ASO - Earnings call transcript Q1 2024 | Academy Sports and Outdoors, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Academy Sports and Outdoors First Quarter Fiscal 2023 Results Conference Call. At this time, this call is being recorded. [Operator Instructions] I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please go ahead.

Matt Hodges

Good morning, everyone, and thank you for joining the Academy Sports and Outdoors first quarter 2023 financial results call. are and Executive Acting Michael Officer. call Chief Steve Chief the Officer; Executive Mullican, on Ken Chairman; Hicks, Lawrence, Financial Participating President and

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

Kenneth Hicks

X CEO we Steve? Academy. Steve over is and Board proven in their place our and forth our Matt. will and I This June including In of Executive exhibited to took thank today. for and create and the for I the set strong to turn Steve new outdoors performance. of all built of years Chief that the work Lawrence, honor I rewarding incredibly shared company providing last the is while the made our unwavering our us of Executive our over XX,XXX and given sports and the know continue leadership growth contributions Michael years, become we accomplished have achieve Michael their to our we've we believe with years future the is who on a CEO, the recognize forward time foundation of several look Executive aligned strategy that during Academy members leadership now of our the Board Academy a team and Executive the joining announced well new due Academy. to and plan XXXX. right President Academy's in Academy of of Financial role X, and of call and team Directors of time our on I our country to becoming to the transition in significant as to for and it's we at best I for strong entire working We've retailer continuing operational Directors. effect April, into X want and leadership to the confidence this thoughtful value leadership vision morning are you, mission our dedication fun are fun. as from have the last talented we strategy over is a lot, They and the team our Academy shareholders, the support Outdoors and due I you, the to Committee clear and transition Officer, also long-range we've Academy believed today leadership Steve Executive the Board with Chairman succession highly our and Officer team Directors' Good during the now thank stakeholders. I'll heights continued and of trust my Board of to all you retailer. Thank plan, as now Chief that support the of in our all the your growth Thank for lead I vision, on and to Chairman officially a values confident abilities company and are The President now Board in Officer Steve Sports the supported and been financial an my transformation very Mullican, company. time the on Merchandising execution my our successful transformation for and through have Chief and privilege Directors. Lawrence. April. It's past you leading as Member Committee you profitable conclude of together the my over with Directors; CEO, Board Academy here

Steven Lawrence

Ken. Thanks,

into all the value the both and outstanding for to members the our last dedicated providing start every team the company through enjoyment closely from with fill assortments, me strong succeed into our privilege new by we with and a our over a continuing experience X.X truly future. it's Ken have of gear Ken our leading to step to has saying I'm to I who also enable Academy's look honor and for forward transformation they as laid an picked retailer I our proposition roles. enjoyed years, has up sports Let partnership He and guided customers our mission, excited our XX,XXX our as a our over lead Academy outdoors will and CEO. fun foundation next as strong day they Academy. working

a of a years is battle-tested role, over capable been me team. fill any have including big like proven past following the have thing our Ken taking environment. confidence and shoes the on have They that challenge, been gives While certainly current into the I legend to X

long-range future well guide is us also agree for bright you'll a and to the that balance thought a move a all a base, team, out addition operating Academy. model In we forward. strong Hopefully, help as have productive to customer well-engaged solid we plan sheet, a highly

our to like to turn Now quarter results. I'd first

economic number The first very environment fronts. quarter presented challenging a of a on

business the in the the decline. year. are fewer contributed the contending progressed break were with but in ongoing $X.XX early sales know costs down, be this and customer up XX%. these business our our During as higher of our on first expectations. headwinds, for will and customers a baseline below clear, factors compared comp a with most be results macroeconomic ahead how into were To to negative continue billion, sales year, through translated first there softening being The of our Day be quarters Investor the such has to sales that spend, careful being everything. weakest which versus saw We that XXXX reported last month. When quarter net April, you which we several quarter, well morning, We April challenging that X.X% us. when in virtually reiterated more as to Analyst second and the they the resulted is Earlier last we transactions we and

fitness we bikes. against were As such And categories from several quarter. of expected, these strong we're most big as still called out, previously categories hunting, the challenged the comping camping, ticket as some up within and results

the outperformed On some where the a enjoyed of we that areas chunk unfavorable of to is a business got have have slower-than-anticipated normalized, off with seasonal markets, categories. be been these these seasonal outside. And a many large positive patterns weather Another our markets weather in several start to categories. meant of and of more in is front, consideration in has the the country our major we

from X% tops Looking XXXX. up seasonal at of and key apparel, which sleeve having here. as much picked categories, sales short such roughly such up business was spring brands, We assortment by Carhartt. division, a versus best-performing is shorts, we as Nike, In share market better our Columbia from benefited apparel, national

Nike, the brands also Our Birkenstock's was Footwear private represent more at quarter. and business grew the as all in SKECHERS Magellan down Slip-ins. year. XX%. during strength the We by These the such product clearly and new apparel brands than this led R.O.W. brands saw second versus out our and Outdoors, last and of X% performed seeking best value by in well, assortment which ideas is Freely, HEYDUDE, customer end

quarter. and continue from It's brands the which business versus to improve the categories shoes. Sports with as stand-outs delivery spots as Kids hunting colors. with delayed X% being business customers businesses year-over-year. year. as inspired more The and as Athletic most have more rainy sales these sports category outdoor our as also Baseball, important Recreation performance businesses products the such up where ammunition of performing while athletic DeMarini both Blackstone note sales category fitness outdoor some the demand customer with attribute Marucci the seasonal through such weakest Cleated continues strong & Team these Cooking Amelon Shoe last at and Our other and sales as Outdoor business the cases, we XX% cooler for our down of in to and anniversary The to year, have down such areas move up challenging such We sports and last running share quarter. the in weather strongest Recreation that did casual as gains should equipment. quarter. Outdoor bright temps were perform expense strong success challenged ideas this running with running of had furniture, and second as court voted In our challenged and the were a benefited looks to XXXX We new water well to the outdoor declined and remains during market historic XXX%. roughly in [indiscernible] some to the The and leaning business Fitness portion we against with believe that and weakness teams in into categories. In brands division purchases be continue from YETI, bikes new resulting during X Bats of by we up the and XX%. most being

