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What changed in Academy Sports & Outdoors, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Academy Sports & Outdoors, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+355 added−361 removedSource: 10-K (2024-03-21) vs 10-K (2023-03-16)

Top changes in Academy Sports & Outdoors, Inc.'s 2024 10-K

355 paragraphs added · 361 removed · 262 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeApproximately 56% of our customers purchased a private label brand from us in 2022. 7 As of January 28, 2023, we generally organized our merchandise in four divisions made up of sixteen categories as follows: Division Category Primary product types Outdoors Camping Coolers and drinkware, camping accessories, camping equipment, sunglasses, backpacks and sports bags Fishing Marine equipment and fishing rods, reels, baits and equipment Hunting Firearms, ammunition, archery and archery equipment, camouflage apparel, waders, shooting accessories, optics, airguns and hunting equipment Sports and Recreation Fitness Fitness equipment, fitness accessories and nutrition supplies Team sports Team and specialty sports equipment, including baseball, football, basketball, soccer, golf, racket sports, and volleyball Recreation Patio furniture, outdoor cooking, wheeled goods (bicycles, skateboards and other ride-on toys), trampolines, play sets, watersports and pet equipment Front end Electronics, watches, and front-end (consumables, batteries, etc.) Apparel Outdoor and seasonal apparel Outdoor apparel, seasonal apparel, denim, work apparel, graphic t-shirts and accessories Youth apparel Boys and girls outdoor and athletic apparel Athletic apparel Sporting apparel and apparel for fitness Licensed apparel Professional and collegiate team licensed apparel and accessories Footwear Casual and seasonal footwear Casual shoes, slippers, seasonal footwear and socks Work footwear Work and western boots, shoes and hunting footwear Youth footwear Boys and girls athletic footwear Athletic footwear Running shoes, athletic lifestyle and training shoes Team sports footwear Team and specialty sports footwear and slides 8 The following table sets forth the approximate amount of sales (all of which are based in the U.S.) by merchandise divisions for the periods presented (amounts in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Merchandise sales Outdoors $ 1,940,811 $ 2,174,650 $ 1,968,514 Sports and recreation 1,366,785 1,463,172 1,256,357 Apparel 1,759,005 1,810,345 1,390,519 Footwear 1,291,224 1,290,197 1,044,502 Total merchandise sales (1) 6,357,825 6,738,364 5,659,892 Other sales (2) 37,248 34,764 29,341 Net sales $ 6,395,073 $ 6,773,128 $ 5,689,233 (1) E-commerce sales consist of 10.7%, 9.3% and 10.4% of merchandise sales for 2022, 2021 and 2020, respectively.
Biggest changeApproximately 55% of our customers purchased a private label brand from us in 2023. 7 As of February 3, 2024, we generally organized our merchandise in four divisions made up of sixteen categories as follows: Division Category Primary product types Outdoors Camping Coolers and drinkware, camping accessories and camping equipment Fishing Marine equipment and fishing rods, reels, baits and equipment Hunting Firearms, ammunition, archery and archery equipment, camouflage apparel, waders, shooting accessories, gun safes, optics, airguns and hunting equipment Sports and Recreation Fitness Fitness equipment, fitness accessories and nutrition supplies Team sports Team and specialty sports equipment, including baseball, football, basketball, soccer, golf, racket sports, and volleyball, and backpacks and sports bags Recreation Patio furniture, outdoor cooking, wheeled goods (bicycles, skateboards and other ride-on toys), trampolines, play sets, watersports and pet equipment Front end Electronics, watches, sunglasses and front-end (consumables, batteries, etc.) Apparel Outdoor and seasonal apparel Outdoor apparel, seasonal apparel, denim, work apparel, graphic t-shirts and accessories Youth apparel Boys and girls outdoor and athletic apparel Athletic apparel Sporting apparel and apparel for fitness Licensed apparel Professional and collegiate team licensed apparel and accessories Footwear Casual and seasonal footwear Casual shoes, slippers, seasonal footwear and socks Work footwear Work and western boots, shoes and hunting footwear Youth footwear Boys and girls footwear Athletic footwear Running shoes, athletic lifestyle and training shoes Team sports footwear Team and specialty sports footwear and slides 8 The following table sets forth the approximate amount of sales (all of which are based in the U.S.) by merchandise divisions for the periods presented (amounts in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Merchandise sales (1) Outdoors $ 1,727,018 $ 1,819,418 $ 2,060,046 Sports and recreation 1,452,377 1,488,187 1,577,776 Apparel 1,710,838 1,758,993 1,810,345 Footwear 1,235,643 1,291,227 1,290,197 Total merchandise sales (2) 6,125,876 6,357,825 6,738,364 Other sales (3) 33,415 37,248 34,764 Net sales $ 6,159,291 $ 6,395,073 $ 6,773,128 (1) Certain products and categories were re-categorized among various categories and divisions, respectively, during 2023 as compared to prior years in order to better align with our current merchandising strategy and view of the business.
We believe the following attributes differentiate us from our competitors: • Value-based assortment that enables our customers to participate and have fun, no matter their budget. • Broad assortment that extends beyond sporting goods and apparel to outdoor recreation and is localized for individual stores. • Emerging, growing and profitable omnichannel strategy that leverages our buy-online-pickup-in-store program ("BOPIS") and shipping fulfillment capabilities. • Strong customer loyalty, with opportunities to increase penetration in existing markets. • Regional focus in the southern United States with a growing presence in some of the fastest-growing Metropolitan Statistical Areas (or "MSAs"). • Core customers comprising active families that we support with one-stop shop convenience. • Significant whitespace opportunity for new stores for both in-fill and adjacent geographies and new markets.
We believe the following attributes differentiate us from our competitors: • Value-based assortment that enables our customers to participate and have fun, no matter their budget. • Broad assortment that extends beyond sporting goods and apparel to outdoor recreation and is localized for individual stores. • Emerging, growing and profitable omnichannel strategy that leverages our buy-online-pickup-in-store program ("BOPIS") and shipping fulfillment capabilities. • Strong customer loyalty, with opportunities to increase penetration in existing markets. • Regional focus in the southern United States with a growing presence in some of the fastest-growing Metropolitan Statistical Areas (or "MSAs"). • Core customers comprising active families that we support with one-stop shop convenience. • Significant whitespace opportunity for new stores for both existing and adjacent geographies and new markets.
(2) Other sales consists primarily of the gift card breakage income, credit card bounties and royalties, shipping income, net hunting and fishing license income, sales return allowance and other items. Stores Our stores, all of which are based in the U.S., are designed to provide our customers with an easy-in, easy-out shopping experience.
(3) Other sales consists primarily of the gift card breakage income, credit card bounties and royalties, shipping income, net hunting and fishing license income, sales return allowance and other items. Stores Our stores, all of which are based in the U.S., are designed to provide our customers with an easy-in, easy-out shopping experience.
Our employment levels fluctuate over the course of the year mainly due to the seasonality of our business. None of our team members are covered by collective bargaining agreements. The Company believes that it has a good working relationship with its team members. 11 Culture and Core Values.
Our employment levels may fluctuate over the course of the year due to the seasonality of our business. None of our team members are covered by collective bargaining agreements. The Company believes that it has a good working relationship with its team members. 11 Culture and Core Values.
We have long-standing relationships with many of our suppliers and have partnered with them to grow our business over time. In 2022, we purchased merchandise from approximately 1,400 vendors. For 2022, 2021 and 2020 no vendor represented more than 11%, 11%, and 12% of our total purchases, respectively.
We have long-standing relationships with many of our suppliers and have partnered with them to grow our business over time. In 2023, we purchased merchandise from approximately 1,400 vendors. For 2023, 2022 and 2021 no vendor represented more than 11% of our total purchases.
Who We Are Academy Sports + Outdoors is a leading full-line sporting goods and outdoor recreation retailers in the United States. Originally founded in 1938 as a family business in Texas, we now operate 268 stores across 18 contiguous states.
Who We Are Academy Sports + Outdoors is a leading full-line sporting goods and outdoor recreation retailer in the United States. Originally founded in 1938 as a family business in Texas, we now operate 282 stores across 18 contiguous states.
Approximately 80% of our 2022 merchandise sales was comprised of national brand products, with the remainder coming from exclusive products in our portfolio of private label brands. No single brand we carry accounted for more than 11% of our 2022 sales.
Approximately 80% of our 2023 merchandise sales was comprised of national brand products, with the remainder coming from exclusive products in our portfolio of private label brands. No single brand we carry accounted for more than 12% of our 2023 sales.
Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act, or UKBA, and other anti-corruption laws; and • securities and exchange laws and regulations. We are a federally licensed firearms dealer, and we sell firearms, ammunition, and related accessories. Firearms represented approximately 6% of our net sales in 2022.
Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act, or UKBA, and other anti-corruption laws; and • securities and exchange laws and regulations. 14 We are a federally licensed firearms dealer, and we sell firearms, ammunition, and related accessories. Firearms represented approximately 5% of our net sales in 2023.
Our private label brand portfolio consists of 20 brands, including Academy Sports + Outdoors, Magellan Outdoors, BCG, O'rageous, Game Winner, Outdoor Gourmet and Freely. Our private label brand strategy focuses on in-filling categories and price points that our national brand products may not satisfy.
Our private label brand portfolio consists of 19 brands, including Academy Sports + Outdoors, Magellan Outdoors, BCG, O'rageous, Game Winner, Outdoor Gourmet, Freely and R.O.W. Our private label brand strategy focuses on in-filling categories and price points that our national brand products may not satisfy.
We continue to focus on developing and driving our safety-first culture through awareness, training, and actions to reduce the frequency and severity of safety incidents. Information about our Executive Officers Below is a list of our executive officers, their respective ages as of January 28, 2023 and a brief account of the business experience of each of them.
We continue to focus on developing and driving our safety-first culture through awareness, training, and actions to reduce the frequency and severity of safety incidents. Information about our Executive Officers Below is a list of our executive officers, their respective ages as of March 21, 2024 and a brief account of the business experience of each of them.
Item 1. Business The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included elsewhere in this Annual Report for the fiscal year ended January 28, 2023. This discussion contains forward-looking statements that involve risks and uncertainties.
Item 1. Business The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included elsewhere in this Annual Report for the fiscal year ended February 3, 2024. This discussion contains forward-looking statements that involve risks and uncertainties.
Our product assortment focuses on key categories of outdoor, apparel, sports & recreation and footwear (representing 31%, 28%, 21%, and 20% of our 2022 net sales, respectively) through both leading national brands and a portfolio of 20 private label brands, which go well beyond traditional sporting goods and apparel offerings.
Our product assortment focuses on key categories of outdoor, apparel, sports & recreation and footwear (representing 28%, 28%, 24% and 20% of our 2023 net sales, respectively) through both leading national brands and a portfolio of 19 private label brands, which go well beyond traditional sporting goods and apparel offerings.
These markets consist of metropolitan, suburban and smaller cities. Additionally, our stores are typically placed in retail centers adjacent to co-tenants who drive significant traffic, with no store tethered to crowded mall spaces. We seek to lease all of our stores in long-term lease agreements with third-party landlords, which typically range from 15 to 20 years.
These markets consist of metropolitan, suburban and smaller cities. Additionally, our stores are typically placed in retail centers adjacent to co-tenants who drive significant traffic. At this time, no stores are connected to malls. We seek to lease all of our stores in long-term lease agreements with third-party landlords, which typically range from 15 to 20 years.
Our Team Members Our mission is to provide “Fun for All” and a critical component to our success is our people. As of January 28, 2023, we employed approximately 22,000 team members in the U.S. and ten team members in Hong Kong. Of those team members, approximately 50% were full-time and 50% were part-time.
Our Team Members Our mission is to provide “Fun for All” and a critical component to our success is our people. As of February 3, 2024, we employed approximately 22,000 team members in the U.S. and eleven team members in Hong Kong. Of those team members, approximately 50% were full-time and 50% were part-time.
Lawrence was President and Chief Executive Officer at francesca’s. From May 2012 to September 2016, he served as Chief Merchandising Officer at Stage Stores. Mr. Lawrence also spent nearly 12 years working in various merchandising leadership roles at J.C. Penney after 10 years at Foley’s. Mr.
Lawrence was President, Chief Executive Officer and served on the board of directors at francesca’s from October 2016 to January 2019. From May 2012 to September 2016, he served as Chief Merchandising Officer at Stage Stores. Mr. Lawrence also spent nearly 12 years working in various merchandising leadership roles at J.C. Penney after 10 years at Foley’s/May Co. Mr.
We have preferred access to hundreds of well-recognized national brands, such as Nike, Under Armour, adidas, Winchester, Brooks, Crocs, Wilson, Spaulding, Yeti, the North Face, and Columbia Sportswear, which are critical to our market penetration.
We have preferred access to hundreds of well-recognized national brands, such as Nike, Under Armour, adidas, Winchester, Columbia Sportswear, Brooks, Skechers, Yeti and Carhartt, which are critical to our market penetration.
Information Technology Our information technology systems are critical to our day-to-day operations as well as to our long-term growth strategies. Our technology is integrated across multiple functions throughout the organization, providing the data analysis, automation and solutions necessary to support our communications, inventory and supply chain management, store operations, distribution, point-of-sale, e-commerce, financial reporting and accounting functions.
Our technology is integrated across multiple functions throughout the organization, providing the data analysis, automation and solutions necessary to support our communications, inventory and supply chain management, store operations, distribution, point-of-sale, e-commerce, customer, financial reporting and accounting functions.
We strive to ensure that a safe and hygienic working environment is provided and that occupational health and safety practices which prevent accidents and injury are promoted.
Workplace, Health and Safety. The health and safety of our customers, team members, and communities is our top priority. We strive to ensure that a safe and hygienic working environment is provided and that occupational health and safety practices which prevent accidents and injury are promoted.
Hicks held senior positions at J.C. Penney Company, Inc., Payless ShoeSource, Home Shopping Network, May Department Stores Company, and McKinsey & Company. Mr. Hicks has served on the board of directors of Avery Dennison Corporation since July 2007 and served on the board of directors of Whole Foods Market, Inc. from May 2017 to August 2017. Mr.
Hicks held senior positions at J.C. Penney Company, Inc., Payless ShoeSource, Home Shopping Network, May Department Stores Company, and McKinsey & Company. Mr. Hicks has served on the board of directors of Avery Dennison Corporation since July 2007, and as Chairman of the board of directors of Guitar Center Holdings, Inc. since October 2023. Previously, Mr.
Distribution Centers We operate three distribution centers in Katy, Texas; Twiggs County, Georgia; and Cookeville, Tennessee. The distribution centers receive and store products from vendors and use sophisticated sorting and logistical equipment to fill the product needs of the retail store locations they serve, as well as to fulfill e-commerce orders. Our distribution centers are leased under long-term agreements.
The distribution centers receive and store products from vendors and use sophisticated sorting and logistical equipment to fill the product needs of the retail store locations they serve, as well as to fulfill e-commerce orders. Our distribution centers are leased under long-term agreements. Third-party trucking companies are used to disburse inventory from the distribution centers to and from our stores.
Lawrence also served on the board of directors of francesca’s from October 2016 to January 2019. Mr. Lawrence obtained his Bachelor of Business Administration in Finance from the University of Notre Dame. 13 Samuel (Sam) J. Johnson has served as our Executive Vice President, Retail Operations since joining the Academy Sports + Outdoors team in April 2017.
Lawrence obtained his Bachelor of Business Administration in Finance from the University of Notre Dame. Samuel (Sam) J. Johnson has served as President since October 2023. Mr. Johnson joined the Company in April 2017 as Executive Vice President, Retail Operations. Prior to joining the Company, Mr.
Hicks has served as the Chairman and our President and Chief Executive Officer since May 2018. Mr. Hicks has served as a member of the board of managers of New Academy Holding Company, LLC (our predecessor company) since May 2017 and as a member of the board of directors of Academy Sports and Outdoors, Inc. since June 2020. Mr.
Hicks has served as a member of the Board of Directors since June 2020 and served as a member of the Board of Managers of New Academy Holding Company, LLC from May 2017 to June 2020. Mr.
Prior to joining Academy Sports + Outdoors, Mr. Johnson spent seven years with hhgregg, Inc., where he most recently served as Chief Retail Officer. While at hhgregg, Inc., he led functions including store operations, customer relations, commercial sales, real estate and visual merchandising.
Johnson spent seven years with hhgregg, Inc., where he most recently served as Chief Retail Officer. While at hhgregg, Inc., he led functions including store operations, customer relations, commercial sales, real estate and visual merchandising. Prior to hhgregg, Inc., he spent more than 20 years in various leadership roles with Sears Holdings Corporation, including Vice President of Small Stores.
We also enter into intellectual property agreements whereby the Company receives the right to use third-party owned trademarks typically in exchange for royalties on sales.
We also enter into intellectual property agreements whereby the Company receives the right to use third-party owned trademarks typically in exchange for royalties on sales. These agreements typically contain a one to three-year term and contractual payment amounts required to be paid by the Company.
