On September 10, 2024, Academy Sports and Outdoors Inc (ASO, Financial) released its 8-K filing detailing the financial results for the second quarter ended August 3, 2024. Academy Sports and Outdoors Inc is engaged in the retail business of sporting goods and outdoor recreation products, with product categories including outdoors, apparel, sports & recreation, and footwear.
Performance Overview
Academy Sports and Outdoors Inc (ASO, Financial) reported net sales of $1,549.0 million for Q2 2024, a 2.2% decline from $1,583.1 million in the same period last year. Comparable sales decreased by 6.9%, reflecting ongoing economic challenges and a temporary distribution center backlog. Despite these hurdles, the company achieved a GAAP diluted EPS of $1.95 and an adjusted diluted EPS of $2.03, surpassing the analyst estimate of $1.97.
Financial Achievements
Academy Sports and Outdoors Inc (ASO, Financial) demonstrated strong financial discipline, achieving a gross margin expansion of 50 basis points and a 5% reduction in units per store. The company also reported a year-to-date adjusted free cash flow increase of 60%, which was utilized to return $107 million to shareholders in Q2.
Income Statement Highlights
| Thirteen Weeks Ended | August 3, 2024 | July 29, 2023 | Change |
|---|---|---|---|
| Net sales | $1,549.0 million | $1,583.1 million | (2.2)% |
| Comparable sales | (6.9)% | (7.5)% | - |
| Income before income tax | $186.5 million | $203.3 million | (8.2)% |
| Net income | $142.6 million | $157.1 million | (9.2)% |
| Adjusted net income | $148.6 million | $163.6 million | (9.2)% |
| Earnings per common share, diluted | $1.95 | $2.01 | (3.0)% |
| Adjusted earnings per common share, diluted | $2.03 | $2.09 | (2.9)% |
Balance Sheet and Cash Flow
As of August 3, 2024, Academy Sports and Outdoors Inc (ASO, Financial) reported cash and cash equivalents of $324.6 million, a 4.3% increase from $311.3 million in the previous year. Merchandise inventories, net, rose by 4.4% to $1,366.6 million. The company also reduced its long-term debt by 17.1% to $483.6 million.
Capital Allocation and Shareholder Returns
Academy Sports and Outdoors Inc (ASO, Financial) repurchased $222.3 million worth of shares in the first half of 2024, a 41.1% increase from $157.6 million in the same period last year. Dividends paid also increased by 16.7% to $16.1 million. The company declared a quarterly cash dividend of $0.11 per share, payable on October 17, 2024.
Challenges and Revised Guidance
Academy Sports and Outdoors Inc (ASO, Financial) faced several challenges, including a tough economy, a temporary distribution center backlog, and an active storm season. As a result, the company revised its full-year guidance, lowering net sales expectations to a range of $5,895.0 million to $6,075.0 million and GAAP earnings per share to a range of $5.45 to $6.20.
Sales for the second quarter were more challenging than expected, impacted by a tough economy, a temporary distribution center backlog related to going live with a new warehouse management system and by a very active storm season across key portions of our footprint," said Carl Ford, Chief Financial Officer.
Conclusion
Despite the challenges, Academy Sports and Outdoors Inc (ASO, Financial) continues to focus on strategic initiatives, including new store openings, omni-channel enhancements, and a new loyalty program. The company's strong cash generation and disciplined inventory management position it well for long-term growth and increased shareholder value.
Explore the complete 8-K earnings release (here) from Academy Sports and Outdoors Inc for further details.
