Academy Sports & Outdoors (NASDAQ: ASO) registered in Delaware, USA. The group of companies is mainly engaged in network retail of goods for sports and active lifestyle.
About company
In Russia, the company's shares are listed on the SPb-Exchange with 1 June 2021 under the ticker ASO and show positive short-term dynamics. In the USA, the company's shares began to be quoted on the NASDAQ stock exchange 1 October 2020.
history of the company. The company was founded in 1938, when founder Max Gohmann opened an academy tire shop in San Antonio, Texas. In 1945 Gohman changed the name of the store to Academy Super Surplus.. In 1956, Gohman moved his business to Austin and expanded it to four stores.. In 1973 Gohman's son Arthur bought Southern Surplus Sales in Houston and changed its name to Academy Corp.. Then opened six academy stores in Houston, expanding the network even more. In 1978, Artur Gokhman stopped practicing law and devoted himself entirely to the retail chain..
Since 1980, a new stage in the company's activities has begun.: management has introduced products for sports and outdoor activities into its range. The following year, the retailer moved to new offices and a 50,000-square-meter warehouse.. feet. Then began a major advertising campaign in the newspapers. In 1988, the company opened its first big box stores with an area of 35-40 thousand square meters. feet.
In 1990, the retailer acquired its current corporate office and distribution center in Katy, Texas.. At that time it was already working. 28 stores across the state. Sales reached $100 million the following year.
A milestone event took place in 1994: network expanded beyond Texas, to Edmond in Oklahoma and Lafayette in Louisiana. In 1995, it changed its name to its modern: Academy Sports & Outdoors. And in 1996, the family business passed to David Gohman, son of Arthur and grandson of Max.
In 2006, the first hypermarket with an area of 100,000 sq. feet, sales reached $ 2 billion. In 2011, Kohlberg Kravis Roberts became an investor in the company & Co., there was an active growth in online sales.
In 2015, the number of stores reached 200, and by 2018 - already 250. In 2020, the company held an initial public offering on the Nasdaq Global Select Market.. To date, there are 259 stores in 16 States, coverage area included South, Southeast and Midwest United States.
Subsidiaries and external relations. The subsidiaries of the group of companies operate primarily under the Academy Sports brand names. & Outdoors, Magellan Outdoors, BCG, O’rageous и Outdoor Gourmet,
The company has established partnerships with professional - NFL, MLB, NBA, MLS - and varsity - SEC and Big 12 - sports teams, as well as with such tourist organizations, like BASS, Major Fishing League, Ducks Unlimited, and with the US Coast Guard.
In fiscal year 2020, the company established exclusive relationships with four varsity sports conferences.: SWAC, SIAC, CIAA, MEAC, whose members are mainly students and teachers of educational institutions, in the HBCU league. Great emphasis is placed on youth work.
In total, the company has partnerships with 415 youth sports teams, associations and police sports leagues.
The company practices donations to non-profit sports organizations and government agencies. Key programs of this kind include support for the security forces, teachers and health professionals.
Funding for individuals and organizations began in 2020, involved in the fight against COVID-19, in particular, cooperation with Texas TIRR Memorial Hermann and Baylor Medical Center has begun, Scott & White, postcoid rehabilitation.
Academy also introduced anti-sag security measures for mass entertainment in partnership with National Night Out and conducted 52 donation activities to maintain anti-sag security measures in educational institutions around the world. Collaboration begins with St. Jude Thaddeus Children's Hospital in Memphis.
Shareholders. The share capital of the company is distributed primarily among investment companies and mutual funds, which is usually for US joint stock companies. Major Shareholder - Fidelity Management & Research Co., one of the largest and oldest investment holdings in the US, which was founded in 1940 by the Johnson family of financial magnates.
This fact contributes to the investment attractiveness of the company - after all, this is proof of a reliable reputation among institutional investors.. In second place is one of the world's largest investment companies The Vanguard Group, owned by stock guru John Bogle.
Shareholder listing could give investors optimism, because the reputation of the Johnsons and Bogle in the financial world is very high, when choosing a portfolio, many people are guided by the composition of their portfolios. Also a shareholder of BlackRock and Morgan Stanley, who need no introduction at all..