We are active members of the communities in which we operate, and our long-time customers have grown up with Academy and passed their passion for us on to the next generation, enabling us to benefit from strong customer loyalty and shopping frequency. 9 As of January 28, 2023, the number of stores that we operated, exclusively in the U.S., by state was as follows: State Number of Stores Texas 107 Georgia 20 Louisiana 18 Alabama 15 North Carolina 15 Florida 14 Tennessee 13 Oklahoma 13 Missouri 10 South Carolina 9 Arkansas 8 Mississippi 8 Kansas 6 Kentucky 6 Indiana 3 Illinois 1 Virginia 1 West Virginia 1 268 We have a strong and growing presence in some of the fastest-growing MSAs in the United States, including Austin, Atlanta and Raleigh, which we believe presents significant growth opportunities in both our core markets and outside our footprint.
We are active members of the communities in which we operate, and our long-time customers have grown up with Academy and passed their passion for us on to the next generation, enabling us to benefit from strong customer loyalty and shopping frequency. 9 As of February 3, 2024, the number of stores that we operated, exclusively in the U.S., by state was as follows: State Number of Stores Texas 111 Georgia 20 Louisiana 18 Florida 16 Alabama 15 North Carolina 15 Tennessee 13 Oklahoma 13 Missouri 11 South Carolina 9 Arkansas 8 Mississippi 8 Kansas 6 Kentucky 6 Indiana 6 Illinois 3 Virginia 3 West Virginia 1 282 We believe our real estate strategy has positioned us well for further expansion, and our track record has demonstrated that we can open and operate stores profitably.
A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter. Our net sales and profits are also impacted by the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.
A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter.
Third-party trucking companies are used to disburse inventory from the distribution centers to and from our stores. These distribution centers are strategically located throughout our footprint to efficiently serve our retail locations and have the capacity to service up to approximately 120 stores per distribution center.
These distribution centers are strategically located throughout our footprint to efficiently serve our retail locations and have the capacity to service up to approximately 120 stores per distribution center. Information Systems Our information systems are critical to our day-to-day operations as well as to our long-term growth strategies.
Hicks graduated from the United States Military Academy located in West Point, NY, and served in the U.S. Army. He also earned a Masters of Business Administration with highest distinction from Harvard Business School. Michael P. Mullican has served as our Executive Vice President and Chief Financial Officer since January 2018.
Hicks served on the board of directors and the Compensation Committee of Whole Foods Market, Inc. from May 2017 to August 2017. Mr. Hicks graduated from the United States Military Academy located in West Point, NY, and served in the U.S. Army. He also earned a Masters of Business Administration with highest distinction from Harvard Business School. Steven (Steve) P.
These agreements typically contain a one to three-year term and contractual payment amounts required to be paid by the Company. 14 Governmental Regulations We operate in a complex regulatory and legal environment that exposes us to regulatory, compliance and litigation risks that could materially affect our operations and financial results.
Governmental Regulations We operate in a complex regulatory and legal environment that exposes us to regulatory, compliance and litigation risks that could materially affect our operations and financial results. Specifically, we are subject to regulation by numerous federal, state and local regulatory agencies and authorities, including the U.S.
Name Age Position Ken C. Hicks 70 Chairman, President and Chief Executive Officer Michael P. Mullican 47 Executive Vice President and Chief Financial Officer Steven P. Lawrence 55 Executive Vice President and Chief Merchandising Officer Samuel J.
Name Age Position Ken C. Hicks 71 Executive Chairman Steven (Steve) P. Lawrence 56 Chief Executive Officer Samuel (Sam) J. Johnson 57 President Earl Carlton (Carl) Ford IV 46 Executive Vice President and Chief Financial Officer Matthew (Matt) M. McCabe 53 Executive Vice President and Chief Merchandising Officer Ken C.
Mullican holds a Bachelor of Arts in Communication from North Carolina State University and a Juris Doctor degree from the University of Chicago Law School. Steven (Steve) P. Lawrence has served as our Executive Vice President and Chief Merchandising Officer since joining the Academy Sports + Outdoors team in February 2019. Prior to joining Academy Sports + Outdoors, Mr.
Lawrence has served as Chief Executive Officer and a member of the Board of Directors since June 2023. Mr. Lawrence joined the Company in February 2019 as Executive Vice President and Chief Merchandising Officer. Prior to joining the Company, Mr.
We are committed to making a positive impact on the communities we serve and partner with over 700 organizations, including youth sports leagues that reach more than 500,000 participants. We also partner with school districts, Historically Black Colleges and Universities (HBCUs), local parks, hunting and fishing organizations, military bases and local first responders.
The Academy Credit Card program and Academy Sports + Outdoors app are foundational to build loyalty among customers while providing a seamless omnichannel shopping experience. 10 We are committed to making a positive impact on the communities we serve and partner with over 750 organizations, including youth sports leagues that reach approximately 400,000 participants.
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Other than stores that we may temporarily own, and for which we are in the process of executing sale-leaseback transactions, we do not own our retail locations.
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As a result, we have reclassified sales between divisions for 2022 and 2021 for comparability purposes. This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed. (2) E-commerce sales consist of 10.7%, 10.7% and 9.3% of merchandise sales for 2023, 2022 and 2021, respectively.
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We believe our real estate strategy has positioned us well for further expansion, and our track record has demonstrated that we can open and operate stores profitably.
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Of the 282 stores operated as of February 3, 2024, 281 are leased from third parties and one store is owned by the Company.
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We believe there is significant near-term opportunity for expansion with stores in in-fill markets, where we already have an established presence, and in adjacent markets, markets nearby to current locations which are not fully represented. We expect to open 13 to 15 stores in fiscal 2023.
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We believe there is significant near-term opportunity for expansion in both new and existing markets. Marketing Our marketing approach is anchored in helping active minded families have fun in their pursuit of sports and outdoors activities.
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Marketing Our marketing strategy is designed to reinforce our fun brand, broad selection of merchandise, and our value offering. We regularly analyze consumer trends on media consumption and rely on various media channels to communicate with our customers.
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The strategy is designed to generate awareness and consideration for the Academy brand while improving intent to purchase across the broad selection of fun categories, top national and private brands at a compelling value within our sporting goods assortment.
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We are continually expanding our targeting and personalization capabilities to deliver the right products and messages at the right time and in the media channel they prefer. Our media mix is a blend of digital and traditional, including paid search, email, affiliate, and social media along with linear and streaming broadcast and radio, print, outdoor and direct mail.
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We analyze first party data from across our customer data platform and data science environments, customer insights studies and retail industry market share data sources to develop annual and seasonal go to market strategies that lead to creation of engaging content and customer experiences that are communicated across a diverse range of owned and paid media channels.
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Our advertising features a broad assortment of products and messaging tailored to the current selling season. We utilize certain customer data obtained from our customer relationship management, or CRM, platform, which enable us to create effective customer-targeting strategies.
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Additionally, we utilize the customer data platform to generate first party data audiences for targeted customer lifecycle management campaigns designed to retain current customers and encourage omnichannel shopping behaviors.
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Our current CRM programs focus on welcoming our first-time customers, recognizing our top spenders, reactivating our lapsed customers and cross-selling our category customers. We also utilize customer demographic data that we capture to better localize our marketing, to know when our customers buy from us and what items they purchase.
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First party data is also used to inform creation of third party data audiences across a mix of media channels to drive engagement and acquisition of new customers through the use of brand designed, influencer and customer created content.
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With over 45 million customers in our database, there is ample opportunity to increase our communication directly with our customers via one-on-one marketing.
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These campaigns are executed across a blend of digital and traditional, including paid search, email, text message, mobile app, digital advertising networks, affiliates, and social media along with linear and digital video, audio, print, outdoor and direct mail.
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In addition to our CRM tools, our Academy Credit Card program also provides data to track our customers’ purchases across all channels, giving us the ability to better serve and target those loyal customers. 10 We often create events at our stores to drive customer traffic.
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We are focused on implementing and continually improving our customer centric marketing technologies, omnichannel services and experiences to save customers time and money while improving the long term health of our customer portfolio.
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These events range from small, private local league shopping nights to large grand opening celebrations to commemorate new store openings that offer various indoor and outdoor activities, athlete and celebrity appearances, fun activities to test our products and meet our suppliers along with food and games.
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We also partner with school districts, Historically Black Colleges and Universities (HBCUs), collegiate and professional sports properties, local parks, hunting and fishing organizations, military bases and local first responders. Distribution Centers We operate three distribution centers in Katy, Texas; Twiggs County, Georgia; and Cookeville, Tennessee.
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We also leverage sports championship moments when professional or collegiate sports teams in our markets win league titles. At these events we extend our store hours and offer official commemorative merchandise and may also host autograph signings and/or meet-and-greet events with players or coaches from the championship team.
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Our net sales and profits are also impacted by the August/September back-to-school selling season during the third quarter and November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.
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In 2022, the Company increased the annual merit and adjustment pool over prior years to recognize and reward our team member’s efforts and support in a unique and challenging year. Workplace, Health and Safety. The health and safety of our customers, team members, and communities is our top priority.
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Hicks has served as the Executive Chairman of the Board of Directors since June 1, 2023. Mr. Hicks served as Chairman of the Board and Chief Executive Officer from May 2018 to June 2023. Mr.
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Johnson 56 Executive Vice President, Retail Operations Sherry Harriman 53 Senior Vice President, Logistics and Supply Chain Jamey Traywick Rutherford 49 Senior Vice President, Omnichannel Manish Maini 49 Senior Vice President, Chief Information Officer William S. Ennis 53 Senior Vice President, Chief Human Resources Officer Rene G. Casares 47 Senior Vice President, General Counsel and Secretary Ken C.
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Earl Carlton (Carl) Ford IV has served as Executive Vice President and Chief Financial Officer since July 2023. Mr.
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Hicks served on the compensation committee of the board of managers of New Academy Holding Company, LLC from May 2017 to May 2018. Mr.
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Ford joined the Company in January 2019, and served as the Senior Vice President, Finance, where he led the Financial Planning and Analysis function of the Company from January 2019 to July 2023 and the Loss Prevention and Inventory Control teams from February 2020 to July 2023. Prior to joining the Company, Mr.
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He previously served as our Executive Vice President and General Counsel from February 2017 to January 2018. Prior to joining Academy Sports + Outdoors, Mr. Mullican served as the Managing Director of Aureus Health Services, a specialty pharmacy owned by Meijer, Inc. Before being named Managing Director at Aureus, Mr.
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Ford served as the Vice President of Financial Planning & Analysis at Belk, Inc. He also served as the Vice President of Internal Audit and held other leadership roles in accounting and treasury during his 15 years at Belk, Inc. Prior to joining Belk, Inc., Mr. Ford worked for Deloitte & Touche in their Audit practice. Mr.
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Mullican held several leadership roles at Meijer, including Vice President of Business Development, and Vice President and Assistant General Counsel. Additionally, Mr. Mullican served as Divisional Counsel and Assistant Secretary at Family Dollar Stores, Inc., and Associate General Counsel and Assistant Secretary at Horizon Lines, Inc. Mr.
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Ford holds a master's degree in accounting from the University of Alabama, a bachelor's degree in accounting from the University of Southern Mississippi and is an active Certified Public Accountant. 13 Matthew (Matt) McCabe has served as the Executive Vice President and Chief Merchandising Officer since June 2023. Mr.
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Prior to hhgregg, Inc., he spent more than 20 years in various leadership roles with Sears Holdings Corporation, including Vice President of Small Stores. Sherry L. Harriman has served as our Senior Vice President, Logistics and Supply Chain since joining the Academy Sports + Outdoors team in August 2018. Prior to joining Academy Sports + Outdoors, Mrs.
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McCabe joined the Company in December 2016 as the Vice President, Divisional Merchandise Manager of Athletic and Licensed Apparel and served as the Senior Vice President, General Merchandise Manager of Footwear from September 2017 to June 2023. In this role, he was responsible for setting the merchandising objectives and business strategy for the Footwear division.
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Harriman spent 29 years at Walmart, Inc., where she served in various logistics and operations roles until she was promoted to Regional Vice President – Logistics in 2007.
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Prior to joining the Company, Mr. McCabe served as Vice President at Golfsmith International, where he led the apparel, footwear and soft consumables buying and private brand businesses.
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In 2010, she was promoted to Divisional Vice President – Supply Chain for Florida and Puerto Rico, where her team delivered innovative Supply Chain solutions that supported omnichannel strategies and disaster relief initiatives. Ms. Harriman holds a Bachelor of Business Administration from the University of Wisconsin-Eau Claire and a Master of Business Administration from John Brown University.
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He has more than 25 years of experience in men's and women's apparel and footwear, and held various leadership roles at The Bon Ton Department Stores, Bachrach, Sears & Roebuck Co., and Mark Shale. Mr. McCabe holds a Bachelor of Science from Miami University.
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Jamey Traywick Rutherford has served as our Senior Vice President, Omnichannel since joining the Academy Sports + Outdoors team in May 2018. Prior to joining Academy Sports + Outdoors, Ms. Traywick Rutherford spent over 17 years at AutoZone where she served in various e-commerce roles until she was promoted to Vice President, e-commerce in 2010.
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She transitioned to Vice President, Merchandising in 2017. She holds a Bachelor of Science in Environmental Science from the University of Denver, and a Master of Science in e-commerce from the University of Memphis. Manish Maini has served as our Senior Vice President, Chief Information Officer since joining the Academy Sports + Outdoors team in June 2017.
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Prior to joining Academy Sports + Outdoors, he served as the Chief Information Officer and Senior Vice President at The Children’s Place U.S. where he led a 120-member team, and was responsible for the development and implementation of the company-wide IT strategy. Mr.
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Maini also spent nine years at Ann, Inc., formerly Ann Taylor Stores Inc., where he served in various IT leadership roles, including Vice President of Enterprise Systems. Mr. Maini holds a Bachelor of Engineering, Electronics and Communication from STJ Institute of Technology in Karnatak, India. William (Bill) S.
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Ennis has served as our Senior Vice President, Chief Human Resources Officer since March 2016. Mr. Ennis joined the Academy Sports + Outdoors team as Vice President of Human Resources in April 2008 and served in that role until October 2010 when he was appointed as Senior Vice President, Human Resources. Prior to joining Academy Sports + Outdoors, Mr.
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Ennis spent over 19 years with Stage Stores, May Department Stores and Federated Department Stores in multiple capacities including human resources, stores, buying group, store operations and finance areas.
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He currently sits on advisory boards for the Texas A&M Center for Retailing Studies and Texas Retailers Education Foundation, and he is also the governing body chair for the Houston HR Leadership Summit. Mr. Ennis graduated with a Bachelor of Arts in Economics from the University of Texas. Rene G.
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Casares has served as our Senior Vice President, General Counsel and Secretary since March 2018. He joined the company in July 2013 as Senior Director, Associate General Counsel and served as Vice President, Associate General Counsel and Assistant Secretary from March 2016 to March 2018. Prior to joining Academy Sports + Outdoors, Mr.
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Casares served as an Associate Attorney at the global law firm, Vinson & Elkins LLP, from 2008 to 2013, where he advised major and middle-market companies with mergers and acquisitions, private equity, corporate governance and capital markets.
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He also served in a similar capacity as an Associate Attorney at the global law firm, Latham & Watkins LLP, from 2006 to 2008. Additionally, Mr. Casares has a background in finance and consulting after serving as an Associate at Growth Capital Partners. L.P., a Strategy Consultant at KPMG Consulting, Inc., and an Analyst at Merrill Lynch & Co. Mr.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

130 edited+32 added−22 removed190 unchanged
Biggest changeAny failure to protect the integrity, confidentiality, and availability of our digital environment (including our technology infrastructure and networks, third party services, and hosted and on-premises software) and data that we hold relating to us and our customers, team members, and partners (including vendors) could result in lost sales, fines, penalties, assessments, investigations, inquiries, and/or lawsuits, a loss of confidence in us, and harm to our reputation, business, results of operations, and financial condition.
Biggest changeWe may require significant capital in the future to sustain or grow our business, including our store and e-commerce activities, due to increased competition, and there is no assurance that cash flow from operations will be sufficient to meet those needs or that additional sources of capital will be available on acceptable terms or at all. 18 Any failure to protect the integrity, confidentiality, and availability of our information systems (including our technology infrastructure and networks, third party services, and hosted and on-premises software) and data that we hold relating to us and our customers, team members, and partners (including vendors) could result in lost sales, fines, penalties, assessments, investigations, inquiries, and/or lawsuits, a loss of confidence in us, and harm to our reputation, business, results of operations, and financial condition.
A significant amount of our merchandise is produced in China, and the ongoing COVID-19 pandemic in China has led to, and may continue to lead to, significant governmental measures being implemented in China to control the spread of the virus, including, among others, restrictions on manufacturing and the movement of team members in many regions of the country.
A significant amount of our merchandise is produced in China. The ongoing COVID-19 pandemic in China has led to, and may continue to lead to, significant governmental measures being implemented in China to control the spread of the virus, including, among others, restrictions on manufacturing and the movement of team members in many regions of the country.
