Academy Sports and Outdoors (ASO) 31 Aug 232024 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Academy Sports + Outdoors Second Quarter Fiscal 2023 Results Conference Call. At this time, this call is being recorded. [Operator Instructions] I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please go ahead.

Good morning, everyone, and thank you for joining the Academy Sports and Outdoors' Second Quarter 2023 Financial Results Call.

are Carl Chief Ford, call Mullican, Officer; the and President; Chief on Steve Executive Lawrence, Michael Participating Financial Officer.

statements release SEC the management may cause These but our reminder, comments to risks are materially These a in The results that include, release subject earnings factors in As no from could revise uncertainties and statements made uncertainties are by considered identified to during our be call obligation actual our and risks any expectations this and and forward-looking statements. today's the the company undertakes forward-looking earnings and filings. limited to, in projections. to not statements. differ

non-GAAP Today's release, today's to measures. earnings Reconciliations comparable is included remarks to the at available in also which certain investors.academy.com. financial GAAP refer most measures are

the turn over call Lawrence to Steve? remarks. for now will I his Steve

to our you been call. Matt. and into stepped since you, joining Thank months earnings X all, morning QX for It's us new Good roles. I our and thank for Michael

Over run I'm the ] the which our the bench and our focusing of roles key team. able fill building internal days, strong past on to and on improve to a that over business expenses our [ we're all hard current sales positions couple worked on trend of to our backfill work has the planning. on with the speaks internal done leadership key and some team past excited rate promotions, we've to the of XX years succession

the and today's our will role long-range that including thrilled strategy, years, IPO, Academy our played in new been these several in achieving shape pandemic, supporting X long-range be create company I'm for has he's milestones time, and first during X.X all the our objectives plan. integral achieve an the us helping navigating Ford, is helping on with of call. Carl highlight new and that our Carl earnings the that, he CFO, and joining promotions, To

Turning to our QX results.

we X.X% For billion of a quarter, net achieved sales $X.XX for negative the comp.

were moved decrease, trend and a in While first In we business with we was that encouraging decelerate results are saw rates we steady line What QX, QX, saw the not both shared our sales during with margin call. quarter. we we running improvements the as with these the better. in line guidance with getting our last month through was in happy unlike and successively quarter each

on progress Our belief into is the build that QX we QX. through can we this as holiday and to continue in season momentum selling

best-performing decrease. sports our the ran well & equipment, a quarter. all was performed the and outdoor which outdoor division, by during business sales furniture quarter during at recreation, X.X% Looking Sporting goods cooking,

was However, the with business fitness second best be X.X% division tough. the bike negative continue to equipment decrease. and Apparel a performing

well the out perform label us well men's private area. our of solid licensed We continue youth see businesses to for business. also along our NIKE apparel as performance as and continues to with

women's business for more has us. The challenging remained

business QX X.X% move on women's forward, very during back active our Footwear on focused a we As ran getting decrease. track. we're

work and better was year be footwear by a we as strong private as and where also along Brazos. ago. our to HEYDUDE driven to with brand, a a casual business boot were position cleated see brands continue apparel in in The continue national we much versus We strength such work inventory

peaks saw to of XXXX from last levels, but continued decline years. the Hunting down performing decrease fishing for Better expectations. it's was continue which challenged ammunition well and QX well during the softness below we that the couple both of business and Our improvement but outdoor for the trend XX.X% remained firearms XX%, was to perform an businesses. categories still QX in camping. versus Both quarter was these most a categories continue were above the our

forward, we comparisons see moderate from expect declines year. last as lap to As to softer these the we in move start categories we

cycles increase assortment key our the quarter. customers called sales. on products the of penetration new on look gravitate of many various continue themes purchases were also Day, continue consistent that categories that Father's businesses, towards with their in into we July. during of pattern the customer second the the Day not of pandemic. as Customers When ticket out X challenged, the the At demonstrated in increased end by of time brand call to in during recovery along across also long with Mother's value OOFOS from a which, shopping and BAGS an such value Fourth BOGG many and you the natural items. benefited many the carried aggregating periods are cases, seen time, our private the to We've Memorial forward slides QX innovative Bigger Day, surge as items be such replacement focusing same of and demand

buys trends. expanding everyday to future the these promotional moments shopping in with with by during as adjusting lean efforts will our along us continually see our are continue Customers offerings We key leveraging while in also efforts into our align promotional assortment space our and the to value position calendar. our evaluated strong

launching announced for new QX help we us with the past regards on of to Columbia of partnership newness. to which new as mean and X climates. their key advantage I'd In sensibility a Northern appetite apparel with Outdoors towards become This a retail customers' week, highlight footwear like couple partners. ideas, our more that and We perfect the of fishing southern a businesses, initiatives believe take to in brands new will L.L.Bean outdoor and Magellan complement and their focus

fall. to ACL boards the is partnership League bags and for and American with Escalade exclusive Cornhole Another this become seller new our of initiative

market the share perfect partnership this strong things tailgating, fit With in have we a all for us. is

but over and help within kick new that geographic a offering apparel. for anchored to and years, online a our been been Later off in the team live with footprint. our partnership we'll offering suit our traditionally business teams license the has QX, Fanatics has This leagues in strong expand us

Our leagues and moving of new our greatly assortment will to service dramatically allow expanded a categories, and forward. relationship teams us grow to number