quarter, and the both first parse in what affording value results to we As ] newness and has clearer [ the for become innovation. customers

both value, showing and of during of the buckets a towards customers terms clearance with with focus quarter. on we've In deals promotions increases these gravitate sales seen

in brands in as customers new the positively new which and places brands the in to this At also price. HEYDUDE BAGS Colors are brands. such BOGG of Limited multiple from Griddles, There seen [indiscernible], the same Edition responded our see such in value our time, this, or regardless outperformed and ideas of as we've shoe Birkenstock. private YETI Blackstone drive We for national performance brands, have

decline more merch Our million of in XXX decline quarter harder XX% margins. first newness point will to adjusted a partially forward be to Shifting was will detail merch The as plan for well revised Michael as per XXXX. year of shortly to or profitability impacted profitability; through net the color we primarily push gross what QX outlook the the rate lower to was contribute XX.X% decreased even the down during margin driven in saw an our to promotions helped XXX share. QX going basis remainder points fronts. both was increase coming similar merch in margins basis or margin income provide $XXX in and by to that give you value our factors quarter. at around decrease the the versus on This more in other regarding due This XXXX. $X.XX

our $X.XX quarter to ending compared was a Turning was increase to which billion, X.X% balance inventory; QX inventory XXXX.

of units past increase in focused year, into Team low are cleats as year, has terms up the receipts summer is our believe compared a depth and the we per season. Overall, X% down done positioned areas for and also the our The years. store believe well-positioned X.X%. the of In slight across in last fund The of and a good on units and new total and units ran is to healthy job such all last inventory are stocks the assortment to current over but last we primarily basis managing team total fresh, categories are versus year stores I that selling Sports. X and is breadth

make the continue with as to it to Our is business. plan thoughtfully and forward trends aligns to sure our move manage in we the inventory

consumer of thoughtful economic Looking the remain the current as ahead the their to that spending navigate we to they in will anticipate the continue remainder year, environment.

help our of natural and our and at space in of positioning near ahead high-traffic there such the as events us inform half as as of couple periods affordable everyday our decision-making increased we to term, value focus a Back can Day have results Father's time leader we have these price. School, will We the head fun out customers that the back in the on the into year. We've Academy from

in efficiencies We strong in-stock we surface appropriate positions inventory QX. to inventory the us through and during that us DCs summer and combination position months. peak that believe expenses typically the we a plus all seasonally as macroeconomic move value through We'll continue of Our remains this see this we improvements and stores also navigate strong under control challenging thoughtfully managing as beneath products drive well in environment. have while

Michael to XXXX updated quarter over walk Now, Michael? through and I'll turn to it financials you our first guidance.

Michael Mullican

Steve. Thanks,

been leadership under honor to last let work has years. Ken's an First, X these it me say

and work results of a as a operational a team pivotal look it. execute and continuing long-range will President work on our Academy come long-range the Ken we I to our with stores in that lot a We increasing and new to in excited help forward of productivity sales a stay am expanded expansion culture company's team the Executive Chairman. plan of role the Steve we've the work with winning team as years achieve store and lot to has of company I a openings, the role time doing drive the have company accomplished with for talented such fun growing into and my distribution and had I'm centers. him built our forward I to new and his take plan. and new during of to key proud look initiatives. with profits to role to evolution. With execute existing continuing to as responsibilities, omni-channel through step greater and our

Net the quarter transactions for with first size. due Now, sales were lower our than negative comparable X.X%. quarter Sales planned billion of first $X.XX fewer ticket sales let's review to smaller and results. were

be meet not me our did results Let expectations. these clear,

strategy. the capital swift reduce disappointing of impacting impact to long-range have minimize expenses we other able our We have to quarter. or action without been Among taken our things, operating substantially allocation plan this

point basis the quarter from first of Our a year. gross rate XXX million with a of last decrease margin XX.X%, was $XXX.X

merchandise higher first higher quarter As Steve points but lower decline from also was last greater losses margins promotional than the Total of rate driven by from shrink primarily costs. activity XX mentioned, year. shrink the basis were

sales, was compensation, of new increase compared quarter, the expenses points During sales, store earnings plans. we growth driven point of per an an Adjusted XXX our expenses increase quarter technology and million factors: earnings million first per first or increase a to of XXX support or In of XXXX, share. by net basis $XX GAAP in are making of diluted the net SG&A per per of stock-based X $X.XX resulting share primarily $X.XX share. were was net $XXX.X diluted income to share total, basis from investments XX.X% the X.X% quarter decrease XXXX. The in were

sales satisfied our to well not with it levels. While results, is remain pre-pandemic we are important that these above note and profitability

we over the last have years we few achieved. We the operational believe majority made that changes keep and significant will have of the gains

that long-term are of We business further enhance areas actively investing our profitability. our in will

million. end to Turning repurchasing to Academy $XXX million credit from on in and capital generated cash had $XX at billion our activities balance invest $X utilized business outstanding first we the approximately operating and plan net during cash facility. no borrowings the million We in in the this execute cash quarter. sheet; our by shares quarter, allocation for XXX,XXX the of the $XX

in million $X.X out dividends. paid we Additionally,

a addition, of as XXXX, per June of payable XX, record share XX, dividend to the XXXX. In $X.XX stockholders Board on recently July of approved

is so important I One primary updating strategies stores, you initiative. growth opening spend on wanted of a to few our new this minutes

the We XX overall based years. confident as are to to the store track stores stores in the new in plans on next XX of over on our to remain X vintage. opening open part to of XXXX our XXX XXXX open We XXX plan performance