We share data with third parties for further processing consistent with applicable terms and conditions. Our retail stores and online operations depend on the secure transmission and processing of confidential information and the continued operation of systems necessary to perform store operations and to process transactions.
We share data with third parties for further processing consistent with applicable terms and conditions. Our retail stores and online operations depend on the secure transmission and processing of confidential information and the continued operation of information systems necessary to perform store operations and to process transactions.
Maintaining compliance with those requirements may require significant effort, cost, and new or improved technical capabilities, may require changes to our business practices, and may limit our ability to obtain or use data to provide a personalized customer experience or to engage in certain marketing practices.
Maintaining compliance with those requirements may require significant effort, cost, new or improved technical capabilities, and changes to our business practices, and may limit our ability to obtain or use data to provide a personalized customer experience or to engage in certain marketing practices.
Our plans to increase our number of retail stores will depend in part on the availability of existing (vacant) retail stores or developable store sites. The availability of second-generation retail store space, and developable retail sites (i.e., land and redevelopment sites) that meet our criteria is very low.
Our plans to increase our number of retail stores will depend in part on the availability of existing vacant retail stores or developable store sites. The availability of second-generation retail store space and developable store sites (i.e., land and redevelopment sites) that meet our criteria is very low.
For example, we may face losses related to the civil unrest in the United States, such as the that which occurred in late May 2020 in response to reported incidents of police violence.
For example, we may face losses related to the civil unrest in the United States, such as that which occurred in late May 2020 in response to reported incidents of police violence.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
If any participant or group of participants with a significant portion of the commitments under the ABL Facility fails to satisfy its or their respective obligations to extend credit under the facility and we are unable to find a replacement for such participant or participants on a timely basis (if at all), our liquidity may be adversely affected.
If any participant or group of participants with a significant portion of the commitments under the ABL Facility fails to satisfy its or their respective obligations to extend credit under the facility and we are unable to find a replacement for such participant or participants on a timely basis (or at all), our liquidity may be adversely affected.
Our quarterly results of operations and comparable sales have historically fluctuated, and may continue to fluctuate, as a result of factors outside our control, including: • general regional and national economic conditions; • consumer confidence in the economy; • unseasonal or extreme weather conditions, natural or man-made disasters or public health emergencies (such as snow storms, hurricanes, tornadoes, floods, pandemics, and civil disturbances); • catastrophic or tragic events (such as tragedies involving firearms); • changes in demand for the products that we offer in our stores; • lack of new product introduction; • lockouts or strikes involving professional sports teams; • retirement of sports superstars used in marketing various products; • sports scandals, including those involving leagues, associations, teams or athletes with ties to us or our markets; • costs related to the closure of existing stores; • litigation; • the success or failure of college and professional sports teams in our markets; • expansion of existing or entry of new competitors into our markets; • consolidation of competitors in our markets; • shift in consumer tastes and fashion trends; • calendar shifts or holiday or seasonal periods; • the timing of income tax refunds to customers; • changes in laws and regulations, politics or consumer advocacy affecting our business, including sentiment relating to the sale of firearms and ammunition; • cancellations of tax-free holidays in certain states; • pricing, promotions or other actions taken by us or our existing or possible new competitors; and 26 • changes in other tenants or landlords or surrounding geographic circumstances in the shopping centers in which we are located.
Our quarterly results of operations and comparable sales have historically fluctuated, and may continue to fluctuate, as a result of factors outside our control, including: • general regional and national economic conditions; • consumer confidence in the economy; • unseasonal or extreme weather conditions, natural or man-made disasters or public health emergencies (such as snow storms, hurricanes, tornadoes, floods, pandemics, and civil disturbances); • catastrophic or tragic events (such as tragedies involving firearms); • changes in demand for the products that we offer in our stores; • lack of new product introduction; • lockouts or strikes involving professional sports teams; • retirement of sports superstars used in marketing various products; • sports scandals, including those involving leagues, associations, teams or athletes with ties to us or our markets; • costs related to the closure of existing stores; • litigation; • the success or failure of college and professional sports teams in our markets; • expansion of existing or entry of new competitors into our markets; • consolidation of competitors in our markets; • shift in consumer tastes and fashion trends; • calendar shifts or holiday or seasonal periods; • the timing of income tax refunds to customers; • changes in laws and regulations, politics or consumer advocacy affecting our business, including sentiment relating to the sale of firearms and ammunition; • cancellations of tax-free holidays in certain states; • pricing, promotions or other actions taken by us or our existing or possible new competitors; and • changes in other tenants or landlords or surrounding geographic circumstances in the shopping centers in which we are located.
From time to time, our computer and information technology systems may require repair, upgrade, enhancement, integration and/or replacement for us to maintain successful current operations and achieve future sales and store growth. 21 Updating our existing information technology systems subjects us to numerous risks, including: • loss of information; • disruption of normal operations; • changes in accounting or other operating procedures; • changes in internal control over financial reporting or general computer controls; • problems maintaining accuracy of historical data; • allocation and dedication of key business resources to the updating of existing systems; • ability to attract and retain adequate experienced technical resources and third-party contractors for the updating of existing systems; • unknown impact on remaining systems; • adequacy of training and change management to address critical changes in business processes and job functions; and • updated information technology system ultimately does not meet the needs of the business.
From time to time, our information systems may require repair, upgrade, enhancement, integration and/or replacement for us to maintain successful current operations and achieve future sales and store growth. 21 Updating our existing information systems subjects us to numerous risks, including: • loss of information; • disruption of normal operations; • changes in accounting or other operating procedures; • changes in internal control over financial reporting or general computer controls; • problems maintaining accuracy of historical data; • allocation and dedication of key business resources to the updating of existing systems; • ability to attract and retain adequate experienced technical resources and third-party contractors for the updating of existing systems; • unknown impact on remaining systems; • adequacy of training and change management to address critical changes in business processes and job functions; and • updated information system ultimately does not meet the needs of the business.
Our indebtedness reduces the funds that would otherwise be available for operations, future business opportunities and payments of our debt obligations and limits our ability to: • obtain additional financing, if necessary, for working capital and operations, or such financing may not be available on favorable terms; • make needed capital expenditures; • make strategic acquisitions or investments or enter into joint ventures; • react to changes or withstand a future downturn in our business, the industry or the economy in general; • meet store growth, distribution center expansion, e-commerce growth, budget targets and forecasts of future results; 33 • engage in business activities, including future opportunities that may be in our interest; and • react to competitive pressures or compete with competitors with less debt.
Our indebtedness reduces the funds that would otherwise be available for operations, future business opportunities and payments of our debt obligations and limits our ability to: • obtain additional financing, if necessary, for working capital and operations, or such financing may not be available on favorable terms; • make needed capital expenditures; • make strategic acquisitions or investments or enter into joint ventures; • react to changes or withstand a future downturn in our business, the industry or the economy in general; • meet store growth, distribution center expansion, e-commerce growth, budget targets and forecasts of future results; • engage in business activities, including future opportunities that may be in our interest; and • react to competitive pressures or compete with competitors with less debt.
Our e-commerce operations are subject to numerous risks that could have a material adverse impact on our overall results of operations, including: • expansion of our sales across the United States, thereby, subjecting us to the regulatory and other requirements of the 50 states; • website operating issues, including website availability, system reliability, website operation, Internet connectivity, website errors, computer viruses, telecommunication failures, electronic break-ins or similar disruptions; • the need to keep pace with rapid technological change and maintain investments necessary for our e-commerce operation; • legal compliance issues related to the online sale of merchandise; • intellectual property litigation related to the enforcement of patent rights; • privacy and personal data security; • protection against credit card and gift card fraud; • fulfillment, inventory control and shipping issues for e-commerce transactions; • tax issues, including state sales tax collection for e-commerce transactions; • hiring, retention and training of personnel qualified to conduct our e-commerce operation; 24 • ability to procure adequate computer hardware and software and technology services and solutions from third-party providers; and • reduction in visits to, diversion and/or cannibalization of sales from, existing retail stores.
Our e-commerce operations are subject to numerous risks that could have a material adverse impact on our overall results of operations, including: • expansion of our sales across the United States, thereby, subjecting us to the regulatory and other requirements of the 50 states; • website operating issues, including website availability, system reliability, website operation, Internet connectivity, website errors, computer viruses, telecommunication failures, electronic break-ins or similar disruptions; • the need to keep pace with rapid technological change and investments from competitors, and maintain investments necessary for our e-commerce operation; • legal compliance issues related to the online sale of merchandise; • intellectual property litigation related to the enforcement of patent rights; • privacy and personal data security; • protection against credit card and gift card fraud; • fulfillment, inventory control and shipping issues for e-commerce transactions; • tax issues, including state sales tax collection for e-commerce transactions; • hiring, retention and training of personnel qualified to conduct our e-commerce operation; • ability to procure adequate computer hardware and software and technology services and solutions from third-party providers; and • reduction in visits to, diversion and/or cannibalization of sales from, existing retail stores.
Any failure to successfully update and maintain our information technology systems, and any missteps, delays, cost overruns, vendor disputes, technical challenges or other similar issues that may arise during the updating of our information technology systems, could have a material impact on our business, financial condition, results of operations, internal controls over financial reporting and ability to manage our business effectively.
Any failure to successfully update and maintain our information systems, and any missteps, delays, cost overruns, vendor disputes, technical challenges or other similar issues that may arise during the updating of our information systems, could have a material impact on our business, financial condition, results of operations, internal controls over financial reporting and ability to manage our business effectively.
Some personal data and personally identifiable information may be deemed sensitive or otherwise protected under applicable laws or regulations and may be subject to specific requirements for collection, processing, security, and disposal. 19 We and our partners rely on commercially available information security technology and industry standard operational practices for collecting, storing, maintaining, transmitting, protecting, and processing data.
Some personal data and personally identifiable information may be deemed sensitive or otherwise protected under applicable laws or regulations and may be subject to specific requirements for collection, processing, security, and disposal. We and our partners rely on commercially available information security technology and industry standard operational practices for collecting, storing, maintaining, transmitting, protecting, and processing data.
Unforeseen events, including public health emergencies, such as pandemics, natural disasters, such as earthquakes, hurricanes, tornadoes, freezes, snow or ice storms, floods and heavy rains, heatwaves, and man-made disasters, such as an oil spill closing large areas of hunting or fishing, could disrupt our operations or the operations of our suppliers, as well as the behavior of our consumers.
Unforeseen events, including public health events, such as pandemics, natural disasters, such as earthquakes, hurricanes, tornadoes, freezes, snow or ice storms, floods and heavy rains, heatwaves, and man-made disasters, such as an oil spill closing large areas of hunting or fishing, could disrupt our operations or the operations of our suppliers, as well as the behavior of our consumers.
Although we attempt to mitigate the risk of possible business interruptions by employing customary strategies, any material disruption, malfunction or any other similar problem in or with our information technology systems could negatively impact our business operations and materially and adversely affect our financial results.
Although we attempt to mitigate the risk of possible business interruptions by employing customary strategies, any material disruption, malfunction or any other similar problem in or with our information systems could negatively impact our business operations and materially and adversely affect our financial results.
Consumer spending on sporting goods, sports and casual apparel and footwear, and outdoor recreation products could decrease or be displaced by spending on other activities due to a number of factors, including: • shifts in behavior away from team sports and outdoor activities in favor of media (including social media) and electronics-driven leisure activities; • state, local and federal government budget cuts on facilities and activities, such as school athletic budgets, parks, ball fields, recreational sports leagues, hunting and fishing services, etc.; • weak economic conditions, recession, inflation or other factors, such as global or local pandemics; • legal and regulatory changes in federal and state hunting and fishing seasons, bag limits and firearm and ammunition restrictions; • consumer activism relating to controversial products we may carry, services we may perform, or our corporate philosophy, including those relating to firearms and ammunition, which could cause them to take their retail business elsewhere; • escalating costs of sporting and outdoor activities due to adverse changes in economic conditions, including rising fuel prices, rising participation fees and rising sporting license fees; and • severe weather and natural or man-made disasters (e.g., an oil spill closing large areas of hunting or fishing), including heat waves, freezes, hurricanes, tornadoes, large storms and floods, and the effects of such events on the ability of large urban areas to continue spending on sporting goods and outdoor recreation products. 17 Total consumer spending may not continue to increase at historical rates due to slowed production growth and shifts in population demographics, and it may not increase in certain product categories given changes in consumer interests and participation rates.
Consumer spending on sporting goods, sports and casual apparel and footwear, and outdoor recreation products could decrease or be displaced by spending on other activities due to a number of factors, including: • shifts in behavior away from team sports and outdoor activities in favor of travel, media (including social media) and electronics-driven leisure activities; • state, local and federal government budget cuts on facilities and activities, such as school athletic budgets, parks, ball fields, recreational sports leagues, hunting and fishing services, etc.; • weak economic conditions, recession, inflation or other factors, such as global or local pandemics; • legal and regulatory changes in federal and state hunting and fishing seasons, bag limits and firearm and ammunition restrictions; • consumer activism relating to controversial products we may carry, services we may perform, or our corporate philosophy, including those relating to firearms and ammunition, which could cause them to take their retail business elsewhere; • escalating costs of sporting and outdoor activities due to adverse changes in economic conditions, including inflation, rising fuel prices, rising participation fees and rising sporting license fees; and • severe weather and natural or man-made disasters (e.g., an oil spill closing large areas of hunting or fishing), including heat waves, freezes, hurricanes, tornadoes, large storms and floods, and the effects of such events on consumer demand for certain seasonal goods and the ability of large urban areas to continue spending on sporting goods and outdoor recreation products. 17 Total consumer spending may not continue to increase at historical rates due to slowed production growth and shifts in population demographics, and it may not increase in certain product categories given changes in consumer interests and participation rates.
Unfavorable changes to regulations in these areas could have a material adverse impact on our e-commerce activities. Our private label brand merchandise exposes us to various risks generally encountered by companies that source, manufacture, market and retail exclusive private label brand merchandise.
Unfavorable changes to regulations in these areas could have a material adverse impact on our e-commerce activities. 25 Our private label brand merchandise exposes us to various risks generally encountered by companies that source, manufacture, market and retail exclusive private label brand merchandise.
This could negatively impact the profitability of new and existing stores and potentially limit the number of viable new store locations or replacement store locations for expiring store leases. Our successful retail strategy is partially attributable to our ability to negotiate favorable trade terms with our vendors.
This could negatively impact the profitability of new and existing stores and potentially limit the number of viable new store locations or replacement store locations for expiring store leases. 37 Our successful retail strategy is partially attributable to our ability to negotiate favorable trade terms with our vendors.
The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you. 39
The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.
We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the work force of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health emergencies, such as the COVID-19 pandemic.
We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the work force of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health events, such as the COVID-19 pandemic.
From time to time we have experienced, and we may in the future further experience, interruptions, damages, or failures of our information technology systems, some of which disrupt our business and cause us to expend additional resources to rectify.
From time to time we have experienced, and we may in the future further experience, interruptions, damages, or failures of our information systems, some of which disrupt our business and cause us to expend additional resources to rectify.
Even if a claim is unsuccessful or is not fully pursued, the negative publicity surrounding any such assertions could adversely affect our reputation. We maintain insurance coverage with third-party insurers.
Even if a claim is unsuccessful or is not fully pursued, the negative publicity surrounding any such assertions could adversely affect our reputation. 33 We maintain insurance coverage with third-party insurers.
For example, we are, and may in the future, be subject to claims, demands and lawsuits, and we may suffer losses and adverse effects to our reputation, related to: • injuries or crimes associated with merchandise we sell, that has been associated with an increased risk of injury, including but not limited to firearms, ammunition, firearm accessories, air pistols, crossbows and other archery equipment, knives, deer stands and other hunting equipment, trampolines, wheeled goods such as bicycles and ride-on toys, certain merchandise qualifying as hazardous material and other products; • product liability claims from customers or actions required or penalties assessed by government agencies relating to products we sell, including but not limited to products that are recalled, defective or otherwise alleged to be harmful; • the design, purchase, manufacture, import, distribution and sale of our private label brand products; • the procurement, transportation, storage, distribution and sale of firearms and ammunition, including improper performance of federally mandated procedures for determining customer firearm purchase eligibility (such as age and residency verification, background checks and proper completion of required paperwork); • municipalities or other organizations attempting to recover costs from firearm manufacturers and retailers, relating to the use of firearms and ammunition; • the operations of a fleet of trucks for distribution purposes, including transportation of hazardous materials by such fleet; • the procurement and ownership, leasing or operation of property for retail stores, distribution centers and other corporate needs; 31 • the alleged infringement upon intellectual property rights to merchandise we sell or technology or services we use, including information technology, marketing and advertising services; • global sourcing, including international, customs and trade issues; • real estate issues, including construction, leasing, zoning and environmental issues; • employment issues, including actions by team members, the Equal Employment Opportunity Commission, the Department of Labor, the Occupational Safety and Health Administration and other federal and state employment agencies; • commercial disputes, including contractual and business disputes with vendors, landlords, or competitors; • tort, personal injury and property damage claims related to our stores, e-commerce, distribution centers or corporate headquarters; and • regulatory compliance, including relating to consumer protection, marketing and advertising, product safety, workplace safety, firearms, ammunition and related accessories, knives, import/export customs, taxes, tariffs, duties, and surcharges, data security and privacy, food and other regulated products, accounting, labor and employment, environmental matters, and hazardous materials.
