SGB Executive spoke with Academy Sports and Outdoors, Inc. EVP and Chief Merchant Matt McCabe following the retailer’s reporting of first-quarter results, which highlighted positives, including the promise to introduce the Jordan brand, a strong response to expanding Nike product and market share gains among higher-income households.
However, Academy missed analysts’ consensus first-quarter estimates partly due to a cool February and the widening of its full-year same-store guidance to account for the negative fallout from inflationary pressures that could arrive this year tied to the Trump Administration’s tariffs.
McCabe joined Academy in 2016 as VP, divisional merchandise manager, Athletic and Licensed Apparel after serving as a buyer for Golfsmith. The company promoted him to chief merchant in June 2023.
SGB Media: How would you sum up the first quarter?
Matt McCabe: Overall, the quarter was choppy. We had a difficult February due to the weather, but we saw a notable rebound in our business in March and April, resulting in a comp-positive performance in April. Overall, we felt the quarter got stronger as we went along, and we’re very pleased with things like the Jordan launch and progress with some of our initiatives, including opening new stores, our e-commerce performance and driving comps out of the recent vintages of new stores that we opened in 2022 and 2023. So, we are seeing things moving in the right direction. We just had a tough start in February.
SGB Media: Academy widened its comp guidance for the year, lowering the bottom end of its guidance but kept the top end intact. What’s driving the wider guidance?
Matt McCabe: We’ve seen our customers be under some considerable strain, and we we’ve been sensitive to the fact that they face an uncertain environment, forcing them to stretch their discretionary spending and look for more value. On the flip side, we continue to see an acceleration from our higher-end customers. During the first quarter, we saw growth in store traffic from consumers earning over $150,000 by almost 20 percent. As a result, we’re seeing strain from our customer cohorts in the lower-income quartiles, but we’re picking up some of the higher-end customers.
SGB Media: Walmart and Dollar General are also citing market share gains with more middle and higher-income shoppers. What’s driving the gains for Academy?
Matt McCabe: There are a couple of reasons. One is that those customers are seeking value. They’re trying to make their dollars go farther. As a value retailer, they might turn to us and see what’s in our stores. Secondly, over the last four to five years, we’ve been on a journey to increase our level of better and best-level products throughout the store without sacrificing our value in the marketplace. And, a lot of those customers might be shopping with us for the first time and see that we have a wide selection of brands such as Brooks or better and best-level baseball bats. We’ve got Jordan in-store now. That not only entices customers to purchase from us, but it also makes them loyal in the long run.
SGB Media: Nike was one of Academy’s best-performing brands in the quarter and benefited from improving allocations. Can you talk about the apparel and footwear category and when you started to get the additional Nike product?
Matt McCabe: We started that about halfway through Q1, but it’s ramping up now in Q2, and you’ll see a full component of our Nike business as we head into the back-to-school season. We expanded our in-store footprint, particularly in Nike apparel, by approximately 20 percent, allowing us to showcase the brand more effectively. We can tell stories in different vignettes around running and training and showcase some of our more fashion geared sportswear better, too. So, Nike is really driving it. Footwear and apparel were the strongest parts of our businesses. We’ve also seen, on the footwear side, that Brooks continues to be a strong brand for us, and we’re killing it with Asics right now. Asics is performing beyond our expectations, and we’re chasing that brand.
SGB Media: Is Academy selling Hoka or On?
Matt McCabe: We don’t have Hoka or On today, but it’s not a question of if we’ll get them but when. We’re doing great with the brands we have. We’re proud of our Brooks business, and we carry better running products from all the brands that we have, including Asics, Nike and Adidas. We’re seeing that business do really, really well.
SGB Media: The Jordan brand launched in about half of Academy’s stores and online on April 23. Can you discuss the launch and what it means to Academy?
Matt McCabe: The Jordan Brand has been the most requested brand in our stores and on our website for several years. We were very happy that we were able to reach an agreement with the Jordan brand last year to bring it to life this spring. The Jordan brand in our stores appears in a branded shop that combines apparel and footwear. You get a nice impact when you walk into the store with the entire collection, available in both men’s and women’s styles. In kids’, we have a Jordan shop as well. It’s housed on the corner of our apparel pad with shoes in the racetrack next to it, but that also creates a nice shop. Our Jordan assortment is selected through the lens of sport. It’s not necessarily shoes just for the high school hallways, but shoes that you want to play in when you play a game, and that’s what our customers have been asking for as well. Over time, that assortment will evolve to include sports-adjacent type merchandise as well, but not necessarily a fully lifestyle component taking over as part of it. So far, Jordan’s tracking ahead of our sales plan. We’re pleased with how it’s going.
SGB Media: Footwear and Apparel delivered flat comps with Sports & Recreation slightly behind. Could you share some highlights from the Sports & Recreation segment?
Matt McCabe: In team sports, we were really happy with our baseball business. That’s our biggest sport, especially in the first half of the year, and in that business year to date, is performing well. We saw some softness in other businesses. Golf got off to a slow start due to the weather, and basketball is also off to a slow start. Some of that comes from basketball systems. People might be holding back on bigger ticket purchases there. However, we’re really happy with where baseball is headed, and we’re starting to see some promising signs for the future, particularly in our football business as well. As that starts to come into season here over the next six weeks, we think there will be a good football story for us to tell.
SGB Media: The Outdoor segment was down by low single digits. What drove the decline?
Matt McCabe: We’ve seen a softer ammo business, which is something we are trying to mitigate. On the other side of that coin, our fishing business has been strong. We picked up share for a third straight quarter in fishing and continue to see that make a mark for us. Those would be the two biggest swings in the categories. We house drinkware in our Camp & Stream division at Academy, and we’ve seen our drinkware business hold its own while our cooler business improved.
SGB Media: Can you share some other Q1 highlights?
Matt McCabe: We saw double-digit increases from our e-commerce site, which is an exciting part of our business. We opened five stores in Q1, and we now have a 303-store count across 21 states. We confirmed our guidance to open between 20 and 25 new stores this year. That’s exciting. Even in an environment where the marketplace might be choppy, we’re sticking to our plan for new store growth and looking forward to what that can do for our business.
SGB Media: How are you handling tariffs, and where do you see Academy’s pricing headed?
Matt McCabe: We’re tackling tariffs the best way we know how. We paused shipments from China, but we’re pulling select shipments in. We’ve accelerated our focus on diversifying out of China to countries that may have lower tariff rates. We’ve leveraged our strong balance sheet and pulled in inventory for more evergreen products that don’t have a markdown date in the near future, so we have thosr products at pre-tariff prices. And that’s an important part of what we did. In terms of what we see in the marketplace, we’re not looking to either lead or lag in terms of promotion. We are focused on our playbook and what we need to do to drive our business, especially during key holidays. We’ll continue to monitor the competition and adjust as needed.
Images courtesy Academy Sports and Outdoors, Inc.
