.

Operator

of Capital. line the from question. Chukumba comes Loop question Please next with Anthony your with proceed Our

Anthony Chukumba

To also want peers to question. respectful to ask just call, my one ask will questions may I be who this on

omni-channel, and store start a SG&A opening Obviously, marketing. and the, I expense is, when anniversary digital the about that fact and my to the the do marketing will continue, store technology we guess bulk talked store new very plan. investments? technology of aggressive I question investments, omni-channel guess, new the But you given So drivers the digital have leverage the you new investments

Michael Mullican

Anthony, sorry, -- the one time? the say You more I'm of bulk anniversarying

Anthony Chukumba

to Yes. technology omni-channel bulk do and When investments? the the of marketing start we digital anniversary

Carl Ford

there. around in we basis the XXX things Hey, of launched it. our as deleverage to back Carl. with the a there we white points priorities think the actually really that April, And and data baked long-range about in in When it's viewed customer get was the Anthony, platform. we into new Omni-channel expense lot we invest to associated it plan strategic capabilities, space we there's ton cockpit of of upside stores. fighter just into starting a think jet have of We we're

lean So always going a see be challenged expect those but you're standpoint We're us we expense I our of structure, really as in think responsive long-range that. plan. areas look us you the and optimize environment macroeconomic kind that at from into to to expense throughout an leaning continue can to to investing consistently into going

Steve Lawrence

new several capabilities. in going big new Currently, Yes. I to right? weeks, the dot-com, us. to think, realm reinventing couple say, adding for investment a have is the stops, in the we're adding capabilities. You're particularly I site, win never was your some of of next We're continually which online going

that going to they necessarily They're to stop. for themselves. think as to the business. we're continual those us thoughtful investments So make how to invest pay discontinue about I sure going very going or where be dollars going But be you're evolve and see those don't we really we they're and

new we're things. platform, really early think I This marketing

start spades investment we say this we're that going to I'd back fact, of and those ROIC and at the everything we game there's matter one, going to I in more an guarantee on we're of against a do, paid As run But get against be investments. for the that. you

Michael Mullican

the initiatives those important that's flow, more parts. one the cash -- funding with existing of And

Operator

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

Brian Nagel

but Anthony's well, with follow lead multiple as and I'll So ask question parts. one I'll

look to off, with working forward First Carl. congratulations, We you.

business out would still are Comps there. So through a cross job the some the look, you you've managing through the question for currents they The provided have, guidance sheet done suggest negative. I negative balance year. of stay fantastic

year, categories current lapping get comp Company -- it guess where then comps? are blocks an think business should building for -- the And you're as post-pandemic these negative type say, consumer? of back Is it the are we challenged to portion looking underlying at I to is, do have these the I really, is how question positive what what what versus some it about beyond that, So, of steady the the more the be?

Steve Lawrence

Yes.

economy. to the about So kind to inflated pandemic the coming of onetime during our in an outsized was 'XX, 'XX 'XX, It customers grew thought out by when right? and we I one business stimulus stores, some to store of cetera. the only and of categories, in there's saw We really state last reset year. extra that open, the year coming surge this clearly, proposed, year last mean of of back intended had et We to year's these growth move kind of

under. I customer think how the pressure thing this into was much year we were coming the is on counting

that's seeing jobs is through we by high being So I debt, that we're et the talked what negotiating kind state created about, card credit The short-term cetera. of the economy. of inflation a year attribute lot of this

that's short-term So we -- think that that's start growth. we customers have move moving stabilize, to the healthier to navigating forward, see as I is a back we keep to going start when and when to through that little we get thing the

and in to making these lot is long-term going when see we're dot-com investments in off that's the once that's going come a making to to right? kick stores, those all a market, of this to initiatives investments, start And that of CDP the we're in, talk our investments really investing paying of we mean things they're short-term lot in. you're I site, that's these kind about having our we dislocation one we're out of or when really they're still new is these we're

Operator

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

Michael Lasser

XXXX? a having take into operating much especially the negative customer comps How Academy its experience can lower expenses without impact remain if on negative

