Academy Sports and Outdoors Inc. (ASO) shares closed down nearly 12 percent on Tuesday, March 17, after the Katy, Texas-based sporting goods chain reported Q4 results that trailed analyst targets, and FY26 guidance landed at the low end of targets. However, Academy officials on an analyst call remain bullish on returning to same-store growth in 2026, citing the benefits of tax refunds, the World Cup, the 250th anniversary of the U.S., and a host of internal “self-help initiatives.”
Academy’s guidance for the current year calls for EPS in the range of $6.10 to $6.60 (vs. analysts’ consensus of $6.45), sales to improve in the range of 2.0 percent to 5.0 percent (vs. consensus +6.4 percent) with comps ranging from negative 1.0 percent to positive 2.0 percent (vs cons +1.2 percent).
On the call, company CEO Steve Lawrence said the low end of guidance contemplates a continued muted backdrop for discretionary consumer spending. He said, “Our belief is that most of the macroeconomic pressures the consumer faced in the back half of 2025 will carry into 2026. In particular, inflationary pressures on goods sourced outside of the U.S. should continue through the first half of the year.”
On the positive side, Lawrence said “several tailwinds that should help us overcome some of these macroeconomic pressures,” including the expectations of higher income tax refunds arriving this year. He said, “In the past, we have seen categories such as firearms, gun safes, and work boots benefit from earlier and/or higher refunds during the tax season. It is hard to discern how much of an impact we are currently seeing from refunds, but I will share with you that through the first seven weeks of the quarter, we are running a positive comp. We believe some portion of these results could be attributed to higher tax refunds.”
A secondary boost is expected from the World Cup, with approximately 30 matches played this summer at venues across Academy’s footprint. Lawrence said, “We believe this should translate into increased tourism and foot traffic in the second quarter, which should provide a sales lift for our licensed team and tailgating businesses. Longer term, we have seen events such as this drive increased participation in youth soccer, which should help drive sales in our sporting goods business in the back half of the year and into 2027.”
Finally, the 250th anniversary of the U.S. is expected to provide an uplift to already “strong selling” patriotic merchandise typically seen over the summer. Lawrence said, “We believe this year will be even stronger when you couple the surge in national pride around our 250th birthday with all of the excitement for Team USA this summer.”
Lawrence also cited several internal sales drivers, including, on the merchandise front, an expanded offering of “better and best brands,” including Jordan and Nike; expanded work and western wear assortments; a product line behind its HYROX partnership; and an emphasis on baseball lifestyle offerings. Other revenue boosts are expected to come from continued aggressive store expansion, numerous investments supporting online growth, and the introduction of a new credit card.
Lawrence said, “We have multiple self-help initiatives we have put in place, which should also enable us to drive comp growth.”
Shares of Academy closed Tuesday at $49.90, down $6.61, or 11.7 percent.
Fourth-Quarter Results
Sales in the quarter were up 2.5 percent to $1.7 billion, missing analysts’ consensus estimate of $1.75 billion. Same-store sales were down 1.6 percent, with transactions down 6.4 percent and ticket up 5.1 percent.
Earnings on an adjusted basis declined 4.3 percent to $132.9 million, or $1.97 a share, from $138.8 million, or $1.96, a year ago, and below analysts’ consensus target of $2.06.
Gross margin in the quarter was 33.6 percent, up 140 basis points and exceeding Academy’s implied guidance. The majority of the expansion was driven by supply chain efficiency gains and the lapping of costs incurred from port disruptions in the prior year. Merchandise margin, inclusive of tariffs, was flat due to increased AURs (average unit retail) to offset tariff impact.
SG&A expenses came in at 23.7 percent of sales, up 70 basis points. The increase was driven by growth initiatives totaling approximately 135 basis points, comprising 115 basis points of new-store growth from the opening of 24 stores in the last 12 months and 20 basis points of technology investments to fuel omnichannel growth.
Lawrence said fourth-quarter results were within Academy’s implied forecast. He noted that, as references on Academy’s third-quarter analyst call, sales were strong over Thanksgiving and Cyber Week, but similar to prior years, customer spending softened in the following weeks in December before experiencing a “surge” during the last two weeks of December.
January was “softer than we anticipated,” primarily driven by the winter storms in the last 10 days of the month that caused approximately half of Academy’s stores to be partially or fully shut down for two to three days. Sales rebounded as stores reopened.
