Academy Sports and Outdoors, Inc. reported first-quarter earnings on an adjusted basis slid 20.8 percent and came in lower than analyst expectations for the second straight quarter. Same-store sales were down 5.7 percent, and gross margins were off slightly.

Steve Lawrence, chief executive officer, commented, “As expected, our first quarter results reflect that our customers remain under pressure in the current economic environment. We will navigate through the remainder of the year by continuing to lean into our position as the value leader in our space while also inspiring customers to shop through introductions and expansions of new and innovative products. We will also continue making strategic investments in our long-range growth initiatives. We are pleased that we drove a positive comp in our new stores and omnichannel business. Academy has the right elements in place to achieve our long-range goals: a well-established business model, an experienced leadership team and a strong balance sheet.”

First Quarter Operating Results
In the quarter ended May 4, sales slid 1.4 percent to $1,364.2 million from $1,383.6 million a year ago. Analysts’ consensus estimate was $1.37 billion. The 5.7 percent comp decrease came against a decline of 7.3 percent a year ago.

Gross margins eased to 33.4 percent from 33.8 percent a year ago. Selling, general and administrative expenses were 25.9 percent of sales, up from 24.6 percent a year ago. Operating earnings fell 18.9 percent to $102.4 million from $126.2 million or 7.5 percent of sales from 9.1 percent a year earlier.

Earnings on an adjusted basis fell 20.8 percent to $81.6 million, or $1.08 a share, from $103 million, or $1.30, a year ago. Wall Street’s consensus estimate had been $1.24.

Net earnings slid 18.6 percent to $76.5 million, or $1.01 a share, against $94.0 million, or $1.19, the prior year. Adjusted earnings exclude non-cash charges related to equity-based compensation, the write-off of deferred loan costs, and the tax effects of these adjustments.

Balance Sheet
At the quarter’s end, inventories were $1,356.8 million, down 2.1 percent from $1,386.5 million a year ago.

Cash and cash equivalents ended the quarter at $378.1 million versus $295.5 million a year ago, representing a gain of 28.0 percent. Long-term debt was $484.1 million at the quarter’s end against $584.1 million a year ago, a decline of 17.1 percent.

The company repurchased $123.5 million shares in the quarter against $50.3 million a year ago, an increase of 145.5 percent.

Subsequent to the end of the first quarter, on June 6, 2024, Academy’s Board of Directors declared a quarterly cash dividend of $0.11 per share of common stock. The dividend is payable on July 18, 2024, to stockholders of record as of the close of business on June 20, 2024.

Carl Ford, chief financial officer, said, “Academy generated $200 million in cash from operations during the quarter. We believe that investing this cash into the pillars of our long-range plan will result in long-term, sustainable sales and profit growth for Academy and our shareholders. To that end, in the first quarter, we invested $32 million of capital back into the company, repurchased $124 million in stock, and paid $8 million in dividends. We are focused on driving traffic, managing our inventory to maintain margins, and controlling expenses as we invest in our growth initiatives.”

New Store Openings
Academy opened two new stores during the first quarter. The company plans to open 15 to 17 stores in 2024.

2024 Outlook
Academy is reiterating its previous sales and net income guidance for fiscal 2024 while updating its earnings per share forecast to reflect the share repurchase activity completed in the first quarter.

Image/Chart courtesy Academy Sports + Outdoors