Michael Mullican

sales know square We're are some I we're per got expense would employees, most in We're productive their competition more employees. foot we competition look more with Well, our sector comes pretty with on in a actions in productive good Yes. basis, had productivity important. a at when we've think more place. but to employee that more happy productive it profit structure per of a that's square productive the I we're reiterate, the it. and have I our for when for foot basis. than you others than productivity

expense I pretty standpoint. in we've a store place our So, good think got structure from a

that long-lived in as there We benefiting improve we've know, structure initiative are really start a we're our won't year. undertaking And that next looking got chain. us our very diligently you and supply to the expense very

the about are but expense the initiatives happen the that, this anticipate particularly do look, on in good the we hard there. on to, supply the So and side, that comp trajectory. initiatives as will based other that we shortly working year, again, to have have on the offsets chain turn hopefully, thereafter, some should that talked We not initiatives Steve we

Steve Lawrence

to we of our productive we're stores us But your a noncustomer-facing there through anything hurt because something more to great question doing off We're is as spend is and we've to. allowed to experience. that flex a continue need flex taken the that's we'll mean and tasks customer our down we labor in time managing question. that's lot sure I this, plate, we're not the talking as about making

to But the to your want a certain level base there of is provide to customer. point, service we

supply terms of down in receipts we us little a and that our chain. bit, business a of how come As room little comes bit down, manage gives

receipts business customers we've or want experience. to want come to sure, we make can think don't still some in point, natural flex erode down, off up I in, but customer how we are got based always So your also of flexes that we the shopping that how to

Michael Lasser

question it. of going expand that the some as distribution, turn put is plays the profit soon distribution is is that operating pressure to more key follow-up your in My margins vendors competitors. to Got which the your perception is lowering going there's for on products. this their in, expanded Academy are of And the of pool some profit key

lower, if factored about you So, competitors Academy's that the maintain has would Academy model margins have to A, their margins expanded we right distribution B, your that enable you over drift now? what it the And have your see into is next few how in years, this outlook?

Steve Lawrence

Yes. Macy's. I'd then And apparel got couple was same DSW lot of too in really with right the is retailers announced we're the our response start is non-mall-based. us is question. their that much. tends Macy's up was apparel, and where in It distribution impacting around a time. I that into quarter back more A as mall-based last We that footwear NIKE picking think are now. We this because -- based. it I DSW believe anticipate of a be going off don't it to mall little

you a maybe of little that bit worry traffic about there. certainly, So from could

But have not that same when and we what we the of it's their carry. look traditionally level they at carried, assortment assortment

it's It years how term, is call. business. five forecast. we us, access past back having but So a people inventory the thing. projected with think got That margin having and Carl for said it and we've isn't that more a on foundational the keep times manage is coming over to And thing for our brands appropriately to accounted foundational this it positive seen the we couple improvement of in key management. starts margin think we've a I Longer I

flow move too has terms benefits in have stores not traffic of As the a that markdowns company, much needlessly. any inefficiencies many in and on of that positive inventory the end system. around carry the creating to created we terms markdowns so Managing back not too way in receipt used inventory managing creating the inventory, to way

and and we management value pricing that value. just inventory through how present then sure and So is a out our big we on day a and basis a one price offer make day great manage

help everyday term. disciplines the two place value think the to think, believe of in in be model, I we combination on put going margin those are is things that I long us our our sustainable that

Michael Mullican

the mean our chain, to that back initiatives, strongly on again, coming more we workforce cross-stock, other fixed. very got multi-stop is basis supply frankly I better today of labor. DC our of XXX deliveries, more variable benefit highly from use then believe we've points the And

marketing, a instrument, well. opportunities target And then as more we've directly blunt being will efficient there. margins using with of customers and got So a instead to help using able effective scalpel our

Operator

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

Seth Basham

your anything if first associated My question so new my store store in calculation, the terms productivity. That's again, around wondering our this there's locating is By of the question. timing? with quarter, I'm

Michael Mullican

the progress stores. than openings We've all three much out stores Sure. in All three last XXXX, better been openings in was pleased honest, XXXX, had of the we not We're successful a footprint. the Westfield three opened opened though, quite of open of And this with Indianapolis. be to of even the in back five the more the year, an new it's we had have one years. to store ideal new the out-of-footprint out Carmel, time we've past market store,

we the So a XXXX we little stores are planned. seeing than ramp slower had

is Milton and the year. It's said this is got analogy we're the times And over, -- again, is The will We've awareness. still this economy the brand and from XX many some that shower. year, it I've they're as challenging, XXXX chain learn But our XXXX. to test than XX Friedman, those. stores, initiative I that did they opening stronger internally fool takes learning build down. used in The around to open time

to You gets hot. cold then get and it turn the doesn't you cold, when and you it it turn it finally hot, and turn hot water

for cause fail to illustrate people meant they're account time many that's effect. times, And studying and that the lag when to

you and slowly can slowly initiative, the all once, studying implement is those can The still doing. decisions, line the initiatives this what when and that's vintage. have we're not punch these you large study at so going of when And them We're here. XXXX we're impact you

