Academy Sports and Outdoors Inc at JPMorgan Retail Round Up Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Christopher Horvers - JPMorgan - Analyst : So maybe starting at a big picture level, I think investors don't appreciate what Academy maybe once was from a merchandizing perspective and where Academy is going. A lot of retail 101, we talked about Ken just a minute ago coming in, but now you really have starting to transform the assortment. So maybe if you could frame it out in terms of where are you from an assortment change perspective, maybe along the good, better, best spectrum. And what's your vision to continue to change that from here?

Question: Christopher Horvers - JPMorgan - Analyst : Is there a certain percentage that you want to get to from the 60% at this point and related to that, as you think about your value to the brands from a customer acquisition perspective, obviously, controlling the value under the market is important for the Academy brand, but also some elevation is important to bring in new brands. So how do you think about that balance?

Question: Christopher Horvers - JPMorgan - Analyst : So you can talk a little more, some exciting news with the Nike expansion coming this spring. Can you share the details? Remind us of the details of what exactly that is. And as you think about the Nike potential, I think it's 12% of sales now, is that right? How do you think about the addition of not just Jordan, but what else is going on around the perimeter of the store in terms of expanding that brand potential?

Question: Christopher Horvers - JPMorgan - Analyst : So I guess, two ways to try to ask the question differently, which is if the Nike brand hits your plan this year and the rest of the store is flat. What would be the contribution?

Question: Christopher Horvers - JPMorgan - Analyst : And another way to ask the question is, as you think about like next year, it being a top 10 brand, obviously, you'll have a full run rate. So it seems like you expect to get to there in the back half of the year in and of itself, right?

Question: Christopher Horvers - JPMorgan - Analyst : And then as you think about the top 10 brands, you've only disclosed the Nike percentage because I think that they're the only one above 10% how quickly is the slope of that as it falls off from [1% to 10%]. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 02, 2025 / 12:00PM, ASO.OQ - Academy Sports and Outdoors Inc at JPMorgan Retail Round Up

Question: Christopher Horvers - JPMorgan - Analyst : Great. I think a lot of analysts argue or have this perception that you're losing share. And I think a lot of analysts have maybe not seen the store, have not conceptualized the difference in your mix versus that of your largest peer. So can you talk a little bit about how you think about share performance maybe in the fourth quarter or last year relative to the industry in some of your larger categories?

Question: Christopher Horvers - JPMorgan - Analyst : One of the changes that your peer made pre-COVID was really the shift out of these hard goods, outdoor lodged categories. How important is that to your core consumer from a lifestyle perspective? And is there any vision to shift away from those categories over the long term?

Question: Christopher Horvers - JPMorgan - Analyst : Can you talk about how the brands, longtime merchant at your core, can you talk about how the brands think about Academy from a customer acquisition perspective? You think why Nike now and what does that say about the potential for other brands to expand into your store?

Question: Christopher Horvers - JPMorgan - Analyst : Asking a little bit of a different way. So is it -- and think about importance from a value perspective from a customer acquisition perspective, is it Nike managing the life cycle of the brand, like now is the appropriate time for Jordan to come into Academy. And as you think about maybe a Hoka, which has seen some slowdown in terms of their growth as they manage the life cycle of that brand, do you think that's a natural extension. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 02, 2025 / 12:00PM, ASO.OQ - Academy Sports and Outdoors Inc at JPMorgan Retail Round Up

Question: Christopher Horvers - JPMorgan - Analyst : Dovetailing back to the consumer a little bit, you did talk about capturing trade down in the fourth quarter call. It's actually a pretty good quarter for goods retailers overall. There's a lot of uncertainty out there with the consumer. We've called out the first quarter being expected to be the low point for the year. I guess, how much of that is just what you've seen in the business around that uncertainty given all the news that's going on in the world versus some other gating factors such as weather and the timing of the Jordan Nike launch.

Question: Christopher Horvers - JPMorgan - Analyst : Nice. The other side of this, I think there's a world trying to understand how the tariff dynamic is affecting the consumer's behavior. I think there was a question in the fourth quarter, like how much of the -- because hard goods finally turn positive for a lot of retailers. Your guns and ammo business did well last year. A lot of that was assortment change, but some of that was five years later. One of the questions then, I think is very relevant now is, are you seeing any pull forward of buying of perceived tariff exposed goods?

