Academy Sports + Outdoors Misses Earnings, Sales in Q1, Charges Ahead on Expansion Plan
Academy Sports + Outdoors reported sales and earnings that were below expectations in the first quarter, but the company is still bullish about expanding its store base to drive more sales in the back half of the year.
The sporting goods retailer saw net sales of $1.38 billion in the quarter, down 5.7 percent from the same quarter last year. Adjusted diluted EPS was $1.30, down 24.4 percent from the prior year. Comparable sales declined 7.3 percent.
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Consumers pulled back on big ticket items like kayaks and fitness equipment and gravitated towards value in Q1, said Academy CEO Steve Lawrence in an interview with FN. There was also softness in the company’s hunting business, which was up against strong comparisons to the prior year. General macro-economic pressures and unfavorable weather also impacted results.
“We’re not sure the customer’s appetite or the macroeconomic environment is going to get better,” Lawrence said regarding the back half of the year. “But we think we’ve got really good plans to help with the business trends to move through the year.”
Within footwear, work footwear, kid’s shoes and retro court-inspired looks were the standouts, with particular strength from brands like Nike, Brooks, Birkenstock, Hey Dude and Skechers.
The weaker results sparked Academy to lower its guidance for the fiscal year. For 2023, the retailer now expects net sales for the year to land between $6.18 billion and $6.37 billion, compared to a previously issued guidance of between $6.5 billion and $6.7 billion. Adjusted earnings per diluted share are expected to be between $6.80 and $7.50, compared to the previously issued guidance of between $7.00 and $7.75.
Academy CFO Michael Mullican said in a statement that the company expects sales to improve in the back half of the year, driven by the contributions of new stores, fresh brands and a growing outdoor business.
“We continue to be bullish about the long-term growth prospects for Academy, as our new store opening plans are progressing well, and the underlying fundamentals of our business and industry remain strong,” Mullican said.
A robust store expansion plan is a key element in Academy’s long-term growth plan. The company is aiming to open 120 to 140 new stores by 2027, expanding its store base by 50% in existing and new markets. Academy currently operates 269 stores after opening one new store in Q1 and is targeting between 13 and 15 store openings in 2023 after opening nine stores in 2022. In the long-term, Academy sees the potential to grow its store count to 800 while balancing growth in existing and new locations.
“We’ve got a very productive model that works very well as we expand it,” Lawrence said. “And we think that it makes sense to take this out to new markets. We think it’s scalable and it’s transportable. And our goal is to give everybody across the U.S., ultimately, a chance to shop at an Academy.”
New stores are expected to generate between $2.4 billion and $2.8 billion in revenue for Academy by 2027. When it comes to choosing a new store location, Academy previously told FN that it makes sure there is a “localized assortments” of products designed for consumers in a specific region or market.
At its investor day in April, the retailer said that it looking to achieve $10 billion in revenue by 2027, with a net income margin of 10%. This goal, which Academy reaffirmed, will be accomplished by opening new stores as well as by investing in the company’s omnichannel and existing business.
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