Again, that We've feel any in the are The our being I we're white certainly key And very in profitable. we accretive cash stores so good cash got opened funding growth and keep are flow. things our We like this in to very, got learnings think stores all existing all them, is only we're happy flow. some applying more in far. that already than space mature through we've almost that but mind of retailer creating can XX flow. of, of to They're states. cash sector, XXXX

we're open reinvesting So stores. that more now to

Steve Lawrence

out stores share to is The of market other markets. those would traditional that's all up share opportunity footprint, that as open I add, market thing to for continue we pick our us. in

Michael Mullican

the And now business dot-com as customers it helps those Academy. awareness have to

Seth Basham

That's helpful.

Just a follow-up.

that with then XXXX figure class, XXXX do of sales your outside class stores. And that? the million footprint, lower So you average, more million $XX the those still expect those opening that again? in Or -- could on expecting, than you're for it $XX be

Michael Mullican

that, ahead be return. those attractive Again, vintages for will average. got average, that's every format that's some based depending pretty both again, store, and and below ahead what tried stores. XX% Yes. how may smaller we've of underwrite On the be the expect tracking that's smaller. some stores, say They we different prototype, tracking that We've really on different ROIC I are hurdle would we achieve they things. what that XX,XXX a we've will seen, of that,

Operator

come one with Gutman for Morgan your which will more gentlemen, with from and Please have Ladies of we question. question, time Simeon line Stanley. the proceed

Jackie Sussman

for Jackie is Simeon. This on

would Just to as expect there we kind of some looking forward, deleverage degree your that? ramp Or and that think in about business? the how be open leverage you stores investments? comp what to should new over level drive is need the model right we the in time Should of you up growth

Carl Ford

in standpoint, we're expecting. seen plan we've and of do some not basis low offset space. single-digit nothing expense have that Yes, supply comps modeled XXX a that that, that that's deleverage. what we points chain long-range We things And the says from in

investment that $XX example, near term year-over-year, you priorities. If really for strategic in in current quarter, the at those SG&A, long-range million up in look is

cash these operations that's from to during flow, in the the when you to in it, free compared a increase million like invest cash got environment we're in to continue what that's strategic Michael and doing. XX% $XX priorities, flow creating comp. actually tough We're makes year-over-year that have And us downside quarter, cash a I but feel permission we year, X.X% our spoke up $XXX flow to million think, last

Jackie Sussman

ahead. go You

seasonality QX follow-up, Just seasonality gross quick a don't given should we in versus line squeeze you think to know with as QX can came if gross normal margin. I cadence of follow a QX. QX in Should I well? QX, guys that guide kind But from margin and margin about whether

Michael Mullican

to take and We things feel standpoint, XX% second move that, to to quarter. periods I'll merch going we're do quarter, just do it. are from We it a three those good that shrink key to units feel reiterate it that going time from margin a I'm to margin, freight. for in three pretty spread really it merch you the down that a the XX.X%, From the are we're but move the sales inventory promotional saw us worked going going to during standpoint, X%. standpoint. this things like and

From impact. a stuff shrink on the and some losses help year that last beneficial We're and, is to from going environment perspective, prevent we fall. a beginning still saw, to in be to having freight, doing deter it's some into cases, a expecting sequential follow-up magically. think things that lap change And tailwind that the we're we not but I'm

manage things. guidance that three we're it, are like to those managing impact We're the to can are what we So going and we three QX those and give things those specifically. spaces. in But on feel going QX the not are

Steve Lawrence

opportunity I the represents of growth investors. that we retail Academy So for space a kind reiterate, to believe in want and just compelling close

make have team growth most one the the things. is We sure want realize of focused compelling And there. to opportunities two on simultaneously you out I guys

sure to the to success working objectives. up time, going going term continue our setting against long-range planning the while in same headwinds we're ourselves long-range We're customers make short-term long the and be plan to to under for navigate we're the are pressure. our At of through achieve

I to everybody And Day Thanks. for that, have with thanks Labor So good And the associates. weekend. our should there. want to everybody out a all of joining call thank Academy

Michael Mullican

Thank you.

Operator

you for call Ladies gentlemen, Thank and now the has concluded. participation. your

You may now disconnect.

Academy Sports and Outdoors (ASO) 31 Aug 232023 Q2 Earnings call transcript