the new driven have store A an open hurdle an new operating us, marketing Lafayette, sales completed resulting success market years. of better X part months, assortments, this and in we several several rate, last the more the are of store is openings. These implementation top of preopening a Indiana. in opened first positive EBITDA. After As new In among being their store store of post-opening in extension include by the XXXX significant and for group, the ranks all preparations learnings already performance one store for our we localized openings from with activities. quarter, they ROIC the above entirely

other brands and great new the unique national and top markets, plan value. fiscal have seen and second QX. open in well-received. customers Illinois. The our assortment private has we of new we in one high-quality been in to store drawn store broad QX XXXX quarter, the our As of everyday pings We are will to an at concept self-fund Peoria, In occur remainder new

customers. Now turning remainder for taking of we to our outlook are a the view pressures on the more the our cautious year; to macroeconomic current due

this are waiting not and we However, out. standing by

help space. as position in to several business the this and our include: in our value-provider strengthening taken environment. have increasing our actions a We These drive focus actions first,

emphasizing that key categories everyday working into items pricing. value are leaning value by are We at

Second, managing the third, revised levels; expenses based on sales controlling inventory our expectations.

already reduce expenses to and our we made forecast. align have will cuts, We with continue new to

already Finally, supporting fruit. are these growth investments many are our worthwhile and initiatives; bearing

net per such to as range income to are is before million; per $X.XX GAAP million; share downturn. for to the of share. will income when $X.XX revising between are share, negative X.X% of to and trends, sales from range stock as per GAAP business sales GAAP per share market fiscal negative growth comes to X.X%; of We be diluted we gross which $X.XX well-positioned range XXXX this results and $XXX expected $X.XX Based billion and million $XXX from the to to follows: share. Adjusted the certain out $XXX earnings million $X.XX taxes excludes compensation, Comparable diluted guidance first net of to XX.X%; earnings XX% estimated from per expected our $X.XX expected margin billion. $XXX current expenses between quarter rate are on

in estimates to fiscal XX.X And in million million For average share XXXX $XX in the climate, closing XXXX. is to remaining not call $XXX million over calculated year million. stock-based tough to met authorization. is compensation $XXX that, adjusted have $XX $XXX will Steve year, the do and weighted to earnings expectations, modeling forecasted include million flow. million thoughts. for this adds turn free Capital repurchase outstanding diluted The million our any we full of million expenditures be a potential I generate not sales million of some share activity from a using for shares even Fiscal to to per Steve? on $XXX repurchase where still which $XXX approximately expect year. With sales $XX range purposes, are to to cash count expected XX-week are the

Steven Lawrence

to through, improve a great have plan and we macroeconomic deliver prices can solid expenses. have this action controlling forward. I also position While we manage compelling managing react confidence customers. at our our to healthy, It's products the move and some into that a a while challenges our retailer sales inventory of as to agile, value-based business to team leans have plan

the new the progresses, of platform. As improve, we the the the and year new following our marketing, half introducing year will that second, actions: brands anticipate to implementation utilizing increasing targeted customer of upgraded by ideas through consumer drive traffic first, sales driven data in back excitement;

start represents expected on stores XXXX the GDP. the term remain that the experience; fourth, from year. our enhancing billion we've the today. We're the finally, investing the of focused best features and opportunities $XXX as and market addition than I of by believe also towards long grow omni-channel year; to our addressable applying the and long-range retail one to by delivering new lessons a and we well opening improving as functionality our QX Simultaneously, faster is will the the total Third, learned profitability seeing over positioning up of growth Academy in in throughout plan. we'll against in remainder of sales sales contributions additional we're improve in driving remainder locations continually customer

strong sheet We business a us a that all have customer balance a growth with experience model proven will allow initiatives. our to self-fund differentiated and of

continuously to improvements As few growth from out the of build X our facets driving against momentum plan strategies. in in business all we Day Analyst April, across the laid years our early while executing we last by on

XXX building I'd in for and As improving engaging to markets thank customers. of a to a and experience driving strengthening all base in our In the passion the outstanding more existing dedication team and powerful customers. members assortment helping store by next stores deliver productivity, service the attracting our business XXX the their and reminder, opening to stores closing, are from X over an omni-channel like growth merchandising Academy our and years, of expanding existing with these new

Now let's fun there. have go out

Now we will up the for your call questions. open

Operator

Nagel The first Instructions] of [Operator question Brian from is coming Oppenheimer.

Brian Nagel

off, new your on congratulations First roles.

I understand think, about first the better sales, did but us maybe have, are the more regard difference a the you I mean, talked then weather. weather Maybe saw here I turn with tight So relatively help between weather in in the business versus impacts the Michael, question the just spring non-weather-impacted markets you to improvement impacted and geography, as recognizing your stores maybe QX. like? in weather

Steven Lawrence

this the Steve. Yes, I'll is question. tackle first jump and in

So you thought Last back back surge versus seen growth. saw obviously, think we a year, movement big from early in we've when start customer. pullback XXXX. right? would had kind we've a a XXXX, We of re-baseline But QX towards see the This the year. been to as we year, where pandemic, we

there facing the I in the out that customer think it's is out terms of there. issues some well-documented of

emphasize number of want make were being XX%. to well things I of I tracking XXXX. We're one up in first, about ahead that one, sure that said, where the So we still we're

emerge. February and we slightly March progressively were We business then of got up But So saw And off in a you how period. as we picking we gains. best market quarter trailed it continue couple tough are -- of look best quarter hold on at in most when second we was the in to even time was actually headwinds share April. share kind to evolved, market February. the the up

