Academy Sports and Outdoors, Inc. (ASO) Q4 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents a mixed outlook. While there are positive developments like improved gross margins, new store openings, and e-commerce growth, the guidance for comp sales remains weak, and significant headwinds from consumer financial health and elevated gas prices persist. The Q&A section reveals analysts' concerns about delays in achieving positive comps and the impact of macroeconomic factors. Given the market cap of $3.8 billion, these mixed signals suggest a neutral stock price movement over the next two weeks.
Key Financial Performance
Fourth Quarter Sales $1.7 billion, a 2.5% increase year-over-year. The increase was driven by strong sales during Thanksgiving and Cyber Week, offset by softer customer spending in mid-December and January due to winter storms.
Comparable Sales (Fourth Quarter) Decreased by 1.6% year-over-year. This was influenced by a 6.4% decline in transactions, partially offset by a 5.1% increase in ticket size.
Gross Margin (Fourth Quarter) 33.6%, up 140 basis points year-over-year. The improvement was due to efficiency gains in the supply chain and lapping of prior year's port disruption costs.
Net Income (Fourth Quarter) $133.7 million, with diluted earnings per share of $1.98. Adjusted net income was $132.9 million or $1.97 per share.
Full Year Sales $6.05 billion, a 2% increase year-over-year. Growth was attributed to market share gains and strategic initiatives like sourcing diversification and pricing optimization.
Annual Gross Margin 34.8%, up 90 basis points year-over-year. This was driven by a 6% increase in average unit retail prices and efforts to maintain value perception.
Dot-com Business Growth 13.6% year-over-year. Growth was driven by improvements in search experience, AI integration, and data enrichment.
New Store Openings 24 new stores opened in 2025, contributing to mid-single-digit comp increases for stores opened between 2022 and 2024.
Inventory Balance $1.5 billion, a 15% increase year-over-year. Per store inventory dollars were up 6.3%, while inventory units remained flat.
Cash from Operations (Full Year) $435 million, with $263 million in adjusted free cash flow. $234 million was returned to investors through dividends and share repurchases.
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Operating Highlights
Dot-com business growth: Achieved 13.6% growth in dot-com business through improved search experience, AI integration, and new features like Scout.
New store expansion: Opened 24 new stores in 2025, exceeding year 1 pro formas, with mid-single-digit comp increases for stores opened in 2022-2024.
Product assortment: Expanded trending brands like Jordan, Converse, Birkenstock, and others to drive traffic and sales.
myAcademy Rewards loyalty program: Grew to over 13 million members, with plans for further expansion in 2026.
Market share gains: Achieved solid market share gains across footprint with $6.05 billion in sales, up 2% year-over-year.
Higher-income customer growth: 10% growth in customers with household income over $100,000, now the largest and fastest-growing cohort.
Gross margin improvement: Improved gross margin by 140 basis points in Q4 and 90 basis points for the year through pricing optimization and sourcing diversification.
Inventory management: Implemented RFID scanners and weekly inventory updates, improving in-stock rates by 500 basis points.
AI and technology integration: Incorporated AI for data enrichment, image generation, and semantic search to enhance customer experience.
Credit card program relaunch: Relaunching Academy credit card in Q2 2026 with new tiers and benefits to drive customer loyalty and spending.
Omnichannel transformation: Accelerating digital transformation with AI-based semantic search, expanded online assortment, and third-party storefronts.
New store openings: Plan to open 20-25 new stores in 2026, focusing on infill within legacy markets.
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Risk or Challenges
Inflationary Pressures: Inflationary pressures on goods sourced outside of the U.S. are expected to continue through the first half of 2026, potentially impacting pricing and consumer spending.
Tariffs: Incremental tariffs levied in late Q1 and Q2 of 2025 created challenges, and continued tariff costs are expected to impact the first half of 2026.
Consumer Spending: Muted discretionary consumer spending is anticipated to persist, particularly among lower and middle-income consumers, due to macroeconomic pressures.
Weather Disruptions: Large winter storms in January 2025 caused store closures, impacting sales. Similar weather events could pose risks in the future.
Supply Chain Costs: Efficiency gains in the supply chain helped offset prior costs, but ongoing challenges in managing supply chain expenses remain a concern.
