Academy Sports 2Q25 Immediate Call Postmortem
Is this really the second quarter in a row where they miss earnings but increase the guidance range? Even that is kind of a mess as they lowered adjusted net income on the high end while raising adjusted EPS (likely due to share repurchases but still a lot of noise here).
Must be happy with their first quarterly positive comp since 2021, even if it was still a rounding error to flat and likely due to price increases. Slow start to May improved later with positive comps last several weeks of quarter. Major families of business (footwear, apparel, sports/rec, and outdoor) all up LSD. Swim was soft to begin the quarter but got better in late June as warm weather arrived. Positive comps during BTS which was up against a tough compare in August last year (only positive comp for the year).
They were much more explicit about inflationary pressures from tariffs than Dicks Sporting Goods was. AUR was up mid-single digit with average ticket up 1.5%. Expect AUR to accelerate to the HSD and even DD range from not just them but the entire industry in 2H. Started seeing price increases as got deeper into the summer and expect more of that activity in 2H as the tariffs begin to find their way into COGS. Some categories like soda and chips where no elasticity. Some where the unit demand is roughly in line, and some bigger ticket categories where demand erosion is greater than the AUR increase.
Management very excited about the comp waterfall longer-term, which certainly is one of the major parts of the story they sell. But there is a little bit of a disconnect here because last quarter they announced they are slowing down the expected pace of signing deals for new stores in 2026. Granted it was to better understand tariff impact on construction costs but they didn’t talk about any of that on this call.
Nike and Jordan were up double-digit from last year (of course they are given all the new space). Excited about early reads and saw that business build, particularly with BTS. Expect that to continue, particularly on footwear side as get to basketball season. Getting access to better premium product. Called out Vomero 18 as well as Plus. They have the 270 out in every door now. Football cleats and backpacks are now in all doors. Expect even more door expansion next Spring.
The share gain from higher income consumers continued with traffic up a strong DD (vs. DD last quarter and MSD in Dec/Jan). They called out flattened market share in the middle-income consumer and traffic declines in lower income cohorts but pace of decline is less than 1Q.
Sounds like some good progress on much of the back end initiatives they have talked about before. Major brands like Nike, Jordan, Adidas, etc account for 25% of sales and now are all on the weekly count cycle to have inventory updated, which should drive improved instocks and sales going forward. Previously called out 20% improvement in inventory accuracy and 400-500 bps in instocks from the RFID work
E-commerce sequentially better at up 18% vs. up 10% in 1Q. They clearly are very happy with the acceleration here and think they are starting to see the benefits of what they have been investing in. Dunno – am sure some of this improvement is because of price increases as well but certainly having better access to Nike and Jordan should help as well.
Still on track to goal to get China down to MSD percent of sourcing by end of year.
*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 later with a more comprehensive work up as well as detailed scenario analysis of how consensus numbers shook out.
Originally posted on X and Substack.