Academy Sports and Outdoors, Inc. (NASDAQ: ASO) experienced a sales decline in the first quarter of fiscal 2024, citing a difficult macroeconomic outlook as a key factor. Despite a 1.4% drop in net sales to $1.36 billion and a 5.7% decline in comparable sales, the company saw sequential improvements, with April showing the best performance.
The outdoor retailer’s .com business, however, saw an 8% increase and contributed to 9% of total sales, driven by the hard goods division, particularly outdoor and camping products. Academy Sports and Outdoors maintained its full-year guidance, expecting net sales to be between $6.07 billion and $6.35 billion.
Key aspects
- Net sales decreased 1.4% to $1.36 billion, with comparable sales declining 5.7%.
- The .com business saw sales increase by 8%, now representing 9% of total sales.
- The hard goods division, especially outdoor and camping, obtained good results.
- The company opened three new stores, bringing the number of stores to 285.
- Academy Sports and Outdoors plans to open 12 to 14 more stores in the second half of the year.
- A new loyalty program, My Academy, and a partnership with DoorDash for same-day delivery are part of the growth strategy.
- The gross margin forecast remains between 34.3% and 34.7%.
- Guidance remains in place for all of fiscal year 2024, with net sales expected to range between $6.07 billion and $6.35 billion.
Company Outlook
- Academy Sports and Outdoors aims to grow its online business to reach 15% penetration over the next five years.
- The retailer is focusing marketing and promotions around key events like Father’s Day and back to school.
- The opening of new stores is expected to contribute to positive same-store sales growth.
Bearish Highlights
- The company faced a difficult macroeconomic environment, with high prices affecting customer spending.
- Sales of the sports and leisure division decreased, especially in the fitness category.
Positive aspects
- Sequential sales improvements were seen throughout the quarter.
- The company plans to leverage its customer data platform for targeted marketing efforts.
- New initiatives, including the My Academy loyalty program, are expected to boost sales.
Failures
- In the first quarter there was a decrease in global sales and comparable sales.
The most outstanding
- Management spoke of the positive impact of the new stores and the potential of the My Academy loyalty program.
- The partnership with DoorDash is showing favorable initial results.
- The company is working to gain access to key footwear brands to drive traffic and sales.
- Academy Sports + Outdoors is controlling promotions and focusing on inventory and expense management.
Academy Sports and Outdoors is navigating a challenging market with strategic initiatives aimed at driving growth and improving sales. The company’s attention to major trade events, the opening of new stores and the expansion of its online and loyalty programs show its commitment to adapting to consumer needs and market conditions. With plans to open more stores and launch new offerings, Academy Sports and Outdoors is positioning itself for future success despite current economic headwinds.
InvestingPro Insights
Academy Sports and Outdoors, Inc. (NASDAQ: ASO) has been navigating a complex economic landscape, as reflected by its recent performance metrics. According to data from InvestingPro, the company has a market capitalization of $3.81 billion and is trading at an attractive earnings multiple, with a P/E of 7.44. This suggests the stock could be undervalued. This suggests that the stock may be undervalued, especially considering that the company’s liquid assets exceed short-term liabilities, indicating a strong liquidity position.
A tip from InvestingPro highlights that even though the stock suffered a major setback last week, with a one-week total price return of -8.11%, analysts predict the company will be profitable this year. This is supported by the fact that Academy Sports and Outdoors has been profitable over the last twelve months, demonstrating the resilience of its business model.
Investors can find additional insights and analysis on Academy Sports and Outdoors by visiting https://www.investing.com/pro/ASO, where they can access more advice from InvestingPro to guide their investment decisions. Currently, there are 8 additional tips available, which could provide a deeper understanding of the company’s financial health and its market position.
To further enhance their investment research, users can take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off an annual or semi-annual Pro and Pro+ subscription at InvestingPro.
In summary, despite recent challenges, Academy Sports and Outdoors shows signs of undervaluation and profitability, making it a potentially interesting option for investors looking for value in the retail sector.
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