Shrinkage: Shrinkage remains a concern, though RFID implementation is expected to mitigate this risk over time.
New Store Expansion: The acceleration in new store growth has increased SG&A expenses, and the back half-weighted opening of 20-25 new stores in 2026 could strain resources.
Economic Uncertainty: General economic uncertainty, including potential prolonged impacts of gas prices, could negatively affect consumer behavior and sales.
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Guidance & Outlook
Sales Growth: Sales guidance for 2026 is projected to grow by 2% to 5%, translating into a comparable sales range of -1% to +2%. The low end assumes continued muted discretionary consumer spending, while the high end assumes improved consumer health and macroeconomic conditions.
Macroeconomic Assumptions: Inflationary pressures on goods sourced outside the U.S. are expected to persist in the first half of 2026, with stabilization anticipated in the second half. Higher income tax refunds and events like the World Cup and the U.S. 250th anniversary are expected to provide sales tailwinds.
Digital Transformation: The company plans to accelerate its digital transformation by implementing an AI-based semantic search platform in Q2 2026, expanding online assortments through drop-ship partnerships, and integrating AI capabilities for enhanced customer engagement.
New Store Expansion: The company plans to open 20 to 25 new stores in 2026, primarily in existing markets. These stores are expected to contribute to comparable sales growth as they mature.
Loyalty Program Enhancements: The myAcademy Rewards loyalty program will be relaunched in Q2 2026 with a new tiered structure, including a Mastercard option that offers rewards for purchases outside of Academy stores.
Product and Brand Expansion: The company will expand offerings in trending brands like Jordan, Nike, and Carhartt, as well as emerging categories like HYROX fitness equipment and baseball lifestyle products. These initiatives are expected to drive traffic and sales.
Gross Margin: Gross margin for 2026 is expected to range from 34.5% to 35.0%, supported by merchandise margin expansion and shrink reduction through RFID technology.
Earnings and Cash Flow: GAAP diluted earnings per share are projected to range from $5.65 to $6.15, with adjusted EPS between $6.10 and $6.60. Adjusted free cash flow is expected to be between $250 million and $300 million after capital expenditures of $200 million to $240 million.
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Shareholder Return Plan
Dividends Paid in 2025: $35 million
Dividend Increase for 2026: 15% increase, resulting in $0.15 per share, payable on April 10, 2026, to stockholders of record as of March 20, 2025
Share Repurchases in 2025: $199 million in share repurchases at an average price of $50.62
Share Repurchases in Q4 2025: Approximately $100 million of shares repurchased at an average share price of $54.03
Remaining Share Repurchase Authorization: $437 million remaining at the end of fiscal 2025
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Key Q&A
Q:Can you quantify the impact of store closures on overall performance in Q4 and provide details on the underlying business trends?
A:Steven Lawrence stated that January was running positive, with roughly half of the stores closed for about 3 days, which caused a 100 basis point headwind in Q4 comps. Post-reopening, business resumed strongly, with February showing positive comps across all divisions, continuing into early March. Ammo sales improved during Q4, turning positive in February before accelerating due to current events.
Q:What is driving the SG&A growth, and how does it align with the guidance for the next year?
A:Earl Ford explained that SG&A growth is primarily driven by store increases, with unit growth providing leverage. The guidance implies modest SG&A leverage next year, aided by reduced costs from the Jordan launch and automation opportunities.
Q:Why is it taking longer to return to positive comps despite promising initiatives?
A:Steven Lawrence attributed the delay to consumer pressure throughout the year, despite top-line growth in 2025. He highlighted growth initiatives like dot-com surging 14%, new stores showing mid-single-digit comps, and the loyalty credit card relaunch as key drivers for achieving positive comps in 2026.
Q:How are the newer stores performing economically, and what is the outlook for their profitability?
A:Earl Ford stated that year 1 stores are performing better than anticipated, with mid-single-digit comps. Legacy market stores perform better than new market stores, which show steady growth into years 2 and 3. The economic model expects a 20% ROIC with $2.5M-$3.5M net CapEx per store.
Q:What is the expected impact of new stores and the loyalty program on sales growth?
A:Steven Lawrence estimated that new stores contributed about a 30 basis point tailwind last year, expected to double this year. The loyalty program is anticipated to provide a similar lift, with its full relaunch starting around Father's Day.
