ASO

• Core Growth Strategy Progress: New store expansion is the top growth lever. 2022-2024 vintage new stores are delivering high single-digit comp sales, and 2025 vintage stores will enter the comp base through 2026. Two stores opened in Q1 2026, three more will open in Q2, and 15-20 total new stores will open in the second half of 2026, focused on mid-sized underserved markets with the firm's core customer base. Future years will see a more balanced split of openings between the first and second half.\n- Existing Store Productivity Initiatives: The newly revamped three-tier MyAcademy Rewards loyalty program, integrated with the firm's credit card ecosystem, is being rolled out for completion by end of June 2026. The base tier offers no-credit-card benefits including welcome/birthday rewards and free shipping on orders over $25; the private-label credit card tier offers 5% instant off at checkout and free shipping with no minimum; the top co-branded MasterCard tier adds 2% back on all non-Academy spend redeemable at Academy. The program has already delivered double-digit enrollment growth, with a target of 2 million new members to reach 15 million total members by year end, and early results show uplift from increased enrollment and card utilization.\n- Omnichannel Expansion: E-commerce continues to outperform, and Q1 saw 17% growth with 100bps penetration expansion. In Q2 2026, the firm will add Uber Eats and Instacart as same-day delivery partners alongside existing DoorDash, with minimal customer overlap between platforms to deliver mostly accretive sales and broader brand exposure. Ahead of the back-to-school season, the firm will migrate its website search to Google's AI Commerce Search and Gemini Enterprise, aligning with growing consumer use of AI for online shopping.\n- Product Category Expansion: A new suppressors category for shooting sports launched in a limited number of stores in Q1, with plans to roll out to over 100 stores by end of 2026; the high average unit retail category has high attachment rates to firearms and is 100% accretive. 100 new work apparel shops focused on the Work Western lifestyle trend will open in the second half of 2026, and 55 new Jordan brand apparel shops will open in Q2 to bring total Jordan shops to 200 stores. The firm continues to expand assortment in the fast-growing performance running category.\n- Operational and Balance Sheet Strength: Inventory per store is down 0.8% in dollar terms and 6.8% in units year over year, with in-stock rates up over 200 basis points driven by RFID utilization. Free cash flow grew 14.2% to $121.6 million in Q1, with $338 million in cash and an untapped $1 billion revolving credit facility. Long-term debt was refinanced in May 2026 at 5.875%, generating $2.5 million in annual interest savings through 2031. Capital allocation follows the existing strategy: 50% of operating cash flow is reinvested in the business, with the remainder returned to shareholders via dividends and share repurchases. 1.7 million shares were repurchased in Q1, with $338 million remaining in the repurchase authorization.

• Full year 2026 total sales guidance was raised to 3% to 5% growth (range of $6.23 billion to $6.35 billion), with comparable sales guidance updated to flat to +2%, an upward revision from prior guidance driven by the strong Q1 start.\n- Gross margin guidance is maintained at 34.5% to 35.0%, with approximately flat gross margin expected at the midpoint of full year guidance. Q1 2026 saw the largest tariff impact of the year, with gross margin pressure expected to moderate in the first half and expand modestly in the second half as tariff headwinds diminish.\n- The midpoint of full year net income guidance was raised, with a new range of $390 million to $415 million. Full year diluted EPS guidance is $5.95 to $6.35, and adjusted EPS (excluding stock compensation) is $6.40 to $6.80, representing over 10% EPS growth compared to fiscal 2025 at the midpoint. The guidance excludes any impact from future share repurchases.\n- SG&A is expected to deliver modest full year leverage at the midpoint, with leverage in the first half and potential minor deleverage in the second half as new store openings accelerate.

