Q2 2024 Academy Sports & Outdoors Inc Earnings Call
Speaker Change: The The
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Academy Sports and Outdoor, second quarter of fiscal 2024 results conference call. At this time, this call is being recorded, and all participants are in less than only mode.
Speaker Change: Following the prepared remarks will be a brief question and answer session. Questions will be limited to analysts and investors. Please let me yourself to one question and one follow-up.
Speaker Change: The answer to your question during the call, please press star 1 from your telephone keypad. If you require operator assistance during the call, please press star 0.
Speaker Change: I'll now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please go ahead.
Matt Hodges: Good morning everyone, and thank you for joining the Academy Sports & Outdoors second quarter 2024 by nature results call.
Speaker Change: For kids made out of college, Steve Lawrence, Chief Executive Officer, and Carl Ford, Chief Financial Officer. As a reminder, statements in today's earnings release and the comments made by management during this call may be considered forward-looking statements.
Speaker Change: These statements are subject to risk in its underneath that could cause our actual results to differ materially from our expectations and projections.
Speaker Change: Police risk and attorneys include, but are not limited to the factors identified in the earnings release and in our SEC filings.
Speaker Change: The company undertakes no obligation to revise any forward-looking statements.
Speaker Change: Today's remarks also referred to certain non-gap financial measures. Reconciliation to the most comparable gap measures are included in today's earnings release, which is available at investors.academy.com.
Speaker Change: I will now turn the call over to Steve Lawrence for his remarks. Steve?
Steve Lawrence: Thanks, Matt. Good morning to everyone and thank you for joining our second quarter, 2024 earnings call. We truly appreciate your interest and support of Academy Sports and Outdoors.
Speaker Change: Sales for the second quarter came at 1.55 billion, which was down 2.2% versus the second quarter last year, and which translated into a negative 6.9% count on a shifted basis.
Speaker Change: The active young families that we primarily serve remain under financial pressure.
Speaker Change: They're struggling to produce spending power driven by price inflation, coupled with higher credit card debt and the link with fees, both the which remain well above pre-pandemic levels.
Speaker Change: We continue to see these factors constrain household spending on discretionary goods in the nearer term.
Speaker Change: At the same time, we faced a very active storm season during the quarter, which included tornadoes and Houston and Dallas and May, and Hurricane Barrel and July, both of which disrupted the business and some of their biggest markets for several weeks during the quarter.
Speaker Change: Hurricane Barrel was particularly impactful and left a few million people without power from multiple days. After making certain all of our team members who were accounted for in safe, we started reopening stores as quickly as possible and began reaching out within the local communities to provide assistance where we could.
Speaker Change: As part of the recovery effort, the academy donated nearly 200,000 bottles of water to help provide relief from the summer heat to those without power.
Speaker Change: We also provided financial assistance in more than 450 of our associates for our team member assistance program.
Speaker Change: I'm very proud of the team for their efforts to quickly deploy the supplies to help out the communities we serve.
Speaker Change: We estimate that these events negatively impact their sales for the quarter by approximately $16 million a roughly 100 basis points in top.
Speaker Change: The other challenge we face had to do with some of the issues that arose as we converted our Georgia Distribution Center to our new warehouse management system.
Speaker Change: As we mentioned in a last call, the initial switchover went smoothly. The main issue we faced was that the ramp up and productivity from the system scaling up could not keep pace with accelerated throughput. We needed to keep the spully and stock during the large volume weeks we experienced during the key several months.
Speaker Change: Working through these sorts of issues as part of the course of these types of systems and implementations. At this point, we're now mostly caught up in this facility and believe it will be ready to take on the accelerated volume we'll see if we ramp up for the holiday season.
Speaker Change: For SMIt is, the PR stocks created by this issue cost us approximately $32 million in sales for roughly 200 basis points in costs.
Speaker Change: We intend to apply the learnings for this goal-life to our cook bill in KDDC Rolls to help minimize any impact on ourselves.
Speaker Change: At this point, we believe we will convert our next DC in Cookville, Tennessee in early 2026.
Speaker Change: For not satisfied with our Q2 results, we recognize that we continue to operate in the challenge of your retail environment for the sports and outdoor categories.
Speaker Change: Our goal remains to grow market share and we're pleased that we continue to hold on to the line share of the business we've picked up over the past five years with Q2 sales running up 25% versus pre-pandemic levels.
Speaker Change: The trans we cited in previous calls in terms of customer shopping patterns continued to hold true.
Speaker Change: We're seeing customers coming out to shopping the key moments on the calendar and then pulling back, I'm spending during the walls.
Speaker Change: Tales results during key events such as Memorial Day, Father's Day, and the 4th of July were solid and in line with our expectations.
Speaker Change: The back-to-school business which straddles Q2 and Q3 for us was weaker than anticipated at the end of July.
Speaker Change: As we turn the corner into August, we saw the customers were compressing their shopping closer to the school start dates, which shifted some volume from late to late to late to August.
Speaker Change: looking at sales across both months. Please, would be overall results for back to school and the solid start to queue three that it gave us.
Speaker Change: Business Outside of these key time periods was more challenging than anticipated, primarily driven by the aforementioned storms and DC conversion issues.
Speaker Change: When the customer does come off the shop during the key events with the calendar, we continue to see them gravitate towards value as well as the new and innovative items in our sort.
Speaker Change: We will continue to leverage these customer shopping behaviors by leaning into our position that the value leader in our space across all touchpoints.
Speaker Change: Our approach is to drive traffic with strong everyday pricing, Dan and Dale while focusing our promotional efforts into the key shopping moments on the customer's calendar.
Speaker Change: At the same time, we will continue to incubate new ideas and roll them out aggressively as they resonate to ensure that we're delivering a steady diet of mooness to our customer base.
Speaker Change: In terms of performance, cross are different businesses.
Speaker Change: on a non-shifted sales basis footwear was the best performing division, the sales increasing 1% over last year.
Speaker Change: James and Athletic Fat were out for far for the quarter, driven by increases in leading active brands, such as Nike, Brooks, A6 and new balance.
Speaker Change: Ford's also a key contributor with strong fails in area and willv rain.
Speaker Change: We're also pleased with the momentum we're seeing in our casual business driven by Birkenstock, Crocs and Skechers.
Speaker Change: The outdoor division also ran a 1% increase during the quarter.
Speaker Change: We continue to see strength in hunting and fishing businesses.
Speaker Change: Drinkler also remains a strong training category with Yeti, Stanley and a wall all consistently delivering a strong pipeline of muneus.
Speaker Change: The pair of cells were down 2% for the quarters.
Speaker Change: Within this division our kids' business ran a solid increase.
