Academy Sports and Outdoors, Inc. (NASDAQ: ASO) Q1 2025 Earnings Call | 06/10/2025

Here's a summary of the Academy Sports and Outdoors First Quarter Fiscal 2025 Earnings Call:

Academy Sports and Outdoors Q1 FY25 Earnings Call Summary

Academy Sports and Outdoors navigated a complex first quarter, addressing new tariffs and a cautious consumer environment while making progress on key strategic initiatives. The company reported a sequential improvement in sales throughout the quarter, with April achieving positive comparable sales.

Key Financial Highlights (Q1 FY25):

• Net Sales: $1.35 billion, down 0.9% year-over-year.
• Comparable Sales (Comp): Down 3.7%. Transactions were down 5.2%, while average ticket was up 1.5%.
• E-commerce Sales: Increased by 10%, with penetration growing by approximately 100 basis points to over 10%.
• Gross Margin: 34%, up 60 basis points from last year, driven by a favorable merchandise mix and improved shrink.
• Selling, General & Administrative (SG&A) Expenses: Increased by $36 million or 290 basis points as a percentage of sales, primarily due to new store support, labor for the Jordan brand launch and Nike expansion, and technology investments.
• Operating Income: $69.3 million.
• Diluted EPS: $0.68 (Adjusted EPS: $0.76).
• Inventory: Per store units up 6.5% and dollars up 7.8% (purposely pulled forward $85 million in domestic inventory receipts at pre-tariff prices for evergreen products).
• Cash & Liquidity: Ended with $285 million in cash and an untapped $1 billion revolving credit facility.
• Capital Allocation: Returned over $100 million to investors in Q1 (including $99 million in share repurchases and $8.7 million in dividends), and invested over $50 million in strategic initiatives.

Strategic Initiatives & Performance:

• Tariff Mitigation: Calculated impact, worked with suppliers for cost offsets, paused shipments from China at high tariff rates, accelerated reduction of China exposure (targeting 6% by year-end from 9% at start of year), pulled forward domestic inventory, and used pricing optimization to offset costs.
• New Store Expansion: Opened 5 new stores in Q1 (now 303 stores across 21 states), including first locations in Pennsylvania and Maryland. On track to open 20-25 new stores this year. The 2022 and 2023 vintages are showing positive low single-digit comp growth. The pace of signing 2026 leases has been slowed to assess construction costs related to tariffs.
• E-commerce Growth: Focus on streamlined experience, improved internal search functionality, and expanded endless aisle offering (dropship). Improvements seen in conversion rate and average order value.
• Existing Store Productivity:
  • New Brands & Products: Launched Jordan brand in 145 doors and online on April 23rd, focusing on accessible price points for sports products. Initial customer reaction is strong, and Jordan is expected to be a top 20 brand by year-end.
  • Technology Leverage: Completed full chain rollout of RFID scanners and new handheld devices with POS functionality. RFID improves inventory accuracy (20% improvement in pilot stores), leading to better in-stocks and conversion. Handheld devices increased "save-the-sale" revenue by 900% on average per store.
• Marketing & Loyalty: Launched a new campaign "Fun Can't Lose" and increased advertising spend to 2.7% of sales. Planning to add 2 million new members to "MyAcademy Rewards" in 2025 (totaling over 13 million members), as loyal customers shop 2-3x more and spend 4-5x more annually.

Market & Consumer Trends:

• Category Performance: Footwear and Apparel were strongest (running flat), with Athletic footwear up 4.5% (led by Nike, Brooks, Jordan). Sports & Recreation (outdoor cooking, baseball) saw positive comps. Outdoor was down (primarily ammo softness), but fishing and firearms performed well.
• Consumer Sentiment: Acknowledged a fragile U.S. consumer and inflationary pressures. However, seeing an acceleration in foot traffic from customers with household incomes over $100,000, a "trade-down" trend as these consumers seek value. This trend is expected to continue.
• Sales Cadence: February was soft due to cold weather; March improved; April was positive (benefiting from Jordan launch, Nike expansion, Easter shift). May ran down low single-digits, reflecting choppy shopping patterns, but Q2 is expected to be strong with upcoming holiday moments (Father's Day, Back-to-School).

Updated Fiscal Year 2025 Guidance:

• Sales: $5.97 billion to $6.26 billion.
• Comp Sales: Negative 4% to positive 1%.
• Gross Margin: Unchanged (expected to be flat to slightly up).
• EPS: $5.10 to $5.90.
• Adjusted EPS: $5.45 to $6.25. (Guidance range accounts for multiple tariff scenarios, with the midpoint assuming current tariff levels.)