For example, we are, and may in the future, be subject to claims, demands and lawsuits, and we may suffer losses and adverse effects to our reputation, related to: • injuries or crimes associated with merchandise we sell, that has been associated with an increased risk of injury, including but not limited to firearms, ammunition, firearm accessories, air pistols, crossbows and other archery equipment, knives, deer stands and other hunting equipment, trampolines, wheeled goods such as bicycles and ride-on toys, certain merchandise qualifying as hazardous material and other products; • product liability claims from customers or actions required or penalties assessed by government agencies relating to products we sell, including but not limited to products that are recalled, defective or otherwise alleged to be harmful; • the design, purchase, manufacture, import, distribution and sale of our private label brand products; • the procurement, transportation, storage, distribution and sale of firearms and ammunition, including improper performance of federally mandated procedures for determining customer firearm purchase eligibility (such as age and residency verification, background checks and proper completion of required paperwork); • municipalities or other organizations attempting to recover costs from firearm manufacturers and retailers, relating to the use of firearms and ammunition; • the operations of a fleet of trucks for distribution purposes, including transportation of hazardous materials by such fleet; • the procurement and ownership, leasing or operation of property for retail stores, distribution centers and other corporate needs; • the alleged infringement upon intellectual property rights to merchandise we sell or technology or services we use, including information technology, marketing and advertising services; • global sourcing, including international, customs and trade issues; • real estate issues, including construction, leasing, zoning and environmental issues; • employment issues, including actions by team members, the Equal Employment Opportunity Commission, the Department of Labor, the Occupational Safety and Health Administration and other federal and state employment agencies; • commercial disputes, including contractual and business disputes with vendors, landlords, or competitors; • tort, personal injury and property damage claims related to our stores, e-commerce, distribution centers or corporate headquarters; • unauthorized access to our information systems or facilities that results in a breach of data security or privacy; and • regulatory compliance, including relating to consumer protection, marketing and advertising, product safety, workplace safety, firearms, ammunition and related accessories, knives, import/export customs, taxes, tariffs, duties, and surcharges, data security and privacy, food and other regulated products, accounting, labor and employment, environmental matters, and hazardous materials.
Our exclusive forum provision does not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders are not be deemed to have waived our compliance with these laws, rules and regulations.
Our exclusive forum provision does not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders are not deemed to have waived our compliance with these laws, rules and regulations.
We depend on approximately 1,400 suppliers to supply us in a timely and efficient manner with the merchandise we sell. Our significant dependence on these suppliers exposes us to various risks that could have a material adverse effect on our business and results of operations. In 2022, purchases from our largest vendor represented approximately 11% of our total inventory purchases.
We depend on approximately 1,400 suppliers to supply us in a timely and efficient manner with the merchandise we sell. Our significant dependence on these suppliers exposes us to various risks that could have a material adverse effect on our business and results of operations. In 2023, purchases from our largest vendor represented approximately 11% of our total inventory purchases.
Any determination to pay future dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, legal requirements, covenant compliance, restrictions in our existing and any future debt agreements and other factors that our board of directors deems relevant.
Any determination to pay future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, business strategy, legal requirements, covenant compliance, restrictions in our existing and any future debt agreements and other factors that our Board of Directors deems relevant.
The general conditions that affect U.S. consumer discretionary spending in our markets include: • health of the economy; • consumer confidence in the economy; • financial market volatility; • wages, jobs and unemployment trends; • public health events (including the COVID-19 pandemic) and their effect on our customers, team members, vendors/suppliers and other stakeholders; • the housing market, including real estate prices and mortgage rates; • consumer credit availability; • consumer debt levels; • gasoline and fuel prices; • interest rates and inflation; • tax rates and tax policy; • immigration policy; • import and customs duties/tariffs and policy; • impact of natural or man-made disasters; • legislation and regulations; • international unrest, trade disputes, labor shortages, and other disruptions to the supply chain; • changes to raw material and commodity prices; and • national and international security and safety concerns.
The general conditions that affect U.S. consumer discretionary spending in our markets include: • health of the economy; • consumer confidence in the economy; • wages, jobs and unemployment trends; • public health events (such as the COVID-19 pandemic) and their effect on our customers, team members, vendors/suppliers and other stakeholders; • the housing market, including real estate prices and mortgage rates; • consumer credit availability; • consumer debt levels; • gasoline and fuel prices; • interest rates and inflation; • tax rates and tax policy; • immigration policy; • import and customs duties/tariffs and policy; • impact of natural or man-made disasters; • legislation and regulations; • international unrest, trade disputes, labor shortages, and other disruptions to the supply chain; • changes to raw material and commodity prices; and • national and international security and safety concerns.
We believe that our trademarks, service marks, copyrights, patents, processes, trade secrets, domain names and other intellectual property, including our Academy Sports + Outdoors brand, our private label brands, such as Academy Sports + Outdoors, Magellan Outdoors, BCG, O'rageous, Game Winner, Outdoor Gourmet and Freely, and our goodwill, designs, names, slogans, images and trade dress associated with these brands, are valuable assets, essential to our success and our competitive position due to their name recognition with customers.
We believe that our trademarks, service marks, copyrights, patents, processes, trade secrets, domain names and other intellectual property, including our Academy Sports + Outdoors brand, our private label brands, such as Academy Sports + Outdoors, Magellan Outdoors, BCG, O'rageous, Game Winner, Outdoor Gourmet, Freely and R.O.W., and our goodwill, designs, names, slogans, images and trade dress associated with these brands, are valuable assets, and are essential to our success and our competitive position due to their name recognition with customers.
The market for sporting and outdoor recreation goods is highly fragmented and intensely competitive. Our current and prospective competitors include many large companies, some of which have substantially greater market presence, name recognition and financial, marketing and other resources than us.
The market for sporting and outdoor recreation goods is highly fragmented, intensely competitive, and continually evolving. Our current and prospective competitors include many large companies, some of which have substantially greater market presence, name recognition and financial, marketing and other resources than us.
Competition for such qualified talent is intense, and we cannot be sure we will be able to find suitable successors promptly, or at all, or to successfully integrate any successors, or that we will be able to attract, retain, and develop a sufficient number of qualified individuals in future periods.
Competition for such qualified talent is significant, and we cannot be sure we will be able to find suitable successors promptly, or at all, or to successfully integrate any successors, or that we will be able to attract, retain, and develop a sufficient number of qualified individuals in future periods.
Our customers provide payment card and gift card information, alternative payment information, and other personal information to purchase products or services, enroll in promotional programs, apply for credit, create accounts and make purchases on our website, or otherwise communicate and interact with us.
Our customers provide payment card and gift card information, alternative payment information, and other personal information to purchase products or services, enroll in promotional programs, apply for credit, create accounts and make purchases on our website or mobile applications, or otherwise communicate and interact with us.
Our information technology systems, if not functioning properly or if failing to function altogether, could disrupt our ability to track, record, and analyze sales and inventory and could cause disruptions of operations, including, among other things, our ability to order, process and ship inventory, process financial information including credit card transactions, prevent data breaches and credit card fraud, process payrolls or vendor payments or engage in other similar normal business activities.
Our information systems, if not functioning properly or if failing to function altogether, could disrupt our ability to track, record, and analyze sales and inventory and could cause disruptions of operations, including, among other things, our ability to order, process and ship inventory, process financial information including credit card transactions, prepare financial statements, prevent data breaches and credit card fraud, process payrolls or vendor payments or engage in other similar normal business activities.
In addition, our expansion in new and existing markets may present competitive, merchandising, marketing, human resources, distribution and regulatory challenges that differ from our current challenges, including competition among our stores, diminished novelty of our store design and concept, added strain on our distribution centers, maintaining our levels of customer service, training our store team members, additional information to be processed by our management information systems and diversion of our management’s attention from operations, such as the control of inventory levels in our stores.
In addition, our expansion in new and existing markets may present competitive, merchandising, marketing, human resources, distribution and regulatory challenges that differ from our current challenges, including expanding and improving our operating capabilities, competition among our stores, diminished novelty of our store design and concept, added strain on our distribution centers, maintaining our levels of customer service, training our store team members, additional information to be processed by our management information systems and diversion of our management’s attention from operations, such as the control of inventory levels in our stores.
You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise. We have approximately 223 million shares of common stock authorized but unissued.
You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise. We have approximately 226 million shares of common stock authorized but unissued.
For example, ransomware events could cause key systems to be unavailable for use, or credential stuffing attacks of customer accounts on academy.com could cause customer privacy breaches and authorized charges to payment or gift cards, or phishing/smishing attacks, in which attackers masquerade as a trustworthy entity in an electronic communication (including email or text message), could gain control of a user's device and/or credentials.
For example, ransomware events could cause key systems to be unavailable for use, or credential stuffing attacks of customer accounts on our website could cause customer privacy breaches and authorized charges to payment or gift cards, or phishing/smishing attacks, in which attackers masquerade as a trustworthy entity in an electronic communication (including email or text message), could gain control of a user's device and/or credentials.
Threat actors may defeat our security measures and may obtain access to data (including personal data or personally identifiable information) that we hold relating to us and our customers, team members, and vendors, or may cause operational harm.
Threat actors may have the ability to defeat our security measures and may obtain access to data (including personal data or personally identifiable information) that we hold relating to us and our customers, team members, and vendors, or may cause operational harm.
In addition, as the popularity and use of Internet sites and free merchandise shipping continue to increase, our business faces increased competition from various domestic and international sources, including our suppliers.
In addition, as the popularity and use of Internet sites, free merchandise shipping, and suppliers selling directly to consumers continue to increase, our business faces increased competition from various domestic and international sources, including our suppliers.
Our senior executive team has substantial experience and expertise in our retail business, and serves an integral role in the growth and support of our various initiatives. If we were to lose the leadership of senior executives or other key team members, our business could be adversely affected.
Our senior executive team has substantial experience and expertise in our retail business, and serves an integral role in the growth and support of our various initiatives. If we were to lose the leadership of senior executives or other key team members without appropriate successors in place, our business could be adversely affected.
As a result of damage to, or prolonged interruption of, operations or inventory at any of these facilities, or with respect to third-party transportation providers, due to a work stoppage, labor shortage, operations significantly below historical efficiency levels, supply chain disruption, inclement weather or natural or man-made disasters (including events that may be caused or exacerbated by climate change), system failures, slowdowns or strikes, acts of terror or other unforeseen events in the areas or regions of these facilities could impair our ability to adequately stock our stores, process returns of products to vendors and ship product to our e-commerce customers, thereby adversely affecting our sales and profitability.
As a result of damage to, or prolonged interruption of, operations or inventory at any of these facilities, or with respect to third-party transportation providers, due to a work stoppage, labor shortage, operations significantly below historical efficiency levels, supply chain disruption, public health events (such as pandemics), severe weather (such as tornadoes) or natural or man-made disasters (including events that may be caused or exacerbated by climate change), system failures or cyber incidents, slowdowns or strikes, acts of terror or other unforeseen events in the areas or regions of these facilities could impair our ability to adequately stock our stores, process returns of products to vendors and ship product to our e-commerce customers, thereby adversely affecting our sales and profitability.
Climate change could exacerbate challenges relating to the availability and quality of water and raw materials, including those used in the production of the private label and other merchandise that we sell, and may result in changes in regulations or consumer preferences that could have a material adverse effect on our business, results of operations and financial condition.
Climate change could exacerbate challenges relating to the availability and quality of water and raw materials, including those used in the production of the private label and other merchandise that we sell, may lead to increased energy usage and costs, and may result in changes in regulations or consumer preferences that could have a material adverse effect on our business, results of operations and financial condition.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere, including increases in global temperatures, changes in weather patterns and increasingly frequent and/or prolonged extreme weather and climate related events, could present risks to our operations.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere, including increases in global temperatures, changes in weather patterns and increasingly frequent and/or prolonged extreme weather and climate related events, could present risks to our operations. The potential impacts of climate change present a variety of risks.
Our new store profitability is partially attributable to our ability to negotiate attractive rental rates with our landlords and to secure sale-leaseback financing at attractive cap rates.
Our new store profitability is partially attributable to our ability to negotiate attractive rental rates with our landlords and, in the future, to secure sale-leaseback financing at attractive cap rates.
For example, during fiscal 2022 we observed increased competition across the industry for resources throughout the supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
For example, during fiscal 2021, we began to see increased competition across the industry for resources throughout the supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
In addition, our hedging activities are subject to the risks that a counterparty may not perform its obligations under the applicable derivative instrument. LIBOR and other interest rates that are indices deemed to be “benchmarks” are the subject of recent and ongoing national, international and other regulatory guidance and proposals for reform.
In addition, our hedging activities are subject to the risks that a counterparty may not perform its obligations under the applicable derivative instrument. Secured Overnight Financing Rate (“SOFR”) and other interest rates that are indices deemed to be “benchmarks” are the subject of recent and ongoing national, international and other regulatory guidance and proposals for reform.
One of our sources of liquidity is the ABL Facility. Each financial institution that is a lender under the ABL Facility is responsible on a several but not joint basis for providing a portion of the loans to be made under the facility.
Each financial institution that is a lender under the ABL Facility is responsible on a several but not joint basis for providing a portion of the loans to be made under the facility.
The trading price of our common stock may be highly volatile and may be adversely affected due to a number of factors, most of which we cannot control, including those listed elsewhere under this “Risk Factors” section, and the following: • results of operations that vary from the expectations of securities analysts and investors; • results of operations that vary from those of our competitors; • changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors; • changes in economic conditions for companies in our industry; • changes in market valuations of, or earnings and other announcements by, companies in our industry; • declines in the market prices of stocks generally, particularly those of sporting goods and outdoor recreation retail companies; • additions or departures of key management personnel; • strategic actions by us or our competitors; • announcements by us, our competitors, our suppliers of significant contracts, price reductions, new products or technologies, acquisitions, dispositions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments; • changes in preference of our customers and our market share; • changes in general economic or market conditions or trends in our industry or the economy as a whole; • changes in governmental fiscal policy or interest rate regulation; 36 • changes in business or regulatory conditions; • future sales of our common stock or other securities; • investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives; • changes in the way we are perceived in the marketplace, including due to negative publicity or campaigns on social media to boycott certain of our products, our business or our industry; • the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; • changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business; • announcements relating to litigation or governmental investigations; • guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; • the development and sustainability of an active trading market for our common stock; • changes in accounting principles; and • other events or factors, including those resulting from informational technology system failures and disruptions, epidemics, pandemics, natural disasters, acts of terrorism, civil unrest, wars (including the invasion of Ukraine by Russia and its regional and global ramifications) or responses to these events.
The trading price of our common stock may be highly volatile and may be adversely affected due to a number of factors, many of which are beyond our control, including without limitation those listed elsewhere under this “Risk Factors” section, and the following: • results of operations that vary from the expectations of securities analysts and investors; • results of operations that vary from those of our competitors; • changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors; • changes in economic conditions for companies in our industry; • changes in market valuations of, or earnings and other announcements by, companies in our industry; • declines in the market prices of stocks generally, particularly those of sporting goods and outdoor recreation retail companies; • additions or departures of key management personnel; • strategic actions by us or our competitors; • announcements by us, our competitors, our suppliers of significant contracts, price reductions, new products or technologies, acquisitions, dispositions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments; • changes in preference of our customers and our market share; • changes in general economic or market conditions or trends in our industry or the economy as a whole; • changes in governmental fiscal policy or interest rate regulation; • changes in business or regulatory conditions; • future sales of our common stock or other securities, or the perception that such sales may occur; • investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives; • changes in the way we are perceived in the marketplace, including due to negative publicity or campaigns on social media to boycott certain of our products, our business or our industry; • the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; • changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business; • announcements relating to litigation or governmental investigations; • guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; • the development and sustainability of an active trading market for our common stock; • changes in accounting principles; and • other events or factors, including those resulting from informational technology system failures and disruptions, epidemics, pandemics, natural disasters, acts of terrorism, civil unrest, wars or responses to these events. 38 Furthermore, the stock market may experience extreme volatility that, in some cases, may be unrelated or disproportionate to the operating performance of particular companies.
The credit agreements governing the Term Loan and the ABL Facility and the indenture governing the Notes contain restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our best interest, including restrictions on our ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; • prepay, redeem or repurchase certain debt; • make loans, investments and other restricted payments; • sell or otherwise dispose of assets; • incur liens; • enter into transactions with affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • consolidate, merge or sell all or substantially all of our assets.