Speaker Change: Fred Dolt, outdoor and athletic businesses performed in line with the average for a peril.
Speaker Change: across both adult and kids, we continue to see strong results from key national brands, such as Nike, Crawheart and Levi, will also seem solid growth in some of our new private brands such as freely and roll.
Speaker Change: So, Lord of Key 1, our licensed team sports business under performed primarily driven by slow starts by the key professional baseball teams in our region including the Rangers and Astros.
Speaker Change: As a reminder, the bulk of this business has done in the back half of the year, and we remain optimistic that our ability to turn this business around as we head into college with pro football season.
Speaker Change: Sports and Recreation was our most challenged situation, the sales down 7% versus last year.
Speaker Change: We're encouraged by our team sports business, which we're going to modest increased during the quarter, primarily driven by baseball, football and pickleball, but that was not enough to ask if the declines we continue to see in several of the big-ticket, long replacement cycle businesses.
Speaker Change: and Replication Categories, such as Poodles, Trampalines, and Fitness, on the KIAX, and Power Marine and Outdoor Division, continue to be some of our software businesses.
Speaker Change: To help manage through these slow sales trends, we've right-side the inventory for space and marketing investments for these businesses to align with the current sales contribution.
Speaker Change: As I covered on the last race call, we also continued our best at new ideas and brands as a way to start the man and stabilize the trend lines in these categories.
Speaker Change: We've seen some clearly encouraging results with some of the new ideas of fitness and started landing later in the corner, such as walking paths. And we'll need to continue to monitor progress here as we move forward throughout the fall.
Speaker Change: At this point, we've made it through many of the key selling events for 2024, including a strong finish to that school, which just wrapped up in August. And we're now more than halfway through the fiscal year.
Speaker Change: Here today, sales through August are down 2.9% to last year, which translates into a negative 5.4% comp on a shifted basis.
Speaker Change: We believe that most of the economic factors pressing consider spending on durable goods will continue throughout the remainder of the year. Based on this, and our year-to-date results, we believe it is prudent to revise and narrow our annual guidance.
Speaker Change: We now forward cast sales for the full year, trained from 5.9 billion to 6.07 billion, which would be a negative forward to negative 1% decline in total sales versus last year, and a negative 6% negative 3 in compounds.
Speaker Change: The team is laser focus on aligning our expenses, the seat flows and inventory with this revised forecast.
Speaker Change: and a profitability standpoint, our gross margin rate came at 36.1% for the quarter, or a 50 basis point increase versus last year.
Speaker Change: Despite the softer than anticipated sales trends, we remain focused on our inventory control disciplines, which we believe will enable us to achieve our full-year growth margin in guidance range, a 34.3% to 34.7%.
Speaker Change: Earl discuss her prostate performance in revised guidance in more detail in his comments later in the call.
Speaker Change: We continue to see some green shoots in our business as our growth strategies for our long-range plans start to take root.
Speaker Change: As a reminder, those are opening new stores in expanding our store base.
Speaker Change: Billing in more powerful on-the-channel business and driving greater productivity out of existing businesses.
Speaker Change: Now give you nothing on each.
Speaker Change: Newster Roll remains a primary sales driver.
Speaker Change: and for the second consecutive quarter or 2022 vintage of new stores posted a positive pop.
Speaker Change: despite the challenging economic backdrop. At the same time, we're continuously applying learning from each new store opening to future venues. When we remain pleased with the sales trajectory we're seeing for both the 23 and 2024 venues of stores.
Speaker Change: During the quarter, we opened one new location in St. Phil Ohio, and our leaders from the store strong. This is our first Orlando Hile expanding the Academy brand to 19 states.
Speaker Change: As we've discussed previously, our goal is to quickly build density in these new markets after we enter them. You'll see our second Ohio store open up this fall with several others planned for 2025 and 2026.
Speaker Change: But we currently only have nine stores from the 22-minute to the copies as we laugh in the majority of the 23 stores in the back half of the year and then to early next year we expect the confirmation from new stores to increase their impact on the total company comp sales trend.
Speaker Change: Here today we've opened up three new stores and are currently on track to hit our goal of 15 to 17 new stores this year.
Speaker Change: In terms of a second growth initiative, for dot-con, business ran its third consecutive quarter of positive growth, and our penetration increased to 9.7% of total sales, which is 30 basis points over last year.
Speaker Change: While it's still early days in the contribution levels to the wall, they're encouraged by the performance of some of our new capabilities such as same day delivery power like DoorDash.
Speaker Change: Our initial analysis of the Nordash data indicates that the business generated through this platform is a creative, due to it attracting a younger customer along customers who tend to live in more dense urban city centers where we don't have a large brick and the presence.
Speaker Change: The third leg of our graph strategy is to drive greater productivity on our existing business.
Speaker Change: We expect that a key contributor to this will be the work we're doing around expanding our customer base, we'll also cultivating a deeper engagement with shoppers who are already in our ecosystem.
Speaker Change: Thank you to, we launched my Academy Awards, which will go on to all stores in early July. It's meant to supplement our Academy Credit Card, which remains the highest tier in our local program.
Speaker Change: As a reminder, the key value proposition is included. It will come off for about 10% off your next purchase of up to $200.
Speaker Change: Please shipping on purchases over $25 or 50 for people who aren't in the program.
Speaker Change: Bassard check-ups are both online and in our app.
Speaker Change: I'm both doing award and insider access to personalized offers deals and products.
Speaker Change: A great example of the last benefit was in an activation campaign we ran at the start of back to school.
Speaker Change: We offer Stanley to procure an exclusive, limited edition color weight and their iconic adventure-quenchur tumblr. This exclusive color was only available to members of our loyalty program for the first week. We sought drive strong sign-up engagement with our Academy of Rules program.
Speaker Change: and we just launched it with pleased with how our customers are embracing and actively signing up for my academy. It's a numbers around this activity. Our daily sign-ups are on the 3X, what we previously saw for customers opting in to create an account with us and we're opting in to target marketing efforts.
Speaker Change: Now original goal, we constructed the program, was to have over 10 million members enrolled by the end of the year. And based off the early weeks, we're confident we'll exceed this goal.
Speaker Change: For getting customers signed up to step on the real value of loyalty will be the migrant customers from occasional shoppers to Loyolas.
Speaker Change: We know that our best customers are on the channel shoppers and the shop is three to four times more frequently, but a single channel shopper and then on an annual basis it's been four times as much with us.
Speaker Change: to reiterate, we're not satisfied with the year-to-date results.
Speaker Change: We're encouraged by our performance during the key shopping moments in the calendar, including the strong finish to back to school.
Speaker Change: The team is moving with urgency across all fronts in a single-minded league focused on improving our top-line performance.
