Academy Sports + Outdoors laid out a long-term plan for growth at its investor day on Tuesday. And a lot of the progress banks on an aggressive store expansion plan.
The sporting goods and outdoor retailer is looking to achieve $10 billion in revenue by 2027, with a net income margin of 10%. This goal will be accomplished by opening new stores and investing in the company’s omnichannel and existing business.
The ambitious targets come shortly after Academy reported that net sales decreased 5.6% to $6.40 billion in fiscal year 2022. Adjusted net income for the year decreased 9.9% to $645.8 million.
“This is still a very tough environment to read,” said Academy CFO and EVP Michael Mullican in a presentation to analysts, explaining how the first and second quarters are this year have already proven tough for the retailer. “We expect the year to get better as we go.”
When it comes to the store expansion plan, Academy is aiming to open 120 to 140 new stores by 2027, expanding its store base by 50% in existing and new markets. Academy currently operates 268 stores and is targeting between 13 and 15 store openings in 2023 after opening nine stores in 2022. In the long-term, Academy sees the potential to grow its store count to 800 while balancing growth in existing and new locations.
Overall, new stores are expected to generate between $2.4 billion and $2.8 billion in revenue for Academy by 2027. When it comes to choosing a new store location, Academy previously told FN that it makes sure there is a “localized assortments” of products designed for consumers in a specific region or market.
“It’s going in ahead of time, understanding the market and demographics and doing a ton of research around that,” explained Academy chief merchandising officer Steve Lawrence in a September interview with FN following the company’s Q2 earnings announcement. “[We want to] outsize the things that we think are gonna be important in that market and pull back on the things that aren’t going to be as important.”
In addition to store expansion, Academy also outlined different strategies to reach new consumers, improve omnichannel, speed up its supply chain and elevate the experience of its team members. Part of this involves improving productivity and merchandising in stores. While the company prides itself on its strong assortment of premium brands, Academy expects penetration of private-label brands to grow from 22% in 2022 to 25% in 2027.
The company reaffirmed its outlook for 2023 and still expects net sales to land between $6.5 billion and $6.7 billion. Gross margin is expected to be between 34% and 34.4% and adjusted EPS is expected to be between $7.00 and $7.75.