Academy Sports & Outdoors, Inc. — Form 10-K Summary
Period clarification: The request identifies “2021 Q4,” but the supplied filing is the Form 10-K for fiscal 2022, the 52 weeks ended January 28, 2023. Comparisons below are with fiscal 2021, ended January 29, 2022.
Business context
Academy is a U.S. sporting goods and outdoor recreation retailer. At year-end, it operated 268 stores across 18 states, primarily in the South, and sold online. Fiscal 2022 sales were led by outdoors (31%), apparel (28%), sports and recreation (21%), and footwear (20%). E-commerce represented 10.7% of merchandise sales, up from 9.3% in fiscal 2021.
Financial results and liquidity
| Metric | Fiscal 2022 | Fiscal 2021 |
|---|---|---|
| Net sales | $6.395 billion | $6.773 billion |
| Gross margin | $2.213 billion; 34.6% | $2.351 billion; 34.7% |
| Operating income | $846.5 million; 13.2% of sales | $907.9 million; 13.4% of sales |
| Net income | $628.0 million | $671.4 million |
| Diluted EPS | $7.49 | $7.12 |
| Cash from operating activities | $552.0 million | $673.3 million |
| Adjusted free cash flow (non-GAAP) | $443.2 million | $597.2 million |
Cash and cash equivalents were $337.1 million at year-end, down from $486.0 million. Merchandise inventory was $1.284 billion, compared with $1.172 billion. Total debt principal was $594.8 million: $400 million of 6.00% secured notes and $194.8 million under a variable-rate term loan (8.12% weighted-average rate). The company had no ABL borrowings and reported $947.8 million of available ABL capacity, subject to borrowing conditions. It prepaid $100 million of term-loan principal during the year. Operating lease obligations totaled $1.899 billion in undiscounted minimum payments.
Changes versus fiscal 2021
- Sales declined 5.6%; comparable sales fell 6.4%. Transactions decreased 8.2%, partly offset by a 2.0% increase in average ticket. Nine net new stores added $50.7 million in sales.
- Lower sales across all divisions reflected normalization from pandemic-era demand and the prior-year impact of U.S. stimulus and child tax credits. Outdoors—particularly hunting—and sports/recreation were notable areas of weakness; footwear was broadly flat.
- Gross margin rate edged down 10 basis points. Higher e-commerce shipping costs and inventory valuation adjustments were partly offset by lower domestic inbound freight costs.
- Net income fell 6.5%, while diluted EPS rose from $7.12 to $7.49, with lower weighted-average shares following substantial repurchases.
- Operating cash flow fell $121.3 million. Financing cash outflows included $489.5 million of share repurchases and $24.6 million of dividends.
Outlook, commentary and risks
- Management expected to open 13–15 stores in fiscal 2023 and forecast capital expenditures of $200–$250 million, with most allocated to new stores. These are plans, not guaranteed results.
- Management said cash, operating cash generation and ABL availability should fund anticipated requirements for at least the next 12 months.
- Key risks include weaker discretionary spending, inflation and interest-rate increases; inventory and demand forecasting; supply-chain, freight and foreign sourcing disruptions; labor availability and costs; intense retail competition; cybersecurity and IT disruption; and weather or other disruptions concentrated in the Southern U.S.
- Firearms were approximately 6% of fiscal 2022 net sales; the company highlighted regulatory, compliance, litigation and reputational risks related to firearms and ammunition.
- Unusual items included $7.2 million of business-interruption proceeds recognized in other income for a February 2021 Texas winter storm. The company recorded a $2.0 million loss on early debt retirement after its $100 million term-loan prepayment.
- Ordinary-course product, premises, employment and commercial claims remain pending; management said reserves were considered adequate and did not expect the matters, in aggregate, to have a material impact. The Sutherland Springs-related suits were dismissed with prejudice in April 2022.
- The board declared a $0.09-per-share dividend after year-end, payable April 13, 2023. Future dividends and repurchases remain discretionary and subject to restrictions and business conditions.
Important facts for investors to verify
- Confirm the intended reporting period: this filing covers fiscal 2022, not fiscal 2021 Q4.
- Review the full audited statements and notes, especially inventory valuation, lease obligations, secured-debt terms, covenants and variable-rate exposure.
- Assess whether sales and comparable-sales declines reflect normalization or a more persistent weakening in demand, and monitor inventory levels, markdowns and gross margin.
- Compare management’s fiscal 2023 store-opening and capital-spending plans with subsequent results and cash generation.
- Consider the scale and timing of capital returns: 11.9 million shares repurchased for $489.5 million in fiscal 2022, with $299.4 million remaining under the then-current repurchase authorization at year-end.
- Note that management’s non-GAAP measures exclude selected items and are not substitutes for GAAP earnings or cash flow. Deloitte issued unqualified opinions on the financial statements and internal controls.