On Thursday, Evercore ISI maintained its Outperform rating on Academy Sports & Outdoors Inc. (NASDAQ:ASO) with a steady price target of $75.00. The firm acknowledged the company's fourth-quarter performance, which saw a slight increase in comparable sales but was offset by higher-than-anticipated selling, general and administrative (SG&A) expenses. Academy Sports reported adjusted earnings per share (EPS) of $2.21 for the quarter, falling short of the consensus estimate by $0.08.
The company provided guidance for 2024 that was more than 10% below analyst expectations, citing lower comparable sales and higher SG&A costs. The projected EPS range of $5.90 to $6.90 contrasts with the consensus forecast of $7.47.
This outlook does not include assumptions regarding share buybacks and it is unclear whether it accounts for stock-based compensation. Despite this, Academy Sports is continuing its expansion, planning to open 15-17 new stores this year, following the 14 new outlets launched in 2023.
Adjusted EBITDA for the fourth quarter was reported at $255 million, which did not meet the street estimates of $263 million. However, the company experienced a 7% year-over-year growth in EPS for the quarter, which included an additional 53rd week.
The fourth quarter also saw a 3.6% decline in comparable store sales, an improvement compared to previous quarters and better than anticipated.
Inventory levels were down by 7%, indicating effective management, even as comparable sales in 2023 decreased by 6.5% following a downturn in 2022. This trend reflects the normalization of demand for outdoor goods after the COVID-19 surge. Management did not discuss current market trends in the press release, and further insights are expected to be shared during the earnings call.
Academy Sports' stock is anticipated to lose some of its year-to-date gains of 8%, with upcoming earnings call discussions expected to focus on SG&A expenses, comparable sales trends, and the sustainability of gross margins.
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