Academy(US:ASO)2025-03-20 15:02Financial Data and Key Metrics Changes - Net sales for Q4 2024 were $1,680,000,000, representing a 6.6% decline compared to the previous year, primarily due to a comparison against a 53-week fiscal year [7][36] - Comparable sales decreased by 3%, with a sequential improvement from Q3 and the first half of the year [8][36] - Gross margin for Q4 was 32.2%, down 110 basis points from the previous year, driven by higher freight and distribution costs [13][37] - Net income for Q4 was $133,600,000, with diluted earnings per share of $1.89 [36] Business Line Data and Key Metrics Changes - The outdoor category was the best performer, with total net sales growth of 2% [11] - The mineral category saw a 1% decline in net sales, rebounding during the holiday season due to strong youth apparel sales [12] - Sports and Recreation net sales improved, finishing down 1% compared to the previous year [12] - Footwear net sales were down 2%, with strong performances from brands like ASICS and New Balance [13] Market Data and Key Metrics Changes - The company gained approximately 40 basis points of store traffic share among households earning over $100,000 annually in December [40] - Traffic growth accelerated by 700 basis points in December compared to October, indicating a positive response to value offerings [40] Company Strategy and Development Direction - The company plans to open 20 to 25 new stores in 2025, having already opened three in Pennsylvania and Maryland [20] - A focus on enhancing the e-commerce experience and expanding fulfillment options is part of the growth strategy [23] - The introduction of the Jordan brand in 145 stores is expected to significantly impact sales and brand presence [26][80] - The company aims to maintain its position as a value leader, especially for lower to middle-income consumers [28] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious consumer environment, with expectations of continued softness in the lower-income demographic [60] - The company anticipates Q1 to be the most challenging quarter, with Q2 expected to show stronger performance due to new initiatives [49][60] - Management expressed optimism about the impact of new store openings and brand launches on future growth [51] Other Important Information - The company generated $528,000,000 in cash from operations in 2024 and returned over $396,000,000 to shareholders through dividends and share repurchases [42][43] - An 18% increase in dividends was approved, resulting in $0.13 per share payable in April 2025 [44] Q&A Session Summary Question: What are the expected drivers of gross margin expansion in 2025? - Management indicated that recapturing supply chain headwinds and a higher penetration of soft lines, supported by Jordan and Nike, are expected to drive gross margin expansion [54][55] Question: How does the company view the impact of weather versus consumer uncertainty? - Management acknowledged a softening in business due to weather but noted a rebound as temperatures warmed, indicating a cautious but stabilizing consumer environment [60][61] Question: What is the expected contribution of new stores to comps in 2025? - Management expects new stores to contribute positively to comps, with a significant number of stores from previous vintages entering the comp base [66] Question: Can you provide more details on the Jordan brand launch? - The Jordan brand will be launched in 145 stores and online, marking the first time Academy will sell Jordan products, with a focus on sport-related items [78][80] Question: What is the company's strategy regarding tariffs and pricing? - Management emphasized a diversified sourcing base to mitigate tariff impacts and a commitment to maintaining competitive pricing on key items [86][87]