Why Academy Sports’ Stock Is Surging Today

Samantha McDonald
·3 min read

Shares of Academy Sports and Outdoors Inc. are surging in Tuesday market trading following the release of “record” sales and better-than-expected earnings results.

For the three months ended Jan. 30, the Katy, Texas-based retailer logged adjusted profits of $103.1 million, or earnings of $1.09 per share, compared with the prior year period’s profits of $17.6 million, or earnings of 23 cents per share. Revenues jumped 16.6% to $1.6 billion. Both amounts topped Wall Street’s predictions of earnings of 52 cents per share and revenues of $1.58 billion.

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As of 1:30 p.m. ET, the company’s stock was up nearly 10% to $26.63. (It went public in October, offering more than 15.6 million shares at $13.)

According to chairman, president and CEO Ken Hicks, Academy Sports recorded its “best fourth-quarter and full-year results” in company history.

“We have now achieved six consecutive quarters of positive comparable sales and profit growth dating back prior to the pandemic,” he added in a conference call with analysts. “These results were driven by our continued efforts to improve our power merchandising, omnichannel and customer experience along with our efforts to increase the productivity of all of our assets.”

Comps at the sporting goods chain rose 16.1% — attributed to “strong consumer demand” across all markets and merchandise divisions, particularly the sports and recreation category. E-commerce sales, in particular, advanced 60.7%, led by a boost in website visits and the performance of buy online, pick-up in store, ship-to-store and curbside pickup services.

What’s more, the company last month launched Freely — an athletic-inspired apparel and footwear label that it plans to expand into plus sizes in fall ’21. According to EVP and chief merchandising officer Steven Paul Lawrence, the brand is “positioned at better price points” than others in its portfolio, and its initial sell-through has been “strong.”

“Apparel sales rebounded versus the trend we saw in Q3, driven by the strong inventory position we took in branded fleece. With this rebound, the apparel business posted a low double-digit comp in the quarter, which aligned with our trend in footwear,” he added in the call. “With many of the macro trends to fuel the business in 2020 not showing any signs of letting up, we anticipate that all of our outdoor categories will continue to see elevated demand as we turn the page into 2021.”

For the full year, Academy Sports’ adjusted profits amounted to $311.7 million, or earnings of $3.83 per share, versus the previous year period’s profits of $75.9 million, or earnings of $1.02 per share. Revenues improved 17.8% to $5.69 billion, and comps climbed 16.1%, with a 138.3% spike in e-commerce.

As it looks ahead to the 2021 fiscal year, the retailer anticipated comps to range from up 2% to down 2% — an 18% through 14% increase on a two-year stacked basis — as well as diluted earnings per share in the range of $2.70 through $2.95. It also notably ended 2020 with twice as much cash and approximately half as much long-term debt than at the end of the prior year.

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