Academy Sports & Outdoors, Inc. Q2 FY2026 earnings call

• Consumer Dynamics & Demographics: Traffic from households earning under $50k decreased by high single digits due to inflationary pressures and gas prices, while traffic from households earning over $100k accelerated with high single-digit growth. Lower-income customers are shopping more episodically around key calendar events to maximize spending power.
• Strategic Pricing & Tariffs: The company reinvested tariff refunds back into customer pricing, restoring pre-tariff price points on key private label items (e.g., Magellan Outdoors shirts, BCG apparel) to stimulate demand. This strategy has successfully driven traffic and value perception without significantly widening price gaps against competitors.
• New Store Expansion: Academy is on track to open 22-24 stores in fiscal 2026. New stores in the comp base contributed ~50 basis points to comparable sales in Q2, with mid-single-digit comp growth observed. By year-end, 63 prior vintage stores will be in the comp base.
• E-commerce & Digital Innovation: Dot-com sales grew 12.8% in Q2 and 14% year-to-date. Key initiatives include launching storefronts on Instacart and Uber Eats, migrating to AI-based semantic search, and launching the Academy Retail Media Network (ARM).
• Loyalty Program Integration: The relaunch of the MyAcademy loyalty program integrated with the credit card program resulted in a 15% increase in credit card applications, approval rates up >900 bps, and credit card spend up ~20%. Members with co-branded cards are expected to spend 3.5x the average customer.
• Assortment & Newness: Strong performance in hard goods, particularly sporting goods (+6%) driven by World Cup soccer gear and fitness equipment (treadmills). Outdoor sales rose 4% on shooting sports and camping. Footwear declined 1% but gained market share; management is shifting funding to top-performing running and lifestyle brands (Nike, HOKA, Birkenstock). New brand launches include HOKA (fall), Burley Bow (scaled to all doors), Chicken Legs (scaled to ~200 doors), and Redfield firearms.

The transcript does not provide a detailed breakdown of financial performance by specific product segments (e.g., Sporting Goods, Outdoor, Footwear) in terms of absolute revenue figures or specific revenue contribution percentages for the quarter. Management highlights relative growth rates: Sports and Recreation was the best-performing division (+6%), Outdoor was the second-best (+4%), Apparel was flat, and Footwear declined (-1%). Net sales for the company were $1.6 billion.

• Sales Guidance: Maintained at +3% to +5% growth, implying full-year sales of $6.23 billion to $6.36 billion.
• Comparable Sales (Comp): Maintained at flat to +2% for fiscal 2026. Midpoint implies ~1% comp in the back half.
• Gross Margin: Raised guidance to 35.5% to 36.0% for the year (previously lower), driven by tariff refunds offsetting strategic price reinvestments and favorable shrink. Fall gross margin is expected to be roughly flat.
• Net Income: Affirmed at $390 million to $415 million.
• EPS: Raised to $6.05 to $6.45 (diluted) and $6.50 to $6.90 (adjusted), benefiting from lower share count and improved margins.
• Free Cash Flow: Expected adjusted free cash flow of $300 million to $350 million.
• Long-Term Plan: Expectations remain for 5% sales CAGR, double-digit EPS growth, and high single-digit unit growth over the next five years.

• Consumer Pressure: Continued macroeconomic uncertainty and inflationary pressures are limiting the spending power of lower-income households (<$50k), leading to episodic shopping behavior and reduced traffic.
• Tariff Impact: While tariff refunds provided a net positive in Q2, future tariff policies or elevated fuel/freight costs could pressure margins if not offset by pricing strategies.
• Competitive Landscape: Increased promotional activity during peak seasons (e.g., Back-to-School, Holiday) creates a competitive backdrop that requires careful rationalization of promotions in lull periods.
• Execution Risk: Success depends on effectively executing new store openings, integrating new brands (HOKA, Redfield), and leveraging the loyalty program to drive incremental traffic and spend.

Q: Chris Harbers (J.P. Morgan) asked about the cadence of sales in H2, specifically the impact of tax-free shifts on Q2 vs Q3, and whether gross margin outlook changed given $11M in price reinvestments and potential clearance pressures. / A: CEO Steve Lawrence noted that tax-free shifts negatively impacted Q2 tail but helped Q3 start; without shifts, Q2 would have been flat. He expects consistent comp performance between Q3 and Q4, avoiding large variances despite negative comps last year. CFO Carl Ford stated embedded H2 gross margin is roughly flat, balancing tailwinds from shrink and tariffs against headwinds from price reinvestments and elevated fuel costs. CEO Lawrence confirmed increased promotionality is expected in Q4, which is already factored into plans via rationalized off-peak pricing.

Q: Jeff Lick (Stephens) asked how Academy’s results differ from a struggling competitor regarding merchandise mix and geography, and requested more granularity on consumer income cohorts. / A: CEO Lawrence attributed resilience to assortment diversity, highlighting strength in outdoor/grilling/shooting sports which insulated them from pure footwear/apparel weakness. He clarified that <$50k traffic declined high single digits (pressure persists), while >$100k traffic grew mid-high single digits, representing nearly 40% of the customer base. These higher-income shoppers trade broadly across categories, not just niche brands.

Q: Kate McShane (Goldman Sachs) asked about World Cup cannibalization, its lift on comp, and initiatives to offset it next year, plus traffic vs. price dynamics. / A: CEO Lawrence said World Cup sales hit plan, slightly muted by OKC Thunder anniversary, and likely cannibalized some Father's Day apparel purchases. Next year, Women's World Cup, localization improvements, and restored private-label pricing will help offset. CFO Ford reported ticket up 4.5% (driven by AUR) while transactions fell ~2%, indicating value-driven purchasing rather than volume growth.

Q: Simeon Gutman (Morgan Stanley) asked if positive comps are guaranteed given new stores and newness, and sought details on store cluster performance differences. / A: CEO Lawrence emphasized that while initiatives (credit card, newness, stores) are strong, consumer backdrop remains the 'wild card'; midpoint guidance implies ~1% H2 comp. CFO Ford noted customer portfolio is de-risked as >$100k cohort grows. Regarding stores, newer openings (2024/early 2025) show stronger mid-single-digit comps, and late-year 2025 openings are targeted at underserved, low-competition markets.

Q: Michael Lazar (UBS) asked if current H2 momentum is driven by same categories as Q2 (hard goods) and how gross margin will trend post-tariff normalization. / A: CEO Lawrence noted footwear/apparel softened in August due to tax-free shifts pushing buying later, but recovered; investment shifted toward hard goods trends. CFO Ford reiterated H2 gross margin is flat, excluding non-recurring tariff benefits. For FY27+, margin stability is supported by rising private brand penetration, retail media network contributions, and credit card revenue, not reliant on tariff refunds.