Academy Sports and Outdoors, Inc. Q2 FY2025 earnings call

• Addressed the Texas Hill Country flooding by donating supplies and to the Kerr County Flood Relief Fund.
• Second quarter sales at $1.6 billion, up 3.3% with 0.2% comp; .com business grew ~18%.
• Traffic data shows strong double-digit growth in foot traffic and share gains from top two income quintiles; flat in middle-income, and slower erosion in lower-income cohorts. Market share gains across key businesses via Circana data. NICS checks data showed solid growth for firearms market share.
• Opened three new stores during the quarter, with plans to open 20-25 locations in 2025; 2022-2023 vintage stores now in comp base.
• .com business growth driven by streamlining site navigation, improving order fulfillment, and expanded endless aisle assortment; online conversion and average order value improved.
• Store productivity initiatives: refining/expanding assortment, rolling out RFID scanners and handheld ordering devices, and targeted marketing with 'Fun, Can't, Lose' campaign and My Academy rewards program.
• Tariff mitigation efforts: partnering with factories/vendors, shifting country of origin, adjusting unit buys, pulling in domestic inventory, and pricing optimization.

Net sales for the second quarter were approximately $1.6 billion, up 3.3% with a comp increase of 0.2%. The .com business grew approximately 18% during Q2 and increased in penetration by 120 basis points. Categories such as footwear, apparel, sports and rec, and outdoor all ran low single-digit increases. Seasonal categories like swim, pools, and summer seasonal footwear initially struggled due to cooler and wetter weather but rebounded in late June and July.

• Tightened the low end of comp sales guidance from negative 4% to negative 3%, with the comp range for the year now between negative 3% and positive 1%.
• Expect continued progress from initiatives bearing fruit and accelerating momentum.

• Consumer spending patterns with episodic shopping and potential valleys between events.
• Tariff impacts on costs and potential pricing adjustments affecting demand.
• Traffic erosion in lower-income consumer cohorts, though pace of decline slowed.

Q: About the consumer and episodic shopping, can the valleys in between attenuate as the year progresses?

A: Yes, saw positive comp in back-to-school, and feel good about momentum with lapping soft comps in late September and October.

Q: On ticket and tariffs, how much ticket benefited from tariff pricing and will tariffs affect back half?

A: AURs up low to mid-single digits; expect more price increases in back half, but feel good about value proposition.

Q: On guidance and SG&A, assumptions around SG&A and how tariffs are offset while peers face margin pressure?

A: SG&A deleverage expected at midpoint 100 basis points; tariff mitigation via partner factories, diversifying sourcing, adjusting unit buys, pulling in domestic inventory, and pricing adjustments.

Q: On gross margins and tariffs, how back half margins play out and COGS import percentage?

A: Merchandise margin tailwind, shrink and e-commerce shipping headwinds; sourcing diversification dynamic, private label COGS exposure ~6-7%.

Q: On consumer cohorts and Nike/Jordan performance, details on Nike and Jordan performance and exclusivity?

A: Nike and Jordan performing well, Jordan launched in late Q1 with growth at back-to-school, Nike with better premium product access and broader distribution.