Обзор Academy Sports & Outdoors: positive indicators and active expansion policy

Обзор Academy Sports & Outdoors: положительные показатели и активная политика расширения

Academy Sports & Outdoors (NASDAQ: ASO) registered in Delaware, USA. The group of companies is mainly engaged in the network retail of goods for sports and active lifestyles..

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 Gohman opened an academy tire shop in San Antonio, Texas. In 1945, Gokhman 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, Hohman's son Arthur bought Southern Surplus Sales in Houston and changed its name to Academy Corp.. Then he opened six academy stores in Houston, expanding the network even more. In 1978, Arthur Gokhman stopped practicing law and devoted himself entirely to the retail network..

Since 1980, a new stage has begun in the company's activities.: the management has introduced goods for sports and outdoor activities into its range. The following year, the retailer moved to new offices and a warehouse with an area of ​​50 thousand sq.. feet. Then a large advertising campaign began 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 at Katy, Texas. In 1990, the retailer acquired its current corporate office and distribution center at Katy, Texas 28 In 1990, the retailer acquired its current corporate office and distribution center at Katy, Texas. Sales reached $ 100 million the following year.

In 1994 a significant event took place: the 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 was transferred to David Gohman., Arthur's son and Max's grandson.

In 2006, the first hypermarket with an area of ​​100 thousand square meters was opened. 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 conducted 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. Subsidiaries of the group of companies operate mainly under the brand names Academy Sports & 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 travel organizations, like BASS, Major Fishing League, Ducks Unlimited, and with the United States Coast Guard.

In FY2020, the company has an exclusive relationship with four varsity sports conferences: SWAC, SIAC, CIAA, MEAC, whose members are mainly students and teachers of educational institutions, HBCU league members. 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 healthcare professionals.

Funding of 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. Cooperation with the Children's Hospital of St. Jude Thaddeus in Memphis began.

Shareholders. The company's share capital is distributed primarily between investment companies and mutual funds, which is usually for US joint stock companies. Largest shareholder - Fidelity Management & Research Co., one of the largest and oldest investment holdings in the USA, which was founded in 1940 by the Johnson family of financial tycoons.

  Bundle of investment news: war, cabinets and semiconductors

This fact contributes to the investment attractiveness of the company - after all, it 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.

List of shareholders can inspire optimism in investors, since the reputation of the Johnsons and Bogle in the financial world is very high, when choosing a portfolio, many are guided by the composition of their portfolios. Also among the shareholders of BlackRock and Morgan Stanley, which 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
Rest, including free float 34,45% Predominantly retail investors

What makes money

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 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 eliminates 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 the case of further adherence to the same strategy, it will have a positive effect on the dynamics of its shares. It is worth noting that, 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 largest share of the company as of fiscal 2021 is sales of hiking goods, and sales of these products 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.

In these conditions, people, who lead an active lifestyle, got the opportunity to go on hiking trips at least within their state. Leading in sales growth, truth, products from the category "other", which is not very positive for the investment attractiveness of the chain of stores, specializing specifically in goods for sports and active lifestyles.

  Investidea: Corning, because factories are not idle

Weak growth in shoe sales can be attributed to, that due to restrictions, Americans began to move less.

Sales structure by product category, 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: outside the United States, his presence is not at all, and in the USA itself, more than a third of stores are located in their native Texas.

The retail company is almost nowhere in the northern United States., except Illinois, where is there only one store, even in the Southwest in rich California, where businesses are trying to locate, retail group is not represented. On the other hand, penetration into Illinois can already be considered a positive sign.

Обзор Academy Sports & Outdoors: положительные показатели и активная политика расширения

Financial performance. The group of companies has not yet released financial results for either the state's 2021 fiscal year., not for 2021 fiscal tax individual company 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, the lag in net profit and net sales growth from other indicators can be attributed to an increase in expenses due to continuing transport and logistics constraints between states.

behind 2 state financial year 2021, growth was much more impressive, Most likely, due to lower restrictions compared to the same period in the previous state fiscal year, which caused a large influx of buyers to stores.

Also, do not discount the fact, that by the beginning of the reporting period, a significant part of Americans had already had 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 fiscal year 2021. If the reporting for the year, which will be released soon, will show the results, close to projected, 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, practically nothing was said about this - except perhaps only about macroeconomic and pandemic forecasts, which even the best doctors in the world cannot give?

Ken Hicks plans to "adapt to the grocery retailer experience" to meet and sustain goals in the next state's fiscal year., indirectly indicating that, that the company needs to expand the composition of some agents, who will "go and pick up orders".

  Testing systems for US stocks.

This information does not carry any semantic meaning for the investor., it would be incorrect to compare grocery retail with sports in the era of a pandemic. Words about, that “Americans continue to rely on exercise, sports and outdoor activities ", also generally debatable, because coronavirus, especially if you get over it again, causes weakness, and for how long, nobody 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 due to the fact, that many people had additional hobbies during the pandemic, from fishing to hiking. It will drive sales., moreover, 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 clothing and footwear to rise in the US due to easing travel restrictions, which fell in 2020. Sure, if restrictive measures are not intensified.

Due to the pandemic, there has been some preference shift among sports store customers. Even before the pandemic, there was a trend towards remote work and blurring the boundaries between work and free time.. In this regard, sportswear is becoming more and more popular.: the man sat at home at the computer and went for half an hour into the yard to the horizontal bars in the same clothes.

Risks

The main risk can be considered geographic limited sales.. The group does not work in the richest states in the United States. In addition, the company ignores foreign markets., less affected by the coronavirus, than American, in particular the Chinese market, which is growing, despite the postponed pandemic.

And while the coronavirus has had some positive impact on the industry, he simultaneously had a destructive 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 reduced demand for sporting goods.

The rest of the 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 practically no competitors. the company has practically no competitors.

The main stores of the group of companies are concentrated in cities with a rapidly growing Latin American 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, pandemic-related, and even during this difficult time held two share placements - primary and secondary. This demonstrates the resilience of her business to external factors.. Investors may also be very optimistic about a set of company brands and stability of financial results..

The concentration of the company's stores in rather problematic regions causes some concern., 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 as part of the investor's portfolio, especially if you focus on the selection of the world's largest investment companies, listed above.

Scroll up