Academy Sports and Outdoors Q2 Earnings Call Highlights

Key Points

• Academy reported solid Q2 growth, with net sales up 3% to $1.6 billion, while comparable sales fell 0.4%. E-commerce remained a key driver, rising 12.8%, and the company reaffirmed its full-year sales and comparable-sales outlook.
• Lower-income consumer traffic weakened significantly, leading Academy to emphasize targeted promotions, clearance activity and loyalty offers. Hardgoods outperformed, particularly sporting goods, fitness and outdoor categories, while apparel was flat and footwear declined 1%.
• Profitability and guidance improved: gross margin rose to 40.4% and adjusted EPS increased 19.1% to $2.31, aided by tariff refunds. Academy raised its full-year gross-margin and EPS forecasts while maintaining its plan to open 22–24 new stores in fiscal 2026.

Academy Sports and Outdoors NASDAQ: ASO reported second-quarter fiscal 2026 net sales of $1.6 billion, up 3% from a year earlier, while comparable sales declined 0.4%. The retailer reaffirmed its full-year sales and comparable-sales outlook despite what management described as continuing pressure on lower-income consumers.

CEO Steve Lawrence said the company’s e-commerce business remained a key growth driver, with sales rising 12.8% during the quarter and digital penetration increasing by 110 basis points year over year. Through the first half, e-commerce sales were up 14%.

Second-quarter sales trends improved late in the period. Lawrence said May and June sales increased 2% overall and declined 1% on a comparable basis, while July sales rose 3% and generated a modest positive comparable-sales result. He said the movement of tax-free weekends in Oklahoma, Missouri, Virginia and South Carolina from late July into early August weighed on the second quarter but supported the start of the third quarter. Sales through Labor Day were running at a low-single-digit comparable-sales increase, according to management.

Consumer pressure and category performance

Management said consumer demand slowed from the first quarter into the second quarter, particularly among households earning less than $50,000 annually. Traffic from that income group declined by high single digits in the second quarter, compared with a low-single-digit decline in the first quarter. By contrast, traffic from households earning more than $100,000 rose by high single digits, accelerating from the first quarter.

Lawrence said lower-income shoppers have increasingly concentrated their purchases around promotional events, including Memorial Day, Father’s Day, the Fourth of July and back-to-school periods. Academy plans to continue using targeted promotions, clearance activity and loyalty offers to appeal to those customers.

Hardgoods outperformed softgoods during the quarter. Sports and recreation sales increased 6%, supported by sporting goods demand and double-digit growth in soccer gear, which Lawrence attributed in part to a “World Cup effect.” Fitness also performed well, with treadmill sales up by high single digits. The outdoor division increased 4%, led by shooting sports, coolers and camping.

Apparel sales were flat, with strength in World Cup jerseys and tees, outdoor apparel, and work and western apparel. Footwear sales fell 1%, though Lawrence said Academy gained market share in the category. The company is shifting funding toward performance running offerings from Nike, Adidas, Brooks and New Balance, along with lifestyle and western brands including Birkenstock and Ariat.

Pricing, new brands and expansion plans

Academy is reinvesting most of the proceeds from tariff refunds into customer pricing, Lawrence said. The company reduced prices on selected private-label products to pre-tariff levels, including its Magellan Outdoors Laguna Madre shirt, which returned to $19.99 from $24.99, and the BCG Coach’s Polo, which is being promoted at $9.99.

The retailer also highlighted several product and brand initiatives. Hoka footwear is scheduled to launch this fall online and in 15 stores. Academy expanded Chubbies from an initial 25-store test to roughly 200 stores for back-to-school, while Ariat shop installations are planned for 200 stores. In shooting sports, the company had suppressors in roughly 85 stores at the end of the second quarter and now expects to expand the category to 135 stores by year-end. Academy also plans to introduce private-label hunting rifles under the Redfield brand in the second half.

New-store expansion remains the company’s largest growth initiative. Academy opened three stores in the second quarter, in Altoona, Pennsylvania, and Morristown and North Knoxville, Tennessee. It remains on track to open 22 to 24 stores during fiscal 2026, including 11 in the third quarter. Stores opened between 2022 and 2025 that are now in the comparable-store base posted mid-single-digit comparable sales growth during the quarter.

Profitability, cash flow and outlook

Chief Financial Officer Carl Ford said gross margin rose 440 basis points year over year to 40.4%, driven primarily by tariff refunds. Tariff refunds contributed 510 basis points to gross margin, partly offset by a 70-basis-point decline in merchandise margin as the company reinvested in price. Ford said Academy has received substantially all expected tariff refunds and does not anticipate further net profit-and-loss effects from refunds during the remainder of the year.

Operating income increased 42.9% to $246 million, inclusive of tariff refunds. Diluted earnings per share rose 17.3% to $2.17, while adjusted earnings per share increased 19.1% to $2.31. Tariff refunds, net of investments in pricing, labor and marketing, added $0.06 to both EPS measures during the quarter, Ford said.

SG&A expenses represented 25.5% of sales, up 20 basis points year over year, reflecting investments in new stores, e-commerce technology, customer data, Jordan Brand shops, store labor and marketing. Inventory increased 4.4% overall, but inventory per store declined 2.3% in dollars and 5.6% in units.

Academy ended the quarter with $298 million in cash and an untapped $1 billion revolving credit facility. Adjusted free cash flow, excluding tariff refunds, was $32 million, up 49% year over year. During the first half, the company repurchased approximately $181 million of shares, representing about 5% of outstanding shares, and paid about $19 million in dividends.

The company reaffirmed fiscal 2026 sales guidance of $6.23 billion to $6.36 billion, representing growth of 3% to 5%, and maintained its forecast for comparable sales ranging from flat to up 2%. Academy raised its full-year gross-margin outlook to 35.5% to 36.0% and raised EPS guidance to $6.05 to $6.45, with adjusted EPS projected at $6.50 to $6.90. Net income guidance remained $390 million to $415 million.

About Academy Sports and Outdoors (NASDAQ:ASO)

Academy Sports and Outdoors is a leading specialty retailer of sporting goods and outdoor gear, operating more than 260 stores across the United States. Headquartered in Katy, Texas, the company offers a broad assortment of merchandise spanning athletic footwear and apparel, team sports equipment, camping and outdoor recreation products, hunting and fishing supplies, and fitness accessories. In addition to its brick-and-mortar footprint, Academy serves customers through its e-commerce platform, offering online ordering, in-store pickup, and home delivery options.

The company's product portfolio includes seasonal and year-round categories designed to meet the needs of both casual enthusiasts and serious athletes.

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