Academy Sports & Outdoors, a leading retailer in the sporting goods sector, made headlines this Tuesday as it revised its sales projections for the full fiscal year, following an unexpected decline in year-over-year revenue for its fiscal second quarter. The company is now anticipating sales to be in the range of approximately $5.9 billion to $6.08 billion for fiscal 2024.
This is a significant adjustment from its earlier estimate of between $6.07 billion and $6.35 billion. Furthermore, Academy Sports is predicting a comparable sales decrease of 3% to 6%, altered from the previous guidance that expected a modest drop of 4% or even a 1% gain. Analysts on Capital IQ had pegged revenue consensus at $6.07 billion, forecasting a same-store sales decline of 3.2%.
Chief Financial Officer Carl Ford elaborated on the challenges faced during the second quarter, attributing the dip in sales to a confluence of factors including the prevailing tough economy, a temporary backlog at the distribution center due to the launch of a new warehouse management system, and a notably active storm season affecting significant portions of the company's operational footprint.
Ford noted, "Sales for the second quarter were more challenging than expected, impacted by a tough economy, a temporary distribution center backlog related to going live with a new warehouse management system and by a very active storm season across key portions of our footprint. We will continue to manage expenses and inventory levels as we focus on driving topline growth." In terms of financial performance, Academy Sports is projecting adjusted earnings per share (EPS) of between $5.75 and $6.50 for the ongoing fiscal year, despite not providing an outlook for this metric when they reported first-quarter results in June.
Market analysts are forecasting normalized EPS of $6.27, reflecting cautious optimism about the company's earnings potential. For the quarter that ended on August 3, Academy’s adjusted EPS saw a slight decline of 2.9%, landing at $2.03, yet it outperformed analysts' expectations, which were set at $2.02.
Meanwhile, total sales dipped to $1.55 billion, down from $1.58 billion in the equivalent quarter of the previous year. This figure aligned with the Street's estimates for the recent three-month period. Additionally, comparable sales decreased by 6.9%, which was steeper than the anticipated 4.1% drop forecasted by the market.
The company's gross margin stood at an impressive 36.1% for the quarter, showing improvement from 35.6% in the prior year's analogous period. Chief Executive Steve Lawrence also commented on the positive impact of inventory discipline, which contributed to a gross margin expansion of 50 basis points alongside a 5% reduction in units per store.
The company opened one new store during this period and reiterated its commitment to launching 15 to 17 new locations within the current fiscal year. Looking forward, Lawrence outlined the company’s strategy for the remainder of the year, emphasizing a focus on increasing traffic and conversion rates in both physical stores and the online platform.
This will be achieved by leveraging enhanced marketing capabilities and expanding the reach of their new loyalty program. As of the latest trading session, Academy Sports & Outdoors shares were priced at $52.92, reflecting a change of +0.28 or a percent change of +0.53..