The credit agreements governing the Term Loan and the ABL Facility and the indenture governing the Notes contain restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our best interest, including restrictions on our ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; • prepay, redeem or repurchase certain debt; • make loans, investments and other restricted payments; • sell or otherwise dispose of assets; • incur liens; • enter into transactions with affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • consolidate, merge or sell all or substantially all of our assets. 36 Additionally, at certain times, the ABL Facility requires maintenance of a certain minimum adjusted fixed charge coverage ratio.
The ABL Facility, under which we had no borrowings as of January 28, 2023, matures on November 6, 2025. The Notes (as defined in Note 4 of the accompanying financial statements) require semi-annual payments of interest (in arrears) and matures on November 15, 2027.
The ABL Facility, under which we had no borrowings as of February 3, 2024, matures on November 6, 2025. The Notes (as defined in Note 4 of the accompanying financial statements) require semi-annual payments of interest (in arrears) and matures on November 15, 2027.
Additionally, changes in our relationships with our suppliers (which can occur for various reasons in or out of our control) also have the potential to increase our expenses and adversely affect our results of operations.
Fluctuations in the supply chain or changes in our relationships with our suppliers (which can occur for various reasons in or out of our control) have the potential to increase our expenses and adversely affect our results of operations.
Fluctuations in transportation costs and availability could adversely affect our results of operations. Labor shortages in the transportation industry have and are expected to continue to negatively affect transportation costs and our ability to supply our stores in a timely manner.
Fluctuations in transportation costs and availability could adversely affect our results of operations. Labor shortages in the transportation industry have historically had and could potentially continue to negatively affect transportation costs and our ability to supply our stores in a timely manner.
Our continued growth also depends in large part, upon our ability to open new stores in a timely manner and to operate them profitably. In 2020 and 2021, in response to the then-current retail environment, we temporarily stopped new store openings, before resuming in 2022.
Our continued growth also depends in large part, upon our ability to open new stores in a timely manner and to operate them profitably. In 2020 and 2021, in response to the then-current retail environment, we temporarily stopped new store openings, before resuming in 2022 and continuing through the date of this Annual Report.
Department of Labor has indicated that it intends to propose rules that may have salary and wage impact for “exempt” team members, which could result in a substantial increase in store payroll expense. Any increase in the cost of our labor could have an adverse effect on our operating costs, financial condition and results of operations.
Department of Labor has proposed rules that we continue to monitor which may have salary and wage impact for “exempt” team members, which could result in a substantial increase in store payroll expense. Any increase in the cost of our labor could have an adverse effect on our operating costs, financial condition and results of operations.
While each of these information technology systems initiatives is intended to further improve and enhance our information technology systems, our failure to timely, properly or adequately implement these systems initiatives could result in increased costs or risks, the diversion of our management’s and team members’ attention and resources and could materially adversely affect our results of operations, our internal controls over financial reporting or general computer controls, our ability to manage our business effectively and possible disruption of our business operations or financial reporting.
Any failure to timely, properly or adequately implement these information systems initiatives could result in increased costs or risks, the diversion of our management’s and team members’ attention and resources and could materially adversely affect our results of operations, our internal controls over financial reporting or general computer controls, our ability to manage our business effectively and possible disruption of our business operations or financial reporting.
Additionally, during fiscal 2022, we observed increased competition across the industry for resources throughout the supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
For example, during fiscal 2021, we began to see increased competition across the industry for resources throughout the supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
We are a federally licensed firearms dealer and we sell firearms, ammunition, and related accessories. Firearms represented approximately 6% of our net sales in 2022.
We are a federally licensed firearms dealer and we sell firearms, ammunition, and related accessories. Firearms represented approximately 5% of our net sales in 2023.
A future data security breach could also (1) attract substantial media attention, (2) damage our relationships with our customers, team members, and partners, (3) cause a loss of confidence in us or cause us to violate applicable privacy laws and obligations, (4) expose us to costly government enforcement actions or private litigation and financial liability (possibly beyond our insurance coverage), (5) increase the costs we incur to protect against or remediate security breaches and vulnerabilities, (6) result in additional costs and operational activities to comply with consumer protection and data privacy laws and obligations, and/or (7) disrupt our operations and distract our management and other key personnel from performing their primary operational duties, any of which could adversely affect our reputation, business, results of operations, and financial condition.
A future cybersecurity incident could also (1) result in unauthorized access, disclosure, loss, or misuse of our intellectual property, proprietary information, or team member, customer or supplier data, (2) attract substantial media attention, (3) damage our relationships with our customers, team members, and partners, (4) cause a loss of confidence in us or cause us to violate applicable privacy laws and obligations, (5) expose us to costly government enforcement actions or private litigation and financial liability (possibly beyond our insurance coverage), (6) increase the costs we incur to protect against or remediate cybersecurity incidents and vulnerabilities, (7) result in additional costs and operational activities to comply with consumer protection and data privacy laws and obligations, and/or (8) disrupt our operations and distract our management and other key personnel from performing their primary operational duties, any of which could adversely affect our reputation, competitiveness, business, results of operations, and financial condition.
We require many of our vendors to carry their own insurance, and we have indemnity agreements with many of our vendors, but we cannot be assured that (1) any specific claim or lawsuit will be subject to a vendor’s insurance or indemnity agreement, (2) our vendors will carry or maintain such insurance coverage or meet their indemnity obligations or (3) we will be able to collect payments from our vendors sufficient to offset liability losses or, in the case of our private label brand products, where almost all of the manufacturing occurs outside the United States, that we will be able to collect anything at all. 32 With all claims and lawsuits, however, there is a risk that liabilities, fines and losses may not be covered by insurance or indemnity or may exceed insurance or indemnity coverage.
We require many of our vendors to carry their own insurance, and we have indemnity agreements with many of our vendors, but we cannot be assured that (1) any specific claim or lawsuit will be subject to a vendor’s insurance or indemnity agreement, (2) our vendors will carry or maintain such insurance coverage or meet their indemnity obligations or (3) we will be able to collect payments from our vendors sufficient to offset liability losses or, in the case of our private label brand products, where almost all of the manufacturing occurs outside the United States, that we will be able to collect anything at all.
Foreign imports subject us to the risks of changes in import duties, quotas, loss of “most favored nation” status with the United States for a particular foreign country, delays in shipment, shipping port and ocean carrier constraints, supply and demand constraints, labor strikes, work stoppages or other disruptions, freight cost increases and economic uncertainties (including the United States imposing anti-dumping or countervailing duty orders, tariffs, safeguards, remedies or compensation and retaliation due to illegal foreign trade practices).
Foreign imports subject us to the risks of changes in import duties, quotas, loss of “most favored nation” status with the United States for a particular foreign country, delays in shipment, shipping port and ocean carrier constraints, supply and demand constraints, labor strikes, work stoppages, supply chain disruptions including those caused by extreme weather, natural disasters, public health events (such as pandemics) or other disruptions, freight cost increases and economic uncertainties (including the United States imposing anti-dumping or countervailing duty orders, tariffs, safeguards, remedies or compensation and retaliation due to illegal foreign trade practices).
The security of our digital environment (including our technology infrastructure and networks, third party services, and hosted and on-premises software) and data (including from our partners) is critical to our business as a retailer, and we devote significant resources to protecting our digital environment and data.
The security of our information systems (including our technology infrastructure and networks, third party services, and hosted and on-premises software) and data (including from our customers, team members and partners) is critical to our business as a retailer, and we devote significant resources to protecting our information systems and data.
We use interest rate swap agreements to hedge market risks relating to possible adverse changes in interest rates with the intent of reducing volatility in our cash flows due to fluctuations in interest rates.
In the past we have used, and in the future we may again use interest rate swap agreements to hedge market risks relating to possible adverse changes in interest rates with the intent of reducing volatility in our cash flows due to fluctuations in interest rates.
We plan to expand our team member base to manage our anticipated growth. Competition for non-entry-level personnel, particularly for team members with retail experience, is highly competitive. Additionally, our ability to maintain consistency in the quality of customer service in our stores is critical to our success.
Competition for non-entry-level personnel, particularly for team members with retail experience, is highly competitive. Additionally, our ability to maintain consistency in the quality of customer service in our stores is critical to our success.
Our sales and operating results could be adversely affected by product safety concerns. If the products that we offer, including from both national brands and our private label brands, do not meet applicable safety standards or our customers’ expectations regarding safety, we could experience decreased sales, increased costs, and/or be exposed to legal and might give rise to reputational risk.
If the products that we offer, including from both national brands and our private label brands, do not meet applicable safety standards or our customers’ expectations regarding safety, we could experience decreased sales, increased costs, and/or be exposed to legal and reputational risk.
Traditional competitors have become increasingly promotional and, if our competitors reduce their prices, it may be difficult for us to reach our net sales goals without reducing our prices, which could impact our margins.
Pressure from our competitors could require us to reduce our prices or increase our spending for advertising and promotion. Traditional competitors have become increasingly promotional and, if our competitors reduce their prices, it may be difficult for us to reach our net sales goals without reducing our prices, which could impact our margins.
As of January 28, 2023, we had no borrowings outstanding under the ABL Facility, and an available borrowing capacity under the ABL Facility of approximately $947.8 million (which is subject to customary borrowing conditions, including a borrowing base). We may be able to increase the commitments under the ABL Facility by $250.0 million, subject to certain conditions.
As of February 3, 2024, we had no borrowings outstanding under the ABL Facility, and an available borrowing capacity under the ABL Facility of approximately $881.4 million (which is subject to customary borrowing conditions, including a borrowing base). We may be able to increase the commitments under the ABL Facility by $250.0 million, subject to certain conditions.
We sell firearms, ammunition, and related accessories. These products are associated with an increased risk of injury and related lawsuits with respect to our compliance with Bureau of Alcohol, Tobacco, Firearms and Explosives and state laws and regulations.
We sell firearms, ammunition, and related accessories. These products are associated with an increased risk of injury and related lawsuits with respect to our compliance with federal and state laws and regulations covering such products.
As these events occur in the future, if they should impact areas in which we have our corporate headquarters, a distribution centers or a concentration of retail stores or vendor sources, such events could have a material adverse effect on our business, financial condition and results of operations.
If these events impact areas in which we have our corporate headquarters, distribution centers, a concentration of retail stores or vendor sources or foreign and/or U.S. ports, such events could have a material adverse effect on our business, financial condition and results of operations.
In addition, price volatility may be greater if the public float and trading volume of our common stock is low. In the past, following periods of market volatility, stockholders have instituted securities class action litigation against various issuers.
These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low. In the past, following periods of market volatility, stockholders have instituted securities class action litigation against various issuers.
In addition, failure to comply with applicable requirements could subject us to fines, sanctions, governmental investigations, lawsuits, reputational damage, and other risks and costs that may be difficult to anticipate but could become material depending on the specific facts.
In addition, any alleged or actual failure to comply with applicable requirements could subject us to fines, sanctions, governmental investigations, lawsuits, reputational damage, and other risks and costs that may be difficult to anticipate but could become material.
These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.
These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders.
In addition to national brand merchandise, we offer customers private label brand merchandise that is primarily sold exclusively by Academy.
In addition to national brand merchandise, we offer customers private label brand merchandise, most of which is sold exclusively by Academy.
All of our vendors must comply with applicable product safety laws, and it is our expectation that our vendors will stand behind their products to ensure that the products we buy comply with all federal, state, and local requirements for sale, including product safety, labeling, and testing requirements.
All of our vendors must comply with applicable product safety laws, and we rely on our vendors to ensure that the products we buy comply with all federal, state, and local requirements for sale, including product safety, labeling, and testing requirements.
Legal and Regulatory Risks We are subject to costs and risks associated with laws and regulations affecting our business, including those relating to the sale, manufacture and import of consumer products and other matters, and the substance or enforcement of such laws may change or become more stringent.
In addition, the integration of any acquired business and their financial results may adversely affect our results of operations. 30 Legal and Regulatory Risks We are subject to costs and risks associated with laws and regulations affecting our business, including those relating to the sale, manufacture and import of consumer products and other matters, and the substance or enforcement of such laws may change or become more stringent.
As of January 28, 2023, we had no borrowings outstanding under the ABL Facility (as defined in Note 4 of the accompanying financial statements), an available borrowing capacity under the ABL Facility of approximately $947.8 million (which is subject to customary borrowing conditions, including a borrowing base), and outstanding letters of credit of $13.9 million, all of which were issued under the ABL Facility.
As of February 3, 2024, we had no borrowings outstanding under the ABL Facility (as defined in Note 4 of the accompanying financial statements), an available borrowing capacity under the ABL Facility of approximately $881.4 million (which is subject to customary borrowing conditions, including a borrowing base), and outstanding letters of credit of $11.6 million, all of which were issued under the ABL Facility.
The techniques used by threat actors to attack or access systems and data evolve and may not be recognized until or after being launched against a target. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks.
The techniques used by threat actors to attack or access systems and data evolve and may not be recognized until or after being launched against a target. We may not have the resources or technical sophistication to anticipate, prevent or stop new or evolving cybersecurity incidents, including attacks to our information systems and data and those of our partners.
A failure by us to follow these laws or regulations may subject us to claims, lawsuits, fines, penalties, adverse publicity and government action (up to and including the possible revocation of licenses and permits allowing the sale of firearms and ammunition), which could have a material adverse effect on our business and results of operations. 30 Another significant risk relating to our operations is compliance with the FCPA, the UKBA, and other anti-corruption laws applicable to our international operations.
A failure by us to follow these laws or regulations may subject us to claims, lawsuits, fines, penalties, adverse publicity and government action (up to and including the possible revocation of licenses and permits allowing the sale of firearms and ammunition), which could have a material adverse effect on our business and results of operations.
Despite our security measures, we may not be able to anticipate, prevent, and stop future attacks to our digital environment and data and those of our partners.
Despite our security measures, we may not be able to anticipate, prevent, and stop future cybersecurity incidents, including attacks to our information systems and data and those of our partners.
Our information technology systems, including our back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service attacks, security breaches (through cyber-attacks from cyber-attackers or sophisticated organizations), catastrophic events such as fires, floods, tornadoes, earthquakes and hurricanes, and usage errors by our associates.
Our information systems, including our back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service attacks, security breaches or other cybersecurity incidents, catastrophic events and severe weather such as fires, floods, tornadoes, earthquakes and hurricanes, and usage or coding errors by our team members or partners.
Risks Related to Our Indebtedness Our level of indebtedness requires that we dedicate a portion of our cash flows to debt service payments and reduces the funds that would otherwise be available for other general corporate purposes and other business opportunities, which could adversely affect our operating performance, growth, profitability and financial condition, which in turn could make it more difficult for us to generate cash flow sufficient to satisfy all of our obligations under our indebtedness.
As a result, any such claim made by or against us or our failure to protect our intellectual property could have an adverse effect on our results of operations. 34 Risks Related to Our Indebtedness Our level of indebtedness requires that we dedicate a portion of our cash flows to debt service payments and reduces the funds that would otherwise be available for other general corporate purposes and other business opportunities, which could adversely affect our operating performance, growth, profitability and financial condition, which in turn could make it more difficult for us to generate cash flow sufficient to satisfy all of our obligations under our indebtedness.

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Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed2 unchanged
Biggest changeAs of January 28, 2023, our total leased store square footage was approximately 18.8 million square feet.
Biggest changeAs of February 3, 2024, our combined leased and owned store square footage was approximately 19.7 million square feet. 42
Three year lease extension to original term entered in 2020. (7) Three year lease entered in 2022. We lease all of our stores. Our initial store lease terms are typically 15 to 20 years with various renewal options and lease escalation structures. We believe that all of our leases are entered into at then-prevailing market lease rates.
Three year lease extension to original term entered in 2020. (7) Three year lease entered in 2022. We lease all but one of our stores. Our initial store lease terms are typically 15 to 20 years with various renewal options and lease escalation structures. We believe that all of our leases are entered into at then-prevailing market lease rates.
The following table sets forth the location, use and size of our corporate and distribution center facilities as of January 28, 2023: Location Use Approximate Square Footage Katy, Texas Corporate Office Building 1 400,000 (1) Katy, Texas Corporate Office Building 2 200,000 (2) Katy, Texas Bulk Warehouse 200,000 (3) Katy, Texas Distribution Center 1,400,000 (4) Twiggs County, Georgia Distribution Center 1,600,000 (5) Cookeville, Tennessee Distribution Center 1,600,000 (6) Kowloon, Hong Kong Global Sourcing Office 5,000 (7) (1) 20 year lease entered in 2007.
The following table sets forth the location, use and size of our corporate and distribution center facilities: Location Use Approximate Square Footage Katy, Texas Corporate Office Building 1 400,000 (1) Katy, Texas Corporate Office Building 2 200,000 (2) Katy, Texas Bulk Warehouse 200,000 (3) Katy, Texas Distribution Center 1,400,000 (4) Twiggs County, Georgia Distribution Center 1,600,000 (5) Cookeville, Tennessee Distribution Center 1,600,000 (6) Kowloon, Hong Kong Global Sourcing Office 5,000 (7) (1) 20 year lease entered in 2007.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+6 added−6 removed3 unchanged
Biggest changeWe believe, taking into consideration our indemnities, defenses, insurance and reserves, the ultimate resolution of these matters will not have a material impact on our financial position, results of operations or cash flows.