We profitability. remain and proactively our we initiatives ensuring possible managing while to results deliver our to remain year achieving the business track shareholders on best our Shifting long-term this for goals. on to focused

performance points versus give margin year, Carl down you at run was for a improvement Beneath will our over market versus came quarter our financial stabilized gross down around color of surface, year, point which Our a point basis rate. XXXX. basis XX basis increase with more XXX at points in was QX rate last the over margin QX improvement the basis last XX.X% merchandise over XXX which shortly. a our XX our

was has inventory. flat last quarter, of dollars the At we into to QX The year. year billion, units a down $X.X per-store the plan Turning and inventory forward. team to was approach basis, terms we X% balance of of a to units declined inventory to continue disciplined compared to last end management this past in strength in X% as lean years, the On our in move exhibited total. through very of and couple which

well the fresh that support our and is confident current to us for and at and is right fall selling should level position We content holiday business forward the position are facing, seasons. which the inventory our

actions order taking action profitability in taking seen we the trends help in the to aggressive we're in quick that the of the I want reminder proactively key As we've this addressing give in the improve we to remainder move discussed the call, QX business. year sales June business through of as we're to on our drive a and year.

as value touch on we'll First, and leader points. a all continue position space to highlight across the in our focus customer

and Second, newness. functionality platform. capitalize opening Cross with XX stores the we we're And Fanatics, American better the We're continually improving L.L.Bean, desire marketing will fall. customer new data for sales customer facilitated along in offerings as introducing such by our new opened expect our advertising the XXXX we new Holding customers' experience. improve targeted also XX that up lastly, Cornhole to our be enhancing in on features assortments effectiveness this to from to new our boost a stores omnichannel

Now over Carl? the new I'd through the turn financials. like call our walk to you CFO, to to

an Academy with our am Thank our capital excited philosophy. of to growth the our has Outdoors. a Chief am be opportunity have It Academy and I to company proud Financial the the I to future. then of operating Officer and not you, I Sports same is I as lead believe, Michael improve very am to is work since the and and follow about Steve. Good I what the excited allocation it morning, initiatives and company was honor selected done into XXXX our everyone. bright organization model. finance balance been have long-term we sheet as about strengthen

Net will billion, I with compared the X.X%. transactions, of impacted X.X% quarter size. details X.X% by a comparable walk Sales XXXX, offset in increase in sales negative our $X.XX partially of ticket you decline now second the by were were to of decline X.X% sales through an second a quarter results.

in increase sequentially during in compared partially of quarter, points points lower of margin higher points was basis each merchandise a basis XX last the offset XX an last costs, basis we and of improvement improvement active were XX higher month and rate to by year. by year comp decline customers freight During point XXX XX.X%, of an points more the than shrink. and basis periods holiday was XX during the saw Gross The quarter. driven margins basis

efforts margins by improved actions a price shrink optimization, detect through from in we system We deter sequentially and taken ongoing benefited to to localization. as our sequential saw capabilities, Our and driven losses. XX improvement basis-point inventory merchandise manage

substantially to rates a at margin challenging operate in be able environment. continue to gross We even higher

net XXXX. are of driven in to $XXX.X quarter by million deleverage investments the increase sales, making second our points compared This long-range XX.X% quarter, we During or expenses plan. SG&A of the of an XXX is basis were primarily

compared digital of this investments. investing of stores, percentage year, SG&A omnichannel, growth growth is XX% new in points related projects are IT, our as this a expenses support that and SG&A to to marketing of sales. were lower QX Approximately increase dollar When basis quarter's initiatives. XXX We

percentage our discussed call, the hard we sales our during work our aligning as done the rightsize revised with reflects the across a we and focused our guidance quarter sales of to on improvement first our spending. As organization sequential expenses of expenses

on during not flexing and rightsizing have times hours long-term sales projects the growth and labor Targeted current scaling distribution Examples based that distribution include business of and are or focused growth. revised back store inventory expectations. year with of on receipt on aligned sales we nonpeak areas scheduling strategies

or $X.XX, $X.XX. diluted decrease earnings per diluted earnings were million from per X.X% $XXX.X adjusted share the of XXX in of sales, quarter resulting second of was a income XXXX, basis Net GAAP point share

year. outstanding of no compared Moving on quarter, we to as in $XXX of borrowings the million and end Academy the $XXX for to dividends. the We Board the net XX% in deployed XX, September facility. operating this of billion per in growth XXXX. pay $X.XX balance and XX, sheet. in dividend million generated to last October is repurchase a cash and initiatives during approximately second $X.X quarter. At to million a quarter share cash XXXX, $XXX.X X the second of on approved our million $X to increase from million out stockholders had activities shares The cash record has our This payable invest credit of

Capital $XX.X million. were expenditures

expect to year, $XXX million. and full million between still $XXX we the For spend

full over key With call an the that, provide guidance. initiatives to Michael? year to our of on I update Michael turn our some and will

want Thanks, finance Officer. last a to He congratulations several to Good years. his has I member Financial say for core promotion Chief everyone. been Academy's on organization Carl the of Carl. morning, to

our the Carl that Carl financial everyone time, a performance. plan. I'd of to Investor will I during team excellent on drive this growth time business of that key that our will a few as move plan to continue and like know some long-range forward initiatives take update past described Day has we to stewards of be the long-range we progress our During the key April. been financial his with driver

improving with stores experiences; to communication, in objectives attracting our and new As chain to key markets; plan best leverage a open and drive start scale engaging strengthening profit will productivity third, second, which the sales and through few expect our by content and and store customers base the new in First, be growth a the and our store stores, of initiative, supply the achieve build we expand existing building business; merchandising, by team growth years. are: these and largest by the powerful to to of omnichannel in over driver next XX% business more reminder, new components the retail. I'll to and fourth, our our service to existing

economic productivity stores XXXX. EBITDA. profitable reminder, And We and contributing expectations our mature of already they and they X challenging even sector-leading opened store are, are stores opened metrics. though collectively meeting have group, a positively in environment, a all As in a as to

and said innings I As in year, have in we this of past, the initiative. early test-and-learn are was the a very XXXX

new existing million have year our forma markets inclusive that sales gate While time current brand the learned need we assumes X, new maturity pro $XX of store sales, of come out while ramps, omnichannel in generally sales have market awareness and may approximately stores in longer of to build stores faster.

