ASO Q2 Earnings Meet Estimates, Sales Miss, '24 Guidance Down
Academy Sports and Outdoors, Inc. ASO reported second-quarter fiscal 2024 (ended Aug. 3) results, wherein adjusted earnings met the Zacks Consensus Estimate but net sales missed the same. The bottom and top lines declined on a year-over-year basis.
The quarterly results reflect lower sales across the sports and recreation merchandise and the apparel merchandise divisions due to ongoing macroeconomic uncertainties and a decline in consumers’ discretionary spending. Also, a temporary reduction in outbound shipments at ASO’s Georgia distribution center related to a new warehouse management information system and several regional severe weather events added to the downtrend.
Going forward, Academy Sports aims to focus on increasing traffic and conversion for its stores and website. It expects to achieve the objective by leveraging its improved targeted marketing capabilities and expanding the new loyalty program.
Following the results, shares of ASO jumped 5.2% on Tuesday.
Quarter in Details
Academy Sports reported adjusted earnings per share (EPS) of $2.03, which met the Zacks Consensus Estimate. The metric, however, declined 2.9% year over year.
Academy Sports and Outdoors, Inc. Price, Consensus and EPS Surprise
Academy Sports and Outdoors, Inc. price-consensus-eps-surprise-chart | Academy Sports and Outdoors, Inc. Quote
Quarterly net sales of $1.55 billion lagged the consensus estimate of $1.57 billion by 1.4% and were down 2.2% year over year. Comparable sales declined 6.9% year over year.
Operating Highlights of ASO
During the quarter, selling, general and administrative expenses (as a percentage of net sales) were up 150 basis points (bps) year over year to 23.8%. The gross margin expanded 50 bps year over year to 36.1%.
Net income was $142.6 million, down from $157.1 million in the year-ago quarter.
Adjusted EBITDA declined year over year to $232.5 million from $248.9 million.
Academy Sports’ Balance Sheet
As of Aug. 3, 2024, ASO’s cash and cash equivalents totaled $324.6 million, down from $347.9 million at the end of fiscal 2023. Net merchandise inventories at the end of the fiscal second quarter were $1.37 billion compared with $1.19 billion at fiscal 2023-end. Net long-term debt was $483.6 million, marginally down from $484.6 million at the end of fiscal 2023.
At the end of the first half of fiscal 2024, net cash provided by operating activities was $291 million, up from $243.6 million in the comparable period a year ago.
ASO’s Fiscal 2024 Outlook Lowered
For fiscal 2024, Academy Sports now expects net sales to be between $5.89 billion and $6.08 billion, down from the prior expected range of $6.07-$6.35 billion. The company expects comparable sales to be between (6)% and (3)% compared with the prior expected range of (4)-1%.
The gross margin is still expected to be between 34.3% and 34.7%. Capital expenditures are now anticipated to be in the range of $175-$225 million, down from $225-$275 million expected earlier. The company expects adjusted net income to be between $420 million and $480 million.
ASO anticipates adjusted EPS to be in the range of $5.75-$6.50.
ASO’s Zacks Rank & Key Picks
Academy Sports currently carries a Zacks Rank #4 (Sell).
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