That a categories. lot talked like some bit up That patio, certainly was a a that bit still some we're about surge headwinds from First, in us. pools, about business little little We categories we had weather we you QX. We being Outdoor the saw and in certainly in seasonal some was about, something challenging the a that. against for of challenging. of QX things factor the a more think of be talked

on As performed that quarter, we geography. we saw categories the we the of the very well Those didn't Florida and have some the part experience of about actually of of in some as call, got of weather example, didn't deeper weather market, challenges talked into they central our for challenges. really part the some the

as open So across country of come seen back. seen those weather the we've we've up some categories

the along new customer the that data in to we're we're vintage happen So that confidence should new the us Certainly, brands of year. reacting kicking back back XXXX gives QX, the going to we stabilize. And up got our comps year. off business to we start platform coming opened in in starts with the future. seeing coming initiatives additional to the the to new about got we this year. which applying what half as to got half And our right that stores the then and have see the stores XX year. late business look that forward, We've the online. talked is impact we year from that part XX this fit of in into We've we're coming our the of We've now

the in confident to we and improve. of year, So while of favor, is as think play the progression things the going our weather some the business we're

Michael Mullican

But that some given standpoint, One that patio the margin to-date the margin margin. for played of very goods like patio the the the impact, help of the long margin-rich we didn't from it sales, like frankly But were soft Brian. weather, a the categories we sell-through certainly thought some pools those pools duration. entire because Certainly, margin. missing significant with field the we on played cooler losing would, would. from Yes. in seasonal across season where margin and little early we fairly were standpoint, out they thing a suppressed and and gross just softer soft bit but kind selling Outdoor was particularly rich, of and are out really had a thought a we haven't Promotions categories weather. I footprint categories in those other the sales think,

Brian Nagel

follow-up perfect And to the that question, on my makes a is margin. segue actually which

is gross QX. no makes though in gross margins. weaker to here margin changes obviously, new So The guidance

for just the other that is play? is you else something -- at the said Michael, reason -- that, there So what there, some is

Michael Mullican

keep high several hundred Yes, XXXX. in that's But part a place, of mind better basis than starting from we're points it. pretty

outlook we're our on only said, of basis changed. with that today, talked points about. hasn't the Where categories we gross off The guide. sit miss, margin of you As seasonal again, we XX that annual bulk our some

part we it the was was shrink. substantially The miss Shrink other big be. in than of thought worse would

think I from we're enforcement to certainly going need point. here some law at some cooperation

because the X degree guys. this control We X in a of tactics, game of bad those or is implemented some I want are of significant our destiny publicly We've to part outfoxing here. number things. really don't to to speak

progress we're there. good making think I

Some benefit think get a year. we've we of of the there and is half so working, in what we'll back piloted the

benefit of there's other we for rest freight in our in more we The here, move freight benefit that understated half. chain, the a half supply we year. think believe anticipated through the we play and that's the thing really in of the to in that, year back come We there as the that, back

So year. baked we ending I we going when the and think forward. in we're promotions, initially the good pretty to range guided XX.X% XX% guide savings get to we've some other feel We going into year started got the that that that to that there's about

Operator

Kate is of McShane coming Sachs. question Goldman next The from

Katharine McShane

ask from half. around more to the wanted little just about bit first commentary the We your line improving a second top half

reasons, initiatives as new well brands. new including number lesson a learned QX listed and of as You from

walk any that the bit was through comp there in a second harder if there, us you wondered given Just more the detail is especially half? little could

Steven Lawrence

look how tale you first the you Yes, down kind of a at the When dig and the sure. cities. business as kind in performed quarter surface of X beneath of

valued the have If There the the more could be assortment that you side flattish, a sales value dropped of reacted in the in of or could that definitely roughly of the things bucket business, well. our that Outdoor -- it of ways. That value we promotional could work footwear, bucket look at the couple of pricing Where Sports business, relatively down I be what XX%. soft and everyday brands. on goods hard in business, the be that clearly track. correct private on we a clearance That performed be values. gravitated to were was Customers customer reflected of Rec towards our that would kind different apparel emerged, of side call our we couple goods that

Second they It's something almost saw saw price on and of pay the customer the that. they of wanted, was We new -- mentioned DeMarini it. was that innovation. innovative the that I emerging for call. from bats up newness irregardless -- some

You having that Yonder, where seasonal last bottle, categories some there customer sports or team think were was new called inventory. colors enough the us good the like you really really the some in cleats, mentioned. we water launch challenged which year that a or voted BAGS a Or about one had stocks. We for had YETI is BOGG not plastic improved third

big ticket, of improvements So work, those the businesses there. of goods. What long all replacement cycle some off work didn't based

then market machine into where to mentioned, cardio We seasonal a get the a talked particularly against over kayaks of spring/summer couple summer. a categories So to the obviously, we up in about think you if that, We past or the years, you start think one. being buy Firearms. went as away go we're the will impacted surge of I the categories about we treadmills little bought bit still as that Amelon And to by weather. deeper new

going provider everyday into progress marketing. credit sure value We'll space. our get marketing value value We're definitely price those items to lean rolling holding that we we pricing. a things do we're So We're ensure that categories for lean value those making as then we And deliver to we in to cases, prices in we're back in work. that going our where we through our solidify some and sure position forward, as and and can into can. on make that through

have making sure we our forward. it, on long we've businesses And other built move plan down cycle innovation. We deliver got accordingly, of businesses, those continue and planned the we forecast those and to as lead-time that newness into replacement then end

Michael Mullican

sales. that's a mean we're the our receive the in again, quarter. where we've it. initiative start We've of still In one very got that, assortment, categories are earnest, ready marketing are don't believe initiatives back investing the that in several addition omni-channel we drive that business customer got getting and Cash the now stage, driving diverse benefits lean value still early because to categories us a half. I back to in pivot year, has flow point to been which really a those from is standpoint we've investments of we and We're allowed to to share challenging to at in launch can so we half in initiative. which into exceptionally working. we can some the a targeted that expect invest strong, continuing We from sales do invest will like

Katharine McShane

of you that just big And if you some would long is when on mentioned, your view up think follow category there of replacement I could stabilize any prediction just maybe or inflect? could goods that ticket the

Steven Lawrence

a bit. that through holiday, think a fall headwinds year, the of I see last demand to get some of of we level year. start we'll bit. pretty as little early get closer up think this against still to little we good there, off We some as We off part were the remainder

Michael Mullican

taking not But a mentality here. we're victor

categories lot are We big-ticket have a that of working.

when cooking. in outdoor value, -- meaningful you good a I merchandise still well category you think offer have and are share it and thoughtfully you customers taking you that present we're And in lot can big accept a still the drive that learnings we needle doing, there's do and there we're but got in tickets. from which to take apply We've will to category it.

