Macroeconomic headwinds are impacting Academy Sports + Outdoors (ASO, Financial), as customers avoid big-ticket purchases like fitness equipment and bikes. This led to a 1.4% decline in Q1 sales to $1.36 billion, missing expectations. EPS of $1.08 also fell short of estimates.
Key points:
- ASO's Q1 earnings report is discouraging, showing a step back from the modest momentum in Q4. Last quarter, ASO achieved a +2.8% sales growth, its first year-over-year increase since Q4 2022. Comps improved to -3.6% from -7.6% in the first three quarters of the year, but weakened to -5.7% in Q1.
- CEO Steven Lawrence noted in the Q4 earnings call that sales and traffic surged during the holiday season and continued post-Christmas. However, Q1 results show that this trend faded as the quarter progressed.
- ASO's performance contrasts sharply with competitor Dick's Sporting Goods (DKS, Financial), which reported a strong Q1 with same-store sales growth of +5.3%. DKS is gaining market share due to its large-format stores offering unique experiences and a trendy product assortment.
However, there is some positive news for ASO.
- ASO raised its FY25 EPS guidance to $6.05-$7.05 from $5.90-$6.90 and reaffirmed its sales and comp guidance of $6.07-$6.35 billion and -4% to +1%, respectively. The improved EPS outlook is due to share repurchase activity in Q1, with ASO buying back $124 million in stock.
Overall, the earnings report was disappointing as consumer spending trends continue to affect ASO's topline. However, the company remains optimistic about its long-term growth, aiming to grow sales to $10+ billion with adjusted EBIT margins of 13.5%.