one. new opening last refine is we our is current and economic size challenging goal learn making store and the each limited expectations and the with than environment better to sample Our the processes but continue of

implemented. with far, we pleased are we learnings that So have the

Given confident and we this can success. In unique Illinois, was Academy X the great year. in our the of stores results new we our opening quarter, model markets to that second preliminary store with concept brand, in which we Peoria, opened positive we take are second store opened the many XXXX, business

scheduled in X including have which opened Friday. last openings Indiana the area, our Indianapolis, first We in store QX,

We stores that and store these to environment, are are the to to our but want emphasize open with existing cash challenges, in we of mentioned strong X track to spite on QX. economic another X flow. growth challenging in able I Carl fund Steve

so of only for large As of in today, us. a runway front states, have in are growth XX we we

for other scaling with retailers many outdoor back share are their there product favorable are markets offerings, that market addition, gains. In

market this customer our further view develop This long this aggregate new within allow confirmed identified the in drive multiple past will Our comprehensive growth. ability data research organization, to stores create diligence creating and perspective, segmented July successful by customer this We specific can use term. We sales that marketing campaigns interests. customer to other of behaviors fandom forward experience us our highly new our our the has data sports customers. and with to customer this in robust refine proactively We to our due will portfolio cohorts, from where deeper an filters. we to you and targeted shopping updating that behaviors, anticipate for interest, platform have refined tool traffic, sources many customers locations a will design as further. conversion level and capability tailored loyalty. We to outdoor customer connecting and increase launched valuable With drive look new data will be develop on about rates, and exciting we a it

update chain our initiatives. a Finally, brief supply on

new leveraging is of partnership with transportation management a generate warehouse intend our discussed productivity, this leveraging basis we implementation existing is times, part supply adjusted our and April, plan achieving major in our Investor component of EBIT of our margin lowering this goal at Day do of Manhattan. We capacity, from improvement chain. As costs, distribution to XXX to in lead costs. long-range e-commerce by the decreasing our unit fulfillment A increasing points system

track We convert new distribution to to centers are system the in our of on XXXX. X

it expected net million X.X%. negative is are and range by to million also billion XX% per supply per are us $XXX sales per before ranging from earnings to share taking We to to up, to year $XXX share taxes share GAAP our $XXX $X.XX between income the visibility chain based $X.XX reiterating and technology XX.X%. margin diluted logistics expected rate half per and productivity expected back on now our multi-store cross-stocking expect of repurchase repurchase updating potential earnings negative EBIT the share million. GAAP expected activity. earnings GAAP calculated to the full deliveries sales consistent steps million I sum we results, for current range and and to diluted between and contribution of and a goal from increasing from estimates earnings the and future flow. range all other are $X.XX outstanding XX.X from by share. margin improve $X.XX weighted million income plan. To average shares not improve expectations, share X.X% per from per $X.XX to processes share guidance activity on quarter. to are Adjusted implementing still investing and Net product income $XXX to with of range to long-range and reflect procedures, to billion count our achieve in do are The still include $X.XX year net comparable forecast diluted the sales trends second while in Gross per our per share are full share. share end any to

expect closing of Finally, $XXX turn generate that, adjusted free his now still over Steve call million to to I for $XXX million back flow. With remarks. will we to the cash

Thanks, Michael.

short-term I stronger much we it's the before to think note As move pandemic. forward, some a we headwinds, important is that company despite were than Academy

and sales driven past margin over structurally our the improvements by years the gross made enhanced above that levels rate few power. XXXX operational significantly remained Our have earnings

new have balance operating we results term, and market capture X-wall affinity that with executing growth through high is scalable with compelling productive of share ways and We customer a transportable, flexible have strong expansion core strategy solid multiple we and drive track within and a sheet, and and very delivering record our store new to existing believe a a into markets. Longer adjacent model markets. growth team a

more of strategic our continue significant base. can have growth to upside, to be from and hard experience importantly an and store have outstanding in the returning the refine of helping Academy I'd value we dividends cash like funded team to Most We the drive closing, to our this of their productivity dedication flow deliver business an customers. members share also all, existing to and improving while work our dot-com all for ability with repurchases. In and generated free business out by the thank through shareholders

out open We'll for the call now up have Now there. let's go, questions. fun your

from [Operator Instructions] question line first the of comes Daniel with Our Stephens. Imbro

want consumer customer, past new this you in whether the of broadly shopping you're attributable the about trends on improvement, Yes. then Do sales talked it that start trade the of on that a down looking half I any any customers signs see when value. benefiting that just really discerning seeing. maybe quarter's for We've was store, to the of quarter, back to from going the plan? Academy be of that marketing was to the within think And the the store? the the comp for new about any you Or within also is year cadence? more kind

kind gravitating or We bigger a the taking Dan, private jump assortment. part. different definitely of stress will see also pressure. Steve. growth We reflected of and the value. this of them in a towards under is first represents of label, in. see couple advantage of I'm clearance that. terms sell ways. value-end start we that customer about sure see that under talked when with which I'll our Michael We We the in We see customer deals

move So towards seeking a there customers definitely is out value.

