Academy Sports and Outdoors, Inc. Q4 FY2025 earnings call

• Fourth quarter sales came in at $1.7 billion, 2.5% increase vs last year, within implied guidance range. Sales strong over Thanksgiving and Cyber Week, softened in December then surged before Christmas, January softer due to winter storms but rebounded. Average unit retails up 10% driving gross margin up 140 basis points.
• Full year 2025: grew top-line sales to $6.05 billion, up 2%, with market share gains. Rallied mid-year to offset incremental tariffs, resulting in annual AUR increase of 6% and gross margin rate of 34.8% (+90 basis points). Dot-com business grew 13.6% with AI initiatives. Opened 24 new stores, new stores in comp base drove mid-single-digit comp increases. In-stocks improved 500 basis points via assortment rationalization and RFID rollout. Leaned into emerging trends and brands. MyAcademy Rewards loyalty program has over 13 million enrolled.
• 2026 guidance: net sales expected to range from $6.18 billion to $6.36 billion (2%-5% increase), comparable sales -1% to +2% (midpoint +0.5%). Expect tailwinds from tax refunds, World Cup in US, 2026 US 250th anniversary. Accelerating digital transformation, relaunching Academy credit card, expanding Jordan brand shop concept, expanding work and western wear, HIROX fitness offering, baseball lifestyle culture. Plan to open 20-25 new stores in 2026.

Fourth quarter net sales were $1.7 billion, up 2.5%, and comparable sales were down 1.6%. Breaking down the comp, transactions were down 6.4%, while ticket was up 5.1%. Fourth quarter net income was $133.7 million and diluted earnings per share of $1.98. Fourth quarter adjusted net income was $132.9 million or $1.97 in adjusted diluted earnings per share. Gross margin of 33.6% in the fourth quarter was up 140 basis points versus last year. SG&A expenses came in at 23.7% of sales for the fourth quarter, an increase of approximately $21 million or 70 basis points. For the full year, generated $435 million in cash from operations, reinvested $172 million back into the business, resulting in approximately $263 million of adjusted free cash flow and returned $234 million to investors. Net sales for full year 2025 were $6.05 billion, up 2%. Dot-com business grew 13.6%. Opened 24 new stores in 2025, with new stores tracking to exceed year one performance. In-stocks improved by 500 basis points.

• Net sales expected to range from $6.18 billion to $6.36 billion, increase of 2% to 5%, comparable sales -1% to +2% (midpoint +0.5%).
• Gross margin rate expected to range from 34.5% to 35.0%.
• GAAP net income between $380 million and $415 million, adjusted net income (excluding stock-based compensation) forecasted to range from $410 million to $445 million.
• GAAP diluted earnings per share $5.65 to $6.15, adjusted diluted earnings per share $6.10 to $6.60.
• Expect to generate between $250 million and $300 million of adjusted free cash flow after investing $200 million to $240 million back into the business.

• Macroeconomic pressures on discretionary consumer spending, especially inflationary pressures on goods sourced outside US.
• Potential impact of prolonged trade policy changes.
• Impact of gas prices on consumer discretionary spending.
• Uncertainty from geopolitical events affecting certain categories like ammo.

• Q: Quantify weather headwind in fourth quarter and impact of ammo business.

A: Roughly half of stores closed for 3 days, estimated 100 basis points headwind in Q4 comp. Ammo business started to stabilize in Q4, running positive comp in February before war, then accelerated.

• Q: SG&A growth and store opens.

A: SG&A increase due to growth initiatives, 20-25 new stores in 2026 will have modest leverage, Jordan launch cost less this year.

• Q: Why taking time to return to positive comps.

A: Consumer financial health headwind, but initiatives like dot-com growth, new stores, loyalty program relaunch, external tailwinds will help.

• Q: Store economic model and loyalty program impact.

A: New stores performing well, ROIC expected 20%. Loyalty relaunch expected to have similar lift to new stores, half-year benefit.

• Q: Supply chain update.

A: Majority gross margin gains in fourth quarter from supply chain, rolled out distribution center management program, details at analyst day.

• Q: Sales outlook and macro factors.

A: Self-help initiatives at midpoint, low end macro headwinds negate tailwinds, high end macro tailwinds outweigh headwinds.

• Q: Business segment performance in Q4 and loyalty program margin impact.

A: Some segments strong, some softer due to seasonal and tariff factors. Loyalty program repurposing discounts, no major impact on gross margin.

• Q: Traffic and income cohort impact.

A: High income cohort traffic up, lower income down due to pressure, but promotional events bring them back.

• Q: Jordan brand performance and impact on other brands.

A: Nike and Jordan combined grew high single digits, used as proof point for talking to new brands, will share new brands at analyst day