Speaker Change: Well, we cannot control many of the economic factors a customer should be dealing with. We can't control how we deliver and market value and newness to our customers on a consistent basis. We should be to improving our top-line performance, while maintaining a bottom line profitability.
Speaker Change: Our focus remains unmanaging through the short term by growing market share while also planting seats for the future executing against our long range growth platforms.
Speaker Change: Now, I will turn it over to Carl who gives you a deeper dive in our Q2 financials and erupting a guide that's from the full year.
Carl Ford: Thanks, Steve, and good morning everyone. Steve covered some of the numbers, but I am going to walk you through the results in more detail.
Carl Ford: The second quarter sales of 1.55 billion and comparable sales of negative 6.9% fell short of our expectations.
Carl Ford: primarily due to a decline in storage traffic compared to last year. Our Comp Transactions declined 7.4% while Comp Sicket increased by 0.5% compared to last year.
Speaker Change: Our primary customers, those with annual incomes of between 50,000 and 150,000 remain very budget conscious and cautious, showing low consumer sentiment for certain discretionary categories.
Speaker Change: We also see an increase in credit card and by now pay later usage in conjunction with household debt continuing to reach multi-year highs. So while inflation has moderated, prices are still high and that along with an increase in personal debt is impacting spend in our category.
Speaker Change: During the quarter, we did see a fails trajectory left during the major shopping events, but it was not enough to offset the slow periods in between. Speaking to the trends of the quarter, May was impacted by tornadoes in our two biggest markets, Houston and Dallas Fort Worth.
Speaker Change: Sales and proved in June, but weekend in July due to hurricane barrel hitting the Houston area. The impact of temporary outbound inventory issues at our Georgia Distribution Center and a compressed back to school shopping period.
Speaker Change: Our gross margin rate in the second quarter was 36.1%, a 50 basis point increase compared to Q2 of last year. Primarily driven by inventory cost management and lower freight experience. Shrink was five basis points better than last year as a percentage of sales.
Speaker Change: Our second quarter SGNA expense of $368.6 million with $16 million or $150 basis points higher than Q2 of last year.
Speaker Change: All of the entries is attributable to spend on our growth initiatives, primarily for new stores and technology.
Speaker Change: We are confident in our long-range plan and are committed to investing in it while also controlling our existing cost structure.
Speaker Change: Overall, in the second quarter, Academy had a double-digit EBIT margin rate of 12%. And generated that income of 142.6 million and diluted earnings per share of $1.95.
Speaker Change: But just in that income which excludes stock base comp of 8 million was $148.6 million or $2.3 in adjusted earnings per share.
Speaker Change: Looking at the balance sheet, we ended the quarter with 325 million in cash.
Speaker Change: Park inventory balance was 1.37 billion and increase of 4% compared to last year.
Speaker Change: Total inventory units were flat, and this includes having an additional 15 stores compared to the end of Q2 2020-3.
Speaker Change: on a per store basis inventory units were down 5%.
Speaker Change: The Merchandiving team continues to do a great job of managing our inventory and think with our sales.
Speaker Change: In terms of capital allocation, our strategy remains the same. To execute against our three pillars, which are one financial stability.
Speaker Change: Two self-funding are growth initiatives and three increasing shareholder returns or share repurchases and dividends.
Speaker Change: We believe these priorities will help drive future sales and earnings growth as well as increase shareholder value.
Speaker Change: In Q2, we generated approximately 91 million in cash from operations. We invested 41 million in our growth initiatives. We purchased approximately 1.8 million shares for 99 million and paid out 8 million in dividends.
Speaker Change: Year to date, Academy has generated approximately 217 million of adjusted, free cash flow compared to 136 million during the first half of 2023.
Speaker Change: This is a 60% increase driven by strong retail operations across the academy.
Speaker Change: Vanderbilt examples included one, disciplined inventory control, leading to a decline in units per store.
Speaker Change: Sue managing promotions in a strained economy, resulting in 10 basis points of year-to-date gross margin rate expansion.
Speaker Change: III, controlling expenses while investing in growth initiatives, and for reducing the amount of capital it takes to open new stores.
Speaker Change: Finally, the board recently approved a dividend of 11 cents per share, payable on October 17, 2024, to stockholders of record as of September 19, 2024.
Speaker Change: Now turning to our outlook for the remainder of the year.
Speaker Change: Based on the current state of the consumer and our year-to-date results, we are revising our previous guidance for fiscal 2024.
Speaker Change: One note, in addition to gap measures, been adjusted for cash flow, we are also providing guidance on two non-gap measures, adjusted net income and adjusted earnings per share. Our revised guidance is as follows.
Speaker Change: Matt sales are expected to range from 5.9 billion to 6.07 billion with comparable sales of negative 6% to negative 3%.
Speaker Change: Let me provide a bridge between the low end and the high end of the comp range.
Speaker Change: The low end of the range assumes that the economy does not improve meaningfully over the back half of the year and that there is no real change in our customers behavior.
Speaker Change: The Delta from the low ends to the high end estimates that sales remain on the current August trend. And we've been a set from some or all of the plans and tactics we are deploying to drive traffic and sales in our stores and online.
Speaker Change: Lee's included adding 12 to 14 new stores.
Speaker Change: Focusing our promotional efforts around the key shopping events utilizing our customer data platform.
Speaker Change: being more pronounced with our value messaging.
Speaker Change: Bringing in more new and innovative products.
Speaker Change: Capitalizing on a resurgent outdoor business.
Speaker Change: Growing the new My Academy Loyalty Program and finally leveraging DoorDash, especially after the Christmas ship and cut off dates.
Speaker Change: Our gross margin rate is still expected to range from 34.3% to 34.7%.
Speaker Change: are S.G. and A expense rate is now expected to be approximately 150 basis points higher than in 2023.
Speaker Change: Gapnet income of between 400 and 460 million dollars.
Speaker Change: Adjusted net income, which excludes certain estimated expenses, primarily stock based compensation of approximately 27 million, is forecast to range from 420 to 480 million dollars.
Speaker Change: Gap diluted earnings per share of $5.45 to $6.20.
Speaker Change: and adjusted deluded earnings per share of $5.75 to $6.50.
Speaker Change: The earnings per share estimates are based on a revised share count of 73.5 million diluted weighted average shares outstanding for the full year.
Speaker Change: This amount does not include any potential future repurchase activity using our remaining 476 million authorization.
Speaker Change: We also remain confident in the strength of our cash flows and still expect to generate between 290 million and 340 million of adjusted free cash flow, including 175 million to 225 million of capital expenditures.
Speaker Change: The Reduction in CapEx guidance is primarily from the work of our real estate and construction team finding ways to open stores more efficiently and building those cost savings not only into 2024 but 25 and beyond.
