Following its record third quarter results in December, Academy Sports and Outdoors is keeping the momentum going with another record quarter and its most profitable year in the company’s history. As the pandemic continues to push people outside and pursue healthier lifestyles, Academy Sports said on Tuesday in its earnings report that its success in Q4 was fueled by a solid holiday performance and strong relationships with key vendors.
For the fourth quarter, the Katy, Texas-based retailer reported a net sales increase of 13.2% over the same period last year to a quarterly record of $1.8 billion, with net income increasing 54.9% to $141.8 million. For fiscal 2021, Academy saw net sales increase 19.1% over last year to a record $6.77 billion, with net income increasing 117.4% to $671.4 million for the full year.
According to president and CEO Ken Hicks, these results were possible due to the company’s dedicated team that implemented a strong plan ahead of the holiday season. On Academy’s earnings call on Tuesday, Hicks told investors that sales accelerated in early November, which allowed the company to pull back on both the number of promotions as well as the depth of the discounts offered during holiday. By taking fewer clearance markdowns, Hicks said that the business saw solid increases in both AUR as well as transaction count for the quarter.
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Hicks also mentioned that the company delivered double-digit sales growth in all four of its major merchandise divisions including apparel, footwear, sports, and recreation outdoors for the full year. “On the soft side of the business, apparel had the largest increase of plus 20%, while footwear was up 14% versus 2020,” Hicks said on the call. “We also ran solid gains on the hard side of the business with outdoors up 10% versus 2020.”
For Academy’s chief merchandising officer Steve Lawrence, this position of growth was due to its inventory recovery from 2020. “One of the things that helped us in the fourth quarter was that we went in with 22% more inventory than the prior year,” Lawrence told FN on a call on Tuesday. “While we are still below 2019 levels, this increase from 2020 really helped us perform in Q4. We actually exited Q4 with inventory up 18%.”
But Lawrence said not all of its segments are on the same level when it comes to inventory. “Categories like bikes and fishing were running low during Q4, but we are back in stock with most items except in our hunting area, specifically in firearms and ammo. Overall, though, inventories are in a much better position that last year. I think it will still be bumpy for most of 2022, but we are in a good place.”
Looking ahead, the retailer is ramping up its store expansion efforts after pausing its new door growth in 2019. On its earnings call on Tuesday, the retailer revealed its goal of opening 80 to 100 stores over the next five years. This is in addition to its already announced plan to open 8 stores in 2021, will fill in certain existing markets in Florida, Georgia, Indiana, Kentucky, and Texas, and expand Academy’s footprint into Virginia and West Virginia.
“Before the pandemic we were focused on growing in our primary markets of Oklahoma, Texas, and Louisiana, but put a halt on our expansion in 2019 to focus on localization,” Lawrence told FN. “Most of our new stores will now be located near our distribution centers in Tennessee, Georgia, and Texas.”
Lawrence also said that these stores will follow a new prototype it rolled out just before the pandemic, which features more natural light, lower fixtures to increase sight-lines and make navigation easier on the customer, as well as more mannequins and moveable fixtures for ease of remerchandising its stores.
As for its merchandise mix, Lawrence said that its relationships with key partners like Nike, Under Armour, North Face, Columbia are strong than ever. He attributes this to the way Academy represents products according to a brand’s vision both online and in stores.
As for newness, Lawrence called out Crocs as performing exceptionally well over the past few years, as well as performance running shoes and cleats for teen sports.
“2021 was a record year for the company,” reiterated Lawrence. “Everyone on our team worked hard to get product into our stores and execute our core goals. Our success is really a testament to what we’ve gone through since the onset of the pandemic.”
