Academy Sports’ Q4 Comps Expand 13 Percent

Academy Sports + Outdoors reported comparable stores jumped 13.1 percent in the fourth quarter and 18.9 percent in the year ended January 29. Adjusted earnings in the quarter grew 40.9 percent, exceeding Wall Street targets. Academy predicted sales in the current year would decline 1.6 percent at the mid-point of its range but be up 38.0 percent versus the pre-pandemic 2019 period.

Highlights

• Fourth Quarter comparable sales Increased 13.1 percent; FY 2021 comparable sales Increased 18.9 percent;
• Fourth-quarter pre-tax income grew 55 percent to $188.4 million;
• FY 2021 pre-tax income grew 154 percent to $859.5 million;
• Fourth quarter and FY EPS of $1.57 and $7.12; adjusted fourth quarter and FY EPS of $1.61 and $7.60; and
• Repurchased 10.6 million shares for $411.4 million in fiscal 2021.

Fourth Quarter and Fiscal 2021 Results
“2021 was an extraordinary year for Academy Sports + Outdoors. The team delivered the highest sales and profits in the company’s history while navigating the many challenges faced by the company and the retail industry,” said Ken Hicks, chairman, president and chief executive officer. “We are proud of what our company has accomplished over the past three years, but even more excited about our future growth prospects. Academy is well-positioned for substantial long-term growth in its existing stores with our broad assortment of great products from the best national and quality private brands, excellent customer service, expanding omnichannel capabilities, and multiple new store openings in our current and new markets.”

For the fourth quarter, net sales increased 13.2 percent to a quarterly record of $1.8 billion. When compared to the fourth quarter of 2019, net sales increased 32.0 percent. Comparable sales were 13.1 percent, on top of 16.1 percent in the fourth quarter of 2020, making it the tenth consecutive quarter of positive comparable sales. Consumer demand for sports and outdoor products drove sales growth and led to an increase in total transactions and average ticket.

For fiscal 2021, net sales increased 19.1 percent to a record $6.77 billion. When compared to fiscal 2019, net sales increased 40.2 percent. Comparable sales increased 18.9 percent on top of 16.1 percent in fiscal 2020. All four merchandise divisions and geographic regions posted double-digit sales growth for the year.

During the fourth quarter, e-commerce sales grew 22.7 percent compared to the prior-year quarter and 97.2 percent compared to the fourth quarter of 2019. For the fiscal year, e-commerce sales increased 6.2 percent compared to 2020 and increased 153.1 percent compared to 2019.

For the fourth quarter, gross margin increased 17.0 percent to a record $584.1 million. The gross margin rate improved by 110 basis points to 32.3 percent. For fiscal 2021, the gross margin increased 35.6 percent to a record $2.4 billion. The gross margin rate improved by 420 basis points to an all-time annual high of 34.7 percent. For the quarter and the year, this growth was primarily driven by higher merchandise margins resulting from a greater mix of regular price sales, higher retail prices and a favorable product mix, which offset higher freight costs.

For the fourth quarter, pre-tax income increased 55.0 percent to $188.4 million compared to $121.6 million. For fiscal 2021, pre-tax income increased 153.5 percent to $859.5 million, the highest in the company’s history.

For the fourth quarter, GAAP net income increased 54.9 percent to $141.8 million compared to $91.5 million. Diluted earnings per share were $1.57 compared to $0.97 per share. Pro forma adjusted net income, which excludes the impact of certain non-cash and extraordinary items, increased 40.9 percent to $145.3 million. Pro forma diluted earnings per share were $1.61 compared to $1.09 per share.

For fiscal 2021, GAAP net income increased 117.4 percent to $671.4 million compared to $308.8 million, making it the most profitable year in the company’s history. GAAP diluted earnings per share were $7.12 compared to $3.79 per share.

Pro forma adjusted net income, which excludes the impact of certain non-cash and extraordinary items, increased 129.9 percent to $716.5 million. Proforma diluted earnings per share were $7.60 compared to $3.83 per share.

Pro-forma EPS of $1.61 exceeded Wall Street’s consensus target of $1.43. Sales of $1.8 billion topped Wall Street’s consensus target of $1.7 billion

Balance Sheet and Capital Allocation Update
As of the end of fiscal 2021, January 29, 2022, the company’s cash and cash equivalents totaled $486.0 million with no borrowings under the $1 billion credit facility. Adjusted free cash flow was $140.9 million during the fourth quarter and $597.2 million for the full year. Merchandise inventories were $1.2 billion, an increase of 18.4 percent compared to the end of fiscal 2020.

During the fourth quarter, the company made open market purchases of 1.6 million shares for $65.6 million. In fiscal 2021, the company repurchased and retired a total of 10.6 million shares of its common stock for $411.4 million, of which $311.4 million was completed under the current $500 million share repurchase program and $100.0 million as part of the May 2021 secondary offering. As of the end of fiscal 2021, the company had $188.6 million remaining under its share repurchase program.

Subsequent to the end of fiscal 2021, on March 3, 2022, Academy announced that its Board of Directors (the Board) approved the initiation of a quarterly cash dividend. The Board declared an inaugural quarterly cash dividend with respect to the quarter ended January 29, 2022, of $0.075 per share of common stock. The dividend is payable on April 14, 2022, to stockholders of record as of the close of business on March 17, 2022.

2022 Outlook
Michael Mullican, executive vice president and chief financial officer said, “For the second consecutive year, Academy delivered record financial results, driven by a dedicated, adaptable team, lasting operational improvements and strong consumer demand. Looking ahead, we are focused on building upon this success by executing our internal initiatives, managing our expenses and deploying our free cash to grow the business and enhance shareholder value. Our outlook for 2022 reflects an expectation of continued strong financial performance and operational improvements, while thoughtfully considering the headwinds of inflation, supply-chain bottlenecks and the prospect of difficult prior-year comparisons.”

Academy is providing the following initial guidance for fiscal 2022, year ending January 28, 2023. This guidance takes into consideration the benefits of the company’s internal sales and profit growth initiatives and strong consumer demand as well as the uncertainty of potential impacts from stimulus overlap, supply chain risks, inflation and other economic risks.

Fiscal 2019 is included in the table for context, and to illustrate the company’s growth expectations post-pandemic and relative to 2019.