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Academy Sports and Outdoors narrowed its fiscal 2024 guidance after experiencing some challenges in the month of October.
The Katy, Texas-based retailer reported that net sales decreased 3.9 percent in the third quarter to $1.343 billion, down from $1.397 billion the same time last year. Net income in the period was $65.8 million, a 34.2 percent decline from $100 million in Q3 2023.
Academy said that it opened eight new locations during the third quarter and another five new stores early in the fourth quarter, bringing the company’s total store count to 298. To date in fiscal 2024, the company has opened a total of 16 new stores, equating to approximately 6 percent annual unit growth, in line with its stated plans for the year.
The company added that it plans to open an additional 20 to 25 stores in 2025, representing approximately 7.5 percent annual unit growth at the midpoint.
Steve Lawrence, chief executive officer of Academy Sports, told analysts on the company’s earnings call on Tuesday that the declines seen in Q3 were due to some unseasonably warm temperatures, which persisted throughout the entire month of October across its footprint, negatively impacting the company’s seasonal businesses and having roughly 140 basis point drag comps. In addition, Academy noted that it lapped the Rangers World Series run from last year, which also negatively impacted its comp in Q3 by roughly 120 basis points.
“We also saw a continued very active storm season during Q3 with Hurricane Helene and Milton hitting in October,” Lawrence added. “I’m incredibly impressed by the resilience of our team members and commend them on their tireless efforts navigating these challenging circumstances.”
Looking at the results by division, the CEO noted that its outdoor business was Academy’s best-performing category, posting total sales growth of 4 percent versus last year, led by continued strength in its camping and hunting businesses. Footwear was its second-best performing category in the period, which was down 2 percent in Q3.
According to Matt McCabe, executive vice president and chief merchandising officer at Academy, newness across footwear continues to do well for the company. “Koolaburra by Ugg has been a strong performer for us,” McCabe told FN in a call on Tuesday. “We continue to perform well with Nike, and probably our shining star has been Brooks in terms of how much volume we’ve added throughout the year.”
The CMO noted that performance run segment continues to be “really strong” at Academy. “We are seeing good performance in that segment from Asics, which, on a percent increase basis, has been our best brand of the year,” McCabe told FN. “And New Balance as well.”
As far as the outdoor category, McCabe added that Skechers continues to perform for the company, Crocs has been a standout and Ariat boots have done “very well.”
Back on the company’s earnings call, Lawrence announced a deeper relationship with Nike. “I’m excited to announce that in Q1 of 2025, we’ll have one of the most meaningful launches in Academy’s history with the addition of an expanded offering of Nike product in 140-plus stores,” the CEO said. “The plan is to launch in April with full assortments in men’s, women’s and kids’ across footwear, apparel and accessories, along with a strong statement of sporting goods.”
Lawrence added that more details of the enhanced partnership will be discussed during the company’s fourth-quarter earnings call in March, but expect to see a “very visible” investment in the brand next year.
Pressed further by analysts on whether this “upgrade” in Nike merchandise could lead to other brands that don’t currently work with Academy – namely On and Hoka – to want to do business with the retailer, Lawerence didn’t give too much away.
“The more we continue to upgrade our assortments and bring in new brands,” the CEO said. “It opens the door for complementary brands to want to come in as well. So it’s certainly a step in the right direction. We continue to have dialogue with those two brands [On and Hoka] that you’re mentioning, but we have nothing to share at this moment in time. Obviously, our goal would be to get access to them because our customer wants access to them, and it’s a way for us to better serve our customers. So I think it could be a step in the right direction, but we’ll have to see how it all plays out.”
Looking ahead, the company is narrowing its guidance for fiscal 2024. As such, Academy now expects net sales for the year between $5.89 billion to $5.94 billion, which ranges from a 4.3 percent loss to a 3.6 percent loss for the year. This is down from the company’s previous guidance, which called for net sales between $5.89 billion and $6.07 billion, which ranges from a 4.3 percent loss to a 1.4 percent loss for the year.
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