Q1 2024 Academy Sports & Outdoors Inc Earnings Call

Speaker Change: [music].

Operator: Good morning, ladies and gentlemen, and welcome to the Academy Sports and Outdoors first quarter fiscal 2024 results conference call. At this time, this call is being recorded, and all participants are in listen-only mode. Following the prepared remarks, there will be a brief question and answer session, but questions will be limited to analysts and investors. Please limit yourself to one question and one follow-up. To ask your question during the call, please press star 1. If you require any assistance during the call, please press star zero. I'll now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports & Outdoors.

Good morning, ladies and gentlemen, and welcome to the Academy Sports and outdoors first quarter fiscal 2024 results conference call.

Speaker Change: At this time this call is being recorded and all participants are in listen only mode.

Speaker Change: Following the prepared remarks, there'll be a brief question and answer session.

Speaker Change: Questions will be limited to analysts and investors.

Speaker Change: Please limit yourself to one question and one follow up.

Speaker Change: To answer your question during the call. Please press star one.

Speaker Change: If you require any assistance during the call. Please press star zero.

Speaker Change: I'll now turn the call over to Matt Hodges, our Vice President of Investor Relations for Academy Sports and outdoors.

Speaker Change: Please go ahead.

Matt Hodges: Good morning, everyone, and thank you for joining the Academy Sports and Outdoors first quarter 2024 financial results call. On the call are Steve Lawrence, Chief Executive Officer, and Carl Ford, Chief Financial Officer.

Speaker Change: Good morning, everyone and thank you for joining the Academy sports and outdoors first quarter 2024 financial results call participating on the call are Steve Lawrence Chief Executive Officer, Carl <unk>, Chief Financial Officer.

Matt Hodges: As a reminder, statements in today's earnings release and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in the RSVC filing. The company undertakes no obligation to revise any forward-looking statements.

Speaker Change: As a reminder, statements in today's earnings release, and the comments made by management. During this call maybe considered forward looking statements.

Speaker Change: These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections.

Carl <unk>: Risks and uncertainties include but are not limited to the factors identified in the earnings release and in our SEC filings the company undertakes.

Carl <unk>: Undertakes no obligation to revise any forward looking statements.

Matt Hodges: Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the Most Comparable Gap Measures are included in today's earnings release, which is available at investors.academy.com. I will now turn the call over to Steve Lawrence for his remarks.

Speaker Change: Today's remarks also refer to certain non-GAAP financial measures reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors thought Academy Dot com.

Speaker Change: I will now turn the call over to Steve Lawrence or his remarks, Steve.

Steven Paul Lawrence: Thanks Matt. Good morning to everyone, and thanks for joining our first quarter 2024 earnings call. As always, we appreciate your interest and support of Academy Sports & Outdoors. As you saw from our press release this morning, sales for Q1 came in at $1.036 billion, which was a 1.4% decline versus the first quarter of last year. As a reminder, we had a 53rd week in 2023, so we're using a shifted comp sales calculation that compares weeks 1 through 13 this year versus weeks 2 through 14 last year. Using this methodology, our comparable sales for the first quarter came in at down 5.7%.

Steven Paul Lawrence: Thanks, Matt good morning to everyone and thanks for joining our first quarter 2024 earnings call as always we appreciate your interest and support of Academy sports and outdoors.

As you saw from our press release. This morning sales for Q1 came in at 1 billion 36, which was a 1.4% decline versus the first quarter of last year.

Speaker Change: As a reminder, we had a 50 <unk> week in 2023, so we're using a shifted comp sales calculation, which compares weeks once were 13 this year versus weeks two through 14 last year.

Speaker Change: Using this methodology.

Speaker Change: Comparable sales for the first quarter came in at down five 7%.

Steven Paul Lawrence: As we expected, our customers remain challenged by the current macroeconomic environment. Inflation is keeping prices at elevated levels while personal savings have been depleted, causing our customers to be tight with their discretionary spending. The trends we've cited in previous calls in terms of customer shopping patterns held true in the first quarter, with customers shopping episodically while gravitating towards the value offerings in our assortment, along with new and innovative items. What was encouraging was that we saw sequential improvement throughout the quarter, with April being the best month of Q1.

Speaker Change: As we expected our customer remains challenged by the current macroeconomic environment.