Speaker Change: We are proud of the value engineering work, Sam Johnson and his real estate team have done in lowering the cost profile of our new stores.
Speaker Change: When we first restarted opening stores in FY22, we were far from optimized. As we build our capabilities and leverage our scale, we have found a number of ways to optimize costs, inclusive of raw material procurement, construction services, and landlord participation.
Speaker Change: This value engineering is also benefiting our store remodel program, allowing us to better serve our team members and customers for less.
Speaker Change: Finally, as we focus on our growth strategy, we have elected to pursue fewer technical projects. To focus on our biggest projects associated with Army Channel, our customer data platform, and our new WMS system.
Speaker Change: Through the first half of the year, our sales were lower than expected.
Speaker Change: But we have prudently managed expenses, resulting in a double digit EBIT margin.
Speaker Change: We also increased our adjusted free cash flow by 60% over last year, which we utilized to repurchase 3.8 million shares or 5% of the outstanding shares of the company.
Speaker Change: At the same time, we have self-funded the investments in the growth pillars of our long-range plan. We believe the actions we are taking to grow the business will drive future sales and earnings growth. With that, we will now open it up for questions.
Speaker Change: Thank you.
Speaker Change: The company will now open the call for questions. To ask you questions, please press star 1. We'll pause a minute to watch the queue. Thank you.
Speaker Change: Thank you and our first question today is from the mind of Brian Nagle with OpenHimer. Please see the question.
Speaker Change: Good morning.
Speaker Change: I'm going to ask the first question I want to ask.
Brian Nagle: and it's a bit of a maintenance question, so I apologize. But you know, just to understand better the sales trajectory in the business.
Speaker Change: So, you know, and make sure I understood this correctly. So, in the prepared comments you talked about, it means essentially 300 basis points.
Speaker Change: of Comp Impact from other the weather.
Speaker Change: or the distribution center issues. And then I think you gave us a comp for August and we're down 5 something.
Speaker Change: So the question I'm asking is, how do we bridge that? Has the business strengthened, did the business strengthened in August with the benefit of back to school kick?
Speaker Change: Yeah, so in terms of the trajectory, what ended up happening was, we talked about the events being strong, right? So we saw strong memorial day, we saw strong fathers day, we saw strong Fourth of July. Businesses impacted in early...
Speaker Change: July with the onset of Hurricane barrel, that lasted for about two weeks where we felt that was the best difference.
Speaker Change: and then towards the later part of the month, I think that's where some of the Instaques heard us from our Atlanta facility. I told that that probably surprised you a little bit, plus a little bit of trade-off volume into August. This is really rebounded in August. We actually ran a positive conf in the month of August.
Speaker Change: which we're pretty excited by, you know, it's one month we don't want to get too far ahead of ourselves, but, you know, it kind of matches, we had a positive con for the 4th of July week, and then we had kind of some disruption to the business and came back to the positive con, and I guess it feels like...
Speaker Change: and some of the initiatives that we're working on are kicking in. Still are late, right? We still have a lot of the back half out of us. The negative five four that we cited was the year to date count through seven months. So that's been confusing. We were down about 6.4% through six months.
Speaker Change: through seven months. It was down 5.4% we wanted to provide that data point because we get questions around, okay, the law of your guidance, you know, is down 6. We wanted to make sure people understood that we were within the low end of our guidance in that guide. I'm so glad you're here.
Speaker Change: Guy, that's very helpful. So just to reimburse the cop in August was positive.
Speaker Change: Okay, in the second question I have, is a follow-up to that, I mean, you know what you're saying today and we're hearing from a lot of other companies is that
Speaker Change #100: who consumers are showing up for events, it's just that...
Speaker Change #101: There's incremental weakness in the walls between those events. So I guess the question I want to ask, you know, you've done a great job of maintaining gross margins and you're looking at your guidance, you expect that to persist in the balance of your year, but is there any thought given the state of the consumer, given how the consumers behaving to get more selectively promotional here to drive better sales?
Speaker Change #102: Yeah, we've tried a lot of different things over the past 12 months to try to stimulate sales, particularly in those walls and what we found is
Speaker Change #103: in those walls when the customer is really pulling back on spending running extra promotions, tends to rot or you are. We don't get the unit up with to offset the AUR erosion and we just give up margin. So the strategy we've landed on that's really seems to work for us is...
Speaker Change #104: Drath off a everyday value proposition, kind of in the walls in between, because we have really strong everyday value, whether it's in our private plans or our national brands that we offer. I've then really aggregated those promotions around those Muslim moments, and that really seemed to work for us, and I see that continuing as we move forward through the remainder this year.
Speaker Change #105: Guys, we're appreciative to call it, thank you. The problem, thanks, Brian.
Speaker Change #106: Thank you. The next question turned in line of Anthony to combat with Luke Kampen-Warkets. Please receive your question.
Speaker Change #107: Good morning, thanks for taking my questions. What are you seeing in terms of the competitive landscape, particularly given the fact that, you know, as you mentioned, consumers are really kind of fresh right now. It's getting any more promotional out there. I'm anything notable that you would point out there.
Speaker Change #107: Yeah, I think we see a continuation of trends that we've talked about on some previous calls where
Speaker Change #108: You know, you had a either promotional environment, pre-pandemic, a lot of that went away during the pandemic. I think further we get away from that, I think you see more promotions creep in.
Speaker Change #108: Each event, it's still where nowhere near back to where it was pre-pandemic. Certainly, it felt like there was...
Speaker Change #109: More promotions and more broad-based promotions during back-to-school, but still not back to where it was pre-pandemic. So we have that modeled in and planned into our promotional tables for a major year. We think we've got to pretty good beat on it. I would characterize as a little more promotional last year, but certainly not back to where it used to be.
Speaker Change #110: Hey Anthony from a competitive landscape standpoint, I think you see permutations spike when heat when retailers don't control their inventory. We feel good about where we are from the inventory disciplines standpoint units per summer down 5% year over year. In looking at a lot of the earnings that I've seen come out the spot, it looks like inventories are relatively well controlled across the channel that's just my viewpoint.
Speaker Change #111: But I think to the extent that people in Bensori get out from under him, that will tend to inflict promotionality. And again, we're just going to lean into what Steve said on every day value in the laws and then went on the muslim time period.
Speaker Change #112: Got it, that's helpful. Thank you.
Speaker Change #113: Our next question comes soon in the line of Seth Bashem with Redwood Securities. Please do their questions.
Speaker Change #114: Thanks a lot, and good morning. My first question is thinking about being proving trend in August and expectations for the back half of the year. You guys can get color on the low-end versus high-end of the combat look.
