Academy Sports (ASO) Dips on Dick’s Sporting Goods’ (DKS) Horrible Quarter
Shares of Academy Sports (ASO) are trading lower today after Dick’s Sporting Goods (DKS) put up a pretty awful quarter.
A few thoughts.
On the downside, DKS’ quarterly report missed expectations pretty much everywhere – sales, EPS, gross margin. They also cut full-year guidance.
On the potential upside (for other retailers trading down in sympathy), Dicks management discussed issues related to inventory shrinkage (i.e. theft) and too much spent on payroll, etc. Some of this is very company specific.
Turning to ASO, it’s definitely possible many of the issues with DKS are specific to that company. Academy’s management team talked about expense cuts in June, and a greater focus on inventory shrink/management. It’s also a “trade down” type retailer, which could be good for consumers looking for less expensive options. This is likely why ASO is off its lows, and not nearly as beat up. It’s also part of why I added the stock last week.
Right now, I’m not making any changes on our ASO strategy. But I’m doing more work on it and following this story as it evolves.
