Academy Sports & Outdoors has attracted very few fans in the stock market since listing in October. Investors only now seem to be noticing its potential.
The Texas-based sporting goods and outdoor retailer had a record year and quarter. For the year ended Jan. 30, net sales reached $5.69 billion, an 18% increase over the previous fiscal year. That is a much bigger bump up than the 9.5% growth that competitor Dick’s Sporting Goods saw. In a year when some other athletic retailers such as Modell’s Sporting Goods went out of business, surviving and thriving is evidence of strong market positioning.
As team sports and sporting events resume this year, it is likely that higher margin products that didn’t sell well last year will come roaring back. On certain days last year, Academy Sports saw zero sales in cleats, for instance, the retailer noted in an earnings call on Tuesday. Licensed apparel also enjoyed little fanfare last year; that merchandise tends to sell well when consumers are attending sporting events.
Products that sold particularly well last year included fitness equipment—demand for which the retailer sometimes struggled to meet—and outdoor categories such as fishing and camping equipment.
Given the strong business performance, Academy Sports’ cheap valuation is a bit of a head scratcher. Even after a 9% rise in its shares Tuesday, they still trade at roughly 11 times forward-12-month earnings, compared with 15 times for Dick’s Sporting Goods and 13 times for Hibbett Sports .