Speaker Change: Inflation is keeping prices at elevated levels, while personal savings have been depleted, causing our customers to be tight with their discretionary spending.

Speaker Change: The trends, we decided in previous calls in terms of customer shopping patterns held true in the first quarter with customer shopping episodically, well gravitating towards the value offerings, our assortment, along with new and innovative items.

Speaker Change: What was encouraging is that we saw sequential improvement throughout the quarter with April being the best month of Q1.

Steven Paul Lawrence: The second quarter represents a good opportunity for us to show continued improvement with several national shopping events still ahead of us, such as Father's Day, the Fourth of July, and the beginning of back-to-school. Meanwhile, beneath the surface, our dot-com business posted an 8% sales increase over last year and comprised 9% of total merchandise sales versus 8.2% last year. Opus, and Ship From Store represented more than 80% of total.com sales for Q1, which highlights the true omni-channel approach that we've taken to growing this business.

Speaker Change: The second quarter represents a good opportunity for us to show continued improvement with several natural shopping that's still ahead of us such as father's day and fourth of July and the beginning of back to school.

Speaker Change: Beneath the surface, our dotcom business posted an 8% sales increase over last year and comprised 9% of total merchandize sales versus eight 2% last year.

Speaker Change: Opus and ship from store represented more than 80% of total dotcom sales for Q1, which highlights a true omni channel approach that we've taken to growing this business.

Steven Paul Lawrence: As you know, one of our long-range plan goals is to build a more powerful omni-channel business. We are focused on engaging as many customers as possible across all of our channels because we know that an omni-channel shopper is our most valuable customer. They shop more frequently, they spend more per transaction, and they're worth three to four times more in sales per year than a non-omni-channel customer.

Speaker Change: As you know.

One of our long range plan goals is to build a more powerful omni channel business.

Speaker Change: We're focused on engaging as many customers as possible across all of our channels because we know in an omnichannel shopper is our most valuable customer shop more frequently they spend more per transaction. There were three to four times more in sales per year and a non omnichannel customer.

Steven Paul Lawrence: In terms of sales performance across our different divisions, the hard goods side of the business performed the best during the quarter on a non-shifted basis. Our strongest category within our goods remains the outdoor division, which ran a 2% increase. Amping continues to make significant gains driven by Stanley and Yeti.

In terms of sales performance across our different divisions, the hard goods side of the business performed the best during the quarter on a non shifted basis.

Speaker Change: Our strongest category with a hard goods remains the outdoor today show, which ran a 2% increase.

Speaker Change: Camping continues to run significant gains driven by Stanley and Yeti.

Steven Paul Lawrence: The strong field trend we saw in Q4 slowed down a little bit in Q1, but we expect this business to pick up later in the year. The hunting and fishing categories remain key differentiators for us, and both businesses are in the best inventory position we've been in over the past four years, which sets us up well heading into the summer months for fishing and the fall for hunting season. The other portion of the business that we categorize as hard goods is sports and recreation, which ran down 4%. We saw strong performance in this division in team sports, which was led by continued growth in pickleball.

Speaker Change: The strong field trend, we saw in Q4 slowed down a little bit in Q1, we expect this business to activate later in the year.

Speaker Change: The hunting and fishing categories remain key differentiators for us and both businesses are in the best inventory position, we've been in over the past four years.

Speaker Change: Sets us up well heading into the summer months for fishing.

Walt: Walt for hunting season.

Speaker Change: The other portion of the business can be categorized as hard goods as sports and recreation, which ran down 4%.

Speaker Change: We saw strong performance in this division in team sports, which was led by continued growth in pickle ball.

Steven Paul Lawrence: It also includes our outdoor cooking category, which has been a strong suit for us over the past couple of years, but had a challenging quarter, primarily driven by a crawfish shortage that suppressed sales across the entire Gulf region. However, we have seen this business rebound as we exited the crawfish cooking season and people started preparing for summer outdoor grilling. We also have a strong marketing plan for the summer to ensure we grow our market share. We offer the broadest and most comprehensive assortment in the marketplace across cooking types and surfaces.

Speaker Change: It also includes our outdoor cooking category, which has been a strong suit for us over the past couple of years, but had a challenging quarter, primarily driven by a crawfish shortage suppress sales across the entire Gulf region.