Equity structure
| Holder | share | Status |
|---|---|---|
| Fidelity Management & Research Co. | 13,99% | Institutional investor |
| The Vanguard Group | 8,37% | Institutional investor |
| Samlyn Capital | 5,79% | Institutional investor |
| BlackRock Fund Advisors | 5,00% | Institutional investor |
| Fidelity Contrafund | 4,09% | mutual fund |
| Morgan Stanley & Co. | 2,85% | Institutional investor |
| Maverick Capital | 2,82% | Institutional investor |
| Vanguard Total Stock Market Index | 2,70% | mutual fund |
| Arrowstreet Capital | 2,41% | Institutional investor |
| Vanguard Small Cap Index Fund | 2,37% | mutual fund |
| iShares Russell 2000 ETF | 1,93% | mutual fund |
| Goldman Sachs & Co. | 1,87% | Institutional investor |
| D. E. Shaw & Co. | 1,86% | Institutional investor |
| Goldman Sachs Asset Management | 1,75% | Institutional investor |
| Fidelity Series Small Cap Opportunities Cup | 1,70% | mutual fund |
| Federated Hermes Kaufmann Small Cap Fund Class A Shares | 1,67% | mutual fund |
| Vanguard Extended Market Index Fund Admiral Shares | 1,25% | mutual fund |
| Fidelity Value Fund | 1,17% | mutual fund |
| Fidelity VIP — Mid Cap Portfolio | 1,05% | mutual fund |
| iShares Russell 2000 Value ETF | 0,91% | mutual fund |
| Other, including free float | 34,45% | Predominantly retail investors |
What he earns
Range. Of all goods for sports and outdoor activities 80% sales accounted for by American brands. Among them 19 brands, the rights to which the company itself has acquired. The assortment is quite diversified, given the fact, that no brand takes more 10% of total sales as of fiscal 2020.
The company is the official distributor of Nike brands, Carhartt, Adidas, Under Armour, Columbia Sportswear, North Face и Winchester. Own brands include Magellan Outdoors, BCG, Academy Sports & Outdoors, Outdoor Gourmet. The company's strategy for its own brands excludes repetition - it is based on filling niches, which are free from products of other companies, including world famous.
This can be considered a strong point of the company., that in case of further adherence to the same strategy, it will positively influence the dynamics of its shares. At the same time, it is worth noting, that the two largest acquired brands, Magellan Outdoors и BCG, are one of the fastest growing brands in terms of sales..
For the state's fiscal year 2020, sales grew by 9,1 And 4% respectively. Moreover, in the mentioned financial year of the state 56% sales came from brands, company-owned, - this increases the competitive strength of the "purchased" products of the group in its stores compared even with world famous third-party brands and serves as a bullish factor for a further rally in its shares.
Sales structure by product groups. The company's largest share as of fiscal year 2021 is sales of hiking products., and the sales of these products have increased. This can be attributed to the partial lifting of quarantine restrictions on movement in the United States., where the products of the group of companies are sold.
Under these conditions, people, who lead an active lifestyle, got the opportunity to go on hiking trips at least within their state. Leader in sales growth, Really, products from the category "other", which is not very positive for the investment attractiveness of the chain of stores, specializing in products for sports and active lifestyle.
Weak growth in shoe sales can be attributed to, that due to restrictions, Americans began to move less.
Sales structure by product categories, one thousand dollars
| 2019 | 2020 | 2021 | Share in 2021 | Change in 2021 | |
|---|---|---|---|---|---|
| Travel goods | 1 473 403 | 1 455 080 | 1 968 514 | 34,60% | 35,29% |
| Goods for sports and recreation | 1 017 670 | 975 711 | 1 258 913 | 22,13% | 29,03% |
| clothing | 1 274 330 | 1 357 320 | 1 387 963 | 24,40% | 2,26% |
| Shoes | 997 692 | 1 021 603 | 1 044 502 | 18,36% | 2,24% |
| Other | 20 798 | 20 183 | 29 341 | 0,52% | 45,37% |
Sales geography. The territorial development of the retailer's chain of stores can be assessed as one-sided: there is no presence outside the USA at all, and in the US itself, more than a third of the stores are in their native Texas.
The company's retail is not present in the northern part of the USA almost anywhere, except Illinois, where is there only one store, even in the Southwest in rich California, where businesses are trying to locate, group retail not represented. On the other hand, penetration into Illinois can already be considered a positive sign.
Financial indicators. The group of companies has not yet released financial results for either the state's fiscal year 2021, nor for the company's 2021 fiscal individual tax year. However, according to 4 the state's fiscal 2021 quarter already has a lot to judge.
All indicators have increased, other than earnings per share, what can be associated with additional emission. The rest can be recognized, that the dynamics of indicators corresponds to the current macroeconomic situation, Lagging growth in net income and net sales compared to other indicators can be attributed to increased costs due to ongoing interstate transportation and logistics restrictions.
For 2 state financial year 2021, growth was much more impressive, Most likely, due to reduced restrictions compared to the same period in the previous state fiscal year, which caused a large influx of customers into stores.
Also, one should not discount the fact, that by the beginning of the reporting period, a significant part of Americans had already been ill with COVID-19, what aroused among those who had recovered interest in a healthy lifestyle within the framework of post-ovarian rehabilitation. Anyway, the dynamics of absolutely all indicators is positive.