OOFOS On between the excited we're that right? ACL. innovative, and launching our going L.L.Bean also to that market after BOGG out and or about the flip of Fanatics them brands about this see fall seeking and things talked side, them a new like some we're we why we That's newness, BAGS see slides. new We

really throughout the really planned bit, CDP, trend the key appointment seen. We've past and was key late And market periods, time promotions So that's targeted aggregate the we've -- kind we've those the the kind during also when really the shopping shopping in our the all year. In the pull seen also them periods of that how shop marketing, to purchases through the QX a and time a there. regards place remainder and of get from put of little then we definitely we back that's seen in way our quarter. customer

back get out think any we'll of benefit of start seeing So the half We we that. the year. that in didn't some really of benefit

it. past holding now fight on X in should to jets come been Most to will the of this comp CDP, little year. We we've own a year, we not own a X have a we're years. dog this come driver big And of propeller out see Danny, learning fighter that bit And our year. a against plane be The but in our years. Yes. fighter benefit the fly or will next jet. meaningful for it flying start will benefit the

there promotions. helpful. then just higher Super peers from was maybe follow-up And around a on Obviously, margins. gross maybe discussion

Your bit granularity to look actually you when margins I'm are items? coming is to peers that calling changing competitive certain And What analysis, trying a Are undercut tied backdrop? on priced? half? worth for shrink know there the there? back where they Anything main you pricing then Academy Just the I or well. held was out at in down curious, your in any quarter-over-quarter. promotional driver improved, the that, to the on you little think,

this this as key Yes, earlier, half on we'll I effective and there we're was year then promotional and promotions, definitely Carl into talked a moments. it's past in question seeing promotions the it where said, first being we shopping started just on have promotions at the answer call, those half shrink. and time. ago out Definitely, I'll than jump of then most this We in back really of into said That about year during seeing start carried in forward more last year. year the creep the those marketplace the

as that forward. we move So we're into leaning certainly

-- see through our to people terms and margins in same that's promotions. merch additional and we've done you seen. point from help the know think But things have not erosion did us inventories other that a the manage strong maybe control assortment have the allocation, that probably planning XX put that our planning, of disciplines thing came best basis those margin place helped we inventory really You is erosion all we management. When and in about have all in control some that

last our In spite faced a taken margin said, we of working. I'll of gross Steve We meaningfully real which able were expand higher confidential issue. our gross of -- can't nature, from frankly, them, in shrink, about last quarter. are actions, me from they're clandestine and the sequentially talk rate It's We've a to take we many and many improved we to year. but compared Let margin as lot of headwinds shrink.

do One store and standpoint process our we stores some count we chance them us the actions a that year. take take again. them gives in thing throughout is we from that the our to inventories early high-strength adjust to regularly year, And some and perhaps count

so year. leaders what visibility members take a that's have blue in And attentive Academy provide and us prevent helping have shirts these have the been in issues. done. I would we to stores, best service folks I do all customer the into the peers. the what that that labor team throughout they our to you customers our thank great significantly time customer They so to and of to environment. best, more is manage that It's stores. want shrink our service do in stores the in difficult because trends do the are provide tell adjust, help We to the good we've fun. than and And way more productive more that's can have do and

in have can we the customers. stores people So helping

rings partnerships enforcement. have that we've help got frankly, take with hard Our with shrink. LP We've great law to, been organized down department helped worked able And very crime intervene some enforcement. law has and

of it talking lot big I'll a a about So people heard this issue is issue. We've here mention thing last it. on because

retailers If you we'll many few reflect past start with facing back over on the challenges the pandemic. COVID years,

community else. We feet stores able quickly. to the COVID believe more During quickly. more back manage our I got crisis, their on the that peak than of were We we the opened help anybody better get

If years. you that over better look other the costs space. than the folks past in few at ballooning most freight We've managed

well, a look others. shrink. with were going didn't same that inventory manage retailers did ago, the to better than to year when at you we We're If and back overbought do their many

and We're use excuse manage We're margin great it. an a we're our not team. not hit to nimble to goals. going going have We to gross it

the Melich with from comes question next Greg Our of line Evercore.

to negative I and just the X.X% the comp? better wanted getting was transaction comp. counts First, Or ticket? look that sequentially at -- average it drive more Were did

quarter down better single So comps talk as about a for We the AUR the traffic quarter down got for slightly, digits, slightly. is the proxy per high progressed. how transaction the us, which units also transactions, successfully was up did

] as [ can we defer through we negative the as -- improve quarter. less steadily traffic You got got

And now? X.X%, it where sounds the we're have the a like now guide that would that's negative in given midpoint you guess, the back of is -- comp -- the half X% of I sort running

give So we guidance obviously don't the we've inter-quarter the that shared. the but to be range guidance, within performance of business continues

was Could you answer to back good on -- idea Got the it. that of supply you're sort this grow to shrink stabilize quantify follow And thinking holistic. that about give maybe us benefit or for that an that? half? then hold I want chain thanks on a up And was and as it. margin gross the how helped pretty into Freight or benefits

Yes, Greg, this is Carl.

improvement. the tailwind XX freight So during quarter-over-quarter basis was of points a quarter,

margin, gross a and puts that was within fall. a Merch negative So And on the as freight in guidance the was a were XX, tailwind up points XX. XX. positive, was shrink we to basis throughout continue a takes see XX that negative