Question: Christopher Horvers - JPMorgan - Analyst : Weather is always a favorite topic for retailers and retail analysts.

Question: Christopher Horvers - JPMorgan - Analyst : But you have a very concentrated -- I think 45% of stores are in Texas -- 40%

Question: Christopher Horvers - JPMorgan - Analyst : You also not only have soccer but baseball is our biggest sport in the spring year round. And fishing also a very weather-sensitive sport. So I guess any color commentary on how you've seen sort of the weather dynamic play because it is so relevant to Academy because of those factors.

Question: Christopher Horvers - JPMorgan - Analyst : Yeah. Peak uncertainty right now between the Easter wrap was March 31.

Question: Christopher Horvers - JPMorgan - Analyst : Yeah. Tariffs, continuing on the tariffs. I know it's very difficult to -- you've measured your direct exposure, especially with the power of your private label brands, but there's a lot of unknowns around the indirect exposure. So any comment on the indirect exposure? If you have and if not, can you talk about, A, are you already seeing -- are you already raising prices for tariffs? And then more broadly, how do you think about your pricing strategy around tariffs?

Question: Christopher Horvers - JPMorgan - Analyst : And so, there are retailers, some home furnishings retailers in particular that have talked about. Already -- like we're cutting checks to the government. A lot of their product comes from abroad, and while they're not taking all the pricing, they've already taken price. So have you -- using that portfolio approach, have you taken up price in your assortment?

Question: Christopher Horvers - JPMorgan - Analyst : And then as you think about that average unit costing dynamic, is your cost of goods accounting such that like if it's average unit cost, the unit cost that gets removed from the inventory is at a lower price. So there's like an intermediate gross margin benefit that goes away next year?

Question: Christopher Horvers - JPMorgan - Analyst : Yeah. Nice 30 years of deflation in hard goods. And nice to have a little bit of inflation to come through there.

Question: Christopher Horvers - JPMorgan - Analyst : Can you talk about new stores. I think it's one of the greatest opportunity, but it's also probably the most controversial aspect of the Academy story. Let me just talk about how your new store strategy has evolved from the initial stores that you're opening? And then we'll get into some questions about how they're performing.

Question: Christopher Horvers - JPMorgan - Analyst : Yes. Inventory management and cash flow have been really incredible considering the duration of the headwinds (multiple speakers) headwinds. I just think about retailers and retail investors love a nice comp waterfall. As you think about -- I think, next year, maybe it'll be lower end to high single-digit type finished growth --

Question: Christopher Horvers - JPMorgan - Analyst : As you reach that run rate, if you went back -- by the way, if you went back to the original targets, it seemed like you would get to like almost low double digit. So maybe you could comment on that. But as you reach your whatever that run rate is from a unit growth or footage growth perspective, how contributory will that be to same-store sales? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 02, 2025 / 12:00PM, ASO.OQ - Academy Sports and Outdoors Inc at JPMorgan Retail Round Up

Question: Christopher Horvers - JPMorgan - Analyst : I'll pause here for any audience questions for the Academy team. Unidentified Participant You historically cited population demographic tailwind for your business (inaudible) given the exposure to the Hispanic consumer in the geos you're in. So how much of a tailwind do you think that's been? And with the current immigration and deportation policies, do you think this switch to a headwind potentially going forward?

Question: Christopher Horvers - JPMorgan - Analyst : Danny? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 02, 2025 / 12:00PM, ASO.OQ - Academy Sports and Outdoors Inc at JPMorgan Retail Round Up Unidentified Participant You didn't really talk about the marketing, which I think has really changed and the online. I have more store in my area. But I get the online marketing, and I think it looks pretty (inaudible) I purchase things from it. And that's without having any store around here. So what's going on there because that's got online, and marketing and it's got to be something that's becoming much more important.

Question: Christopher Horvers - JPMorgan - Analyst : Awesome. Well, with that, our time is up. We really appreciate your time.