Academy Sports (NASDAQ:ASO) Reports Q4 In Line With Expectations But Stock Drops 13.5%

Anthony Lee /
2024/03/21 8:12 am EDT

Sporting goods retailer Academy Sports & Outdoor (NASDAQ:ASO) reported results in line with analysts' expectations in Q4 CY2023, with revenue up 2.8% year on year to $1.79 billion. On the other hand, the company's full-year revenue guidance of $6.21 billion at the midpoint came in 2.7% below analysts' estimates. It made a GAAP profit of $2.21 per share, improving from its profit of $1.97 per share in the same quarter last year.

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Academy Sports (ASO) Q4 CY2023 Highlights:

  • Revenue: $1.79 billion vs analyst estimates of $1.8 billion (small miss)
  • EPS: $2.21 vs analyst expectations of $2.28 (2.9% miss)
  • Management's revenue guidance for the upcoming financial year 2024 is $6.21 billion at the midpoint, missing analyst estimates by 2.7% and implying 0.8% growth (vs -3.9% in FY2023)
  • Management's EPS guidance for the upcoming financial year 2024 is $6.40 at the midpoint, missing analyst of $7.53
  • Gross Margin (GAAP): 33.3%, up from 32.8% in the same quarter last year
  • Free Cash Flow of $178.8 million, down 16.4% from the same quarter last year
  • Same-Store Sales were down 3.6% year on year
  • Store Locations: 282 at quarter end, increasing by 14 over the last 12 months
  • Market Capitalization: $5.28 billion

"I am proud of the progress we have made and the resiliency that the team has shown, as we have navigated through many challenges over the past year. We have been working through a choppy macro-economic backdrop while putting in place the building blocks for our future," said Steve Lawrence, Chief Executive Officer.

Founded in 1938 as a tire shop before expanding into fishing equipment, Academy Sports & Outdoor (NASDAQ:ASO) sells a broad selection of sporting goods but is still known for its outdoor activity merchandise.

Sports & Outdoor Equipment Retailer

Some of us spend our leisure time vegging out, but many others take to the courts, fields, beaches, and campsites; sports equipment retailers cater to the avid sportsman as well as the weekend warrior. Shoppers can find everything from tents to lawn games to baseball bats to satisfy their athletic and leisure needs along with competitive prices and helpful store associates that can talk through brands, sizing, and product quality. This is a category that has moved rapidly online over the last few decades, so these sports and outdoor equipment retailers have needed to be nimble and aggressive with their e-commerce and omnichannel presences.

Sales Growth

Academy Sports is larger than most consumer retail companies and benefits from economies of scale, giving it an edge over its competitors.

As you can see below, the company's annualized revenue growth rate of 6.3% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was weak , but to its credit, it opened new stores and expanded its reach.

Academy Sports Total Revenue

This quarter, Academy Sports's revenue grew 2.8% year on year to $1.79 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 3.5% over the next 12 months, an acceleration from this quarter.

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Same-Store Sales

Academy Sports's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 6.5% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.

Academy Sports Year On Year Same Store Sales Growth

In the latest quarter, Academy Sports's same-store sales fell 3.6% year on year. This decrease was a further deceleration from the 5.1% year-on-year decline it posted 12 months ago. We hope the business can get back on track.

Key Takeaways from Academy Sports's Q4 Results

It was a tough quarter. The company's full-year revenue and earnings forecast missed analysts' expectations. The company is down 13.5% on the results and currently trades at $61.6 per share.

Academy Sports may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.