Academy starts trading on day of turmoil

Academy Sports + Outdoors began trading Friday, a turbulent day for the stock market.

Initially planning to price its public debut at $15 to $17 a share, the Katy-based retailer opened trading at $13, signaling soft demand for the offering. Ken Hicks, the company’s chief executive, said the lower price had much to do with the fact that initial investors couldn’t travel as they normally would, due to the pandemic, to see how Academy differed from the competition.

“A lot of the people who create the markets didn’t get a chance to see our stores,” Hicks said in an interview.

The market also responded indifferently to the offering, sending shares down to $12.45 before they recovered to close the day essentially even, at $12.99.

It was a less than auspicious day tomake a debut. The markets were roiled by news that President Donald Trump had tested positive for the coronavirus and a mix jobs report. The Nasdaq, where Academy trades, ended the day down 2.2 percent and the S&P 500 was down 0.96 percent.

“Based upon the market situation,” Hicks said, “I felt pretty good about where we ended up for the day.”

Academy and its controlling shareholder, investment firm KKR& Co., began the public offering process last month, announcing its plans to offer 15.6 million shares amid soaring demand for outdoor sports gear during the pandemic. In its fiscal year ended Feb. 1, Academy had sales of $4.8 billion, and is well on its way to surpassing that figure in fiscal 2020, reporting sales of $2.7 billion through the six-month pe

riod ended Aug. 1.

David Swartz, an analyst in Morningstar’s consumer sector research group, agreed it was a bad day for an initial public offering, but added thatmight not be the only factor in play.

Major layoffs this week and a recession also place strain on trading, Swartz said. Potential investors

may question how sustainable Academy’s growth has been, and they may hesitate to invest in any retailers in a time when coronavirus infections raise the specter of more shutdowns.

“People may think there’s a risk that storeswill have to close because of virus restrictions,” he said.

But Hicks said his company is on a good trajectory, that people have started new outdoor hobbies dur

ing the pandemic and there’s plenty of room for growth. And regarding safety, Hicks said Academy’s stores stayed open during the pandemic and proved they could stay open safely.

“We will move on,” he said. “And we will continue to deliver the performance and that’s what will be recognized. Not a particular day in the market.”