Speaker Change: We have seen this business rebound as we exited crawfish cooking season, when people started preparing for summer outdoor grilling.

Speaker Change: To help capitalize on this we also have a strong marketing plan for the summer to ensure we grow our market share.

Speaker Change: We offer the broadest and most holistic assortment in the marketplace across cooking types and surfaces.

Steven Paul Lawrence: Spices and Rubs, Accessories, and Premium Fuels, making it another key differentiator and traffic driver for Academy. The most challenged business in sports and recreation remains fitness, but we continue to see weakness in cardio equipment. I'll talk about some plans to help improve this business a little bit later in my remarks. On the soft goods side of the business, footwear sales were down slightly at negative 1%, which was a solid improvement over our Q4 trend. Athletic Footwear had the strongest performance for the quarter, driven by increases in performance running brands such as Nike, Brooks, and New Balance.

Speaker Change: Spices, and Rob's accessories, and premium fuels, making a another key differentiator and traffic driver for Academy.

Speaker Change: Most challenged business the sports and recreation remains fitness, where we continue to see softness in cardio equipment.

Speaker Change: I will talk about some plans to help improve this business a little bit later in my remarks.

Speaker Change: On the soft goods side of the business, where sales were down slightly at negative, 1%, which was a solid improvement over our Q4 trend.

Speaker Change: Athletic footwear had the strongest performance for the quarter driven by increases in performance running brands, such as Nike Brooks and new balance.

Steven Paul Lawrence: Casual footwear is the second best-performing category, with strong sales of Birkenstocks, Crocs, and Skechers driven by slip-ons. We continue to partner with our existing footwear brands to gain expanded access to the invention pipelines so we can ensure our customers have access to the newest styles. At the same time, we continue to work with relevant brands to gain access to items and categories that are not already part of our current assortment. Apparel Sales were down 3% for the quarter.

Casual footwear was the second best performing category with strong sales and Birkenstocks crocs with Skechers driven by slowdowns.

Speaker Change: We continue to partner with our existing footwear brands to gain expanded access to them. They actually pipelines. So we can ensure our customers have access to the newest styles.

Speaker Change: At the same time, we continue to work with relevant brands to gain access to items in categories that are not already part of our current assortment.

Speaker Change: Apparel sales were down 3% for the quarter.

Steven Paul Lawrence: Within this division, our kids and outdoor apparel businesses were the top performers. We continue to see strong results from key national brands such as Nike, Carhartt, and Levi's. We're also seeing solid growth in some of our newer private brands, such as Freely and Rowe. Licensed Apparel was the weakest segment of the business, as we are lapping the release of the commemorative Astros World Series jerseys that launched last spring, along with the LSU Women's Basketball National Championship from last year.

Speaker Change: Okay, Miss Division, our kids and outdoor apparel businesses were the top performers.

Speaker Change: To see strong results from key national brands, such as Nike Carhartt Levis, We're also seeing solid growth in some of our newer private brands such as freely enroll.

Speaker Change: Licensed apparel was the weakest segment of the business as we were lapping the release of the commemorative Astros World series jerseys that launched last spring along with the LSU Women's basketball National Championship from last year.

Steven Paul Lawrence: That being said, the majority of this business for us is done during the fall, and the team has done a lot of great work around editing the assortment to position us well for the kickoff to college and pro football later this year. From a profitability standpoint, our gross margin rate came in at 33.4% for the quarter, or a 40 basis point decline versus last year, primarily driven by an 80 basis point decline in merchandise margin.

Speaker Change: That being said the majority of this business for US is done during the fall and the team has done a lot of great work around editing the assortment.

Speaker Change: As well for the kick off to college and pro football later this year.

Speaker Change: From a profitability standpoint, our gross margin rate came in at 33, 4% for the quarter or a 40 basis point decline versus last year, primarily driven by an 80 basis point decline in merchandise margins.

Steven Paul Lawrence: The merchandise margin decline vs. Lasser is primarily caused by sales mixing into lower margin hard goods businesses coupled with some planned extra promotional activity this year. We remain on track to achieve our full-year gross margin rate guidance of 34.3% to 34.7%. Carl will discuss our profitability performance in more detail in his comments later in the call. As we forecast sales for the remainder of the year, we expect that our customer base will remain under pressure and continue to moderate their spending. To combat this, we're leaning into shopping trends that customers clearly demonstrated over the past year while also focusing on our long-range plan initiative. In regards to customer behavior, there are three primary sales drivers. Nunez.