Our with the from JPMorgan. of Horvers line Christopher next question comes

forward form you're business can we look you seeing can such think to start relative bottom the the is start Are those about some ultimately and like hunt whether to, improvement to you key or then and are so seasonally? in to we XXXX, -- seeing comp that basically talk winning it's more Or think are what as the positive business things in about in Can year? categories, of the bike exercise out forth? equipment, and you COVID about stabilizing the

when [indiscernible] look business, bigger and ticket big talked basis, our Yes. pretty mean particular, search just the some in The businesses, a will be at be fitness you still hunt those of challenged, you've of between continue comparison -- key challenged. continues you to On challenged. Y-o-Y fitness business to they're the right? categories to business about, I about continues be equipment, talked

we we this year. get the daunting the get less comps further As through get year, through a the little

improvement like we're in up some where move the look category It's XXXX, part the question, still the that hunt And 'XX. like businesses in at like on was your you counting beneath versus latter at versus ammo, these of still versus are up XX% if look a you as surface through 'XX. of When all they're business. still we you going back take when So the mid-XXs in really, it's really to healthy. year. But the it

seen certainly little it's from spread still the the And a activity pre-pandemic. a business we've last back kind really maintaining see but to healthy years, this couple of of in we once falling bit start I total So is start able a think I being it to than we'll perspective. more higher level from to in where company and it stabilize was move at going 'XX, think stabilize, a when growth towards versus that's

So I guess just focusing on that.

look these we we're better to in categories ago forward? you a business, broadly a bottom the are okay that confident and you more you that quarter have So seeing point or do than today getting feel visibility in as of, form

start But we though. a certainly the becoming -- negative that. businesses. forecasting a predictable to through us. I want of these running They're can getting not negative. those depend little to terms on in They're more mean as diminish They're headwinds get mislead bit. year, running help for are still you lot We closer I don't

And on as of part counting guidance. what really we're our so that's

thing. other X Chris,

a on if this long long term, think ago. looking we're few space than focused term. out and we're differentiated we We're I more were the in years again,

fewer there's space. think and really away competitors competitors from this largest of backed the have I some

as said, definitely, some of we're is down in Steve those still stabilizing. categories. So It short term, running

term, long and got pick a support up great and share to category. opportunity as think new I we customers into we've meaningful really this lean

from we're lot of on right have the cross player even candidly, place outdoor complementary with the nature We're the to people a major footprint. Yes, believe and us categories though more And the a space, is sports they that assortment, we the this, the only about retailer. through become across this back shop how And we of space the you're shop maybe and the fighting businesses talking short-term for as a outdoor chop some in diversified pull large ultimately, cross be. company.

follow-up from gross top my cadence perspective terms help is think the models. line as back in then on any And we and it. here Got of about question a half margin the

think delivered consumer we our health. guidance newness. X.X%. points those on perspective, open No, pre-COVID that Yes. enhancements, guidance you into I that. up XXX on to We've We're and that planning completely we're what continue we've in -- basis to business XXXX We're coming life since is think doing the and going to with from XX.X% buy down started or going continue feel down consistently of -- that to those to The variability the And to having over as the It's doing a execution, markdown lean planning guide comfortable of lean to that X consistently. down systems management, allocation, and all X.X% the to cycle value. related team discipline, we're health. into buy consumer through leadership margin and flexibility years. really Steve merchandise to the back kind of XX.X%, past this from disciplines comfortable It's walked of about with annual

day day managing what That's the out we're doing as in and business.

the past the for margin we've we guide, years. comfortable delivered with feel it X And and so

from comes the of Kate question next Sachs. McShane with Goldman Our line

currently areas half the are wondered wondered This impact is marketplace Emily and health of the sounds we might that inventory were overall into Ghosh about second like for Academy. and how heavier year. on where how We thinking the some there's It there you of the Kate.

position about inventory very Yes. comfortable we're talked with we've is. our certainly, where I mean,

that debts can know everyday about customers brands we gravitate Inflation new core headwinds some the -- value higher that other issues promotions have, about, resonate there's competition of got will customers And also you're real. a business it's heavy There's those strong think out is label continue this out and problems customers offerings there really the our when kind mentioned has sometimes product. than of as we've right? they of become the That increased been. the fundamental is of and But being towards positioning pressure, tailwinds definitely said, inventories are credit strong and to card and some value. We've got We you that think I are. you some private we there, problems liquidate to who talking under with.

and we're in. year. of the been new got combination go things feel an done encompasses the going some We we've A react like the coming So and much as read to downside thoughtful and all we situation those upside things. have ] just [ scenario. gave guidance we And is all both

Reiterating think, of And weren't happy future a be the Yes. today back was, think own what to certainly to benefit it positions from where best believe we're year than we're positioned said, on our inventory will and year it our in ago, strength inventory their time, we Steve based hold is that more to certainly in able we retailers of at -- an number more than that was the with than there we a management. value and going environment a we're important I ago, the that.

risk units of consistently. basis. we've inventory on We our like the And doing per tripling up, a are this been really into leaned we've management it X% down store At feel thing.

the Robby Bank from line Our question next comes of America. Ohmes with of

This Perry is Alex Robby. for on

much Is then trends end currently the you the And headwind the you're back-to-school in to continued? back how us in just acceleration repeated? And a then of you're implies of based win you high think how some then on could the seen as I think Has not first, Just color lapping were I that the that's an half? back the up? same-store that shaping momentum remind what half. you've driving Astros same-store give a well. be could that are is of sales, that us Can if also, buckets acceleration And seeing? sort sort more on July

our up in it. tackle do wrapped that question. best Lot to We'll

we than back-to-school earlier our That is know guidance. being said, don't we people. You give -- inter-quarter before, we said as a lot other of

a for carried was really quarter July. in So those of lot month half already for back-to-school our the We've July We lot the once we time ahead kind shop us. or us. you still the best during of bit part -- of performing of shopping periods. we you starts the A we've back-to-school. holiday now, tailgating really a go little backpacks, period. then of that in the those areas quarter kickoff trends were Right hydration, time get happen strong said, seen terms But of all at back-to-school of past season, appointment kind get for quarter the have we in like those into the quarter lull end things hunting August customer key of have back-to-school strength how for into talked us. That of youth about a the later footwear, key of July a we being the the until we best told back in apparel, of to saw