Speaker Change #115: But if we think about some of the other drivers of potential improvement, perhaps you give us more color on things like contributions from new stores that are coming in the hot days, and how much you expect from the loyalty program.
Speaker Change #116: Sure, so when you think about the guidance that we gave the low end kind of plates that we see kind of the trends through the first seven months of the year.
Speaker Change #117: Continuing forward. So down 5-4, the down 6 kind of brackets that we don't see getting much better and I'll add.
Speaker Change #117: that that down 5-4 through the first seven months has.
Speaker Change #118: to pretty tough weather events in it, along with the slowdown in our Atlanta facility, which we believe from mostly past this point. So, hopefully we don't have to deal with those going forward. The high end.
Speaker Change #118: Employees, the trends that we saw in August continue to a certain degree through the remainder of the year.
Speaker Change #118: and there's a lot of things that we think would help contribute to keep in that stateing, you know, first.
Speaker Change #119: We've talked about leaning in the customer behavior, focusing on value, making sure we've got the right prices during their key promotional time pairs when we need to win market share, leaning in the newness and innovation as the customer really is buying that almost agnostic price.
Speaker Change #120: We've got a research and outdoor business and we've seen in improving footwear and apparel business. One of the things that was really encouraging to see out of August was
Speaker Change #121: It wasn't just the back-to-school category, certainly we saw strength in our kids' business and what we're in a peril, but we also saw adult peril for the strong, we also saw outdoor business, be pretty strong.
Speaker Change #122: We've seen new stores coming into the base. We talked about how the 22 of them just stores. Now I have two back to that quarter of positive cops.
Speaker Change #122: as we get deeper into this year, off several of the 2023 stores start leaning into that base as well.
Speaker Change #123: We've got a new look at program, which is early days, but we're seeing sign of stare.
Speaker Change #123: People signing up for about three times faster than they did in the past for an account sign-up. And the more people we can get into that, into that program, the more targeted marketing we can do, we can get that flywheel going so we're pretty excited about that. And we're well on pace to be about the 10 million customers there by the end of year, and exceeding our goal, they're so pretty excited.
Speaker Change #123: He got an election year that is always a well card so that could simulate certain businesses could also maybe impact other businesses.
Speaker Change #124: to the negative we've got got calm that is three quarters in a row of positive growth and then new capabilities, you know, we've got the same day delivery that's powered by DoorDash, we talked about in the last.
Speaker Change #125: Paul and I touched on some of my prepared remarks and I mean that's a new capabilities for us where
Speaker Change #126: You know, we didn't have that ability and you think about it's helping us reach people more in inner cities, so it's a new customer that's mostly creative. And what I think really excited about is if you think about that holiday time period, you get into that 18th or 19th of December where...
Speaker Change #127: People stop trying to shift goods because they're afraid that it's not going to get delivered in time. We now have the capability to offer same day delivery on that. I think it's really going to help us those last five to six days heading in the Christmas. So those are the initiatives that I think get us from the low end of the guidance to the higher end of the guidance.
Speaker Change #127: That's really helpful, Tyler. And maybe just to follow up on these stores.
Speaker Change #128: Can you provide some more information on how the 2023 class is performing relative to your expectations? As you look at 2025, do you plan to material accelerate the number of stores you're opening that year relative to 2024 to hit your medium term guidance? Thank you.
Speaker Change #129: Yeah, so I'll start with, we're excited to see the 22 that it just stores post positive cops.
Speaker Change #130: We've taken the learnings from each of the enemies to the climate of the next damage. So I'll tell you that there are 23 stores.
Speaker Change #131: Although most of them are not in the concept of this point, they're performing better out of the gate than the 22's, and the three stores, we just built on a far, far, far, far, far away, this past weekend, soft opening and right, exactly West Virginia, we expect those to be better than the 23, so we're seeing them steadily get better as we open up each finish.
Speaker Change #131: This year, our plan is open up 15 to 17 new stores over the next five years, 160 to 180. It doesn't apply an acceleration next year, so our plan right now, we haven't given a guidance on what the exact number will be, would be to be more stores than the 15 to 17 we're opening up this year.
Speaker Change #131: Thank you.
Speaker Change #131: Our next questions are in the line of Civilian Government with Morgan Stanley. Please just see with your questions.
Speaker Change #132: Hi everyone, I'm following up on the prior question, Steve, if you look at the holistic spread.
Speaker Change #133: between the comps of new stores and mature stores. However, way you can segment them. Is that spread roughly holding? Did it narrow? Did it widen? If you look first the second quarter. Thanks.
Speaker Change #134: I would say that the cop between new stores and existing stores was about the same first quarter to second quarter.
Speaker Change #134: The thing we're pleased by is...
Speaker Change #135: You know when you think about a growth strategy, we talked about obviously a new store growth is number one platform for growth and that's where we're going to get the big Spain for our buck. The second one is
Speaker Change #135: I'm Colin, but implied in our long-range plan is to have flattish the slate, comf increases in the base, and we haven't had that, so the fact.
Speaker Change #136: that the new stores are comping positive. That's a much bigger spread than we initially model between the base and the new stores. And I hope and belief is that as we see, you know, the base business starts to come back that we'll see an even greater acceleration.
Speaker Change #137: and the comp on a new store waterfall because if we can hold that same dump of that, that would be really really a strong outcome for us.
Speaker Change #137: Okay, and then quick follow up.
Speaker Change #137: The gross margin performance in guidance looks good in light of what's happening in the backdrop.
Speaker Change #138: There's any of this year's gross margin gains preclude how it flows in 25. We much, you can improve next year, I don't know if on DC side or inventory is there anything that you're kind of, I don't know if you pull forward in any way, but how to think about that.
Speaker Change #139: Now, I would tell you, no, it doesn't, in fact, I think with the George of Distribution Center, I'd a bit of a headwind.
Speaker Change #140: I think we'll see improved performance from a distribution center standpoint, from reminder that the DC productivity is housed within Gross Margin.
Speaker Change #140: and as we think about the longer term, you know, five-year plan. We had supply chain benefits in there, we had growth about 150 basis points and growth margins. There's nothing that we're seeing that makes us feel otherwise about that. So, no, I don't think I don't think.
Speaker Change #141: What were the 50 basis points that were up in Q2 this year? I don't think that takes away anything associated with the trajectory of 2025.
Speaker Change #142: Okay, thank you both. Good luck, take care. Thanks for being.
Speaker Change #143: The next questions are from the line of Justin Cleaver with Barred. Please just see the other questions.
Speaker Change #144: Good morning, everyone. Thanks for taking the questions. First, just on Gross Margin, Steven Carl, you mentioned inventory cost management. Can you comment just on how merchandise margins performed during QQ and what your guidance assumes for Merks margins across the back half of the year?
