Academy Sports and Outdoors Inc Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Justin Kleber - Robert W. Baird & Co - Analyst : Hey, good morning, everyone. Thanks for taking the questions. Steve, you mentioned the positive comp and new stores and hoping you could expand on that a bit. How did the '22 vintage comp in aggregate, how does that compare to what you would anticipate from normal maturation? Just trying to understand the comp benefit from new store maturation versus how your mature stores are performing.

Question: Justin Kleber - Robert W. Baird & Co - Analyst : That's helpful. Thanks. And then maybe a question for Carl, just on gross margin. Curious how 1Q came in relative to your expectations and if you just help us bridge the gap between the 1Q gross margin rate to the full year guide? I know 2Q, 3Q historically have higher of our historically higher without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 2:00PM, ASO.OQ - Q1 2024 Academy Sports and Outdoors Inc Earnings Call margin rate quarters, but just how you envision merch margins evolving over the balance of the year and what your assumptions are for freight within the full year guide? Thanks.

Question: Justin Kleber - Robert W. Baird & Co - Analyst : Hi, guys. Thanks for all the color and best of luck.

Question: Michael Lasser - UBS - Analyst : Good morning. Thank you so much for taking my question. So it sounds like the consumer has been responding to some of the promotional activity and discounting that the Academy has been doing. How aggressive is the Academy willing to be with it gross margin in order to drive sales, given what's happening in this environment?

Question: Michael Lasser - UBS - Analyst : My follow-up question is on the momentum you talked about in April, has that continued into the current quarter? And Steve, there's a lot of skepticism on Academy's ability to hit it at the least the low end of the guidance for the rest of the year. What's implied in that is that comps do make a meaningful improvement? You outlined several factors that and you think will drive the improvement, if you don't see that improvement, what actions are you going to take in order to preserve the profitability and manage the business? Thank you.

Question: Michael Lasser - UBS - Analyst : Thank you very much and good luck.

Question: Simeon Gutman - Morgan Stanley & Co - Analyst : Good morning, everyone. My first question is on the new stores. Can you talk about and like the newness in terms of the you said new vintages are comping positive. Does that include all stores? And then can you assess why the '24 class is or the '23 class, is comping well ahead or at higher levels like what how do you diagnose that? And is there any is there any cannibalization happening across neighboring stores?

Question: Simeon Gutman - Morgan Stanley & Co - Analyst : And then a follow up regarding the cadence for the rest of the year, you said the customers being more discerning and you talked about promotion and then you have more newness and activities, I guess, initiatives as it goes on. So I guess the question is, how do you balance the more discerning maybe more value oriented customer with the I guess, the slope now that's implied for the rest of the year to drive the events or to drive the comp?

Question: Simeon Gutman - Morgan Stanley & Co - Analyst : Thank you. Good luck.

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : Thanks. Good morning. So in terms of the improvement in the back half, can you talk a little more specifically about the categories and that you expect to turn positive. To what extent is a MIX going to play out in the gross margin as it relates to that? And to what extent are you still expecting maybe the hunt category to see some lift around the election. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 2:00PM, ASO.OQ - Q1 2024 Academy Sports and Outdoors Inc Earnings Call

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : And then just to clarify, so in the gross margin as supply chains or tailwinds shrinks flat, merchandise margin is flat, is that right? Am I am I missing pieces and then that merch margin, are you expecting mix to be a positive and then essentially offset more promotions year-on-year?

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : Got it. Thanks very much.

Question: Kate McShane - Goldman Sachs Group Inc - Analyst : Hi, good morning. Thanks for taking our question. Our first question was just on the My Academy loyalty program. I just wondered if you could give us a little bit more detail on the timing of the rollout of that and end the guidance capturing any kind of upside potential from that or any kind of margin implications as a result of the promotions and offerings that go along with it?

Question: Kate McShane - Goldman Sachs Group Inc - Analyst : Thank you. And our second question just was around your comments around some of the key brands that you aren't currently carrying in footwear. How much do you think this specifically is challenging traffic to the store?

Question: Kate McShane - Goldman Sachs Group Inc - Analyst : Thank you.

Question: Robbie Ohmes - BofA Securities Inc - Analyst : Well, hey, thanks for taking my question. Maybe for Carl, just some on the store opening cadence for the year. Any thing you can tell us about how that may or may not pressure certain quarters pre-opening expense or just timing of store openings being back half weighted?

Question: Robbie Ohmes - BofA Securities Inc - Analyst : Got it. And then, Tom, can you walk us through the economics of the DoorDash deal? Was that is very favorable to you guys? How is that structured?

Question: Robbie Ohmes - BofA Securities Inc - Analyst : Got it. Thank you.

Question: Anthony Chukumba - Loop Capital Markets LLC - Analyst : Good morning. Thank you so much for taking my question. I want to add my I want to give my usual on and how quick question, given you've already been and cover. So I guess I have to come up something else. I guess my question and just on the competitive promotional environment. I mean, you've been talking now for a while about the fact that you're not promoting, much if at all between big sale events, which makes a lot of sense. And what are you seeing from your competitors? I mean our competitors, are they doing a similar thing in terms of the timing of their promotions? And how would you just sort of compare maybe just year over year or maybe now versus pre-pandemic, just kind of the all the overall competitive promotional environment. Thank you.

Question: Anthony Chukumba - Loop Capital Markets LLC - Analyst : Got it. And then just one quick follow-up on you mentioned that your shrink was down 20 basis points year over year. Is there anything in particular that that was driving that? And do you expect continued shrink improvement over the remainder of the year?

Question: Anthony Chukumba - Loop Capital Markets LLC - Analyst : Thanks.

Question: John Kernan - TD Cowen - Analyst : Good morning. Thanks for taking my question. So Carl, just on the SG&A rate, looks like SG&A dollars were up about 4% in the first quarter. And how should we think about SG&A dollars and rate into the back half of the year and in the different scenarios of comps that you laid out, that is a fairly wide range yet down Florida up once. I'm just thinking how that rate might trend given the on the high and low end of the comp guide? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 2:00PM, ASO.OQ - Q1 2024 Academy Sports and Outdoors Inc Earnings Call

Question: John Kernan - TD Cowen - Analyst : And Steve, just on the merchandising front, I think footwear has been the big driver of one of your big biggest peers. Our comps recently what are you doing in terms of working with the vendors working with the in-store presentation within footwear? Because it's the category that obviously has a lot of momentum right now on it's not all just with Avon and hope you have a big Nike business, New Balance and other. So just what are you doing in terms of allocations as we get into the back half of the year?

Question: John Kernan - TD Cowen - Analyst : That's great. Thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 2:00PM, ASO.OQ - Q1 2024 Academy Sports and Outdoors Inc Earnings Call

Question: John Heinbockel - Guggenheim Securities LLC - Analyst : It's due to tremendous related questions, right? We've talked a lot about driving business in the episodic periods, but in the periods in between right, when you think about using CDP to go after heavy users for either whether it's sufficient or outdoor cooking, what do you see as that opportunity in those periods? And then during the promotional periods you have to do, are you getting a better sense of promotional elasticity by customer, right such that your promotions are more effective than they were a year or two ago?

Question: John Heinbockel - Guggenheim Securities LLC - Analyst : Thank you.