Speaker Change: The merchandise margin decline versus last year is primarily caused by sales mixing into lower margin hard goods businesses, coupled with some planned extra promotional activity this year.

Speaker Change: We remain on track to achieve our full year gross margin rate guidance of 34.3 to 34, 7%.

Speaker Change: Carl will discuss our profitability performance in more detail in his comments later in the call.

Carl <unk>: As we forecast sales out for the remainder of the year, we expect that our customer base will remain under pressure, we continue to moderate their spending.

Carl <unk>: To combat this leaning into shopping transfer customers clearly demonstrated over the past year, while also focusing on our long range plan initiatives.

Speaker Change: In regards to customer behavior. There are three primary sales drivers newness value driving traffic during the key time periods on the calendar.

Steven Paul Lawrence: Value driving traffic during the key time periods on the calendar. In terms of newness, we continue to look for emerging and innovative brands to add to our assortment as another way to spark customer interest and drive traffic and sales. Several of the new brands that we've added to the assortment over the last year, such as Birkenstock, Nordic Track & Fitness, and Burlapone Apparel, will be available in an expanded number of stores this year. We also continue to bring in well-known brands that previously weren't part of our assortment, such as Altra trail running shoes or Chaco sandals.

Speaker Change: In terms of newness, we continue to look for emerging and innovative brands to add to our assortment is another way to spark customer interest and drive traffic and sales.

Speaker Change: Several of the new brands that we've added the assortment over the last year, such as birkenstock product traction fitness and Birla bone apparel will be available in an expanded number of stores this year.

Speaker Change: We also continue to bring in well known brands that previously weren't part of our assortment such as ultra trail running shoes or Chaco sandals.

Steven Paul Lawrence: In order to highlight our value offering, another place we've added newness is in our private brand portfolio, where we recently launched McGregor Golf as a brick-and-mortar exclusive for Academy. Initially, we're leaning into golf balls and club sets, but similar to Redfield on the outdoor side of the business, we think there are category expansion opportunities down the road. The last way we're leveraging newness is to jumpstart sales and lagging categories.

Speaker Change: In order to highlight our value offering another place we've added newness is in our private brand portfolio.

Speaker Change: Recently launched Mcgregor golf as a brick and mortar exclusive her academy.

McGregor: Initially, we're leaning into golf balls and clubs sets, but similar to red seal on the outdoor side of the business. We think are a category expansion opportunities down the road.

Speaker Change: Lastly, we're leveraging newness is the jumpstart sales lagging categories.

Steven Paul Lawrence: I mentioned earlier in my comments about the continued softness in the fitness business, and our plan is to lean into newness and innovation as a way to help spark this business. The first focus is to re-energize our cardio equipment assortment by capitalizing on emerging trends while also leaning into value with items such as walking pads, which are essentially a simplified treadmill that works well for people who use standing desks or want a low-impact aerobic workout at home.

Speaker Change: I mentioned earlier in my comments about the continued softness in the fitness business and our plan is to lean into newness and innovation as a way to help spark this business.

Speaker Change: The first focus is to reenergize, our cardio equipment assortment of capitalizing on emerging trends. We're also leaning into value with items, such as walking pads, which are essentially a simple by treadmill. It worthwhile for people, who you're standing desk or want a low impact of all the work out at home.

Steven Paul Lawrence: Another addition is taking advantage of the CrossFit trend by being the first retailer to add salt fitness to our brick and mortar store. They're a digitally native brand that is well known and respected within the CrossFit community. Finally, within cardio, as I briefly mentioned earlier, we're expanding our Nordic track assortment out to all doors with additional styles. Another growing fitness trend is focused on recovery, where we're expanding into cold therapy with offerings from LifePro and HyperIce. Nutrition is the third leg of the stool, with several new brands launching in our stores, including Jocko and Podium.

Speaker Change: Another addition is taking advantage of the cross that trend of being the first retailer to add assault fitness toward brick and mortar assortment.

Speaker Change: Digitally native brand that is well known and respected within the Crossfit community.

