Academy Sports 1Q26 Immediate Call Postmortem
Bit surprised by the stock strength as quarter itself largely non-event on topline given updated guidance heading into the investor day awhile back – management stated quarter came in as expected.
Getting into the suppressor business which should be 100% accretive to growth in the shooting sports category. Double digit growth in the front-end business due to the collectible trading card business. Double digit growth in better private brands and continued momentum in the Nike and Jordan brands. All this sounds great but just hard to share management’s optimism when the two-year comp stack remains negative.
Speaking of the stack, we get the difficult compare from the original Nike expansion last year but can it really be considered difficult when comps were down 3.7% in 1Q25? Distinctly remember them saying it only had a benefit in the last two weeks of April last year but now they seem to claim they had products on the floor in March – something doesn’t foot here.
High gas prices “largely offset” the benefit of tax refunds. I dunno about that comment – headwind for sure but there are lots of retailers that saw a net benefit here. Comp sales tracking flat through Memorial Day and they blame the slowdown on gas prices. Ike tried to get them to drill down into comp trends post Memorial Day but all they would say is they are “happy” and that the shift in Fathers Day makes this period “murky”.
The lower income cohort was “less bad” in 1Q26. Yeah no shit, that’s called tax returns guys. I know they have to be optimistic and all but downplaying the tax return benefit is probably not helpful.
Look at Horvers trying to be a Softline analyst in Q&A with a question that read directly from the Deckers call (watch out Matt Boss)! The company will not comment on any potential new vendor partners.
Combined Nike/Jordan business up MSD – management “believes” that’s a comp number (LOL, what a confidence driving comment). “Feels they are just starting to get their innovation pipeline really moving”.
Spurs will be a “little bit of tailwind” but they called out a difficult compare with the Thunder winning last year.
Heinbockle had a great question about how high gas prices might amplify the peaks and valleys around holidays. The company is seeing bigger response to promotional windows related to these holidays and consumers pulling back a bit in the lulls. Guess we only need to look at the credit card data for key holidays now…
A little strange they got rid of the adjusted EBITDA metric in the press release but whatever.
*These are our unabridged quick thoughts and notes from the call. We get them out as soon as possible after the call ends. Management has given some topics to dig deeper into and will circle back afterwards with much more in depth work on what was mentioned. You can find that work (and more on Academy Sports and other retail/consumer research) at our website here: M Squared Capital
Originally posted on X and Substack.