Total first quarter net sales came in at $1.44 billion, an increase of 6.7% year over year, with comparable store sales up 2.9%. The e-commerce (dot-com) segment grew 17% year over year, with penetration expanding 100 basis points, and accounted for a larger share of total sales as a result. Of the four core product divisions: 1) Outdoor: Up 12%, the strongest performing division, led by growth in fishing and shooting sports; the previously headwind ammo segment turned positive in Q1, and firearms market share has grown for 8 consecutive quarters. 2) Sports and Recreation: Up 6%, driven by solid gains in baseball/team sports, plus double-digit growth in the front-end collectible trading card category and outdoor speakers. 3) Apparel: Up 5%, with strength in outdoor and work apparel from Carhartt, Levi's, and owned brand Magellan Outdoors, plus continued momentum from Nike, Jordan, and private brands Freely and Rowe. 4) Footwear: Up 3%, driven by baseball cleats, seasonal growth from Crocs and Birkenstock, and momentum in the performance running category.

• Persistently high gas prices and broad inflationary pressures continue to negatively impact discretionary spending, particularly for lower-income consumer cohorts, and are expected to remain headwinds throughout 2026.\n- Lower-income households (under $50,000 annual income) continue to experience reduced spending and low consumer confidence, creating uncertainty around the magnitude of their spending weakness for the remainder of the year, which is the key driver of variance between the low and high ends of guidance.\n- Bifurcated consumer confidence means the company's growth is increasingly reliant on higher-income cohorts (the firm's fastest growing segment), even as lower-income consumer performance remains a key swing factor for full year results.\n- IEPA tariffs created material gross margin pressure in Q1 2026, and while pressure is expected to moderate, elevated fuel prices will remain a headwind for transportation and operating costs through the year.\n- Consumer spending has become more volatile, with larger peaks during promotional and holiday events and deeper valleys between events, requiring ongoing tactical adjustments to marketing and promotional planning.

Q: After the April analyst day, what surprised management about performance, how are high gas prices impacting consumption, and is Q2 still expected to be the weakest comp quarter of the year? / A: The Q1 quarter was broadly in line with expectations, coming in at the high end of prior guidance, with no major positive or negative surprises. High gas prices are acting as a clear headwind, reducing overall consumer discretionary spending, and management has seen a slight slowdown in Q2 consumer demand compared to Q1, with total sales tracking flat comp through Memorial Day. Management still expects full year comp to land within the guided flat to +2% range, inclusive of Q2 performance, and remains optimistic that upcoming tailwinds from the World Cup, America's 250th anniversary, and the new credit card/loyalty rollout will drive Q2 results.

Q: Does the strength of the lower-margin ammo category contribute to Q1 gross margin pressure, and what is the expected cadence of tariff pressure for the rest of the year? / A: Of the 71 basis points of year-over-year gross margin decline in Q1, 110 basis points came from IEPA tariffs (which had no impact on Q1 2025), offset by 20 basis points of improvement from lower shrink and 10 basis points from better freight/shipping costs. While ammo has a lower margin profile and contributed modest pressure, this impact was offset by other product mix shifts. Tariff pressure will moderate throughout 2026, leading to gross margin expansion in the second half of the year.

Q: Q1 comp was stronger than the full year guidance midpoint. What Q1 strength will not repeat, and what drives the implied lower comp for the remainder of the year? / A: The main temporary tailwind for Q1 was larger-than-usual tax refunds, which blunted the impact of higher gas prices during the quarter. As the impact of these refunds faded, the business settled into a natural run rate of roughly flat comp. Easy year-over-year comparisons (Q1 2025 comp was -3.7%) also boosted Q1 results, with much tougher compares in the remaining quarters. The firm's self-help growth initiatives (credit card rollout, new stores, e-commerce expansion) are expected to deliver enough growth to reach the full year guidance midpoint of +1% comp.

Q: Why is Academy adding suppressors to its assortment now, when many competitors are pulling back from the category? / A: Recent changes in laws have made procuring and selling suppressors easier than in the past, and the category is growing across the industry. Suppressors are primarily sold as hearing protection for recreational shooters, have a very high attachment rate to existing firearms purchases, drive add-on sales of cleaning equipment and specialty ammo, and are fully accretive to the existing shooting sports business. The firm is rolling out to over 100 stores by end of 2026, and expects the category to fuel growth in shooting sports through 2026 and 2027.