Lawrence noted that the “big unknown” was how consumers would respond to inflationary pressures on imports due to tariffs. Academy increased its average unit retails (AURs) by 10 percent in the quarter, in line with guidance calling for a low-double-digit increase, which helped support better-than-expected margins. The increase reflected promotional optimization, expanding better and best offerings, and some strategic AUR increases.
By category, bikes, fishing, outdoor cooking, apparel, electronics, and athletic footwear were all strong,” said Lawrence. “Softer” areas included seasonal footwear, such as boots, as well as outerwear.
Ammo continued to face tough comparisons against the prior year. Lawrence said, “If you go back and look at 2025 in a vacuum, probably one of the bigger headwinds we faced was ammo. That is a big business for us. It does move the needle, and there were a lot of events that drove that business in 2024 that were not there in 2025.”
Hydration was also a “little soft” due to challenging comparisons in drinkware, and ride-on toys were also “a little tougher” this past holiday season. Lawrence added, “When we went back and looked at it, we had to cobble together an assortment there based on the tariff environment, trying to find the right goods out there. What is exciting is that as we have crossed over into spring and moved to a positive comp, all the businesses are performing pretty well right now. So, we are seeing pretty broad-based solid business across all the different businesses.”
Full-Year Results
Highlighting progress in the full year, Lawrence noted that Academy was able to secure “solid market share gains across our footprint” and invested in “many foundational building blocks” that are expected to drive growth in the years ahead.
Among the accomplishments for 2026, he noted that Academy was able to mitigate the impact of incremental tariffs arriving in the first half of last year through a combination of sourcing-country diversification, inventory pull-forward at lower costs, and pricing and promotional optimization. Annual AURs increased 6 percent, supporting an increase in gross margins by 90 basis points to 34.8 percent.
Lawrence said as AURs were increased to offset tariff costs, Academy continued to monitor pricing to ensure the chain still stands out for value. He said, “What we found through the ongoing customer research work we do is that we have managed to improve average unit retails across the full year while also improving our value perception with customers relative to key competitors. I can assure you that this was no easy feat.”
A second accomplishment for the year was 13.8 percent growth in e-commerce, helped by investments in search and site experience, including introducing agentic AI to its platform for the first time. In marketing, the My Academy Rewards loyalty program, launched in mid-2024, reached over 13 million customers.
Academy also opened 24 stores last year, with the openings in aggregate on track to exceed their year-one performance targets. Stores opened from 2022 to 2024 are in Academy’s comp base and delivering mid-single-digit comp increases. Lawrence said, “We expect this tailwind to grow in 2026 as the 2025 vintage of new stores rolls into the comps as we progress throughout the year.”
On the merchandise front, Lawrence noted that Academy made progress in improving in-stocks through a combination of assortment rationalization efforts and the rollout of RFID scanners to all stores in the second quarter. During the year, Academy shifted to weekly counts and inventory updates on brands that are RFID-enabled, which in aggregate represent roughly a quarter of its annual volume. As a result, store in-stocks improved across the company by 500 basis points, offering a “major impact” on overall customer satisfaction and improving conversion.
Lawrence further said Academy benefited from “leaning into emerging trends and brands, which helped reinforce our position as a key destination during gift-giving time periods such as Father’s Day and Christmas, along with stock-up time periods such as back-to-school.”
New brands to Academy in 2025 included Jordan and Converse, while expanding “hot trending items” cited included Birkenstock, Burlebo, Baseball Lifestyle 101, Turtlebox speakers, and Ray-Ban Meta smart glasses. Lawrence said the newness “helped us drive traffic into our stores during the key moments on our customers’ calendars. This is another initiative that we will continue to push on in 2026.”
The new and expanded offerings are also helping Academy attract higher spenders. Academy saw 10 percent growth in consumers with household incomes over $100,000 a year, with the group now representing Academy’s largest and fastest-growing customer cohort. Lawrence said, “To be clear, we remain focused and committed to maintaining our position as the value provider in the sports and outdoor space. That being said, we believe layering on new trending brands and items targeted at the better-best end of the assortment is a good way for us to both expand our share of wallet with existing customers while also attracting new customers to shop with us.”
Balance Sheet/Capital Allocation
Inventory grew 15 percent compared to last year. On a per-store basis, inventory dollars were up 6.3 percent while inventory units were flat.
New Store Openings
Academy opened 5 new stores during the fourth quarter, bringing the total to 24 in fiscal 2025. In fiscal 2026, the company plans to open 20 to 25 new stores.