our certainly we got So modeled forecast. that into

this in I by And still counting terms first hunt. Brazos, Ranger In are against still are also, Astros, of the have well Astros up point this think, think, we in as the out I tied at the time. We're for in place, as yet. the hope Astros win. we you're way, not I

teams the hunt. kind got something there's So would still to get series teams things X about the that while our to And X the to certainly license that we that those we're know be the And take we if the fun upside we forecast, that's and that forecasting. when in lot what do the those of out of right? of happens, world get always of business world we've is a of into try series,

and but play seasons game. be. on really we have don't plan the And matter that. like think business. for the take Alex, We're X we when win, not strong, that We the we don't they may field thing No license how oddsmakers the more and the local can teams

there is that's beneficial to forecast. the to anything So beneficial us

We should XX start XX remainder between into a half XX, year. going have, And -- up this year. year. the that about then from where of new that the give start our things the on XX, we've call kind belief into stores newness of that focus business initiatives store the leaning They have be of another the We the to some last that talked achievable the That's of anniversary falling store to on a somewhere back new comps. we've for value us. us in got -- open is to think openings tailwind we the we forecast question, have, your back the is we the

of back us things lot give year. the a there's the solid that that different belief of is our pretty a forecast for half So

that forecast year. stores XX new I just the we to XX in it although to there, noncomp, say out total this want put includes

just margins really That's And follow there. Perfect. up all helpful. then on to

in the of gross buckets about think versus the year-over-year high just the in versus what the XH sort there shrink terms color environment. margin drivers you're I end implies the how would us thinking half Maybe some of give promo of freight for back guidance increases of be improvement?

a year. last had represents range. up mean XX% points pre-pandemic. It's still general in annual I of It's to little XXX XX.X% same to back Yes. actually the we've bit what a that from give basis

quarter. margins, I you freight players. saw think throw main the to are that anything the We fourth previous be 'XX seeing to H up or FY in quarter the third We the started going the start quarter. going not third buckets to in last and merch the were points shrink the third turn quarter X shrink new basis year this XX beginning We're year. in of to quarter,

accrual had that quarter being the customer inventory is going about of fall. a I'm already of I the baked kind value So previously begins those some think physical bit. on little XX%, Michael inventories. saying to but as it's of not with said, with this ends approximately environment a tailwind was and change, year-round up talking that I into ahead rate. to With stuff XX that's basis just our think taking We second margin management, we it that freight, stated, And standpoint, points. want. be a they the I From options for merch providing going really got and

the within embedded what's that's So guidance.

now higher. times work look how you we of margin basis perspective. And pre-pandemic. made right different really this when in We getting XX% 'XX and where buy business would allocate back And of right really at you changes every lot a optimization we of as and -- our that's the profiling we we're we points the I we do that on where about company, sustaining regular we We're markdown get quarter XXX size price stores. to a the company the we think a that couple sales it, a and question about I in back in built just to said do, operational we've margin. were reiterate we are meaningful think around right about from of Yes, than point. is terms a goods the The better strong were

the the also goods us provides brand bigger business of a be business, becoming We starts of the to should a soft tailwind. percentage as business Private provides become normalized mix bigger think margin percentage benefit and that that tailwind. of a kind margin gross

our certainly term value improve like we've come that in pricing, we're we they're regular or feel we everyday by about on be. sales XX% retailer time long foundational right? So be. periods. to the But those But a margin. planned like call price, from out margin We is be going an core, our moves right the to certainly participate during are be the going They're made we've promotions there. Promotions going and feel previous of what the is roughly strength like on going feel got to hold talked them which to driven they're of our value appropriately. structurally we going to and And to we So structural what are at it. promotions to

of with question Chukumba Capital. Anthony the next comes Our Loop line from

just to will respectful ask on be want ask may questions who peers call, I question. my to also X this To

and a the But omnichannel the opening will new given expense the the the bulk have very leverage is, technology, So store drivers we investments new of I my digital guess that I question investments, fact SG&A you continue, marketing aggressive Obviously, anniversary new store and technology talked guess, start and marketing. investments? omnichannel, store to about plan. you digital when the, the do

bulk more time? say of the You the anniversary-ing -- X sorry, Anthony, I'm

marketing Yes. anniversary When investments? technology, we to and the start bulk omnichannel, of digital do the

we're When the priorities long-range we April, plan our as new in we we stores. customer that strategic baked into the it things of jet deleverage Carl. Omni-channel capabilities, about points we in We expense space just the a into it. around have think really to data viewed there. upside to think there of in get white with starting of fighter it's and there's a ton we associated And lot of basis cockpit XXX Anthony, actually invest back was launched platform. the

you in and us to areas leaning you're plan. expense expect that continue So challenged see a standpoint investing to from can be structure, but responsive an kind expense we at lean throughout us I going think really as going the into to to long-range look we're into consistently of optimize macroeconomic those environment that. always our

to stops, in going us. continually have adding which [indiscernible] a was I online weeks, some think, Currently, site, new new We're capabilities. is dot-com, right? couple reinventing for [indiscernible] I never of Yes. several win we're your investment going adding the the You're particularly the to big of say, capabilities. in next realm

dollars and going really you're early be think we're they're how that things. to as for those about necessarily to think going those us marketing stop. very to and really thoughtful sure new to we're see going the investments discontinue platform, don't themselves. This continual I going we pay So they or evolve I But business. They're we be where invest make

you one, As investment I'd But be going against investments. an of say do, to everything and of more a get to ROIC this that. the paid the run spades we and on we're I guarantee against game back start those we're there's we for going matter that in fact, at

important X And parts. flow. -- funding the existing initiatives more with cash That's those of the