Quarterly financials, one thousand dollars
| 4к2020 | 4к2021 | The change | |
|---|---|---|---|
| Profit before tax | 168 681 | 240 897 | 42,81% |
| Adjusted EBITDA | 229 645 | 324 416 | 41,27% |
| Operating profit | 183 788 | 254 558 | 38,51% |
| Gross margin | 496 501 | 642 496 | 29,40% |
| Net profit | 167 676 | 190 510 | 13,62% |
| Net sales | 1 606 420 | 1 791 530 | 11,52% |
| Basic earnings per share | 2,31 $ | 2,06 $ | −10,82% |
| Diluted earnings per share | 2,25 $ | 1,99 $ | −11,56% |
Financial indicators for half a year, one thousand dollars
| 2п2020 | 2п2021 | The change | |
|---|---|---|---|
| Profit before tax | 159 174 | 465 819 | 192,65% |
| Adjusted EBITDA | 282 902 | 595 409 | 110,46% |
| Operating profit | 197 810 | 493 632 | 149,55% |
| Gross margin | 794 446 | 1 206 197 | 51,83% |
| Net profit | 157 656 | 368 306 | 133,61% |
| Net sales | 2 742 721 | 3 371 863 | 22,94% |
| Basic earnings per share | 2,18 $ | 3,99 $ | 83,03% |
| Diluted earnings per share | 2,12 $ | 3,82 $ | 80,19% |
Plans
The company plans to significantly increase key financial indicators for the state's financial year 2021. If the annual report, which will be released soon, will show the results, close to predicted, we can expect an additional impetus to the growth of shares.
The question arises: how the issuer will achieve such results, after all, in the above reference to the forecast, almost nothing was said about this - except perhaps only about macroeconomic and pandemic forecasts, which even the best doctors in the world cannot accurately give?
Ken Hicks Plans To Achieve And Maintain Goals In State's Next Fiscal Year To 'Adjust To Grocery Retailer Experience', indirectly pointing to, that the company needs to expand the composition of some agents, who will "walk and pick up orders".
This information does not carry any semantic load for the investor., it would be incorrect to compare grocery retail with sports retail in the era of a pandemic. Words about, that "Americans continue to rely on exercise, sports and active rest», also generally debatable., because coronavirus, especially if you get sick again, causes weakness, and for how long, no one knows yet. Another thing, that the company plans to open before 10 new stores are good news for investors.
Financial performance projected by the company, million dollars
| 2019 | 2020 | 2021, min. forecast | 2021, Max. forecast | |
|---|---|---|---|---|
| Profit before tax | 123,00 | 339,00 | 670,00 | 715,00 |
| Net profit | 120,00 | 309,00 | 525,00 | 560,00 |
| Diluted earnings per share, Dollars | 1,60 $ | 3,79 $ | 5,45 $ | 5,80 $ |
| Net sales | 483,00 | 5689,00 | 6465,00 | 6620,00 |
Hicks thinks, that the pandemic provides additional business opportunities for the group of companies. This is related to, that many people have acquired additional hobbies during the pandemic, from fishing to hiking. It will drive sales., and, according to Hicks, even after, how will the pandemic go. Even if only a third of adherents of new hobbies continue to engage in them after the end of the pandemic, it will still mean a huge increase in sales. Demand for apparel and footwear will rise as US travel restrictions ease, which fell in 2020. Certainly, unless restrictions are tightened.
Due to the pandemic, there has been some shift in preferences among sports shop customers. Even before the pandemic, there was a trend towards remote work and a blurring of the lines between work and free time.. In this regard, sportswear is becoming more and more popular.: a man sat at home at the computer and went for half an hour to the yard for horizontal bars in the same clothes.
Risks
The main risk can be considered geographic limited sales.. The group does not operate in the richest US states. In addition, the company ignores foreign markets, who are less affected by the coronavirus, than American, in particular the Chinese market, which is growing, despite the pandemic.
And while the coronavirus has had some positive impact on the industry, it also had a detrimental effect on the physical activity of people, who have had it: in 40% of them, according to research, she dropped. Respectively, there is a risk of lower demand for sporting goods.
Other risks are generally insignificant. The competitive environment can be considered favorable.
conclusions
The company's shares have strong growth prospects. This is primarily due to the fact, what's in the coverage area, and this is mainly the Southwest and South of the United States, the company has almost no competitors. But at the same time, the company occupies the second place on a federal scale among chain sports retailers..
The main stores of the group of companies are concentrated in cities with a rapidly growing Hispanic population, which is the source of the greatest demographic growth, from which we can draw a conclusion, that the number of potential buyers in the group's stores will increase.
The company has successfully overcome obstacles, related to the pandemic, and even during this difficult time held two share placements - primary and secondary. This demonstrates the resilience of its business to external factors.. The choice of the company's brands and the stability of financial results can also cause great optimism among investors..
Some concern is the concentration of the company's stores in rather problematic regions., located on the border with Mexico. One has only to close the border - the demographic situation in the region will worsen, the number of potential buyers will also decrease. In addition, these are not the best regions in terms of the purchasing power of the population.. The group traditionally ignores the northern regions..
Positive prospects outweigh the risks. Therefore, the shares of the group of companies would look good in the investor's portfolio, especially if you focus on the selection of the world's largest investment companies, listed above.
