Academy Sports and Outdoors Inc Q4 2023 Earnings Call Transcript

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

Question: Simeon Gutman - Morgan Stanley - Analyst : Hey, guys, thanks for the question. My first question is on thinking about the normalized comp rate for the business in three years sort of post COVID. The business did really well. It's but it is still comping negative. And I don't know if it's taking longer in your mind to turn the corner or not, but because it is, does that affect the normalized comp rate going forward, especially since you're adding more stores?

Question: Simeon Gutman - Morgan Stanley - Analyst : And then the one follow-up related is, I think, just to clarify what you said, the stores that you're opening in existing markets, those are performing better relative to either new space productivity or a comp waterfall second, third year, then you thought it's the stores that are in markets in which you don't have a presence that have been ramping slowly more slowly. Is that a fair characterization?

Question: Simeon Gutman - Morgan Stanley - Analyst : Makes sense. Okay, thanks. Good luck.

Question: Kate McShane - Goldman Sachs - Analyst : Hi, good morning. Thanks for taking our question. You mentioned in the prepared comments that you're going to focus on value and price. And I know that pretty much always where you've been focused on but do you think that you've got a little bit away from where you've been historically REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 21, 2024 / 2:00PM, ASO.OQ - Q4 2023 Academy Sports and Outdoors Inc Earnings Call and that could be part of the reason why you've seen some pressure on the comps and how should we think about just a renewed emphasis on value going forward in '24?

Question: Kate McShane - Goldman Sachs - Analyst : If I could just ask a quick follow up on the promotions. I know there's been a lot of vendor support for promotions over the last year or so. Are you expecting the same level of vendor support in '24, what you saw in '23?

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

Question: Greg Melich - Evercore ISI - Analyst : Thanks. Maybe just to help us on the what's driving the growth or that inflection you talked about, Steve, the in the fourth quarter, ticket was still positive in transactions running down five. If you look at the guide this year, I would you expect that all the improvement to be on transactions and transaction growth if we get back to a 0% comp actually being positive this year?

Question: Greg Melich - Evercore ISI - Analyst : And in terms of a progression, just given how it sounds like, it's the first quarter would be the weakest and then we'll get slowly better over time or do the comparisons get harder by the end of the year, given how December was strong.

Question: Greg Melich - Evercore ISI - Analyst : And just to clarify that the SG&A that now including the stock comp and thanks for that, it's nice to make it clean. Is that that 100 bps increase that you flagged, is that a new run rate that we should think of in terms of stock-based comp or was there something about this year that sort of steps it up versus last year?

Question: Greg Melich - Evercore ISI - Analyst : That's great. Thanks and good luck.

Question: Chris Horvers - JPMorgan - Analyst : Thanks, and good morning, guys. So a couple of follow-ups there. So first, on the comp, do you expect the first quarter to be within the range of the year and sort of are you are you essentially expecting 1Q look like and the quarter to date trend on? And then as you think about it, can you can you talk about like the gross margin puts and takes you? You mentioned rolling out WIMS. over the next 18 months. You talked about some efficiencies that the new head of supply chain has seen. How are you thinking about the gross margin good guys in 2024? And what are the offsets?

Question: Chris Horvers - JPMorgan - Analyst : Got it. And then my follow-up, just on the new store maturity ramp. You lowered the year one given the new market mix. But as you think about like where can you remind us what you said about where did they get in year five because it sounds like you said there's this very steep ramp to year five in that over the next five years that will get to the average on the average of the chain 10 years out. So can you maybe just provide some more color because typically we think of, you know, double digit comps in year one and then by year five, you're floating with the overall business?

Question: Chris Horvers - JPMorgan - Analyst : Thank you very much.

Question: Robbie Ohmes - BofA Global Research - Analyst : Hey, good morning, guys. Can you talk a little more about you've mentioned how well the private label is doing. How are you thinking about getting the athletic apparel, the outdoor apparel, some of the branded athletic footwear, are there things you can do to get those businesses to be a little stronger or any initiatives underway? How are things like LBL being doing? I'd love to get some color on that.

Question: Robbie Ohmes - BofA Global Research - Analyst : Thanks. And then my follow-up is I actually want to follow-up on Kate's question. When you look at the vendor community, are you seeing prices coming down? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 21, 2024 / 2:00PM, ASO.OQ - Q4 2023 Academy Sports and Outdoors Inc Earnings Call

Question: Robbie Ohmes - BofA Global Research - Analyst : Got it. Thanks.

Question: Michael Lasser - UBS - Analyst : Good morning. Thanks a lot for taking my question. Steve, when we compare Academy's results to especially in the footwear and apparel categories to several other retailers, especially those retailers that also index for lower income segments. The footwear and apparel categories in particular seem to be it's doing worse that Academy than many other players out there suggesting it's seeding market share. A, why do you think that is the case and B outside of some of the factors that you pointed to, what do you think is the principal and strategy that's going to allow Academy to stabilize its market share because is it simply a function of its core customer base getting healthier that might prove to be elusive for us?

Question: Michael Lasser - UBS - Analyst : My follow-up question is on the gross margin in the last 50 years seem to any investment you might be making either promotions or price would you would you see how much would you see and improvement in sales if you are willing to sacrifice some of the gross margin gains that you've achieved is a quick housekeeping note and how much will SG&A grew? How much will SG&A dollars grow this year and due to investments that you might be making in wages or labor within the store? Thank you very much.

Question: Michael Lasser - UBS - Analyst : Thanks very much.

Question: Anthony Chukumba - Loop Capital Markets LLC - Analyst : Good morning and thanks for taking my questions. So I just want to kind of tie a couple of things together. In terms of my question, you talked about some of the outperformance in certain footwear brands, you specifically brought up, Brooks, you also talked about the fact that you're definitely counting on some new products to drive growth in 2024 to help in 2024. So kind of tying those two together, any insights in terms of some of the sort of hot running brands, US specifically Hogan on any insights in terms of whether what your expectations in terms of whether you can get one or either or both of those brands, particularly given the fact you've had success with Brooks, which is a relatively, you know, what sort of high ticket footwear brand? Thank you.

Question: Anthony Chukumba - Loop Capital Markets LLC - Analyst : Got it. And apologies for asking the same question, I mean, nothing if not consistent. I'm just you all everyone quick follow-up. You talked about the stock-based compensation that's like $0.3. So when they look at this initial guide and so on and kind of apples to apples like adjusted basis, that would say the guidance was really more like kind of $6.20 to $7.20 on an adjusted basis, is it is there also the potential for there to be other add backs over the course. I mean, I know it's obviously hard to hard to say that you want to stick with the with the gap. And I'm just I'm just trying to make sure I'm thinking about this apples to apples. I mean, could there be other potential add-backs to gap as the year progresses? Thanks.

Question: Anthony Chukumba - Loop Capital Markets LLC - Analyst : Thanks for the kind words. Good luck with us fiscal 2024.

Question: John Heinbockel - Guggenheim Securities LLC - Analyst : Steve, can you just walk through our CRM initiatives this year right now that you've stood that up, whether it's reactivating customers, wallet share and how you're going to lean into that? And then the thought of about personalized promotions, right you talked about this pricing on bikes and fitness and stuff like that. Do you see an opportunity to do personalized promotions where you're not blasting that out to the marketplace, but being very surgical in how you attack that?

Question: John Heinbockel - Guggenheim Securities LLC - Analyst : And then just quickly last thing. When do you think when do you launch the new loyalty program? Is that still pretty holiday here?

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

Question: Robbie Ohmes - BofA Global Research - Analyst : Okay. So with that, I'll (multiple speakers)