Q:What is the current status of supply chain initiatives and their impact on margins?
A:Steven Lawrence noted that supply chain efficiencies contributed to gross margin gains in Q4. The Manhattan Active Warehouse Management program has been rolled out in one distribution center, with plans for others in the future. Further details will be shared on April 7.
Q:What are the main headwinds and tailwinds affecting the path to consistent positive comps?
A:Steven Lawrence identified ammo sales and consumer financial health as headwinds, while initiatives like e-commerce growth, new stores, and loyalty programs are tailwinds. Earl Ford emphasized the financial health of the American consumer as a significant headwind.
Q:How do elevated gas prices impact the business?
A:Steven Lawrence explained that high gas prices reduce discretionary spending but can also boost employment in oil-rich regions like Texas, which may benefit the business. Ammo sales also tend to react positively to geopolitical events.
Q:What are the assumptions behind the sales outlook for 2026?
A:Earl Ford stated that self-help initiatives drive the midpoint of the 2%-5% guidance range. Macro factors like tax refunds, the World Cup, and the 250th anniversary of the U.S. could either offset or enhance these initiatives, depending on consumer financial health.
Q:Is the shift to higher-income customers and premium brands increasing operating expenses?
A:Earl Ford clarified that operating costs are not significantly elevated. Steven Lawrence emphasized that Academy remains a value retailer, with premium brands helping to diversify and attract new customers without losing focus on value-based customers.
Q:How did each business segment perform during Q4?
A:Steven Lawrence reported strength in bikes, fishing, outdoor cooking, apparel, electronics, and athletic footwear. Seasonal categories like boots and outerwear, as well as ammo and camping, were softer. Ride-ons also faced challenges due to tariff-related assortment issues.
Q:What are the cost implications of the loyalty program relaunch?
A:Steven Lawrence stated that the loyalty program will repurpose existing discounts, making them more targeted, without significantly impacting gross margins.
Q:What is the traffic trend by income cohort, and how does it affect the business?
A:Steven Lawrence noted double-digit traffic growth among households earning over $100,000, while lower-income households saw high single-digit declines. Middle-income traffic remained stable. Lower-income consumers are under pressure but respond to promotional events.
Q:How has the Jordan brand performed, and will it help attract other high-profile brands?
A:Steven Lawrence stated that Nike and Jordan combined grew high single digits, exceeding expectations. The successful launch demonstrates Academy's ability to attract and showcase premium brands, potentially aiding in securing other high-profile brands.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the future supply chain efficiencies beyond 2026, deferring further discussion to the Analyst Day on April 7.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI search
Academy Sports
Academy credit
Analyst Day
Baseball Lifestyle
Christmas
Jordan brand
RFID
Sports Outdoors
base end
birthday
count inventory
credit card
dive
initiative
label credit
lifestyle
midyear
myAcademy Rewards
offering
platform
purchase
push
race
relaunch
reward
self health
shipping dot
sign discount
spring store
store comp
tax refund
tier myAcademy
trending
year customer
ASO Transcript
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Academy Sports And Outdoors, Inc. (ASO) Q4 2025 Earnings Call Transcript
Positive3-19
The earnings call indicates positive financial performance with a 5% YoY revenue increase and a 10% rise in net income, despite a slight margin decline. The company's optimistic revenue and margin projections, along with strategic initiatives like store openings and e-commerce growth, suggest a positive outlook. The lack of explicit risks in the Q&A further supports a positive sentiment. Given the market cap and the strategic plan's focus on growth, the stock price is likely to experience a positive movement of 2% to 8% over the next two weeks.
Academy Sports and Outdoors, Inc. (ASO) Q4 2026 Earnings Call Transcript
Unknown3-17
The earnings call summary presents a mixed outlook. While there are positive developments like improved gross margins, new store openings, and e-commerce growth, the guidance for comp sales remains weak, and significant headwinds from consumer financial health and elevated gas prices persist. The Q&A section reveals analysts' concerns about delays in achieving positive comps and the impact of macroeconomic factors. Given the market cap of $3.8 billion, these mixed signals suggest a neutral stock price movement over the next two weeks.
ASO Slides
ASO Report
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