Academy(US:ASO)2025-03-20 20:10Sales Performance - Total merchandise sales for the fiscal year ended February 1, 2025, were $5,896.7 million, a decrease of 3.7% from $6,125.9 million in the previous year[35]. - E-commerce sales accounted for 10.5% of merchandise sales in 2024, consistent with 10.7% in both 2023 and 2022[35]. - Approximately 77% of merchandise sales in 2024 were from national brand products, while private label brands accounted for 23%[28][33]. - A significant portion of the company's net sales and profits is driven by seasonal events, particularly summer holidays, which impact the second quarter[49]. - Firearms represented approximately 6% of the company's net sales in 2024, highlighting the importance of compliance with federal, state, and local regulations[63]. - Seasonal fluctuations significantly affect net sales and profits, particularly during summer holidays and the November/December holiday season[122]. - The company reported net sales distribution for 2024: outdoors (30%), apparel (27%), sports & recreation (23%), and footwear (20%) of total net sales[204]. Store Operations - The company operates 298 stores across 19 states, with Texas having the highest number at 113 stores[41]. - The average customer visits the stores 2 to 3 times per year, indicating strong customer loyalty[29]. - The company opened 16 new stores during fiscal year 2024 and plans to open 20 to 25 stores in fiscal year 2025[219]. - Comparable sales for the fiscal year ending February 1, 2025, will be compared to the final 52 weeks of fiscal year 2023, which was a 53-week year with merchandise net sales of $73.3 million for the 53rd week[211]. - Approximately 95% of total sales during 2024 were facilitated by stores, including ship-from-store, BOPIS, and in-store retail sales[218]. Customer Engagement and Loyalty - The company launched the myAcademy loyalty program in July 2024 to enhance customer engagement and retention[45]. - The company is enhancing its omnichannel capabilities, including investments in a new customer data platform and website features to improve customer engagement[218]. Employee and Team Management - As of February 1, 2025, the company employed approximately 22,000 team members in the U.S., with 45% full-time and 55% part-time[50]. - The company offers a competitive benefits package, including a 401(k) plan with a 6% dollar-for-dollar match and a 15% discount on stock purchases[52]. - The company is focused on creating a winning team through talent management, including annual performance reviews and succession planning[51]. - The company is committed to providing a rewarding workplace culture, focusing on personal growth and career advancement opportunities for team members[51]. - The company faces challenges in attracting and retaining quality team members, with high turnover rates in entry-level positions leading to increased training and retention costs[105]. Financial Performance and Risks - The company’s level of indebtedness requires a portion of cash flows to be dedicated to debt service payments, impacting available funds for operations and growth[145]. - If the company cannot generate sufficient cash flow to service its debt, it may face default, leading to potential bankruptcy or liquidation[150]. - The company may incur additional debt in the future, which could exacerbate financial risks[151]. - The credit agreements governing the Term Loan and ABL Facility impose significant operating and financial restrictions on the company[154]. - The company has consistently paid quarterly cash dividends since Q4 of fiscal 2021, but future payments are at the discretion of the Board of Directors[165]. - The company has incurred additional indebtedness and guarantees, which may affect its financial flexibility[155]. Supply Chain and Inventory Management - The company purchased merchandise from approximately 1,500 vendors in 2024, with no single vendor representing more than 11% of total purchases[31]. - Effective inventory management is crucial; failure to do so could lead to reduced net sales or significant markdowns on unpopular merchandise[82]. - The company depends on approximately 1,500 suppliers, with significant reliance on a few key vendors, exposing it to supply chain disruptions and potential losses in purchasing incentives[118]. - The company has implemented new tools for inventory management, improving handling and vendor relations to better estimate future inventory requirements[216]. Regulatory and Compliance Risks - The company is subject to various regulatory risks that could materially affect operations and financial results, including consumer product safety and labor laws[62]. - Compliance with the Uyghur Forced Labor Prevention Act could materially affect the company's business and financial condition due to restrictions on imports from certain regions in China[71]. - The company faces risks associated with private label brand merchandise, including compliance with regulatory requirements and potential product recalls[119]. - The company is subject to various legal and regulatory risks, including compliance with consumer product safety and labor laws, which may change frequently[127][128]. Economic and Market Conditions - Economic conditions significantly impact the company's operations, with a decline in U.S. consumer discretionary spending potentially leading to lower net sales[67]. - The company faces potential adverse impacts on liquidity and operations due to economic downturns, requiring access to additional funding sources like ABL Facility and term loans[70]. - Trade tensions with China have led to increased inventory costs, negatively impacting sales and gross margins, with tariffs on imports rising to 20%[75]. - Fluctuations in merchandise costs and increases in commodity prices could negatively impact sales and profitability, as higher prices may reduce demand[113]. Cybersecurity and Data Management - The company emphasizes the importance of data security and the potential consequences of cybersecurity incidents, including loss of sales and reputational harm[89]. - The company’s cybersecurity program is based on the NIST Cybersecurity Framework, focusing on risk management and incident response[179]. - The company has a Cyber Security Incident Response Plan (CSIRP) to standardize responses to cybersecurity incidents[181]. - The company maintains cyber liability insurance, but there is no guarantee of coverage sufficiency or timely payment in the event of a cyber incident[91]. Competition and Market Position - Intense competition in the sporting goods retail industry may limit growth and profitability, with competitors having greater resources and market presence[93]. - The company relies on effective marketing and advertising programs to drive sales, with potential declines in sales adversely affecting available funds for these initiatives[103]. Environmental and Sustainability Risks - Climate change and sustainability-related risks could adversely affect the company’s operations and financial condition[141]. - The company is subject to various legal and regulatory risks, including product safety concerns and compliance with environmental regulations[140].