Academy(ASO)2024-09-10 17:37Financial Data and Key Metrics Changes - Sales for Q2 2024 were $1.55 billion, down 2.2% year-over-year, translating to a negative 6.9% comparable sales on a shifted basis [5][23] - Gross margin rate was 36.1%, a 50 basis point increase compared to the previous year, driven by inventory cost management and lower freight expenses [16][25] - Net income for the quarter was $142.6 million, with diluted earnings per share of $1.95, and adjusted net income of $148.6 million or $2.03 in adjusted earnings per share [25][27] Business Line Data and Key Metrics Changes - Footwear sales increased by 1%, driven by strong performance in kids and athletic footwear, while the outdoor division also saw a 1% increase [11][12] - Apparel sales decreased by 2%, with strong results in the kids segment but underperformance in licensed team sports [12][13] - Sports and recreation division faced a 7% decline, with challenges in big-ticket items like pools and fitness equipment [13][14] Market Data and Key Metrics Changes - Year-to-date sales through August were down 2.9%, translating to a negative 5.4% comparable sales on a shifted basis [15] - The company faced significant sales impacts from weather events, estimating a $16 million loss due to storms and $32 million from distribution center issues [7][8] Company Strategy and Development Direction - The company aims to grow market share despite a challenging retail environment, focusing on value leadership and innovative product offerings [9][10] - New store growth remains a primary sales driver, with plans to open 15 to 17 new stores in 2024 and 160 to 180 over the next five years [17][49] - The launch of the My Academy Rewards program aims to enhance customer loyalty and engagement, with early sign-ups exceeding expectations [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that economic factors suppressing consumer spending are expected to persist, leading to a revision of annual sales guidance to a range of $5.9 billion to $6.07 billion [15][29] - The company remains focused on aligning expenses and inventory with revised forecasts while maintaining profitability [16][30] Other Important Information - The company generated approximately $91 million in cash from operations and repurchased about 1.8 million shares for $99 million during the quarter [27] - The Board approved a dividend of $0.11 per share payable on October 17, 2024 [27] Q&A Session Summary Question: What is the sales trajectory in the business? - Management indicated that August saw a positive comp, rebounding from earlier disruptions caused by weather events [34][36] Question: Is there a thought to become more promotional given the state of the consumer? - Management stated that extra promotions during lulls tend to erode average unit retail (AUR) and that they will focus on everyday value instead [38][39] Question: What is the competitive landscape like? - Management observed a slight increase in promotions but noted that it is not back to pre-pandemic levels [41][42] Question: What are the drivers of potential improvement for the back half of the year? - Management highlighted new store contributions, the loyalty program, and improved customer engagement as key drivers [45][46] Question: How are the 2023 stores performing? - Management reported that the 2023 stores are performing better than the 2022 vintage stores [48][49] Question: What is the impact of the calendar shift on sales? - Management noted a $35 million benefit from the calendar shift in Q2, which will reverse in the following quarters [60][61]