Biggest changeWe believe, taking into consideration our indemnities, defenses, insurance and reserves, the ultimate resolution of these matters will not have a material impact on our financial position, results of operations or cash flows. In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding our business. In May and December 2023, U.S.
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Included in the matters discussed above were nine lawsuits filed against us between December 2017 and November 2019 in Texas state judicial courts located in Bexar County, Texas, by 79 plaintiffs on behalf of certain victims of a November 2017 shooting in Sutherland Springs, Texas.
Added
Customs and Border Protection ("CBP") notified us that we owed additional duties relating to certain products that we imported from China that CBP believes are subject to certain anti-dumping and/or countervailing duties. We do not believe that these products are subject to such duties and are contesting CBP’s determination vigorously.
Removed
These cases, which presented substantially similar issues of law and fact, related to the April 2016 sale by one of our stores of a firearm and magazine that were alleged to have been used in the Sutherland Springs incident.
Added
While we contest CBP’s determination, we were required to deposit with CBP an amount of duties relating to these products, which are included in prepaid expenses and other current assets on the Company’s consolidated balance sheet while this matter is pending.
Removed
The plaintiffs sought monetary relief ranging from $1 million to over $150 million and, in some cases, injunctive relief to prohibit us from selling certain firearms in Texas to residents of states where such a sale would violate their home state’s applicable firearm laws.
Added
We anticipate that this matter will be resolved without a material adverse effect on our financial position, results of operations or cash flows.
Removed
The Supreme Court of Texas heard oral arguments relating to our motions for summary judgment to dismiss certain of the cases in October 2020 (the “Texas Supreme Court Cases”), with the remainder of these cases stayed pending the Supreme Court of Texas’ decision.
Added
However, the ultimate outcome of this matter cannot be determined at this time, and we cannot assure you that we will be successful in contesting CBP's determination or that we will not need to accrue or pay additional amounts in the future.
Removed
On June 25, 2021, the Supreme Court of Texas issued an opinion directing the trial court to grant our motion for summary judgment and held that the Texas Supreme Court Cases are statutorily barred and we are protected from continued participation in the Texas Supreme Court cases.
Added
During 2023, the Company settled a legal matter pertaining to the overcharge of interchange feeds with certain financial institutions for prior periods dating back to 2004. In connection with this settlement, we recognized a net gain of approximately $15.9 million in Other (income), net on the Consolidated Statements of Income, when the gain became realizable.
Removed
Given the Supreme Court of Texas’s opinion, all of the plaintiffs filed motions to voluntarily dismiss their lawsuits on April 11, 2022 and the court granted those motions and dismissed all of the plaintiffs' claims with prejudice on April 13, 2022. 40 Item 4. Mine Safety Disclosures Not applicable. PART II
Added
We are not currently party to any other legal proceedings that we believe would have a material adverse effect on our financial position, results of operations or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−2 removed4 unchanged
Biggest changeAs of January 28, 2023, approximately $299.4 million remained available for share repurchases pursuant the 2022 Share Repurchase Program (see Note 2 to the accompanying financial statements). The 2022 Share Repurchase Program does not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time.
Biggest changeThe 2022 Share Repurchase Program and the 2023 Share Repurchase Program are collectively referred to as the "Share Repurchase Programs". As of February 3, 2024, approximately $696.7 million remained available for share repurchases pursuant to the Share Repurchase Programs (see Note 2 to the accompanying financial statements).
The graph below presents the Company’s cumulative total stockholder returns relative to the performance of the Nasdaq US Benchmark Retail Index and the Russell 3000 Index commencing October 2, 2020 (the Company’s initial day of trading) through January 27, 2023.
The graph below presents the Company’s cumulative total stockholder returns relative to the performance of the Nasdaq US Benchmark Retail Index and the Russell 3000 Index commencing October 2, 2020 (the Company’s initial day of trading) through February 2, 2024.
The Company intends to announce quarterly cash dividends, the declaration, timing, amount, and payment of which will be subject to the discretion and approval of the Board, taking into account such considerations as the Board may deem relevant at the time, including, among others, the Company’s results, financial condition and capital allocation plans.
The declaration, timing, amount and payment of any future cash dividends will be subject to the discretion and approval of the Board of Directors, taking into account such considerations as the Board of Directors may deem relevant at the time, including, among others, the Company’s results, financial condition and capital allocation plans.
Dividends On March 2, 2023, the Company issued a press release announcing that the Board of Directors (the “Board”) declared a quarterly cash dividend with respect to the quarter ended January 28, 2023 of $0.09 per share of common stock, payable on April 13, 2023, to stockholders of record as of the close of business on March 23, 2023.
Dividends On March 7, 2024, the Company issued a press release announcing that the Board of Directors declared a quarterly cash dividend with respect to the quarter ended February 3, 2024 of $0.11 per share of common stock, payable on April 18, 2024, to stockholders of record as of the close of business on March 26, 2024.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. 41 Issuer Purchases of Equity Securities The following table summarizes the repurchases and cancellations of our common stock during the fourth quarter of 2022: Period Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Share Purchased as Part of Publicly Announced Plans or Programs (b) Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (b) October 30, 2022 to November 26, 2022 — $ — — $ 399,411,562 November 27, 2022 to December 31, 2022 1,125,350 $ 52.38 1,125,350 $ 340,489,446 January 1, 2023 to January 28, 2023 778,582 $ 52.78 778,582 $ 299,411,563 Total 1,903,932 $ 52.54 1,903,932 $ 299,411,563 (a) The total number of shares purchased excludes shares which were net-settled, and therefore not issued, to cover employee tax withholding related to the vesting of certain restricted stock awards.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. 44 Issuer Purchases of Equity Securities The following table summarizes the repurchases and cancellations of our common stock during the fourth quarter of 2023: Period Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Share Purchased as Part of Publicly Announced Plans or Programs (b) Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (b) October 29, 2023 to November 25, 2023 — $ — — $ 99,411,688 November 26, 2023 to December 30, 2023 — — — 699,411,688 December 31, 2023 to February 3, 2024 43,526 $ 62.57 43,526 696,688,936 Total 43,526 $ 62.57 43,526 $ 696,688,936 (a) The total number of shares purchased excludes shares which were net-settled, and therefore not issued, to cover employee withholding related to the vesting of certain restricted stock awards and exercise of certain stock option awards.
All values assume a $100 initial investment at the opening price of the Company’s common stock on the Nasdaq and data for the Nasdaq US Benchmark Retail Index and the Russell 3000 Index assumes all dividends were reinvested on the date paid.
All values assume a $100 initial investment at the opening price of the Company’s common stock on Nasdaq and assumes all dividends were reinvested on the date paid. The points on the graph represent fiscal quarter-end values based on the last trading day of each fiscal quarter.
Removed
The points on the graph represent fiscal quarter-end values based on the last trading day of each fiscal quarter.
Added
On November 29, 2023, the Board of Directors of the Company authorized a share repurchase program (the "2023 Share Repurchase Program") under which the Company may purchase up to $600 million of its outstanding shares during the three-year period ending November 29, 2026.
Removed
Holders As of March 9, 2023, there were 18 holders of record of ASO, Inc.'s common stock.
Added
The Share Repurchase Programs do not obligate the Company to acquire any particular number of common shares, and the programs may be suspended, extended, modified or discontinued at any time. Holders As of March 14, 2024, there were 12 holders of record of ASO, Inc.'s common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

88 edited+33 added−37 removed51 unchanged
Biggest change(h) Effective January 28, 2023, we no longer exclude pre-opening expenses from our computation of Adjusted EBITDA and Adjusted EBIT (see "Pre-Opening Expenses" in Note 2 to the accompanying financial statements). 50 Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share The following table provides a reconciliation of net income to Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share for the periods presented (amounts in thousands, except per share data): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Net income $ 628,001 $ 671,381 $ 308,764 Consulting fees (a) — — 285 Private equity sponsor monitoring fee (b) — — 14,793 Equity compensation (c) 21,175 39,264 31,617 (Gain) loss on early retirement of debt, net 1,963 2,239 (3,582) Severance and executive transition costs (d) — — 6,571 Costs related to the COVID-19 pandemic (e) — — 17,632 Payroll taxes associated with the 2021 Vesting Event (f) — 15,418 — Other (g) — 3,118 8,592 Tax effects of these adjustments (h) (5,382) (14,884) (136) Adjusted Net Income (i) 645,757 716,536 384,536 Estimated tax effect of change to C-Corporation status (j) — — (72,844) Pro Forma Adjusted Net Income (i) $ 645,757 $ 716,536 $ 311,692 Earnings per common share: Basic $ 7.70 $ 7.38 $ 3.96 Diluted $ 7.49 $ 7.12 $ 3.79 Pro Forma Adjusted Earnings per Share: Basic $ 7.91 $ 7.88 $ 4.00 Diluted $ 7.70 $ 7.60 $ 3.83 Weighted average common shares outstanding: Basic 81,590 90,956 77,994 Diluted 83,895 94,284 81,431 (a) Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives.
Biggest change(d) Other adjustments include (representing deductions or additions to Adjusted EBITDA and Adjusted EBIT) amounts that management believes are not representative of our operating performance, including installation costs for energy savings associated with our profitability initiatives. 54 Adjusted Net Income and Adjusted Earnings per Share The following table provides a reconciliation of net income to Adjusted Net Income and Adjusted Earnings per Share for the periods presented (amounts in thousands, except per share data): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net income (a) $ 519,190 $ 628,001 $ 671,381 Equity compensation (b) 24,377 21,175 39,264 Loss on early retirement of debt 1,525 1,963 2,239 Payroll taxes associated with the 2021 Vesting Event (c) — — 15,418 Other (d) — — 3,118 Tax effects of these adjustments (e) (5,621) (5,382) (14,884) Adjusted Net Income $ 539,471 $ 645,757 $ 716,536 Earnings per common share: Basic $ 6.89 $ 7.70 $ 7.38 Diluted $ 6.70 $ 7.49 $ 7.12 Adjusted Earnings per Share: Basic $ 7.16 $ 7.91 $ 7.88 Diluted $ 6.96 $ 7.70 $ 7.60 Weighted average common shares outstanding: Basic 75,389 81,590 90,956 Diluted 77,469 83,895 94,284 (a) Net income for the year ended February 3, 2024, includes a $15.9 million net gain relative to a credit card fee litigation settlement which occurred in the fourth quarter of 2023.
Net Sales . Net sales are derived from in-store and e-commerce merchandise sales, net of sales tax and an allowance for merchandise returns.
Net sales are derived from in-store and e-commerce merchandise sales, net of sales tax and an allowance for merchandise returns.
Some of these limitations are: • Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share do not reflect costs or cash outlays for capital expenditures or contractual commitments; • Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA and Adjusted EBIT do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, and Adjusted Free Cash Flow does not reflect the cash requirements necessary to service principal payments on our debt; • Adjusted EBITDA and Adjusted EBIT do not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes; • Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted Free Cash Flow do not reflect cash requirements for such replacements; and • other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Some of these limitations are: • Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share do not reflect costs or cash outlays for capital expenditures or contractual commitments; • Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA and Adjusted EBIT do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, and Adjusted Free Cash Flow does not reflect the cash requirements necessary to service principal payments on our debt; • Adjusted EBITDA and Adjusted EBIT do not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes; • Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted Free Cash Flow do not reflect cash requirements for such replacements; and • other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or net cash provided by operating activities as a measure of liquidity, or any other performance measures derived in accordance with GAAP.
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or net cash provided by operating activities as a measure of liquidity, or any other performance measures derived in accordance with GAAP.
Management believes Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments.
Management believes Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments.
Merchandise inventories include the direct cost of merchandise and capitalized costs related to procurement, warehousing and distribution and are reflected net of shrinkage, vendor allowances and other valuation accounts. Judgments and Uncertainties: We record an inventory reserve for the estimated shrinkage between physical inventories on a by location basis.
Merchandise inventories include the direct cost of merchandise and capitalized costs related to procurement, warehousing and distribution and are reflected net of shrinkage, vendor allowances and other valuation reserves. Judgments and Uncertainties: We record an inventory reserve for the estimated shrinkage between physical inventories on a by location basis.
Management uses Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures.
Management uses Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures.
Management uses Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures.
Management uses Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures.
Any reference in this Annual Report to "year" or any year in particular refers to our fiscal year, which represents the fifty-two or fifty-three week period ending on the Saturday closest to January 31. Unless otherwise specified, all comparisons or changes regarding 2022 are made to 2021.
Any reference in this Annual Report to "year" or any year in particular refers to our fiscal year, which represents the fifty-two or fifty-three week period ending on the Saturday closest to January 31. Unless otherwise specified, all comparisons or changes regarding 2023 are made to 2022.
Our gross margin is also impacted by variables including commodity costs, freight costs, shrinkage and inventory processing costs and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.
Our gross margin is also impacted by variables including commodity costs, freight costs, shrinkage (discussed below) and inventory processing costs and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.
In evaluating Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation.
In evaluating Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation.
There is significant judgment used in determining these assumptions used in the assessment of goodwill impairment and variability in the assumptions could cause us to reach a different conclusion on impairment. In 2022, we performed a qualitative impairment assessment and determined a quantitative assessment was not necessary.
There is significant judgment used in determining these assumptions used in the assessment of goodwill impairment and variability in the assumptions could cause us to reach a different conclusion on impairment. In 2023, we performed a qualitative impairment assessment and determined a quantitative assessment was not necessary.
There is significant judgment used in determining these assumptions on intangible asset impairment and variability in the assumptions could cause us to reach a different conclusion on impairment. In 2022, we performed a qualitative impairment assessment and determined a quantitative assessment was not necessary.
There is significant judgment used in determining these assumptions on intangible asset impairment and variability in the assumptions could cause us to reach a different conclusion on impairment. In 2023, we performed a qualitative impairment assessment and determined a quantitative assessment was not necessary.
Because of these limitations, Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.
Because of these limitations, Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.
We describe these adjustments by reconciling net income (loss) to Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share in the applicable table below. We describe Adjusted Free Cash Flow as net cash provided by (used in) operating activities less net cash used in investing activities.
We describe these adjustments by reconciling net income (loss) to Adjusted Net Income and Adjusted Earnings per Share in the applicable table below. We describe Adjusted Free Cash Flow as net cash provided by (used in) operating activities less net cash used in investing activities.
GAAP). The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. See Note 2 to the consolidated financial statements for additional information.
The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. See Note 2 to the accompanying financial statements for additional information.
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share should not be construed to imply that our future results will be unaffected by unusual or non-recurring items.
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share should not be construed to imply that our future results will be unaffected by unusual or non-recurring items.
We define basic Pro Forma Adjusted Earnings per Share as Pro Forma Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and diluted Pro Forma Adjusted Earnings per Share as Pro Forma Adjusted Net Income divided by the diluted weighted average common shares outstanding during the period.
We define basic Adjusted Earnings per Share as Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and diluted Adjusted Earnings per Share as Adjusted Net Income divided by the diluted weighted average common shares outstanding during the period.
Additionally, we are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities, such as our mobile app, optimizing the website experience and upgrading our fulfillment capabilities. 43 The following table summarizes store activity for the periods indicated: Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Beginning stores 259 259 259 Q1 new stores 1 — — Q2 new stores 1 — — Q3 new stores 4 — — Q4 new stores 3 — — Closed — — — Ending stores 268 259 259 Relocated stores — 1 — How We Assess the Performance of Our Business and Recent Trends Our management considers a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate projections.
Additionally, we are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities, such as our mobile app, optimizing the website experience and upgrading our fulfillment capabilities. 46 The following table summarizes store activity for the periods indicated: Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Beginning stores 268 259 259 Q1 new stores 1 1 — Q2 new stores 1 1 — Q3 new stores 5 4 — Q4 new stores 7 3 — Closed — — — Ending stores 282 268 259 Relocated stores — — 1 How We Assess the Performance of Our Business and Recent Trends Our management considers a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate projections.
We define average ticket as total comparable sales divided by the number of transactions during a given period, which tells us the average amount the customer is spending on a purchase. 44 Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow.
We define average ticket as total comparable sales divided by the number of transactions during a given period, which tells us the average amount the customer is spending on a purchase. 47 Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow.
Future Liquidity We expect to use existing cash balances, internally generated cash flows and borrowings under our ABL Facility to fulfill anticipated obligations such as capital expenditures, dividends, stock repurchases, working capital needs and scheduled debt maturities over at least the next twelve months.
Future Liquidity We expect our existing cash balances, internally generated cash flows and available borrowings under our ABL Facility will fulfill anticipated obligations such as capital expenditures, dividends, stock repurchases, working capital needs and scheduled debt maturities over at least the next twelve months.
Management also uses Adjusted EBIT as a performance target to establish and award discretionary annual incentive compensation. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.
Management has also historically used Adjusted EBIT as a performance target to establish and award discretionary annual incentive compensation. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.
