On November 30, 2023, Academy Sports and Outdoors Inc (ASO, Financial) released its 8-K filing, detailing a challenging third quarter with net sales and earnings falling short of expectations. The company cited weakening consumer sentiment and unseasonably warm weather as key factors impacting demand for fall products.
Financial Performance Overview
For the thirteen weeks ended October 28, 2023, ASO reported net sales of $1.397.8 million, a decrease of 6.4% from $1.493.9 million in the prior year. Comparable sales saw an 8.0% decline, while income before income tax and net income also decreased by 23.5% and 24.1%, respectively. Diluted earnings per share (EPS) dropped to $1.31 from $1.62, and adjusted diluted EPS decreased to $1.38 from $1.67 in the third quarter of the previous year.
Year-to-Date Results and Balance Sheet Highlights
Year-to-date, ASO's net sales reached $4.364.5 million, marking a 6.1% decrease from the previous year. Net income for the thirty-nine weeks ended October 28, 2023, was $351.0 million, down from $470.3 million, reflecting a 25.4% decline. Adjusted net income also fell by 23.0% to $371.2 million. The company's balance sheet shows a 13.6% reduction in cash and cash equivalents, while long-term debt decreased by 14.6%.
Capital Allocation and Shareholder Returns
ASO has been actively managing its capital, with share repurchases totaling $201.5 million, down 48.3% from the previous year. However, dividends paid increased by 9.0%. The Board of Directors declared a quarterly cash dividend of $0.09 per share and approved a new $600 million share repurchase program, bringing the total available for buybacks to approximately $700 million.
Store Expansion and Updated Fiscal 2023 Outlook
Despite the downturn, ASO continued its expansion by opening five new stores in the third quarter and completing its annual openings with a total of 14 new stores in 2023. Looking ahead, the company has narrowed its fiscal 2023 guidance, with net sales expected to be between $6.110.0 million and $6.170.0 million, and adjusted diluted EPS projected to be between $7.05 and $7.20.
Management Commentary
CEO Steve Lawrence expressed commitment to the company's long-term strategy and growth initiatives, emphasizing the importance of customer service and value offerings during the holiday season. CFO Carl Ford highlighted the focus on expense control and inventory management to maintain healthy margins and optimize cash flow, ensuring a strong balance sheet and the ability to self-fund strategic initiatives.
Non-GAAP Financial Measures
ASO provided non-GAAP financial measures, including adjusted net income and adjusted EPS, to offer additional insights into the company's performance by excluding certain items affecting overall comparability. These measures are intended to assist investors in understanding and evaluating underlying business trends and performance as viewed by management.
Academy Sports and Outdoors Inc (ASO, Financial) faces headwinds as it navigates a challenging macroeconomic environment, but remains focused on strategic growth and shareholder value. With a solid operating model and strong customer affinity, ASO is poised to continue its expansion and adapt to evolving market conditions.
Explore the complete 8-K earnings release (here) from Academy Sports and Outdoors Inc for further details.