Speaker Change #145: Yeah, so just in review 50 basis points I've been responding in Q2, year to date up to 10 basis points, my comments are in Q2, so that 50 basis points to composition up to 20 basis points from emerging diving margins tailwind.
Speaker Change #146: Slight tailwind associated with freight, shrink with five basis points better, so nothing much to speak out there.
Speaker Change #147: I think it's a good old fashion, like inventory management, to be honest with you, and leaning into promotions only during those key time periods and then leveraging EVV during the walls, that's a bit of a composition. So from a guidance perspective, we held guidance at 34-3-34-7 implied in that is...
Speaker Change #147: in a roughly a 40 basis point spread that 40 basis points would be driven primarily by merchandise margin if we achieve the high side of that guy's.
Speaker Change #148: Good morning. Okay, thank you very helpful. And they just given last year's extra week and the fact each quarter of this year starts one week later, what was the sales?
Speaker Change #149: and EPS benefit here in 2Q and can you provide us any color on what that calendar shift headwind will look like as it reverses across the back half of the year just so we have our models.
Speaker Change #150: Calabrated appropriately. Yeah, for Q2, it was about a $35 million benefit to the second quarter.
Speaker Change #151: So, that's our comment on the shift, that'll reverse the bulk of that in the recorder of the remainder and for, I've heard a lot of commentary in the Marketplace Association with that cadence. It's applicable to us, and magnitude is just a bit different based on our size and scale.
Speaker Change #152: Just to be clear, that impacts the total number that we're reporting. The company number is on a shifted basis. That's also a good way to think about the businesses.
Speaker Change #153: We have shifted and are preparing weeks once or 52 this year against weeks two through 53 of last year. So that does take into account any of these shifts when we report that number.
Speaker Change #153: Thank you so much, that's a lot. Thanks for your suggestion.
Speaker Change #154: Our next question from the line of Christine the Fernandez with Telsey Viser Group. Please see with your questions.
Christine Fernandez: Hi, good morning. I want to, um...
Speaker Change #156: asked about the improvement you saw in August, would there specific categories that had more of the benefit, and can we talk about it with the improvement mostly in traffic or cover, or conversion just to understand what led to the better trend.
Speaker Change #156: We have the primary improvement came through traffic.
Speaker Change #156: We also had some of you are uplift during the month as well.
Speaker Change #156: in terms of the...
Speaker Change #157: The performance was very broad based, you know, to initially the first part of the month.
Speaker Change #158: He was more back to school driven, you know, obviously, but we're a pair old driving that. But that being said, you know, our back to school is earlier. We don't have a lot of school districts in our Geography, go back to school culture, the Labor Day. So really back to school for us kind of...
Speaker Change #159: Strattles, that last week or two July into the first week or two of August.
Speaker Change #160: and we saw continued strength once we got past those first two weeks all the way through in the Labor Day.
Speaker Change #161: and it was broad-based, it was a parallel, it was footwear and it was in our outdoor division. So I think certainly we saw an increased traffic from back to school, but it felt like it kind of sustained.
Speaker Change #161: as we move through the morn which was encouraging to us.
Speaker Change #161: And then a second question from the private brands, can you talk more detail around the performance in?
Speaker Change #162: Are you seeing the consumer gravitate to those brands, if you think trade them with a category, it's just one to be, you know, the, how is the consumer responding to your value offering? Are you seeing, kind of like a shift from bigger ticket items to, to lower ticket within categories?
Speaker Change #163: Yeah, I mean we definitely do see that particularly during some of the wolves in the calendar, you know, when we talk about our everyday value proposition, the place where that's the best express candidly is in our private brands where
Speaker Change #163: You know, we take at these goods at Price Femden and day out at really sharp prices. You know, one of the ones we're most proud of, we talk a lot about is our polling chair that we saw for 5.99. It's been at that price now for going on five to six years.
Speaker Change #164: and had a raise price there. You know, customer certainly find those items in our sormon and we see growth in those items in categories, private brand, has been a growth for us over the past couple years.
Speaker Change #165: You know, it's our goal ultimately is to get from around 20% pre-pandemic to around 25%. We're kind of in the mid, you know, 20 to 23% range from generations from making good progress there.
Speaker Change #165: Thank you.
Speaker Change #166: Our next question comes in the line of Christopher Horvers with JP Morgan. Please, see you with your questions.
Speaker Change #167: It was a significant trajectory changed from what we saw obviously in July I think some of it you're probably right. We thought that at least the first week or two it was some compression of back to school timing, where people are buying closer to need you certainly have seen that happened. Even if you go back to fourth of July or Morial day, where it used to be maybe a five.
Speaker Change #168: Five to seven day of that maybe it's a three to four days now so we see that compressed shopping pattern happen and Thats. What we initially thought was happening in August, but the fact that a sustained throughout the entire month and we also saw a really strong labor day and then it was more broad based outside of just the back to school categories was encouraging you know that being said we still have.
Speaker Change #167: Hum.
Speaker Change #169: 99 weeks ahead of us throughout the quarter. So we don't want to get too far ahead of ourselves, but it was an encouraging early sign to see kind of that sales trajectory flip.
Speaker Change #170: During the back to school time period.
Speaker Change #171: Got it makes sense and then just broadly you mentioned the the type.
Speaker Change #172: The calendar shift and as to the impact of sales any other cadence items just to think about in the in the balance of the year, whether it's timing of opens maybe how gross margin those gross margin drivers, perhaps play out in the back half. Thank you.
Speaker Change #173: I think we'll tag team this one I mean.
Speaker Change #174: Certainly we've got nine stores that we've announced that are going to open up in.
Speaker Change #175: In Q3, the remainder of the new stores will open up early Q4.
Speaker Change #176: Generally in early November.
Speaker Change #177: The only other really big shift that's still ahead of US is that compressed holiday calendar I know you guys are well aware of that.
There's five fewer days.
Speaker Change #177: Between Thanksgiving and Christmas this year, so that certainly is going to be something we're going to have to navigate as we get into Q4.
Speaker Change #177: But everybody's faced with that challenge in and.
Speaker Change #177: Certainly that's well documented out there.
Speaker Change #177: The other thing that I would talk about is.
Speaker Change #178: With our some of the categories that we sell the election does tend to have a bit of an impact on what a normalized quarterly bills would look like.
So depending upon what people are talking about in the kras and whatnot, that's a little bit different than what you would've seen once late last year or the year before.
Speaker Change #178: And then as it relates to the margin cadence the only thing I would add is.
Speaker Change #179: Is it really does start and end with inventory discipline.
Speaker Change #179: We're very comfortable with where we are and we're beginning to see.