Speaker Change: Finally within cardio as I briefly mentioned earlier, we're expanding our Nordic track assortment out to all doors with additional styles.

Speaker Change: Another growing fitness trend is focused on recovery or expanding into cold therapy with offerings through life pro and hyper ice.

Speaker Change: Sports Nutrition is the third leg of the stool with several new brands launching in our stores, including Jacko and podium.

Steven Paul Lawrence: On the value front, we continue to ramp up our focus by distorting the products, brands, and categories we have clearly defined everyday value leadership on key private and national brand items. You'll see these items heavily featured in marketing and prominently positioned and signed in our stores and on our website. While we remain firmly committed to our everyday pricing model, we will also use promotions on seasonal categories as a way to take advantage of customers' episodic shopping patterns and drive traffic during the key milestones in the calendar. As I mentioned earlier, we have several national shopping events on the calendar in the second quarter, including Memorial Day, Father's Day, the 4th of July, and the kickoff to back-to-school and the football season.

Speaker Change: On the value front, we continue to ramp up our focus by distorting the products brands and categories. We have clearly defined everyday value leadership on key private and national brand items, you'll see these atoms heavily featured in marketing and properly positioned and sign in our stores and on our website.

Speaker Change: While we remain firmly committed to our everyday pricing model. We will also use promotions seasonal categories as a way to take advantage of customers' episodic shopping patterns and drive traffic during the key milestones in the calendar.

Speaker Change: As I mentioned earlier, we have several natural shopping events on the calendar in the second quarter, including Memorial day father's day and fourth of July and the kick off the back to school and football season.

Steven Paul Lawrence: We have a strong slate of promotions focused on this time period with an emphasis on key summer categories such as grilling, patio furniture, pools, and fishing to help ensure we win the driveway decision. We also have several initiatives that are incorporated into our long-range plan strategies, which we expect to start paying dividends as we progress through the year. Opening new stores remains the number one growth driver for us. As we previously guided, in 2024, we plan to open 15, 17 new stores.

Speaker Change: With a strong slate of promotions focusing in this time period with an emphasis on key summer categories, such as grilling patio furniture pools and fishing help ensure we win the driveway decision.

Speaker Change: We also have several initiatives that are incorporated into our long range plan strategies, which we expect to start paying dividends as we progress through the year.

Speaker Change: Opening new stores remains the number one growth driver for us as we previously guided in 'twenty 'twenty four we plan to open up 15 17 new stores.

Steven Paul Lawrence: During the quarter, we opened up two new stores, with the first one in Knightdale, North Carolina, which is right outside of Raleigh, and the second in Greenwood, Indiana, which is south of Indianapolis. We're excited that just a couple of weeks ago we opened up our third new store for this year in Zanesville, Ohio, expanding our presence from 18 to 19 states and our store count to 285. The remaining 12 to 14 stores will open in the second half of the year with a good balance of locations between new and existing markets.

Speaker Change: During the quarter, we opened up two new stores with the first one and Nightingale, North Carolina, which is right outside of Raleigh, and the second in Greenwood, Indiana, which is south of Indianapolis.

Speaker Change: We're excited that just a couple of weeks ago, we opened up our third new store for this year in Zanesville, Ohio, expanding our presence from 18 to 19 states and our store count to 285.

Speaker Change: The remaining 12 to 14 stores will open up in the second half of the year with a good balance of locations between new and existing markets.

Steven Paul Lawrence: During the first quarter, our 22 vintage and new stores ran positive comps. While the 2023 vintage is not currently in the comp base, they are tracking to higher year-one volume levels than that of the 22 vintage.

Speaker Change: During the first quarter R 22 vintage of new stores ran positive comps while.

Speaker Change: While the 2023 vintage is not currently in the comp base they were tracking to higher year, one volume levels and out of the 22 vintage.

Steven Paul Lawrence: Our expectation is that the 2024 stores will be even stronger. Our second core strategy is to grow our dot-com business to 15% penetration over the next five years. As I mentioned earlier, our sales in this channel are off to a strong start in Q1. This is the second consecutive quarter of positive comms for the dot com business.

Speaker Change: Expectation is that the 2024 stores will be even stronger.

Speaker Change: Our second core strategy is to grow our dot com business to 15% penetration over the next five years.

Speaker Change: As I mentioned earlier, our sales in this channel are off to a strong start in Q1. This.