Kenneth Hicks

And more also and we seeing back, are be customer product. that appears like is the leveling to And come paddle out are to is buying marine big -- it -- gets some starting as tickets categories that that seasonal, off. coming

Operator

of Ohmes Robbie is America. The from of Bank next question coming

Robert Ohmes

Steve, haven't X new Michael, I had Ken, congratulate your chance roles. First, to of a you on all

great a together have team X it's congrats you and I guys So IPO. done questions. what I since think on have as the

more bit, about is a a The talk XQ we first maybe question color. can little little

April been to sounds worse -- the minus than the comps it think I have X%. had like

a a sales first saw given that hit than So guys initiatives -- then be would could that And more versus heading thoughts same-store we quarter the what back into have second should should XQ and in we be be the other lot be in half, down thinking follow-up. helpful. XQ, you the of the in any And quarter? back about I half

Steven Lawrence

And CDP, such the initiatives, then couple to we surges start X.X% we I this, in. certainly definitely brand against talked the May, see that said, year. the in Certainly, off. get up launches of That bit. got obviously, still it April period. that as want were about, Yes, we summer a weather we past oversell But those quarter color kind being initiatives big I'm in deceleration the But and of guidance the pretty headwinds as of of X.X%. that the the we'll stay some starting given from initiatives of start, into guidance. we dying sure and and That categories seasonal new have don't temperature we once reflected little a see some saw giving off. first the there some then business year level we of QX, the new a talked down and activity, last surge and and into as chime about, a off time fall away we we guide we the to see half I'll continued into in to but to out the we've other down those we store some shift, And as of that's

Michael Mullican

Robbie. At it plan the assume of We at get bit [indiscernible] think little things the continues the better a soften. consumer high to would that end a guide, the we've would got low assume end

hit rapid, couldn't the to able In appropriately. now a that the read point year. our been got do was good we've expenses And on deceleration the April, back of we've we've a for half we honestly, adjust think so forecast. the I now comparing again

Robert Ohmes

you more even should you thinking here, a And new then you. we can us plural call introduction of can on maybe about? anything out be -- mentioned that categories like Got brands, little color -- you give

Steven Lawrence

next tease probably and we on in always try hold call. little pick to that closer off store to those the it the We're they that -- and Yes, be up certainly expect news our a announce perspective, to in immediately. bit. our We sometimes during from QX going earnings announce a customer-facing

we've are closer a But apparel on of during So get coming primarily year. color as that half and footwear we'll couple things in. more back give the you got we of the

Robert Ohmes

I'm going to Nike. squeeze in quick. one more real

Steven Lawrence

Exciting will you though, that. I tell

Robert Ohmes

Nike, reopening Macy's, how think that? do guys you about

Steven Lawrence

for being surprised over We of interesting I talked about couple go of lot terribly on-mall, that distribution taking an one. off-mall. they're of being years tailwind the still That that, I believe into locations we said, mean, certainly, control to a That's vendors decided Candidly, Macy's. the a Nike last think and back that's don't we're that all us. true. are our

mall-based don't we retailers. other our business impacting as maybe it really So see as much

Operator

Michael Lasser is coming of UBS. from question next The

Michael Lasser

it last different are Why do customer is some account differences in your or pair those that like underperformance? several larger And Academy's to results really even assortment we is driving for from to compared if can it's quarters. So of mix market for we losing seem and what address competitors, would business XQ the Academy Academy that factors different if case? the can And share. mix,

Steven Lawrence

itself. which in with Circana, track every as I'll well. start that's We we picking the firmly NPD, resources other work we Well, market multiple definitively, actually kind at broad-based question almost category. look market share data. is market a categories. And with We share get lot share up where of as known we our across But are do of across

-- piece not who goods you competition pieces XX% business business, or mix different you goods, our of mix we apparel our of depending our Those some much been well. soft at the business, business. share. the the piece side have of look of of is business of the the certainly losing market towards versus start footwear upon hard have I'll more the goods team to, the about with business, right? We're healthier So sports a us When weighted compare XX% of we're as soft

down categories. having So by versus one having of though, having doubling each one And focused believe, a to we're having other. complement be the win overly customer, that outdoor customer, sports diversified going rec a they diversified longer assortment, X all the things to and is term, the in we or assortment

Michael Lasser

step that back year have the But and you're question offset of going for half associated what to up to it better understanding get the is you a improve going shrink gets get worse to need benefit before you tail as that that? it is that assumed have tends freight to with on in for My promotions if to a follow-up promotions shrink order that well. the sales, doesn't and longer

Steven Lawrence

marketplace. I I'd the a of got think say the promotions from a beat on promotion in we've perspective, pretty good level

because QX in. back talked period, merch and basis we that down of during being added at If margins you back that time our go about about have primarily commentary, our points look the XXX additional promotions

a that. seen would land for appropriately I was ago, it it's the was year lay of line promotionally. shared got where basis to say pandemic. was quarters much very kind with baked than the it in points, the now not margin XXX And what of where to plan into is down more merch couple QX about that think We've prior where the we've back guidance Our so a we've that today. promotional I certainly got we of

terms you on shrink, of In have do that? Michael, thoughts any

Michael Mullican

will of be inventories lot for actions the about there we improve Yes. won't will same. mean Shrink, move the we're that. taken most a taking We've the other. our one to and needle frankly, or that the year, assume, remain way I there