Our next question with comes Nagel from the Oppenheimer. Brian line of

well, as with parts. multiple Anthony's and follow I'll So ask question only lead X but

forward Carl. off, look congratulations, you. to with working First We

products the out provided business through for have, stay are would sheet guidance year. I cross fantastic you of the look, negative. balance done negative question there. Comps a The the managing still some So through they job you've suggest

we then portion guess an really, the Is these are what And I -- challenged business it year, think how the where back comps? what company are some what negative looking should type it about beyond categories lapping the for is, do get underlying comp that, the say, blocks question it versus consumer? -- current to more to is positive you're of So of have the at as building post-pandemic steady I these the be?

Yes.

year of of 'XX, 'XX, to an the customers onetime inflated kind to about out It and grew proposed, et economy. I coming our last coming of of and intended open, this year move categories, stores, We saw the kind during to really of We So stimulus of that when year's by some 'XX surge mean right? pandemic only back outsized in we clearly, year. business there's state extra was reset the X growth store thought cetera. these to the had last in

I the were think the customer we year this much how counting thing on coming is into pressure was under.

inflation I of attribute chop short-term we're economy. kind what high this et card a that negotiating that's by created cetera. seeing The we about, being lot year credit talked debt, is the So of the of through state

thing chop. of really is we our to going short-term that's in in. talk these come when investments we're of they're investments, So to making short-term little that When healthier customers get X in, to still to to the start navigating move these that's as the to things through growth. that that's -- going kick and dislocation about CDP long-term making to see having we we're is in I when the market, that's we we we once really to dot-com And start the forward, keep start think when have a all out investments of or that's and investing new these back a of site, paying off stabilize, kind lot that lot I right? we're going we our we're those initiatives mean a you're is see stores, they're this moving

comes from Lasser question with line next UBS. Our the Michael of

can XXXX? lower negative if negative its on the operating much expenses How especially without into remain Academy a impact customer comps take experience having

our know in sales place. the foot comes on we good with foot competition have more more square are it. pretty productivity we're structure productive, others per a in productivity expense their I We're than competition when got that think had Yes. productive sector that's employee, more I per a happy we're profit in it the productive I our would we've in look basis, basis. per reiterate, with more we're square some employee. Well, productive of important. actions for at you employees, when but to most a and

as expense I And So our undertaking think won't a the our a really very we've expense since initiative got looking we're know, start that in very year. we long-lived store improve are us structure next you got we've that standpoint, good our and from diligently chain. supply pretty structure a there to place benefiting

and on as we the happen supply offsets initiatives not have initiatives we thereafter, to have talked other that are we this working again, initiatives anticipate the Steve look, We So on on hard [indiscernible], trajectory. that but expense about good that do comp should chain shortly side, the turn that, particularly will the year, hopefully, in based there. the some the

of question we're managing I your customer more that anything stores mean a time that's productive talking making and labor this, to not the that's flex base to plate, about doing is allowed question. But there spend certain hurt a flex as we've down service great experience. is We're something our your to because as we we and in there a sure provide point, tasks noncustomer-facing through level to lot we're the to the is we'll continue we to. to our want need of us off taken customer. But

little As business a of of how terms and manage come a in supply chain. receipts bit, we our gives comes little down, that room down us bit

some flex experience. off we but think down, how natural in always can to want to sure, customer or that how make point, based still are got I shopping we've also So we to the flexes don't of business in, want erode your that come customers receipts we up

to soon some their is that going Got that are there's it. profit distribution is distribution, question is pressure your as some expand going Academy more operating profit products. the the put plays expanded on perception turn follow-up for of key this competitors. the the your pool in And to in, of vendors lowering is margins of key which My

what next Academy's we So, the margins a, over now? would you if have expanded this is right to your enable see their it has about drift maintain you your have years, few that distribution b, how in into that the Academy And factored outlook? lower, competitors margins model

distribution response us our think are of anticipate up same right last around now. going the of NIKE question. to I Yes. is and then time. into much. believe don't couple the I'd it is a DSW was non as impacting Macy's apparel, too footwear be mall-based. in really picking back -- announced start We in more -- off-mall-based. quarter with It a because is that got not Macy's. that was little this that retailers And tends lot A they're it mall-based, apparel we're I where DSW We

bit a you maybe worry traffic So could from about of certainly, there. little that

traditionally assortment at they we and same look have carried, of not we when the that what carry. But assortment their level it's

I over call. a and I key said times but past a having in That we've on Carl positive that think improvement foundational brands management. we seen it forecast. a margin And starts term, us, inventory people more having got coming foundational manage and the for it's think access it X Longer our is the how this It keep we margin for years thing accounted thing. couple of So the is to we've with back business. to isn't appropriately projected

on to carry and stores any back to that not the the creating has have inventory in benefits terms move flow needlessly. managing Managing many markdowns creating As end inventory, positive we around too receipt inventory way inefficiencies in used a of way terms system. the the too of company, much created not traffic in markdowns that so

then basis offer So a is out our big on make value. a inventory just that sure and day we day present and we how price through and a and great manage pricing management X value