Speaker Change: This is the second consecutive quarter of positive comps for the dotcom business.

Steven Paul Lawrence: Our core focuses on this front are to streamline and elevate the omni-channel shopping experience. [Inaudible] One key capability that will go live as we head into the remainder of the year is the ability to offer same-day delivery for many of our products. We've partnered with DoorDash to help us deliver this new level of same-day fulfillment, and we'll launch this capability across our entire footprint as we head into back-to-school. Initially, customers will be able to order Academy products through the DoorDash app.

Speaker Change: Our core focus is on this front or to streamline and elevate the omnichannel shopping experience.

Speaker Change: Offer expanded assortments online and improve our fulfillment speed.

Speaker Change: One key capability that will go live as we head into the remainder of the year is the ability to offer same day delivery from any of our products.

Speaker Change: Partner with door Dash helped us deliver this new level of same day fulfillment or washes capability across our entire footprint as we head into back to school.

Speaker Change: Initially customers will be able to order academy products through the door Dash App.

Steven Paul Lawrence: The next phase will be to integrate this functionality into our site so that customers can choose same-day delivery as another fulfillment option. We believe that this added capability will help us reach new customers through the DoorDash app and drive incremental sales. This new service, coupled with our strong focus offering, where we will focus on one hour fulfillment guarantee, helps further simplify our customer shopping experience and better enable them to have fun out there in all of their sports and outdoor activities.

Speaker Change: The next phase will be to integrate this functionality into our sites. So that customers can choose same day delivery is another film an option.

Speaker Change: We believe that this added capability will help us reach new customers through the door dash Hap and drive incremental sales.

Speaker Change: This new service, coupled with our strong bogus offering where we will focus on one hour fulfillment guarantee.

Speaker Change: Further simplify our customer shopping experience and better enable them to have fun out there and all of their sports and outdoor activities.

Steven Paul Lawrence: Another focus under this strategy is all the work that you've heard us speak about in prior calls around driving a deeper connection with our customers through the use of data and analytics. Over the summer, we plan to launch our first ever loyalty program, which will be branded as MyAcademy. To be clear, our Academy Credit Card will remain our primary loyalty tool, with 5% off every purchase being the cornerstone of the value proposition. That being said, we have many customers who don't either qualify for the card or choose not to apply.

Speaker Change: Another focus under this strategy is all the work that you've heard us speak to in prior calls around driving a deeper connection with our customer through the use of data and analytics.

Speaker Change: Over the summer we plan to launch our first ever loyalty program, which will be branded as my Academy.

Speaker Change: To be clear our Academy credit card will remain our primary loyalty tool with 5% off every purchase being the cornerstone of value proposition.

Speaker Change: That being said, we have many customers, who don't eat or qualify for the card or choose not to apply so we plan to expand how we engage with non academy credit card customers through my Academy.

Steven Paul Lawrence: So we plan to expand how we engage with non-Academy credit card customers through iAcademy. The goal is to reduce and or eliminate friction for a loyalist while also expanding their buying power by offering targeted offers and promotions. Key elements of my academy will include a welcome offer of 10% off your next purchase of up to $200, and pre-shipping on purchases over $25 versus $50 for people who aren't in the program. Stafford Checkout for both online and in our app. Insider Access, Personalized Offers, Deals, and Products. A Birthday reward.

Speaker Change: The goal is to reduce <unk> eliminate friction for a loyalist while also expanding their buying power by offering targeted offers and promotions.

Speaker Change: Key elements of my Academy will include welcome offer 10% off your next purchase of up to $200 apiece.

Speaker Change: Free shipping on purchases over $25 versus $50 for people who aren't in the program.

Speaker Change: Faster checkout for both online and in our App.

Speaker Change: Insider access to personalize offers Nielsen products kind.

Speaker Change: And a birthday reward.

Steven Paul Lawrence: Over time, as we test new features and benefits, our plan is to integrate the ones that resonate with our customers into this loyalty program. At this point, our plan is to have the program fully rolled out prior to back to school. Another one of our long-range plan initiatives is to leverage and scale our supply chain. The implementation of our new warehouse management system is one of several supply chain initiatives. We should see increased productivity and service levels out of our Georgia Distribution Center as we move forward now that it has gone live.