Operator

The next Horvers Christopher question from of JPMorgan. is coming

Christopher Horvers

So a couple the of on margin questions front.

those cutting slowed I chain cuts guess about expense openings are and new talked the finding ramping you as initiative? in well and that supply expenses. as executing considering reacting you business as store are you where So up

Steven Lawrence

been And hole. thought. a coming lot trim there his an here lot and than I able about feel pretty look, saw those where came from I in in skinnying a nice going standpoint. thought haves expense a to we look we've found business, lower little be Things and cycles good of experience up longer stores. that's a like tighten do we [indiscernible] we to. thoughtful haves. And us opportunity winter this than of as -- in belt. our team in he forward, planogram around we more to Well, to there. we've shadow, we time lot and some been we we bit think our are a pulling task to labor There's managing remodels, got that, do out of -- lot to to He retail, is need the and opportunities still how it's resets is back being fewer There's a nice of through think told his

get You to through way always is haves. business. is able flow have it's shaping do. But there Again, strong. that, now. in nice to things still you we've been still it invest The cash very this the a And can does up, year

we've what done. to and cut have You them out, that's

Kenneth Hicks

thoughtful we're expense. we're very growth on At I it's time, to We're very just into going the we long-range protect the to to -- lean managing reiterate, strategies. right? manage investments need the the to that same I and make we going focused mean I there. support be through to how environment, bumpy out want short-term our

the to now, right the environment controlling making So in, time, invest term. operating but sure sober the in controllables same business its long for the we're we're the at about equal parts, continue

Christopher Horvers

being assuming now the on like I circulars down what's Got then back and is? and of on? side about from half? marking to you what that it. you're what And eliminating are that? half starting maybe that turning and in versus on Like what enabling -- able turns doing different send What's anticipate the you what direct mails advertising you what's back do for way? more to that exactly guess I'm the the Can what year, talk

Steven Lawrence

that it lived out platform. pull tell not of we few, data Really, in us databases to the in There's putting you to other. multiple but -- our had that we're reinvest very It not customer it to data tricky There's target unlock new for well I'll to circulars place the left us back is very each a many. Yes. a real-time, to market a candidly. customer a In there and consumer. lot big lot. our cut wasn't speak for made past, didn't

of So going as us. I card this retarget our that online an [indiscernible]. based invested triggered think that can will better how to you're for tail end of browsing opportunity come more We've in technology customers off the much QX. And see at based in in us we off we behavior, e-mails putting recognize place of nimble triggered terms --

and see is file that to be didn't creating we broadcast unlocks have segmentation. be shopping and based there, You're profiles lists, a a we targeted before. of e-mail, was customer A more think able us going to There's more lot of out much lot off customer to terms going patterns. nimble via just lot see get blasted messaging you're our with in I broad via candidly media, pretty of

Kenneth Hicks

trucks, of some investments on better in to mean I with will expense help us those our side, help inventory. with inventory better the again, of RFID too. flowing utilization our And stores

to the side. is there's pretty that. on year sit seeing. ability a on feel the a of and guidance number And Again, the lot, different feel the the expense sales with helpful to we're contemplates both what pivot and comfortable we based in scenarios So today where certainly early

Steven Lawrence

see happened the the get for this of the to time slowdown, Yes. I QX that and fact make day, everything were but mean other we in gives lined a and as up I remainder us that Michael we talking to year. never react the sure business want

Operator

Melich from coming ISI. is Evercore question next of The Greg

Gregory Melich

decline items Is promotions was out went the do My ticket of question through the the that was or both count ticket the presumably on that that is all And ticket and went basket? traffic and it deflation average first quarter there come declines. transaction down? size hit was it or

Steven Lawrence

transactions the were of So the challenge. traffic kind way if transactions down course our biggest broke over of look quarter, you the at the

more at If AUR, flattish. you UPT, they're look

big lower-priced categories of and some AUR pullback in terms like those more time apparel, overall of a footwear, lead ticket basket it's more big the decline, In reflection that. of ticket long things of selling the

Michael Mullican

the transaction activity side, had the last it's year of some coupled we softness the quarter consumer, ammo. into of surge the On with I first on extended think the that

Gregory Melich

SG&A. includes X% right? but then guide, were want be look cost a up I And dollars it. Got it backing taking I your the that would quarter. If here. week follow-up first know I as have -- that you're am looks sure in make dollars year. extra Is into on action. it the I this right to like that I SG&A second, slightly, at SG&A up

Michael Mullican

a were seeing growth, of higher was phenomenon up, our that corporately job Yes. dollar is is The rate From Advertising the a they new quarter. we're in some standpoint, standpoint. that. fueled from store lower open

why were the of we've back in quarter. that's come year back half. guide. dollars So the going lot a of we're in times pivot got higher the And standpoint, Again, the on based for the rate in from the a the half rate to on

So to the variable time the that in again, with of flexing prior question. adjust those some along I other that down we've got expenses discussed takeouts

Operator

Stanley. The question from is Morgan Gutman coming of Simeon next

Jacquelyn Sussman

kind versus new guys for this holding especially XXXX, first Simeon. just inflecting fitness lower the I just Jackie durables year of -- about on next up is that piggybacking impact as line, you thinking I each categories This with coming of sales this of year, top does how guess baseline? that category merchandising in how on off are off more such are those equipment? guess