Our product assortment focuses on key categories of outdoors, apparel, sports & recreation and footwear (representing 31%, 28%, 21% and 20% of our 2022 net sales, respectively) through both leading national brands and a portfolio of 20 private label brands, which go well beyond traditional sporting goods and apparel offerings. Our business is subject to seasonal fluctuations.
Our product assortment focuses on key categories of outdoors, apparel, sports & recreation and footwear (representing 28%, 28%, 24% and 20% of our 2023 net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings. Our business is subject to seasonal fluctuations.
If such a conclusion is reached, we would then be required to perform a quantitative impairment assessment for the Trade Name. However, if the qualitative assessment leads to a determination that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then no further assessments are required.
If such a conclusion is reached, we would then be required to perform a quantitative impairment assessment for the Trade Name. However, if the qualitative assessment leads to a determination that it is more likely than not that the fair value of an intangible asset is greater than its carrying amount, then no further assessments are required.
("ASO, Inc.") is treated as a U.S. corporation for U.S. federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes since October 1, 2020.
ASO, Inc. is treated as a U.S. corporation for U.S. federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes.
Cash flows from operating activities are seasonal in our business. Typically, cash flows from operations are used to build inventory in advance of peak selling seasons, with the fourth quarter pre-holiday inventory increase being the most significant. Cash provided by operating activities in 2022 decreased $121.3 million compared to 2021.
Cash flows from operating activities are seasonal in our business. Typically, cash flows from operations are used to build inventory in advance of peak selling seasons, with the fourth quarter pre-holiday inventory increase being the most significant. Cash provided by operating activities in 2023 decreased $16.2 million compared to 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report for the fiscal year ended January 28, 2023 (this "Annual Report").
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report for the fiscal year ended February 3, 2024 (this "Annual Report").
All references in this discussion and analysis to "2022", "2021" and "2020" or like terms relate to our fiscal years as follows: Fiscal Year Ended Weeks 2022 January 28, 2023 52 2021 January 29, 2022 52 2020 January 30, 2021 52 Overview We are a leading full-line sporting goods and outdoor recreation retailers in the United States.
All references in this discussion and analysis to "2023", "2022" and "2021" or like terms relate to our fiscal years as follows: Fiscal Year Ended Weeks 2023 February 3, 2024 53 2022 January 28, 2023 52 2021 January 29, 2022 52 Overview We are a leading full-line sporting goods and outdoor recreation retailer in the United States.
Management of SG&A expenses depends on our ability to balance a control of operating costs, such as store, distribution center, and corporate headcount, information technology infrastructure and marketing and advertising expenses, with efficiently and effectively servicing our customers. Interest Expense.
Management of SG&A expenses depends on our ability to balance a control of operating costs, such as store and corporate headcount, information technology infrastructure and marketing and advertising expenses, while efficiently and effectively servicing our customers.
Management also uses Adjusted EBIT as a performance target to establish and award discretionary annual incentive compensation. See "Non-GAAP Financial Measures" below. Components of Our Results of Operations. Our profitability is primarily influenced by fluctuations in net sales, inventory expenses, our ability to leverage selling, general and administrative expenses, and our ability to limit our interest and income tax expense.
Management also uses Adjusted EBIT as a performance target to establish and award discretionary annual incentive compensation. See "Non-GAAP Measures" below. Components of Our Results of Operations. Our profitability is primarily influenced by fluctuations in net sales, gross margin and our ability to leverage selling, general and administrative expenses. Net Sales .
Our results of operations have been and will continue to be materially affected by the timing and number of new store openings. We are continually assessing the number of locations available that could accommodate our preferred size of stores in markets we would consider, and we expect to open 13 to 15 new stores in fiscal 2023.
Our results of operations have been and will continue to be materially affected by the timing and number of new store openings. We are continually assessing the number of locations available that could accommodate our preferred size of stores in markets we would consider, and during 2023 we opened 14 new stores.
Our stores are supported by approximately 22,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app, introduced in the 2021 second quarter.
Our stores are supported by approximately 22,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app.
We expect to continue to invest in expanding and enhancing our omnichannel capabilities, including support of our mobile app, optimizing the web site experience and upgrading our fulfillment capabilities, which will continue to require significant investments by us. 45 We expect that new stores will be a key driver of growth in our net sales and gross margin in the future.
We expect to continue to invest in expanding and enhancing our omnichannel capabilities, including our mobile app, optimizing the web site experience and upgrading our fulfillment capabilities, which will continue to require further investments by us. 48 We expect that new stores will be a key driver of growth in our net sales and gross margin in the future as we execute our new store opening growth plans.
As of January 28, 2023, we operated 268 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 18 contiguous states located primarily in the southern United States.
As of February 3, 2024, we operated 282 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 18 contiguous states located primarily in the southern United States.
Over the past couple of years, we have seen increased competition across the industry for resources throughout a constrained supply chain, which has resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
During 2021, we began to see increased competition across the industry for resources throughout a constrained supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
(c) Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors such as the 2021 Vesting Event (see Note 1 to the accompanying financial statements), timing and valuation of awards, achievement of performance targets and equity award forfeitures. (d) Represents severance costs associated with executive leadership changes and enterprise-wide organizational changes.
(b) Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors such as the 2021 Vesting Event (see Note 1 to the accompanying financial statements), timing and valuation of awards, achievement of performance targets and equity award forfeitures.
We also use cash to pay dividends and occasionally use cash to repurchase common stock. We fund these liquidity requirements through cash and cash equivalents, cash generated from operating activities, issuances of debt (such as the Notes) and borrowings under our ABL Facility. On January 28, 2023, our cash and cash equivalents totaled $337.1 million.
We also use cash to pay dividends and occasionally use cash to repurchase common stock. We may fund our liquidity requirements through cash and cash equivalents, cash generated from operating activities, issuances of debt (such as the Notes) and borrowings under our ABL Facility. On February 3, 2024, our cash and cash equivalents totaled $347.9 million.
Recent Accounting Pronouncements For discussion of recent accounting pronouncements, see Note 2 to the accompanying financial statements. Related Party Transactions For discussion of related party transactions, see Note 13 to the accompanying financial statements.
Recent Accounting Pronouncements For discussion of recent accounting pronouncements, see Note 2 to the accompanying financial statements. 61
The Trade Name is tested for impairment annually or whenever events or circumstances indicate that the carrying amount of the Trade Name may not be recoverable. 57 Judgments and Uncertainties: The annual Trade Name impairment test provides for the option of first performing a qualitative assessment to evaluate the existence of events and circumstances that would lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Judgments and Uncertainties: The annual Trade Name impairment test provides for the option of first performing a qualitative assessment to evaluate the existence of events and circumstances that would lead to a determination that it is more likely than not that the fair value of an intangible asset is less than its carrying amount.
Long-Term Debt As of January 28, 2023, the Company's long-term debt and interest rates consists of (see Note 4 to the accompanying financial statements): • Notes - 6.00% fixed rate senior secured notes with $400 million in principal outstanding and full principal maturing November 15, 2027; • Term Loan - 8.12% variable rate term-loan with $194.8 million in principal outstanding maturing November 6, 2027 and quarterly principal payments of $750 thousand; and • ABL Facility - $1.0 billion commitment on a variable rate secured asset-based revolving credit facility with no principal outstanding maturing November 6, 2025.
Long-Term Debt As of February 3, 2024, the Company's long-term debt and interest rates consists of: • Notes - 6.00% fixed rate senior secured notes with $400 million in principal outstanding and full principal maturing November 15, 2027; • Term Loan - 9.19% variable rate term-loan with $91.8 million in principal outstanding maturing November 6, 2027 and quarterly principal payments of $750 thousand; and • ABL Facility - $1.0 billion commitment on a variable rate secured asset-based revolving credit facility with no principal outstanding maturing November 6, 2025.
Selling, general and administrative ("SG&A") expenses include store and corporate administrative payroll and payroll benefits, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature.
Selling, general and administrative ("SG&A") expenses include store and corporate administrative payroll and payroll benefits, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature. SG&A expenses as a percentage of sales increased from 21.4% in 2022 to 23.3% in 2023.
Impact of Assumptions: The assumptions used to project long-term company income consider variables such as historical and current trends, macroeconomic conditions, supply chain factors, projections consistent with the Company’s operating strategy, such as the future development of e-commerce and our assumptions used on future store openings, and other variables expected to impact future sales.
These approaches use key input assumptions such as our projected future operating results, the discount rate, the weighting for each valuation approach and the comparable set of companies. 60 Impact of Assumptions: The assumptions used to project long-term company income consider variables such as historical and current trends, macroeconomic conditions, supply chain factors, projections consistent with the Company’s operating strategy, such as the future development of e-commerce and our assumptions used on future store openings, and other variables expected to impact future sales.
Our Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP.
Our presentation of Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow should not be construed to imply that our future results will be unaffected by any such adjustments. 52 Our Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP.
We describe this adjustment by reconciling net cash provided by operating activities to Adjusted Free Cash Flow in the applicable table below. 48 We believe Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings per Share assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
We believe Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
The following table summarizes our current debt obligations by fiscal year (amounts in thousands): 2023 2024 2025 2026 2027 Total Term Loan and related interest (1) $ 19,590 $ 17,263 $ 15,660 $ 15,284 $ 192,860 $ 260,657 Notes and related interest (2) 24,000 24,000 24,000 24,000 424,000 520,000 ABL Facility and related interest (3) 2,500 2,500 1,909 — — 6,909 (1) Interest payments do not include amortization of discount and debt issuance costs and are approximated based on projected interest rates and assume no unscheduled principal payments.
The following table summarizes our current debt obligations by fiscal year (amounts in thousands): 2024 2025 2026 2027 Total Term Loan and related interest (1) $ 10,835 $ 9,595 $ 9,159 $ 87,725 $ 117,314 Notes and related interest (2) 24,000 24,000 24,000 424,000 496,000 ABL Facility and related interest (3) 2,500 1,909 — — 4,409 (1) Interest payments do not include amortization of discount and debt issuance costs and are approximated based on projected interest rates and assume no unscheduled principal payments.
Investing Activities . Cash used in investing activities increased $32.8 million in 2022 compared to 2021. The increase in cash used in investing activities is primarily related to: • $32.5 million higher capital expenditures driven by investments in new stores and store updates in 2022. Financing Activities .
Investing Activities . Cash used in investing activities increased $97.3 million in 2023 compared to 2022. The increase in cash used in investing activities is primarily related to: • $99.5 million higher capital expenditures, primarily driven by increased investments in new stores in 2023. Financing Activities . Cash used in financing activities decreased $273.2 million in 2023, compared to 2022.
We expect most of our stores to achieve profitability within the first twelve months of opening. We believe our real estate strategy has positioned us well for further expansion. Gross Margin. Gross margin is our net sales less cost of goods sold.
We believe our real estate strategy has positioned us well for further expansion. Gross Margin. Gross margin is our net sales less cost of goods sold.
We define transactions as the number of customer transactions for stores and e-commerce during a given period on a comparable sales basis. Transactions are influenced by customer traffic, the amount of customers that visited our stores or website, and sales conversion, the percent of those customers that made a purchase.
Transactions are influenced by customer traffic, the amount of customers that visited our stores or website, and sales conversion, the percent of those customers that made a purchase.
Results of Operations A discussion regarding Results of Operations and Analysis of Financial Condition for the fiscal year ended January 29, 2022, as compared to the fiscal year ended January 30, 2021, is included in “Part II – Item 7.
Recent fluctuations in income tax expense have been primarily as a result of changes in income before income taxes. Results of Operations A discussion regarding Results of Operations and Analysis of Financial Condition for the fiscal year ended January 28, 2023, as compared to the fiscal year ended January 29, 2022, is included in “Part II – Item 7.
(b) Represents our contractual payments under the Monitoring Agreement. (c) Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors such as the 2021 Vesting Event, timing and valuation of awards, achievement of performance targets and equity award forfeitures. (d) Represents severance costs associated with executive leadership changes and enterprise-wide organizational changes.
(b) Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors such as the 2021 Vesting Event, timing and valuation of awards, achievement of performance targets and equity award forfeitures. (c) Represents cash expenses related to taxes on equity-based compensation resulting from the 2021 Vesting Event.
As of January 28, 2023, the Company had $299.4 million remaining for share repurchases under the 2022 Share Repurchase Program. The 2022 Share Repurchase Program does not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time.
The 2022 Share Repurchase Program and the 2023 Share Repurchase Program are collectively referred to as the "Share Repurchase Programs". The Share Repurchase Programs do not obligate the Company to acquire any particular number of common shares, and the programs may be suspended, extended, modified or discontinued at any time.
As our business begins to normalize, we are experiencing a shift in our sales mix from the outdoors and sports and recreation merchandise divisions to the footwear and apparel merchandise divisions, which would generally have a positive impact on our gross margin rate.
As our business has normalized, we have experienced a shift in our sales mix from the outdoors and sports and recreation merchandise divisions to the footwear and apparel merchandise divisions, which has generally had a positive impact on our gross margin rate. The expansion and enhancement of our omnichannel capabilities has resulted in increased sales in recent years.
Net Sales . Net sales decreased $378.1 million, or 5.6%, in 2022 over the prior year as a result of decreased comparable sales of 6.4%, which were partially offset by $50.7 million in additional net sales generated by new locations. As of the end of 2022, we operated nine additional stores as compared to the end of 2021.
Net Sales . Net sales decreased $235.8 million, or 3.7%, in 2023 over the prior year as a result of decreased comparable sales of 6.5%, which were partially offset by additional net sales generated by new locations.
As of January 28, 2023, we had $947.8 million of available capacity under our ABL Facility and $337.1 million of cash and cash equivalents. 55 Critical Accounting Policies and Estimates This discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S.
Critical Accounting Policies and Estimates This discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP).
We describe these adjustments reconciling net income (loss) to Adjusted EBITDA and to Adjusted EBIT in the applicable table below.
We define Adjusted EBITDA as net income (loss) before interest expense, net, income tax expense and depreciation, amortization and impairment and other adjustments included in the table below. We define Adjusted EBIT as Adjusted EBITDA less depreciation and amortization. We describe these adjustments reconciling net income (loss) to Adjusted EBITDA and to Adjusted EBIT in the applicable table below.
Income Tax Expense. Income tax expense increased $2.2 million to $190.3 million in 2022 as compared to $188.2 million in 2021 resulting primarily from an increased effective tax rate. ASO, Inc.'s effective tax rate for 2022 was 23.3% compared to 21.9% in 2021.
Income Tax Expense. Income tax expense decreased $46.4 million to $144.0 million in 2023 as compared to $190.3 million in 2022, resulting primarily from a decrease in pre-tax income. ASO, Inc.'s effective tax rate for 2023 was 21.7% compared to 23.3% in 2022.
Additionally, the long-term store income projections also contain a projection of future store specific costs such as store wages and advertising. Actual long-term income results could vary significantly from our projections due to a variety of reasons such as changes in the local retail environment or macroeconomic factors not used in our assumptions.
Actual long-term income results could vary significantly from our projections due to a variety of reasons such as changes in the local retail environment or macroeconomic factors not used in our assumptions. In addition to variables considered in developing projected long-term store income, assumptions are made to develop the assumed discount rate based on company specific factors.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” to our Annual Report on Form 10-K for the fiscal year ended January 29, 2022. 46 2022 (52 weeks) Compared to 2021 (52 weeks) The following table sets forth amounts and information derived from our consolidated statements of income for the periods indicated as follows (dollar amounts in thousands): Fiscal Year Ended Change January 28, 2023 January 29, 2022 Dollars Percent Net sales $ 6,395,073 100.0 % $ 6,773,128 100.0 % $ (378,055) (5.6) % Cost of goods sold 4,182,571 65.4 % 4,422,033 65.3 % (239,462) (5.4) % Gross margin 2,212,502 34.6 % 2,351,095 34.7 % (138,593) (5.9) % Selling, general and administrative expenses 1,365,953 21.4 % 1,443,148 21.3 % (77,195) (5.3) % Operating income 846,549 13.2 % 907,947 13.4 % (61,398) (6.8) % Interest expense, net 46,441 0.7 % 48,989 0.7 % (2,548) (5.2) % Loss on early retirement of debt 1,963 0.0 % 2,239 0.0 % (276) (12.3) % Other (income), net (20,175) (0.3) % (2,821) (0.0) % (17,354) 615.2 % Income before income taxes 818,320 12.8 % 859,540 12.7 % (41,220) (4.8) % Income tax expense 190,319 3.0 % 188,159 2.8 % 2,160 1.1 % Net income $ 628,001 9.8 % $ 671,381 9.9 % $ (43,380) (6.5) % * Percentages in table may not sum properly due to rounding.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” to our Annual Report on Form 10-K for the fiscal year ended January 28, 2023. 2023 (53 weeks) Compared to 2022 (52 weeks) The following table sets forth amounts and information derived from our consolidated statements of income for the periods indicated as follows (dollar amounts in thousands): Fiscal Year Ended Change February 3, 2024 January 28, 2023 Dollars Percent Net sales $ 6,159,291 100.0 % $ 6,395,073 100.0 % $ (235,782) (3.7) % Cost of goods sold 4,049,080 65.7 % 4,182,571 65.4 % (133,491) (3.2) % Gross margin 2,110,211 34.3 % 2,212,502 34.6 % (102,291) (4.6) % Selling, general and administrative expenses 1,432,356 23.3 % 1,365,953 21.4 % 66,403 4.9 % Operating income 677,855 11.0 % 846,549 13.2 % (168,694) (19.9) % Interest expense, net 46,051 0.7 % 46,441 0.7 % (390) (0.8) % Loss on early retirement of debt 1,525 0.0 % 1,963 0.0 % (438) (22.3) % Other (income), net (32,877) (0.5) % (20,175) (0.3) % (12,702) 63.0 % Income before income taxes 663,156 10.8 % 818,320 12.8 % (155,164) (19.0) % Income tax expense 143,966 2.3 % 190,319 3.0 % (46,353) (24.4) % Net income $ 519,190 8.4 % $ 628,001 9.8 % $ (108,811) (17.3) % * Percentages in table may not sum properly due to rounding.
