High inventory levels and fewer promotions fuel Academy Sports’ winning streak

Following his third quarter record results in December, Academy Sports and Outdoors continues its momentum with another record quarter and its most profitable year in company history. As the pandemic continues to push people outdoors and into healthier lifestyles, Academy Sports said in its earnings report on Tuesday that its fourth-quarter success was fueled by a strong holiday performance and strong relationships with key suppliers.

For the fourth quarter, the Katy, Texas-based retailer reported a 13.2% increase in net sales from the same period last year to a quarterly record of $1.8 billion, with net profit up 54.9% to $141.8 million. For fiscal 2021, Academy saw net sales increase 19.1% from a year ago to a record $6.77 billion, with net income up 117.4% to $671.4 million for the full year.

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According to President and CEO Ken Hicks, these results were possible because the company’s dedicated team implemented a solid plan ahead of the holiday season. During the Academy’s earnings call on Tuesday, Hicks told investors that sales accelerated in early November, which allowed the company to reduce both the number of promotions and the size of discounts. offered during the holidays. Taking fewer markdowns, Hicks said the company saw solid increases in AUR as well as number of transactions for the quarter.

Hicks also mentioned that the company posted double-digit sales growth across its four major merchandise divisions, including apparel, footwear, sports and outdoor recreation for the year as a whole. “On the soft side of the business, apparel saw the largest increase of over 20%, while footwear was up 14% from 2020,” Hicks said on the call. “We also made strong gains on the hard side of the business with a 10% upside from 2020.”

Credit: Courtesy of Academy Sports and Outdoors

Credit: Courtesy of Academy Sports and Outdoors

Courtesy of the Sports and Outdoors Academy

For Academy merchandising director Steve Lawrence, this growth position was due to its inventory recovery from 2020. “One of the things that helped us in the fourth quarter is that we came in with 22% more inventory than the year before,” Lawrence told FN in a call on Tuesday. “While we’re still below 2019 levels, this increase over 2020 really helped us perform in the fourth quarter. We actually left the fourth quarter with inventory up 18%.”

But Lawrence said not all of its segments are on the same level when it comes to inventory. “Categories like Bikes and Fishing were weak in the fourth quarter, but we’re back in stock with most items except in our hunting area, especially guns and ammunition. In the together, however, stocks are in a much better position than last year. I think it will still be bumpy for most of 2022, but we are in a good position.”

Looking ahead, the retailer is stepping up its store expansion efforts after pausing its growth of new doors in 2019. During its earnings call on Tuesday, the retailer revealed its goal of opening 80 to 100 stores over the next next five years. This is in addition to his plan already announced will open 8 stores in 2021, fill select existing markets in Florida, Georgia, Indiana, Kentucky and Texas, and expand Academy’s footprint in Virginia and West Virginia.

“Before the pandemic, we were focused on growth in our core markets of Oklahoma, Texas and Louisiana, but we paused our expansion in 2019 to focus on localization,” Lawrence told FN. “Most of our new stores will now be located near our distribution centers in Tennessee, Georgia and Texas.”

Lawrence also said these stores will follow a new prototype he rolled out just before the pandemic, which includes more natural light, lower fixtures to increase sightlines and make it easier for the customer to navigate, and more mannequins. and mobile lights for convenience. to restock its stores.

As for its merchandise mix, Lawrence said its relationships with key partners like Nike, Under Armour, North Face, Columbia are stronger than ever. He attributes this to the way Academy represents products according to a brand’s vision both online and in-store.

As for novelty, Lawrence called Crocodile as having performed exceptionally well over the past few years, as well as performance running shoes and cleats for teen sports.

“2021 has been a banner year for the company,” Lawrence reiterated. “All of our team members have worked hard to get products into our stores and achieve our core goals. Our success is truly a testament to what we have been through since the pandemic began. »

Credit: Courtesy of Academy Sports and Outdoors

Credit: Courtesy of Academy Sports and Outdoors

Courtesy of the Sports and Outdoors Academy

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