Steven Lawrence

pretty So to and is Apparel QX up were I'll a pretty QX that much candidly. where XX% XX%. close XX%. with is we on we most up with line in more sticking are versus that. pretty business, business line up of is were -- sticking 'XX. we're much of Outdoor the little pretty XX%, them with, about the than is where start average, Rec up That's Sports and Across in most

hobby picked of a many talked 'XX categories are -- versus but bit fishing that we've not off. they're would been average, We of they higher ammos a little be than some the period, that categories seen place kind category one all like so fishing, on little the about couple 'XX, benchmark. maybe a 'XX, So softer fall sticking much 'XX with up same covering on XXX% of as call, time of even not that. There's up below around where to in over the that actually still people tracking as during a closer it's versus

first XXXX, As need get through about we you around XXXX. give of any we before think XXXX sort to thoughts

Jacquelyn Sussman

follow-up. I just quick seeing a And guys guess good, trade Are better you down any Understood. best your signs of and mix? within

Steven Lawrence

impacted down. value, was a private We national Yes. bit brands more towards We than more the towards promotions. places as were customers did brand weeks of took ago, better our same business. that year We talked private run the of and customer gravitating actually a where saw promotion this we trade that about label gravitating performing is advantage clearance, had most or assume little we saw customers we We more towards year.

value. to flight a as that took we So

also, I as of But that. end on to gravitating and newness mentioned, we other the it, seen certainly customers innovation. So saw

customer move that year. innovation. and what not things, sure And so that the got delivering wants we've for that's we're we of there the is we're same against delivering those the paying as on sure more focused the really forward customer out they both for make newness is and What last voting had value is making

Operator

from coming Fitzsimons Wells is Fargo. question next of Kate The

Kate Fitzsimons

just on XX stores the to XX I guys role. footage guess growth, elevations year. alluded of on this everyone, to my You Congratulations, right? your question,

next What just remains the years out This the out pleased to evaluating I vintages. know the today? You stores maybe seeing with And sound XX% for you you're implied, the at that I you're in few footage year your very we just think with And XX% or what to of next given footage would maybe in year philosophy want I little how XXXX, again right? you're pacing. confident are should XXX shaking just that that path what XXX have than obviously you have pacing, looking just the hoped. one year? KPIs XXXX extent kind XXXX, the in follow-up. the looking a to tougher to business the are then around is hear that with acceleration tougher, Just XXXX, To this growth

Steven Lawrence

Yes.

the strong XXXX operations. we cash already to from all say, keep in think growth X strong. important old, peers. fund thing mind And about still cash average, the flow. cash our to is I of incredibly the to accretive compared flow And flow on I'd is our incredibly It's plan this to it's from vintage, months

store this is program. we so very clearly with of the to And We're an new should pleased drive. that continue investment progress the

As a apply we this it year, test we new year layouts new of next set few out and We them, capability. The us markets. and learn learn and up early a is mentioned, specifically paced wanted a those group to challenge And build it reason. with stores new stores the was was learnings. to and and for really to formats this from

we'll we've Lafayette working, to very which so [indiscernible] You sure tough they're very In better a and apply soon. with brand-new market in make for with the openings store in of a find them one environment. done. was Lafayette, on few here initial stores us we've a which read and ever is had, the that

we're we we're ROIC, encouraged it. of stores. bullish So right again, thing is think our the to very, We're store very program. on with this the And opening And very do. new ramp the looking the at

Kate Fitzsimons

ROIC 'XX from at vintage look [indiscernible]. we a the when And perspective

Steven Lawrence

piggybacking with your I a at buyback speak obviously, have Okay. reset to the times. Very on guess perspective, forward certainly given a QX. flow line pace all the on appreciate that expectations I But to appetite can I'd what this seen. From than back go bought you Michael, buybacks several just here just the you lesser year? that, cash stock you guys volatility. helpful. top can But alluded off the say in we

Michael Mullican

Yes, philosophy again, on that. hasn't our I'd changed say

sheet. maintain strong priority is first to Our balance a

to cash We We've funding cautious is At do Again, comfortable done same to that environment. we consistently. we'll return of in be nimble that a extent and some can left capital structure we this variety to a that will it think important We and be cycles. growth I flexible. withstand want feel shareholders. economic have time, over, the the have

generated going where The where was, the first we part is, it in with our not ton of thought And returned capital first a quarter. we in important stock allocation was and forward. what and comfortable general, quarter we great we that a an generate cash. We value to policy buybacks will obviously our it's felt of remain think

Operator

Chukumba from coming question Anthony Capital. of is next The Loop

Anthony Chukumba

headwinds in about Do was you about you the XX% that So talked you a returns refunds U.S. first think income quarter. the saw question, know down that that tax down first We all? headwind year. at were this were --

Steven Lawrence

we going high. of probably we to didn't the into refund is Credit card say, customer Yes, debts headwinds. -- there. pretty an I one -- out all them, lean consumer certainly, headwinds contribute all-time was thought balances to But tax what those are at high

remember there's think, the saw. debt to they So a different also threat of lot just which of ceiling, I things, And playing into the it. got you

which part out but most, It's those the think hard sure. psyche. I the that the it weighting one in all of it certainly, So parse was to played of for impacted

Anthony Chukumba

it. continuation received. the current And you it. and kind your your follow-up if updated more the market last a take With cash last on that's just that Understood. midpoint of flow, than on Got Got question of -- the cap. it's then I of a guidance, XX% free your

mean likely that's I me, different any stock to year? a of I guidance basically buy over a back the follow-up. my you let make the ask does I reduced way. guess, guess, remainder question in So your less yes,

Michael Mullican

on We're investments, we going will We're we've execute return, Anthony, can extent to that. of to the We're being we'll the the million just going have do. strategy all do that. profitable well and the stores the this, one we nimble. that. to to All make cash. think yes. but the return, million stores in got we after can our $XX to story. that, the range. do have generates point, $XX run in it's range. a And which I do stability going lot above prioritized we cash We the to I stores in They're to your something thing fuel don't more dividends, any lost business And that if don't to want

of can generate environment challenging a a in even business lot in cash this So your point.