Speaker Change #179: Bit of inflection in the August sales I think keep here both of those together and and that makes for some.
Speaker Change #180: Some margin opportunity, yes, I didn't leave one thing off the calendar too.
We're up against the range is one of the World series.
Speaker Change #180: That obviously impacts one week.
Speaker Change #181: Tends to be you know a one week event for us It does based off the calendar shift this year fall in the tail end of Q3 versus last year was the first week of Q4 that would be the only other thing I can think of.
Speaker Change #182: Meaning that that would affect the comp for <unk>, because you report shifted.
It could it could depending now listen the astra's are looking pretty strong right. Now. So we don't we don't really we take those out of the plans each year when we make the plans, but that definitely is something that we're up against the last week of the quarter.
Speaker Change #182: Awesome go Cowboys.
Speaker Change #182: Goodbye.
Speaker Change #182: Right.
Speaker Change #182: Our next question is from the line of Michael Lasser with UBS. Please proceed with your question.
Speaker Change #182: Hi, This is Henry calling for Michael last year. Thanks, a lot for taking our questions. This morning.
Speaker Change #183: Want to clear so the 60 million dollar headwind from the storms and the $32 million headwind and the out of stocks both occurred in Q.
Speaker Change #183: Out of stocks issue isn't expected to impact <unk>.
Speaker Change #183: Sure.
Speaker Change #185: Yeah, that's correct I mean, the statement as were mostly caught up.
Speaker Change #186: You know what what ended up happening there is we actually.
Speaker Change #187: Had anticipated some slowdown and we put goods into the stores that serviced by this DC extra goods to help them get through the month of May all the way into father's day.
The ramp up our productivity was a little slower than we anticipated. So it did create some out of stocks as we got past father's day in the summer months.
Speaker Change #188: You know the team now that we're past that back to school surge is chipping away at the backlog and as I characterize that were mostly caught up at this point.
Speaker Change #189: It actually did impact us a little bit in August, but we offset that with the strength of the rest of the business. So the positive comp that we had did have some impact of that but as we move into September and beyond we're kind of at a low for the next probably 30 to 45 days until we see it start to ramp up heading into holiday. So we don't anticipate it having any impact on our business.
Speaker Change #188: Heading into holiday.
Speaker Change #189: Okay.
Speaker Change #189: Okay.
Speaker Change #190: Just as a follow up so the gross margin was driven the strong performance in <unk> was driven by inventory management. Despite this outage stock headwind.
Speaker Change #190: Yeah, that's right yeah. So when we quote when we kind of like.
Speaker Change #190: Inventory per store or units.
Speaker Change #190: Units per store were quoting the total inventory divided by the number of stores some of that inventory does happen to be in the distribution center at any given time, but yeah inventory management.
Speaker Change #191: That's per store down 5%, we like we like where that's at launch of nine new stores. So there was a little bit of inventory in there associated with stores that haven't opened yet.
Speaker Change #190: <unk>.
Speaker Change #190: And then the composition of the gross margin you know call it 20 basis points merchandising margin.
Speaker Change #190: A little bit of good news from a from a from a shrink from.
Speaker Change #190:
Freight standpoint, a mix of other things we felt good about the composition of the margin as we mentioned I think this is a bit of a surprise to the external user because our gross margins were down 40 basis points in the first quarter. It was that over penetration to clearance, we feel like right now with what we've got going on from a inventory comps.
Speaker Change #190: <unk> standpoint, the newness the freshness.
Speaker Change #192: Per store efficiencies, that's what's driving gross margin and we feel good about that going into fall.
Speaker Change #192: Okay.
Speaker Change #192: Okay. Thank you so much.
Speaker Change #192: Okay.
Speaker Change #192: Thank you. The next question is from the line of Robbie Holmes with Bank of America. Please proceed with your questions.
Speaker Change #193: Hello, Good morning, guys. Thanks for taking my question.
Do you guys look to the back half year, and especially the holiday can you can you talk a little bit about how you feel about the merchandising setup.
Speaker Change #194: For the back half are you looking for.
Speaker Change #194: Better allocations from some of the key brands you know are you feeling like.
Speaker Change #195: The yeti the Stanley drink wear et cetera, I mean is that do you think youre going to have even a better setup for the back half than you did for the first half.
Speaker Change #196: From Nikkei are there any other footwear brands that might be coming in for the back half that weren't there in the front half any kind of thoughts on that would be great.
Speaker Change #195: Yeah. So.
Speaker Change #197: In general we feel very good about where we're positioned for holiday I think that the team is really leaning into kind of both ends of that barbell, we talk about there's a ton of newness coming in.
Speaker Change #198: Youre correct in your assumption that we're getting a lot better allocation of both Stanley and Yeti and candidly a wallet is coming up as a strong kind of third third contender in that mix and.
Speaker Change #197: And we feel really good about the inventory we have position.
Speaker Change #199: All of those brands and you know the interesting thing is all three of them are performing very well for us.
Speaker Change #197: They there.
Speaker Change #200: Generating a steady diet of newness across all three of the brands and I think that's going to really help us heading into holiday, we continue to work with our existing vendors to get greater access to product.
We continue to get expanded access, particularly with Nike as you mentioned on shoes like the $2 70, where it is in more doors, we have more colors and so we're excited about that we're taking some ideas. We tested last year and we talked about this on a previous call where birkenstocks has done really well we've expanded our distribution in our door count there.
Speaker Change #201: Odd who is having a moment last holiday we carry culebra buyout, that's going to be any standard door count. So we feel really good about on one end the newness component and then the two.
Speaker Change #202: Team is loaded for bear on value I mean, we've gone after a lot of these key categories.
Speaker Change #202: We saw a really strong trend in an opening price point of drilling over the summer and so we're going to lean into that kind of an idea as we head into holiday. So we.
Speaker Change #202: We feel like we're well positioned you know the the only wildcard really assist the compressed holiday calendar, we're dealing with.
Speaker Change #203: Got you that's helpful. And then quick follow up did you guys give the digital percent of sales for the quarter and also related to that is his door dash expected to drive up digital penetration you know the trajectory there for the back half.
Speaker Change #204: So dotcom penetration was up 30 basis points.
Speaker Change #205: For the quarter right now door dash is not feeding into the dotcom number its done extremely few door dash, we will as.
As we integrate phase two which is having same day delivery on our site that will start powering into the Dotcom Council. So far right now it's not actually if you dig into it.
Speaker Change #205: Got it thanks, so much.
Speaker Change #206: Our next question is from the line of John Kernan with Cowen. Please proceed with your questions.
Speaker Change #206: Hey, good morning, Thanks for taking my question.
