Academy Sports more vulnerable to tariffs than rival DICK'S Sporting Goods

seekingalpha11-20 01:10

sturti/E+ via Getty Images The changing landscape for the sporting goods segment with higher tariffs on imported merchandise from China and the potential for Nike (NKE) to re-engage with wholesale ...

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Academy Sports (ASO) has endured 10 straight quarters of year-over-year comparable sales declines, and Truist credit card data suggests sales will continue to trend below the street’s expectations for Q3 and the current quarter.  “While we have been more optimistic that ASO’s comps could inflect positively against weaker comparisons, we are now more cautious that upward price pressure [from tariffs] can push this timeline out further,” Truist’s Joseph Civello and Scot Ciccarelli said.  This outlook could be further exacerbated by Nike’s broader re-engagement with wholesale partners, meaning a less-differentiated assortment for Academy (ASO).  Academy’s (ASO) inventory of durable goods (treadmills, bikes, guns, outdoor appliances) with a longer replacement cycle, coupled with economic pressure on middle/low income consumers (who will push the replacement cycle out further) is yet another potential drag on profitability.  This was evidenced in the company’s latest quarterly report, where soft Q2 results came alongside downbeat FY24 guidance.  Within the sporting goods category, Civello and Ciccarelli are more bullish on \"top player\" DICK’S Sporting Goods (NYSE:DKS) as DICK'S will continue to receive differentiated Nike (NKE) assortments, including certain merchandise that Nike (NKE) has withheld from its own DTC channel. DICK'S (DKS) already benefits from assortments from Hoka (DECK), and On Holdings (ONON), both of which contributed to DICK'S (DKS) recent outperformance.  “We believe [DICK'S] customer base skews more towards upper-middle income cohorts that we feel are better equipped to absorb potentially higher costs,” Civello and Ciccarelli say.  In addition to a downgrade, Truist lowered its price target for Academy Sports (ASO) by 21% to $50 and EPS estimates for FY24 and FY25 to $6.15/$6.65 from $6.25/$7.10, respectively. This compares to Street estimates of $6.18 and $6.85, respectively.  Shares of Academy Sports and Outdoors (ASO) are lower by 2.6% to a new 52-week low, and in negative turf for an eighth consecutive day.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"Policy And Regulatory","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2484978340"}