Academy’s “Self-Help” Sales Drivers for 2026
Lawrence expects Academy’s growth this year to be driven by several ‘self-help’ or internal initiatives.
E-commerce sales are expected to be boosted by a shift to an AI-based semantic search platform in late Q2 to improve relevance and conversion rates. Lawrence said, ‘We are also working with leading AI platforms such as OpenAI and Google to enable our catalog of products and offers to surface inside their ecosystems, which will greatly simplify the browsing experience for customers who are using AI as a search engine for shopping.”
Academy is also expanding its online assortment through additional drop-ship partnerships. The rollout of RFID-enabled handheld devices is enabling associates to expand assortments to in-store customers “well beyond what is physically available in that individual store.”
Academy also plans to increase its sales “through third-party storefronts on platforms where our customers are frequent,” according to Lawrence.
A major introduction this year is the relaunch of the Academy credit card, which will expand its My Academy Awards rewards program to three levels. They include a base tier that does not require an Academy credit card to access, another offering a private-label credit card that can only be used at Academy, and a top-tier offering representing the new My Academy Rewards Mastercard, which can be used anywhere. Lawrence said, “We will fully relaunch the program and convert existing cardholders over to the new card in Q2 in advance of Father’s Day.”
On the merchandising front, Academy is expanding the Jordan Brand Shop concept this spring to an additional 55 stores, taking the integrated footwear/apparel presentation to more than 200 doors overall. Lawrence said, “At the same time, we also will continue to expand our offering from Nike to higher-level fashion in both footwear and apparel into all stores and online.”
Riding the strong western lifestyle trend, the work and western wear category is being expanded with key brands such as Carhartt, Wrangler, and Ariat, while emerging brands such as Hooey and Brunt are being tested. In the fitness category, Academy will bring Hyrox-branded training equipment to over 70 Academy doors this spring to capitalize on the popularity of Hyrox races. Academy is Hyrox’s exclusive brick-and-mortar partner in the U.S.
Academy is also making a continued push into baseball lifestyle culture with an expanded assortment of hats and gloves, as well as apparel and lifestyle accessories from trending brands such as Baseball Lifestyle 101, Dirty Mids, and Bruce Bolt. Said Lawrence, “This area was one of our best-selling categories for our holiday, and we expect that the momentum will carry through in the spring and summer selling seasons.”
The retailer plans to build on the success of the past year of rolling out RFID scanners to improve inventory in-stocks by expanding tagging to include private-branded apparel and footwear products. The expansion will enable Academy to view weekly inventory counts on approximately one-third of its sales base by the end of spring.
Openings of between 20 and 25 stores will also support top-line growth in 2026. Said Lawrence, “The majority of these stores will be infill within our legacy and existing markets and should be strong performers for us right out of the gates.” By the end of the year, over 50 stores that opened between 2022 and 2025 will be impacting Academy’s comparable sales growth.
A deeper view of Academy’s real estate and overall growth strategies will be revealed at an Analyst Day being held in New York City on April 7.
Lawrence concluded in his formal comments, “We expect the macroeconomic backdrop to be challenging for the lower- and middle-income consumer and believe that there are a combination of external factors that, when coupled with our internal initiatives, should allow us to grow top-line sales 2 percent to 5 percent while also driving margin expansion and earnings per share growth in 2026.
2026 Outlook
Carl Ford, EVP and CFO, said that comps in the first seven weeks of the first quarter are “off to a positive comp sales start,” and Academy expects the period to be its strongest quarter of the year, as the chain laps a 3.7 percent decline a year ago. He said the second quarter could be “the most challenging” as Academy anniversaries the launch of the Jordan brand, and the subsequent Nike assortment expansion. However, the strong launches may be offset by the launch of the My Academy Rewards Mastercard, continued rollout of the Jordan Brand shop, the World Cup, increased tax refunds, and America’s 250th anniversary.
Ford added, ‘We expect the positive momentum in the first half to carry over into the second half of the year, but we are mindful that tariffs and any prolonged impact to gas prices could have a negative impact on the U.S. consumer. It is also important to remember that the 20 to 25 new store openings in 2026 will be more back-half weighted when compared to fiscal 2025 due to the initial pausing of signing new leases for 2026 when tariffs caused uncertainty in construction prices.”
Image courtesy Academy Sports and Outdoors