I think us value term. sustainable the our believe that in combination of X the to there margin those is are disciplines our I place help in long everyday in model, going put things we be that think,

points back multi-stop of in XXX then the other of labor. And mean we strongly again, our better basis cross-stock, that fixed. today supply from is I the initiatives, very chain, use got more highly believe coming to benefit deliveries, we've more workforce our frankly variable DC

directly using instrument, as blunt being able will well. of opportunities more efficient got we've instead effective to target And and our customers there. marketing, then with scalpel using a So a help margins

question Our next from the line comes Seth of Wedbush. with Basham

My I'm anything location quarter. our ] opened question wondering or By the there's productivity. again, this store associated That's is calculation. my around new [ question. first store [indiscernible] new of in timing? if with terms

better All Sure. X We've XXXX, new this opened all X year, stores stores. the the open X we past X had out much have openings openings Indianapolis. We're pleased it's successful back to more of ideal had the of of Carmel, in new store of honest, been with progress Westfield X than out even the the footprint. the in store, we've years. out-of-footprint The XXXX. last though, be in a quite And was not an time to market opened we

we're XX initiative internally said our XX this that used in year, that I those. is will seeing the a challenging, is we year. over, open down. ramp the awareness. we chain The Friedman, in XXXX Milton time got as We've they some I've So It's But stronger did times again, planned. stores still little build stores, slower fool from XXXX and it they're around the XXXX. than many brand is are The -- shower. analogy opening the economy test-and-learn And than had learning takes to to this

gets cold, doesn't you turn it then it cold finally when get water and You turn and hot, and turn the it it hot hot. to you

to meant that times, people fail that's account effect. they're the illustrate for many time to and when studying And lag cause

impact doing. Again, this you here. you study we've initiatives of learnings can and very is white happy good them. of, when profitable. you vintage. our are sector, We in far. so that at The punchline our going We're only the keep have And of is And not can and to We've of we're those when studying in can key decisions, still got this states. certainly stores being cash initiative, slowly these the implement once, them large we're applying slowly flow. very, things what and the some opened But than mature The XXXX through cash that's so like got space we're creating all that all funding more we cash accretive XX we're mind I in all retailer flow. in almost flow. growth They're existing stores any that XXXX to already think feel are

we're to that open stores. So more now reinvesting

open out footprint, continue to share those we as [indiscernible] for market is market markets. that that's of add, in would up traditional share I thing other The opportunity our pick stores us. all

awareness business customers as And it to those helps Academy. the now have dot-com

That's helpful.

a Just follow-up.

expect XXXX on expecting, Or And be than the it footprint, class XXXX you in $XX could again? stores. the million your figure more outside class, $XX average, sales that that? million -- opening you're So lower for still do with then that those those of

we the different expect on tried we Beyond we've got that's stores, some again, They I be how average, different average. format and stores. some things. what may depending smaller We've underwrite that's will on ROIC really for those will seen. based prototype, what both XX,XXX and store, that, smaller. the Again, we've XX% vintages they be achieve below hurdle every are that say would

ahead of that. tracking And

pretty that. of ahead a That's return. attractive Tracking

for of Stanley. line Morgan more question, come with Ladies Simeon Gutman we X will from have time and gentlemen, which the

Simeon. is This Jackie on for

what forward, kind deleverage you the over drive model stores comp should we is would to right your open expect degree of the time level we need in growth think some that of that? the how new Just there you up in investments? business? Or about and be as Should looking ramp to leverage

nothing and in not things we're in that plan digit chain space. some long-range standpoint, have basis a what we comps modeled of expense points single Yes, that seen And we've low expecting. that's XXX deleverage. says from offset We that supply do the that,

cash year, to a increase doing. and million think, near operations up flow, year-over-year. us comp. If but million creating $XXX $XX cash million X.X% that term And in actually to that's in XX% example, it, compared a in quarter, from flow strategic you spoke feel free when to We're the really Michael have the these like up environment for in long-range priorities, the cash at flow quarter, permission I you year-over-year what priorities. tough in investment we're current continue strategic $XX SG&A, is look down to those our during invest last that's in got we That makes

Great.

ahead. Go [indiscernible]. one Just

You go ahead.

know cadence margin. squeeze whether Should a QX I versus seasonality can QX gross should if well? normal in QX kind margin that of with from gross think guys QX seasonality and in QX. guide follow-up. Just line follow you QX, came quick But we I a don't margin about given as

to during going it. going standpoint. sales We I'm We key a periods margin, inventory the and going that I'll the to a to move X that worked that second shrink, saw units time really you the down like to to feel reiterate merch going quarter, from things things pretty move it X%. standpoint, this to it take standpoint, From in X just we're spread it margin XX.X%, are do the are and do for a merch XX% freight. we're feel from good but promotional that, quarter. those us

to some perspective, that and shrink impact. doing but the some environment magically. not We're losses expecting that follow-up on last the a in beneficial prevent we from and, year we to think we're deter From lap I'm help cases, sequential saw, having change stuff beginning things is a that

And freight, it's into fall. tailwind going to a still be

managing We're can QX like not going But those are manage give to and spaces. feel going the we are So on those to are QX that it, we're in the impact things and those guidance specifically. what X X we things.

that just represents I a and to kind growth in reiterate, compelling Academy for retail the investors. we want close believe So of opportunity space

to continue going headwinds of focused most is want realize on make team navigate things. X there. sure while the to through And We're X compelling the same our under you the long-range are make opportunities to long and objectives. guys sure growth customers I the to plan term we're have planning We short-term out our be long-range the time, for At setting achieve working going pressure. up the to against in and success we're simultaneously ourselves

Academy want to all joining associates. everybody Day I a there. to of that, call with Labor good the have Thanks. And So thanks And for thank everybody out should our weekend.

Thank you.

you call the gentlemen, and Ladies has now for your concluded. Thank participation.

now disconnect. You may