(j) Represents the retrospective tax effect of Adjusted Net Income at our estimated effective tax rate of approximately 25% for periods prior to October 1, 2020, the effective date of our conversion to a C-Corporation, upon which we became subject to federal income taxes. 51 Adjusted Free Cash Flow The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flow for the periods presented (amounts in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Net cash provided by operating activities $ 552,005 $ 673,265 $ 1,011,597 Net cash used in investing activities (108,806) (76,017) (33,144) Adjusted Free Cash Flow $ 443,199 $ 597,248 $ 978,453 Liquidity and Capital Resources Sources and Uses of Liquidity Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense.
Adjusted Free Cash Flow The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flow for the periods presented (amounts in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net cash provided by operating activities $ 535,779 $ 552,005 $ 673,265 Net cash used in investing activities (206,139) (108,806) (76,017) Adjusted Free Cash Flow $ 329,640 $ 443,199 $ 597,248 55 Liquidity and Capital Resources Sources and Uses of Liquidity Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense.
Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow supplementally. 49 Adjusted EBITDA and Adjusted EBIT The following table provides reconciliations of net income (loss) to Adjusted EBITDA and to Adjusted EBIT for the periods presented (amounts in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Net income $ 628,001 $ 671,381 $ 308,764 Interest expense, net 46,441 48,989 86,514 Income tax expense 190,319 188,159 30,356 Depreciation and amortization 106,762 105,274 105,481 Consulting fees (a) — — 285 Private equity sponsor monitoring fee (b) — — 14,793 Equity compensation (c) 21,175 39,264 31,617 (Gain) loss on early retirement of debt, net 1,963 2,239 (3,582) Severance and executive transition costs (d) — — 6,571 Costs related to the COVID-19 pandemic (e) — — 17,632 Payroll taxes associated with the 2021 Vesting Event (f) — 15,418 — Other (g) — 3,118 8,592 Adjusted EBITDA (h) $ 994,661 $ 1,073,842 $ 607,023 Less: Depreciation and amortization (106,762) (105,274) (105,481) Adjusted EBIT (h) $ 887,899 $ 968,568 $ 501,542 (a) Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives.
Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow supplementally. 53 Adjusted EBITDA and Adjusted EBIT The following table provides reconciliations of net income to Adjusted EBITDA and to Adjusted EBIT for the periods presented (amounts in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net income (a) $ 519,190 $ 628,001 $ 671,381 Interest expense, net 46,051 46,441 48,989 Income tax expense 143,966 190,319 188,159 Depreciation and amortization 110,936 106,762 105,274 Equity compensation (b) 24,377 21,175 39,264 Loss on early retirement of debt 1,525 1,963 2,239 Payroll taxes associated with the 2021 Vesting Event (c) — — 15,418 Other (d) — — 3,118 Adjusted EBITDA $ 846,045 $ 994,661 $ 1,073,842 Less: Depreciation and amortization (110,936) (106,762) (105,274) Adjusted EBIT $ 735,109 $ 887,899 $ 968,568 (a) Net income for the year ended February 3, 2024, includes a $15.9 million net gain relative to a credit card fee litigation settlement which occurred in the fourth quarter of 2023.
Loss on early retirement of debt decreased $0.3 million to a loss of $2.0 million from $2.2 million in 2021. During the 2022 fourth quarter, we utilized cash on hand to voluntarily prepay $100.0 million of outstanding borrowings under the Term Loan, which resulted in a loss on early retirement of debt of $2.0 million.
Loss on early retirement of debt. We utilized cash on hand to voluntarily prepay $100 million of outstanding borrowings under the Term Loan in February of 2024. In December of 2022, we also voluntarily prepaid $100 million of outstanding borrowings under the Term Loan.
Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions.
Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. The Company believes the following are its critical accounting estimates: Merchandise Inventories, net Description: Merchandise inventories are stated at the lower of weighted average cost and net realizable value.
(2) Interest payments do not include amortization of debt issuance costs and assumes Notes are paid in full at maturity date.
(2) Interest payments do not include amortization of debt issuance costs and assumes Notes are paid in full at maturity date. (3) Assumes a minimum revolving credit commitment of $1.0 billion and no balances drawn on our ABL Facility.
Our broad assortment gives us an advantage over mass general merchants who typically do not carry the leading national brands sold at Academy. We have also continued to add private label brand products to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer.
We have also continued to add private label brand products to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer.
We regularly review inventories and record a valuation adjustment when necessary such as for inventory that has a carrying value in excess of the net realizable value or for slow moving or obsolete inventory.
We regularly review inventories and record a valuation adjustment when necessary such as for inventory that has a carrying value in excess of the net realizable value or for slow moving or obsolete inventory. 59 Impact of Assumptions: For inventory shrinkage, our reserves may be inaccurate if our historical physical inventory shrinkage rates, used in our assumptions, differ significantly from actual rates due to consistent misses to our accrual.
Non-GAAP Measures Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Pro Forma Adjusted Net Income, Pro Forma Adjusted Earnings per Share and Adjusted Free Cash Flow, as shown below, have been presented in this Annual Report as supplemental measures of financial performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP").
The decrease in effective tax rate was largely driven by the inclusion of certain research and development tax credits relative to 2022 and 2023 in the current year results, as well as increased permanent adjustments resulting from the vesting of a higher number of stock compensation awards during 2023. 51 Non-GAAP Measures Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow, as shown below, have been presented in this Annual Report as supplemental measures of financial performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP").
Our gross margin, as a percentage of net sales, was 34.6% in 2022 compared to 34.7% in 2021, a decrease of 10 basis points.
E-commerce sales represented 10.7% of merchandise sales for 2023 and 2022. 50 Gross Margin. Gross margin for 2023 decreased $102.3 million, or 4.6%, when compared to 2022. Our gross margin, as a percentage of net sales, was 34.3% in 2023 compared to 34.6% in 2022, a decrease of 30 basis points.
In November of 2020, we refinanced our debt resulting in an approximate $630 million reduction in our overall debt outstanding. Subsequently, in May of 2021 we entered into an amendment to our Term Loan, which reduced the applicable margin on our LIBOR rate by 1.25%, and paid down $99 million (see Note 4 to the accompanying financial statements).
In May of 2021, we entered into an amendment to our Term Loan which reduced the applicable margin on our LIBOR rate by 1.25%, and paid down $99 million. In December of 2022, we utilized cash on hand to voluntarily prepay $100 million of outstanding borrowings on our Term Loan.
If such assets are considered to be impaired, the impairment loss recognized is the amount by which the carrying amount of the assets exceeds its estimated fair value, which is calculated using discounted expected future cash flows. 56 Impact of Assumptions: The assumptions used to project store impairment loss is based on projected future store income and considers variables such as historical and current trends, macroeconomic conditions, store location and local economy and supply chain factors.
If such assets are considered to be impaired, the impairment loss recognized is the amount by which the carrying amount of the assets exceeds its estimated fair value, which is calculated using discounted expected future cash flows.
(g) Other adjustments include (representing deductions or additions to Adjusted Net Income) amounts that management believes are not representative of our operating performance, including installation costs for energy savings associated with our profitability initiatives, legal fees associated with a distribution to NAHC's members and our omnibus incentive plan, and other costs associated with strategic cost savings and business optimization initiatives.
(d) Other adjustments include (representing deductions or additions to Adjusted Net Income) amounts that management believes are not representative of our operating performance, including installation costs for energy savings associated with our profitability initiatives. (e) Represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at our historical tax rate.
It is imperative that we continue to find innovative ways to strengthen our inventory management if we are to remain competitive and expand our margins on a go-forward basis.
It is imperative that we continue to find innovative ways to strengthen our inventory management if we are to remain competitive and expand our margins on a go-forward basis. Our broad assortment gives us an advantage over mass general merchants who typically do not carry the leading national brands sold at Academy.
The following table summarizes our operating lease obligations by fiscal year: 2023 2024 2025 2026 2027 After 2027 Total Operating lease payments (1) (2) $ 211,906 $ 207,038 $ 200,278 $ 192,346 $ 178,547 $ 908,455 $ 1,898,570 (1) Minimum lease payments have not been reduced by sublease rentals of $0.5 million due in the future under non-cancelable subleases.
The following table summarizes our operating lease obligations by fiscal year: 2024 2025 2026 2027 2028 After 2028 Total Operating lease payments (1) (2) $ 206,111 $ 224,177 $ 215,877 $ 201,825 $ 183,797 $ 924,267 $ 1,956,054 (1) Minimum lease payments have not been reduced by sublease rentals of $2.3 million due in the future under non-cancelable subleases.
These costs were no longer added back beginning in the third quarter of 2020. (f) Represents cash expenses related to taxes on equity-based compensation resulting from the 2021 Vesting Event.
(c) Represents cash expenses related to taxes on equity-based compensation resulting from the 2021 Vesting Event.
(2) These balances include stores where we have an executed contract but have not taken possession of the location as of January 28, 2023. In the fiscal year ended January 28, 2023, we opened nine new locations. We expect to open 13 to 15 stores in fiscal 2023.
(2) These balances include stores where we have an executed contract but have not taken possession of the location as of February 3, 2024.
Dividends The following table summarizes our quarterly dividend payments for the fiscal year ended January 28, 2023 (amounts in thousands, except per share amounts): Dividends Paid per Share Total Dividends Paid Stockholder Date of Record First Quarter (January 30, 2022 to April 30, 2022) $ 0.075 $ 6,536 March 17, 2022 Second Quarter (May 1, 2022 to July 30, 2022) $ 0.075 6,271 June 16, 2022 Third Quarter (July 31, 2022 to October 29, 2022) $ 0.075 5,974 September 15, 2022 Fourth Quarter (October 30, 2022 to January 28, 2023) $ 0.075 5,852 December 20, 2022 Total Dividends Paid $ 24,633 Capital Expenditures The following table summarizes our capital expenditures for the fiscal years ended January 28, 2023 and January 29, 2022 (amounts in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 Corporate, e-commerce and information technology programs $ 50,019 $ 44,967 New stores and relocations 42,735 1,955 Updates for existing stores and distribution centers 15,550 28,880 Total capital expenditures $ 108,304 $ 75,802 We expect capital expenditures for fiscal year 2023 to be between $200 million and $250 million.
Capital Expenditures The following table summarizes our capital expenditures for the periods shown (amounts in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 New stores and relocations $ 100,419 $ 42,735 $ 1,955 Corporate, e-commerce, information technology programs and other 81,992 50,019 44,967 Updates for existing stores and distribution centers 25,359 15,550 28,880 Total capital expenditures $ 207,770 $ 108,304 $ 75,802 We expect capital expenditures for fiscal year 2024 to be between $225 million and $275 million.
Interest expense decreased $2.5 million, or 5.2%, to $46.4 million in 2022 from $49.0 million in 2021 resulting primarily from a lower outstanding balance on our long-term debt as a result of the Refinancing Transactions (see Note 4 to the accompanying financial statements) and the voluntary Term Loan prepayments of $99.0 million and $100.0 million, which occurred in the second quarter of 2021 and the fourth quarter of 2022, respectively, partially offset by an increase in interest rates in recent months on our Term Loan.
Interest expense decreased $0.4 million, or 0.8%, to $46.1 million in 2023 from $46.4 million in 2022 resulting primarily from higher capitalized interest due to increased construction of new stores and a lower outstanding balance on our long-term debt, driven by a voluntary prepayment of $100.0 million made in December 2022, partially offset by an increase in interest rates on our Term Loan.
(3) Assumes a minimum revolving credit commitment of $1.0 billion and no balances drawn on our ABL Facility. 52 Liquidity information related to the ABL Facility is as follows for the periods shown (dollar amounts in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Average funds drawn $ — $ — $ 126,648 Number of days with outstanding balance — — 99 Maximum daily amount outstanding $ — $ — $ 500,000 Minimum available borrowing capacity $ 935,550 $ 780,945 $ 161,089 Liquidity information related to the ABL Facility (amounts in thousands) as of: January 28, 2023 January 29, 2022 Outstanding borrowings $ — $ — Outstanding letters of credit $ 13,878 $ 17,828 Available borrowing capacity $ 947,764 $ 874,831 Leases We lease store locations, distribution centers, office space and certain equipment under operating leases expiring between fiscal years 2023 and 2043.
Liquidity information related to the ABL Facility is as follows for the periods shown (dollar amounts in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Average funds drawn $ — $ — $ — Number of days with outstanding balance — — — Maximum daily amount outstanding $ — $ — $ — Minimum available borrowing capacity $ 881,445 $ 935,550 $ 780,945 Liquidity information related to the ABL Facility (amounts in thousands) as of: February 3, 2024 January 28, 2023 Outstanding borrowings $ — $ — Outstanding letters of credit $ 11,553 $ 13,878 Available borrowing capacity $ 881,445 $ 947,764 On March 8, 2024, the Company issued a press release announcing that the Company entered into an amendment which among other things, extended the maturity of Academy’s asset-based revolving credit facility to March 8, 2029.
The following table summarizes our forecasted allocation of capital expenditures for fiscal year 2023: 2023 Corporate, e-commerce and information technology programs 25 % New stores 55 % Updates for existing stores and distribution centers 20 % We review forecasted capital expenditures throughout the year and will adjust or our capital expenditures based on business conditions at that time. 54 Cash Flows: Our consolidated statements of cash flows are summarized as follows (in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Net cash provided by operating activities $ 552,005 $ 673,265 $ 1,011,597 Net cash used in investing activities (108,806) (76,017) (33,144) Net cash used in financing activities (592,052) (488,854) (750,234) Net increase (decrease) in cash and cash equivalents $ (148,853) $ 108,394 $ 228,219 Operating Activities.
Cash Flows Our consolidated statements of cash flows are summarized as follows (in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net cash provided by operating activities $ 535,779 $ 552,005 $ 673,265 Net cash used in investing activities (206,139) (108,806) (76,017) Net cash used in financing activities (318,865) (592,052) (488,854) Net increase (decrease) in cash and cash equivalents $ 10,775 $ (148,853) $ 108,394 Operating Activities.
As a result, we have experienced a period of decreased or delayed supply and high inflation. These factors have negatively impacted transportation and inventory costs. Under the last in, first out method ("LIFO"), our cost of sales reflects the costs of the most recently purchased inventories.
As a result, we experienced a period of decreased or delayed supply and high inflation which negatively impacted transportation and inventory costs. Over the past year, we have seen improvement to these constraints, resulting in decreased freight costs. We refer to loss or theft of inventory as "shrinkage" or "shrink".
Our improved e-commerce platform supports our stores with digital marketing and our BOPIS and ship-to-store programs. Additionally, our e-commerce platform allows us to reach customers outside of our current store footprint and introduces new customers to the Academy brand. It also allows for us to connect further with our customers for marketing and product education.
These platforms allow us to connect further with our customers for marketing and product education and assists us in introducing customers to the Academy brand by reaching customers outside of our current store footprint. During 2023, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS and in-store retail sales.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest change“Derivative Financial Instruments” and Note 6 “Fair Value Measurements” to our accompanying financial statements included in Part IV. Item 15 of this Annual Report. The detrimental effect of a hypothetical 100 basis point increase in interest rates on current borrowings under the Term Loan and ABL Facility would increase our interest expense by approximately $2.0 million.
Biggest changeThe detrimental effect of a hypothetical 100 basis point increase in interest rates on current borrowings under the Term Loan and ABL Facility would increase our interest expense by approximately $0.9 million. Interim Results and Seasonality Our business is subject to seasonal fluctuations.
Our net sales and profits are also impacted by the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter. 58
A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter. Our net sales and profits are also impacted by the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.
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Interim Results and Seasonality Our business is subject to seasonal fluctuations. A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter.
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“Derivative Financial Instruments” and Note 6. “Fair Value Measurements” to our accompanying financial statements included in Part IV. Item 15 of this Annual Report. As of February 3, 2024, we do not have any derivative financial instruments outstanding.

Other ASO 10-K year-over-year comparisons