of to and continue that. we're I returning think a we've do got history to demonstrated it, going

Operator

of coming Daniel is question next The Imbro Inc. from Stephens

Daniel Imbro

new want little is I sales chain, look there anywhere on Michael, a at the you bit too inventory the of given may chain the half today, the to year supply supply the there we risk start the is up to over get as does inventories or we West does that heavy of business days, the today? impact then levels light? the Coast, it how in-stock anywhere we look some have talked underperformance, and or about back into is last be your present at And delays that inventory, a but X port cropped that the as

Steven Lawrence

I and Michael probably tag will team this one.

category. stock So certainly, virtually say in would we're broadly back across I every

a Think as out goes categories not year around couple inventory can pretty seasonal in geography. couple need of most we watching that. are on, a some like almost about slowdown we're keep to. saw we last years. places that inventory our those sports, We not that's bad, certainly early where and its saw that There though, those cases, we of the things it's water problem some that In flow closely. that of of faced the over So we

of I'll supply in has the all over pretty diversified of the tell the of West of you with terms we, the into, think chain, and bring the everybody impact of the along gotten goods disruption etcetera. In years, terms ports I with Coast couple we past number

seen impact we any that. to haven't really So

Michael Mullican

competition, We a vis-a-vis when a the think I West Coast. Yes. don't disruptions competitive I likes on think advantage West anybody in lot disruptions there are bring substantial maintain But we the Coast. don't the Coast. the in West through

impact his we indirect through the on some but -- Coast, Now do the with on a down we compared impacted, Galveston impact, basis direct store lot we're not East holes. believe to industry have can significant others. in no may but and I as a it entire direct a prepared get on as a Port Steve impact of in per actually more inventory One the thing put unit LY remarks, inventory,

Daniel Imbro

I you to these cost belabor outlook, changes up the mentioned the but the or to guidance at you incorporate in changed hit point, you to appreciate of does quantify far a that then talked And color. take nice sense that the on maybe that cost get or what follow as continue how so haves. cost the you aggressive SG&A that But outlook outlook? not can to Michael, just guidance, the find you changes look the made And but you've you've Just out about to through trying growth, more dollar be? year? assume the could that conservative just does to to savings

Michael Mullican

Yes.

wouldn't we we've think I the where again, And very where on through in not can identified pivot a and But we'll in come been believe, and from it, a didn't we'll that's identify leave thought the perspective, sales -- we're year a that's where of leave necessary. that. I a one there. we if rate lower it outlook, put cycles that team we've and We start these today. it seasoned will we'd guidance number got for

Operator

coming Basham last one Securities. Today's for showing Seth Wedbush of time question. from question We're final is

Seth Basham

question gross is around margins. My merchandise

provide to pieces the quarter. some moving as you color If in could more the

XXX was how You a shrink down was and basis and point freight other mentioned moving to promos, headwind. pieces? were basis offset overall XX with that much How points much any

Steven Lawrence

perspective. a to So look We mentioned, margin of we those for quarter. Clearance Both were you were from mix down sales of an don't little they the A promotions too. that is break at things as if of bit it increase bucket a impacted level. it. down up granular sales, couple the a that

find impacted doesn't definitely its Freight there. So the us. line margin. merch that into below way our That's

but -- calculate gross profit is certainly in it. we it So as our

Seth Basham

in clear, margins the of list Okay. shrink than were ]? headwind To promos [ terms larger merch be to

Michael Mullican

due to fewer and water some have way. played that sports a way to goods. mix from the it way and I'd rec where pools was the planned merchandise the sales the yes, and seasonal was it soft little out off would down, we of the thought Well, but of we planned say promos plan, they we margin our outdoor

Steven Lawrence

primarily thing is and price. than also XX% XX% on retailer. clearance other that of in value-based up, value stable business of baseline -- make you've The everyday everyday Promotions its remember so we're less to got average, of our

Operator

I'd turn to time, closing back floor Mr. Hicks over this like the for At comments. to

Steven Lawrence

then on. and The little the Ken. we the on certainly results. than more pass what's year to start challenging reiterate, anticipated, reacting I We're start, to I'll it we're a the not I'll wanted feet. of to going been over of we're balls satisfied has with just but our

and We've strategy transportable operating scalable that and customers as laser-focused believe short that guidance and to all the term. that our off to making the for of remainder we're term we this goal is today in going our got sure navigating that the simultaneously, in. to that goals year. And of got the think terms towns against we we we a put on deliver our model We've of the eye Academy long not the long-range like model can. -- then bring many take in is an So we're that a out we ball as

the this on I closing give With So same a do the term to to Ken chance going on the focused to long at couple we're that, remarks want of stay time. call.

Kenneth Hicks

that a move plan the baton with is said Thanks, very a experienced But team Steve. foundation it's a forward. strong tough to And quarter a pass and on. this solid to clear

volume the the our to not stores, us and markets purview. which of provide through to cannibalize new will breadth company be opportunity primarily new -- which most increase Our markets strategy of of in the for that Academy's new areas growth grow will existing will us for and will is and provide the

of new sure the We to investments it of Academy omni-channel stores and up continue role. with in of are the taking easier also to confidence it And customers. the thank we all working team having make done and our in strengthening our care great job that our forward to that and in for target to the company. I position the the members and challenge. put doing thank shop where they've the also the foundation I us to well. investors all is and to for of to that the to being and and country. But as vision to believe I our the contribute us our them with consumers sports we retailer see in we forward our our want all and strength have existing team business pursue thank to better I you best outdoors go make look here working to want in and mission everybody wish they're

Steven Lawrence

Thank you, guys.

Operator

gentlemen, and participation. today's conference. you Ladies your concludes thank for This

and You may enjoy this off disconnect time webcast, of lines log rest the your or phone your the at

Academy Sports and Outdoors (ASO) 6 Jun 232024 Q1 Earnings call transcript