Academy Sports and Outdoors, Inc. (NASDAQ:ASO) shares are falling during Tuesday’s trading session. This occurred despite the sporting goods retailer announcing significant expansion news. The company reported five new store locations opened during the fourth quarter of 2025. • ASO is encountering selling pressure. Get the market research here.The retailer ultimately opened 24 new stores by the end of fiscal 2025. The new locations include stores in Russellville, Ark.; Seguin, Texas and Fort Wayne, Ind. Ad ...

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported a revenue of 12.3 billion yuan for FY2026H1, a year-on-year decrease of 5.8%, and a net profit attributable to shareholders of 790 million yuan, down 9.7% year-on-year. The company plans to distribute an interim dividend of 810 million yuan, with a payout ratio of 102% [2][4]. - Retail sales showed a decline in Q2, contributing to the overall revenue drop, with retail income down 3% and wholesale income down 20% year-on-year [6]. - The company is optimizing channel efficiency, with a net store closure of 332, bringing the total to 4,688 stores. Despite a decrease in store count, the sales area per store increased by 6.5% year-on-year, indicating improved channel structure [6]. - Gross margin remained strong at 41%, stable year-on-year, despite a challenging retail environment and increased discounts. The company maintained excellent cost control, with sales and management expense ratios showing minor changes [6]. - The company is believed to be at the bottom of its operating cycle, gradually moving upwards. If the recovery of Nike in China exceeds expectations, significant improvements in revenue and gross margin are anticipated [6]. Summary by Sections Financial Performance - FY2026H1 revenue was 12.3 billion yuan, down 5.8% year-on-year; net profit was 790 million yuan, down 9.7% year-on-year [2][4]. - The company expects to achieve net profits of 1.28 billion, 1.43 billion, and 1.57 billion yuan for FY2026, FY2027, and FY2028 respectively, with corresponding P/E ratios of 15, 14, and 13 [6][8]. Operational Insights - Retail sales in Q2 showed a decline, with retail income down 3% and wholesale income down 20% year-on-year [6]. - The company closed 332 stores, resulting in a total of 4,688 stores, while the sales area per store increased by 6.5% year-on-year [6]. Margin and Cost Control - Gross margin for FY2026H1 was 41%, stable year-on-year, despite a challenging retail environment [6]. - The company maintained strong cost control, with minor changes in expense ratios [6].

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of the 2026 fiscal year, with a revenue of 12.3 billion RMB, down 5.8% year-on-year, and a net profit of 790 million RMB, down 9.7% year-on-year, while maintaining a high dividend payout ratio of 102.2% [4][5]. Financial Performance - The company's total sales for the first half of the 2026 fiscal year saw a decline in both quarters, with sales dropping in the mid-single digits to high single digits year-on-year [5]. - Gross margin decreased by 0.1 percentage points to 41.0%, operating margin fell by 0.5 percentage points to 8.1%, and net profit margin declined by 0.3 percentage points to 6.4% [5]. Revenue Breakdown - Revenue from the main brands (Nike and Adidas) decreased by 4.8%, while revenue from other brands fell by 12.2%. The total number of stores decreased by 332 [6]. - The revenue distribution by brand shows that the main brands accounted for 87.9% of total revenue, while other brands contributed 11.5% [6]. Store Performance - As of August 2025, the company operated 4,688 stores, a net decrease of 332 stores since February 2025, with total sales area down 14.1% year-on-year, but average store size increased by 6.5% [6]. Cost and Cash Flow - The company experienced a slight increase in expense ratio by 0.1 percentage points to 33.3%, with selling, general, and administrative expenses showing mixed trends [7]. - Inventory decreased by 2.8% quarter-on-quarter to 5.83 billion RMB, while operating net cash flow dropped significantly by 48.2% year-on-year to 1.35 billion RMB [7].

Financial Data and Key Metrics Changes - The company reported second quarter sales of $658.5 million, a decline of 3.6% year over year, with sales trends improving sequentially in both segments [24][10] - Adjusted earnings per share were $0.35, down from $0.85 in the previous year [30] - Consolidated gross margin was 43.4%, down 20 basis points compared to last year, driven by lower margins in both segments [26] Business Segment Data and Key Metrics Changes - Brand Portfolio sales declined 3.5%, with lead brands growing about 1% in North America and 3.6% globally [25][11] - Famous Footwear sales were down 4.9%, with comparable sales declining 3.4% [25][19] - The Brand Portfolio experienced gross margin pressure due to tariffs and markdown reserves, while Famous Footwear's gross margin was 43.7%, down 130 basis points [26][27] Market Data and Key Metrics Changes - International sales increased by double digits, and the company gained market share in women's fashion footwear [6][11] - E-commerce sales for Famous Footwear were up double digits, particularly in May and July [19] - The company gained 0.6 points of kids market share in shoe chains during the quarter [22] Company Strategy and Development Direction - The company completed structural cost savings initiatives expected to deliver annualized savings of $15 million, with half of that coming this year [7] - The acquisition of Stuart Weitzman was completed, adding a new lead brand to the portfolio, with a focus on operational efficiency and profitability post-transition [8][9] - Strategic focuses include ongoing tariff mitigation, expense and capital discipline, and integrating Stuart Weitzman while fueling lead brands and Famous Footwear [23] Management's Comments on Operating Environment and Future Outlook - Management noted headwinds due to market uncertainty but highlighted improved sales trends and market share gains [5] - The tariff environment remains uncertain, with expectations of continued gross margin pressure in the second half of the year [17][33] - Management expressed confidence in executing strategic plans to improve financial performance and drive shareholder value [23] Other Important Information - The company expects to finalize purchase accounting for Stuart Weitzman and provide more information on its impact in the next earnings call [35] - Inventory at quarter end was $693 million, up 4.9% year over year, with a 2% increase in Famous and an 8.6% increase in Brand Portfolio [31] Q&A Session Summary Question: Can you provide insights on August performance and any shifts in the women's business? - Management noted improved traffic and conversion in brick-and-mortar stores, with flat average unit retails (AURs) [38] - The product assortment shift positively impacted sales, particularly with the launch of Jordan [39] Question: What are the expectations for gross margins moving forward? - Management anticipates less headwind from promotions in the back half of the year, with continued pressure from tariffs [41][42] Question: What is the expected impact of the Stuart Weitzman acquisition on sales and EBIT? - Management is not providing specific details at this time, as purchase accounting is still being finalized [46][47] Question: How is the consumer health of Famous Footwear and Brand Portfolio customers? - Management observed that consumers continue to prefer highly demanded national brands, with strong performance in back-to-school sales [60][61] Question: What mitigation tactics for tariffs are being employed? - The company is selectively passing through price increases and negotiating with factory partners for cost savings [64][66]