Speaker Change #207: A lot of helpful commentary on quarter to date and outlook for the back half of the year.
Speaker Change #207: 12 of the stores from the 2023 cohort, we're going to jump into the comp base.
Speaker Change #208: Pretty soon and you had pretty bullish commentary on.
Speaker Change #209: On how they are performing versus the 22 cohort how should we think about new store productivity as you start to ramp.
Speaker Change #210: Openings it sounds like even beyond the 16 or the 15 or 17, you're doing this year. Thank you.
Speaker Change #211: Yeah from a new store productivity standpoint, we're still kind of operating within the framework of what we put out there $12 million to $16 million year, one sales, it's going to be towards the low end of the newer markets where brand awareness is lower it's going to be at the higher end on the existing markets or where there already is a brand awareness of <unk>.
Speaker Change #212: And Academy Sports and outdoors is committed to a 20% ROIC is a hurdle rates payback is typically in your for on a cash on cash basis.
Speaker Change #213: We put out there $4 million to $5 million from a capex standpoint, I gave a little bit of commentary about what the real estate team is doing there I think as we begin to scale. This program more they're finding more efficiencies not only with how were.
Speaker Change #214: Working with landlords, but also like raw materials and whatnot.
Speaker Change #214: Yeah positive coughing second quarter in a row from a 22 standpoint.
Speaker Change #215: You know I think our first new store from 2023 has just entered the comp that we're not going to speak on kind of like individual onesie twosies stores, but obviously from a comp waterfall standpoint, the more stores that we'd get into that waterfall that are in the aggregate are providing pop sales obviously that.
Speaker Change #216: Lifts all boats from our comp trajectory standpoint, but with only nine in there right now from 22 in the first one from 'twenty three standpoint, again, what kind of talk about all of our initiatives as we move forward, but we're pleased with what we're seeing and it's operating within the framework that we put out there for you guys.
Speaker Change #217: Okay, that's helpful and shifting gears, a little bit to SG&A, you've obviously, given us very specific guidance about the back half of the year there are.
Speaker Change #218: The new stores are obviously ramping in the back half with spring some similar expenses onto the income statement.
Speaker Change #218: As you shift to more to a faster unit growth perspective, maybe in 2025, how does that affect the overall SG&A rate, how we should be thinking about modeling SG&A dollars.
Speaker Change #218: Yeah.
Speaker Change #219: He had 200 basis points of deleverage.
Speaker Change #220: It also had low single digit comps, which were not experiencing right now year to date. So I didn't want to brag on that team just a little bit.
Speaker Change #221: Q2, SG&A expense was up $16 million quarter over quarter more than more than all of that was related to your new stores and some technology stuff that we're doing with CDP omnichannel and Duffy on that so the only incur mentality that we're spending is on these initiatives and the strategies that we really.
Speaker Change #222: Talk with you guys about it's not fancy strategy to start building out something that's never been done before we're just slowly and methodically doing that I think I think what you should expect from US is to continue to see incremental <unk> associated with growth in our strategic initiatives.
Speaker Change #222: <unk> a new store growth is going to is going to drive more rent more payroll I think what the difference is this is longer term aspirations and at what we're seeing with the consumer when that base.
Speaker Change #222: Stores begins to have that.
Speaker Change #223: That comp trajectory that were expecting I think youll see leverage associated with that so again, the 150 basis points that we're talking about I think it's within the framework of L. R. P. That is that is focused on 200 basis points of deleverage from an expense perspective still getting to that 13.
Speaker Change #223: 5% EBIT rate.
Speaker Change #223: But I think the difference will be not be strategies that we invest in but the trajectory of the base comp stores.
Speaker Change #224: That's very helpful. Thanks, Rob.
Thanks, Thank you.
Speaker Change #225: Thank you we have time for one more question, which will come from the line of John <unk> with Guggenheim Securities. Please proceed with your question.
Speaker Change #225: Good morning. This is Anders Meyer on for John.
Anders Meyer: Just one from me now that Robert had more time with the company can you provide an update on the timing of the realization of the 100 basis points and supply chain savings and have you been able to identify any incremental opportunities.
Speaker Change #227: Yeah, So rob how he's been with US as of January and February He has been with US February February.
Speaker Change #227: He is great.
Working with I think he has been instrumental in jumping on top of what we're seeing come out of twigs.
Speaker Change #229: We talked about on the call. Our next distribution center were targeting early calendar 2026.
Speaker Change #230: Just wanted to make sure that we digest all the learnings associated with the with the Georgia distribution facility and make sure that similar to kind of what we're doing with our stores. We're getting we're getting better based off the learnings that we're providing yes. He is seeing other opportunities within the broader supply chain I've talked previously about.
Speaker Change #230: And the existing state from an outbound transportation standpoint.
Speaker Change #231: We have one D. C store, one do you see door dedicated to one truck and it services one store that is not the norm in retail it's more.
Speaker Change #232: Normal to have multi stop deliveries, especially in a city where you have.
Speaker Change #232: Some level of synergies like think about Houston, or Dallas, or Atlanta, or Charlotte, we should be doing to lose with those trucks.
Speaker Change #233: WNS AIDS us or not and building out in advance those the stores theres opportunities there and I think overall as he looks at the D. C. How we have them set up and how we operate within their stuff outside of just the WNS that he's got his eye on very pleased with him as a new add to the team.
Speaker Change #234: Very pleased with some of the opportunities that he's going to bring to bear I don't have any trepidation of 100 basis points of leverage along this long range plan associated with the supply chain.
Speaker Change #234: Got it thank you.
Speaker Change #234: Thank you.
Speaker Change #234: Okay.
Speaker Change #235: And as we move into the back half of the year, we remain deeply committed to helping the active young families who serve have thrown out there by expanding their spending power to providing a compelling assortment and an outstanding value.
Speaker Change #236: Same time, we're also laser focused on delivering value to our shareholders across multiple fronts, including our quarterly dividend, while also strategically repurchasing shares.
Speaker Change #237: On a longer term basis, we think academy is one of the most compelling growth opportunities in retail and we'll continue to thoughtfully invest in our long term growth initiatives.
Speaker Change #237: Ultimately, we believe that remaining true to these strategies will allow us to breakthrough the current short term consumer malaise and deliver against our vision to be the best sports and outdoor retailer in the country.
Speaker Change #238: Anna Thank all 22000 of our Academy team members for all the hard work and effort they put in so far during 2024.
No we have the right team in place to allow us to enter in the back half of the year and the future for Academy is bright.
Speaker Change #239: Thanks, everybody for joining us this morning and have a great rest of your day.
Speaker Change #240: Ladies and gentlemen, the call has now concluded. Thank you for your participation you may now disconnect.