Academy Sports + Outdoors Reports Record Results
Apparel and footwear have been gaining momentum after pandemic-related challenges through much of last year.
The apparel space at Academy Sports + Outdoors.
Academy Sports + Outdoors reported record sales and earnings for the fourth quarter — and apparel and footwear were key factors in the gains.
“Apparel and footwear ran double-digit comps in the fourth quarter. We saw those categories rebound very fast,” Steve Lawrence, Academy’s executive vice president and chief merchandising officer, told WWD on Tuesday, just after the company reported that its fourth-quarter net income rose 416 percent to $91.5 million, on a comparable sales gain of 16.1 percent.
While other retailers were canceling orders, Academy bought into apparel and footwear, including fleece, long-sleeved T-shirts, heavier knits for layering, joggers and active bottoms. The decisions paid off. Footwear and apparel account for about half of Academy’s total business. Last year in the later part of the first quarter, and during the second quarter, “apparel and footwear were two of the harder-hit businesses, then we had a practically nonexistent back-to school-season,” Lawrence said.
But for apparel and footwear in 2021, “We should have a pretty good year. We are up against really soft comps in Q1 and Q2 of last year. Our biggest opportunity is Q1,” of 2021.
Lawrence also said many people should stick with some of the more solitary activities and hobbies taken up during the pandemic, such as hiking and fishing, which would stimulate apparel sales. College and pro-licensed and team sports apparel businesses should also pick up.
He also said some big athletic brands have been generally cutting back distribution but haven’t done that with Academy enabling the company to get market share gains in such labels as Nike and Under Armour.
In February, Academy launched a women’s private label called Freely. It’s focused on low-impact aerobics like yoga and pilates. “It’s a fusion workout and sportswear brand with very soft fabrics for comfort,” said Lawrence. Freely’s price point falls between that of national brands and less expensive private labels.
While through much of last year apparel and footwear were challenged, Academy saw strength in a broad selection of products and categories, including at-home fitness, outdoor cooking and backyard games, along with socially distanced outdoor recreation activities like biking, fishing and camping.
No new stores are planned for 2021, though eight to 10 are seen in 2023 in existing or adjacent markets. Academy has stores in 16 states. They range from 65,000 to 75,000 square feet, though a 40,000-square-foot prototype opened last year.
For the fourth quarter ended Jan. 30, 2021, net sales increased 16.6 percent to a record $1.6 billion. E-commerce sales grew 60.7 percent, led by an increase in website visits and the continued consumer adoption of buy online, pick up in store, ship-to-store and curbside pickup.
Gross profit increased 34.7 percent to $499.1 million. The gross margin rate increased 420 basis points to 31.2 percent. This increase was driven by higher merchandise margins, fewer promotions and a reduction in clearance sales.
Pro forma adjusted net income, which excludes the impact of certain noncash and extraordinary items, was $103.1 million, a 485.8 percent increase over the $17.6 million posted in the prior-year quarter. Pro forma diluted earnings per share were $1.09, compared to 23 cents per share in the year-ago quarter.
For 2021, the company projects comparable sales ranging from negative 2 percent to positive 2 percent; net income ranging from $265 million to $290 million, and earnings per diluted share of $2.70 to $2.95.
“I am very proud of everything the Academy Sports + Outdoors team members achieved in 2020 as they faced substantial adversity and uncertainty due to the pandemic,” said Ken Hicks, chairman, president and chief executive officer of the Katy, Texas-based retailer. “With our outstanding team, strong balance sheet and by investing in our key initiatives, such as power merchandising and e-commerce capabilities, Academy is very well positioned to continue to drive top- and bottom-line growth for the long term as well as enhance shareholder value.”
For all of 2020, net income increased 157.2 percent to a record $308.8 million. Net sales increased 17.8 percent to a record $5.69 billion. Comparable sales increased 16.1 percent. Growth was led by a 138.3 percent increase in e-commerce sales and strong demand in the outdoor and sports and recreation categories.
Diluted EPS came to $3.79, versus $1.60 for fiscal 2019.
Fiscal 2020 pro forma adjusted net income was $311.7 million, a 310.7 percent increase over fiscal 2019 pro forma adjusted net income of $75.9 million. This resulted in pro forma adjusted diluted EPS of $3.83, compared to $1.02 in fiscal 2019.
As of the end of fiscal 2020, cash and cash equivalents totaled $377.6 million, compared to $149.4 million at the end of fiscal 2019.
The sports and outdoor sectors have been standouts during the pandemic. Also showing strong results was Dick’s Sporting Goods, which reported that in the fourth quarter, comparable-store sales increased 19.3 percent to $3.13 billion, which included a jump of 57 percent in e-commerce sales. The e-commerce penetration, which was aided by in-store and curbside pickup similar to Academy Sports + Outdoors, represents 32 percent of the total business, up from 25 percent in the fourth quarter of 2019.
Like Academy Sports + Outdoors, Dick’s is projecting a bit of a slowdown this year. Fiscal 2021 sales are estimated to be $9.5 billion to $9.9 billion with same-store sales seen down 2 percent to up 2 percent.