Core Viewpoint - The company reported a decline in revenue and net profit for the fiscal year 2025, with a significant drop in profit margins, while maintaining a high dividend payout ratio of 135.0% [3][6]. Financial Performance - For the fiscal year 2025, the company achieved a revenue of 27.01 billion yuan, a year-on-year decrease of 6.6%, and a net profit attributable to shareholders of 1.29 billion yuan, down 41.9% [3]. - Earnings per share (EPS) was reported at 0.21 yuan, with a proposed final dividend of 0.02 yuan per share and a special dividend of 0.12 yuan per share, alongside an interim dividend of 0.14 yuan per share [3]. - The company experienced a decline in gross margin by 3.4 percentage points to 38.4%, and operating profit margin decreased by 3.7 percentage points to 5.9% [3][5]. Revenue Breakdown - Revenue from the main brands (Nike and Adidas) decreased by 6.1%, while other brand revenues fell by 9.9% [3]. - Retail and wholesale revenues accounted for 85.3% and 14.0% of total revenue, respectively, with retail revenue declining by 6.8% and wholesale by 5.8% [4]. Store Performance - The total number of stores decreased by 18.3%, with the company operating 5,020 stores as of February 2025 [4]. - The total sales area decreased by 12.4%, while the average sales area per store increased by 7.2% [4]. Cost and Cash Flow Management - The company reported a slight increase in expense ratio by 0.4 percentage points to 33.2%, with employee costs and rental expenses remaining stable [5]. - Inventory decreased by 4.5% to 6 billion yuan, and operating net cash flow increased by 20.0% to 3.76 billion yuan [5]. Strategic Focus - The company aims to enhance operational efficiency by closing underperforming stores and focusing on online channels, including platform e-commerce and private domain operations [6]. - The company continues to expand its brand portfolio, becoming the exclusive operator for high-end running brand SOAR Running and top outdoor brand Norrøna in the Chinese market [6]. Dividend Policy - The company has maintained a high dividend payout ratio exceeding 100% for the fiscal years 2023 to 2025, with an average dividend yield of 12.6% over the past three years [7].

Core Insights - The company reported a decline in revenue and net profit for the fiscal year 2025, with revenue at 27.01 billion RMB, down 6.6% year-on-year, and net profit at 1.29 billion RMB, down 41.9% [1][2] - The company maintained a high dividend payout ratio of 135.0%, exceeding the previous year's 100.9% [1][2] - The decline in profit was attributed to a significant drop in gross margin and a slight increase in expense ratio [1][2] Revenue Breakdown - Main brand revenue (Nike + Adidas) decreased by 6.1%, while other brand revenue fell by 9.9% [1][2] - Revenue from retail, wholesale, and esports accounted for 85.3%, 14.0%, and 0.2% of total revenue, respectively, with retail and wholesale revenues down 6.8% and 5.8% year-on-year [2][3] - The total number of stores decreased by 18.3%, with a total of 5,020 stores as of February 2025 [2][3] Financial Metrics - Gross margin decreased by 3.4 percentage points to 38.4%, primarily due to increased discounting [2][3] - The expense ratio increased by 0.4 percentage points to 33.2%, with sales, management, and financial expense ratios at 29.4%, 3.7%, and 0.1%, respectively [2][3] - Inventory decreased by 4.5% to 6 billion RMB, and accounts receivable decreased by 43.4% to 750 million RMB [3] Future Outlook - The company aims to enhance operational efficiency and reduce costs amid weak consumer demand and declining foot traffic [3][4] - The company plans to expand its brand matrix and has become the exclusive operating partner for high-end running brand SOARRunning and top outdoor brand Norrona in China [3][4] - Profit forecasts for fiscal years 2026 and 2027 have been revised down by 21% and 26%, respectively, with expected EPS of 0.21, 0.23, and 0.26 for fiscal years 2026 to 2028 [4]