Speaker Change: Overtime as we test new features and benefits our plan is to integrate the ones that resonate with our customers into this loyalty program.

Speaker Change: At this point our plan is to have the program fully rolled out prior to back to school.

Speaker Change: Another one of our long range plan initiatives is to leverage and scale our supply chain.

Speaker Change: Implementation of our new warehouse management system is one of several supply chain initiatives.

Speaker Change: We should see increased productivity and service levels out of our Georgia distribution Center as we move forward now that it has gone live.

Steven Paul Lawrence: Our management team has collectively been through many of these transitions at other companies, and we are all pleased at how smoothly the changeover to the new WMS has gone. As a reminder, the implementation and rollout of this system are foundational to us achieving our new store growth targets that we outlined in our long-range plan. This is the first of our three DCs that we will be converting over to the Manhattan WMS.

Speaker Change: <unk> team has collectively been through many of these transitions that other companies and we're all pleased with how smoothly the changeover to the new WNS has gone.

Speaker Change: As a reminder, the implementation of a lot of the system is foundational to achieving our new store growth targets, we outlined in our long range plan.

Speaker Change: This is the first of our three D. C is that we will be converting over to the Manhattan WNS.

Steven Paul Lawrence: While we can't control the economy, we can control how we deliver value and newness for customers on a regular basis. We can also control how we engage with our customers through marketing and the service levels we provide, along with how we execute against the pillars of our long-range plan. And that is what we're going to remain focused on. With that, I'll turn it over to Carl, who will give you a deeper dive into our Q1 financials. Carl?

Speaker Change: While we can't control the economy, we can control, how we deliver value and newness for customers on a regular basis.

Speaker Change: We can also control how we engage with our customer through marketing and the service levels, we provide along with how we execute against the pillars of our long range plan and that is what we're gonna remain focused on.

Speaker Change: With that I'll turn it over to Carl who will give you a deeper dive into our Q1 financials Carl.

Earl Carlton Ford: Thanks Steve. Good morning everyone.

Carl <unk>: Thanks, Steve Good morning, everyone. Our topline in the first quarter did not meet our expectations, giving us we work to manage our inventory levels and control our operating costs, resulting in academy generating $200 million in cash from operations during the quarter.

Earl Carlton Ford: Our top line in the first quarter did not meet our expectations. Given this, we worked to manage our inventory levels and control our operating costs, resulting in Academy generating $200 million in cash from operations during the quarter. Now let's walk through the details of our first quarter results. Net sales came in at $1.36 billion, a 1.4% decline compared to the first quarter of last year, and a comp of negative 5.7%. Our comp ticket size decreased by 1%, while comp transactions declined by 5%.

Earl Carlton Ford: Our omni-channel sales were 9% of total merchandise sales compared to 8.2% in the first quarter of 2023. The investments we have made over the past couple of years upgrading the technical aspects of our website and the connectivity to the stores have solidified the backend infrastructure to improve the customer checkout experience.

Carl <unk>: Now, let's walk through the details of our first quarter results.

Speaker Change: Net sales came in at 1.36, Billion% to 1.4% decline compared to the first quarter of last year with a comp of negative five 7%.

Speaker Change: Called ticket size decreased by 1% while comp transactions declined by 5%.

Speaker Change: Our omnichannel sales were 9% of total merchandise sales compared to eight 2% in the first quarter of 2023.

Speaker Change: The investments we have made over the past couple of years upgrading the technical aspects of our website and the connectivity to the stores have solidified the backend infrastructure to improve the customer checkout experience. We are now focused on investing in new customer acquisition and driving more traffic to the site.

Earl Carlton Ford: We are now focused on investing in new customer acquisition and driving more traffic to the site. The gross margin rate in the first quarter was 33.4%, a 40 basis point decrease compared to Q1 of last year. Merchandise margins declined by 80 basis points, primarily due to a higher sales mix of hard goods and more promotional activity versus last year. This decline was partially offset by a 40-basis point improvement in freight costs and a 20-basis point improvement in shrink compared to Q1 of last year.

Speaker Change: The gross margin rate in the first quarter was 33, 4%.

Speaker Change: A 40 basis point decrease compared to Q1 of last year merchandise margins declined by 80 basis points, primarily due to a higher sales mix of hard goods and more promotional activity versus last year.

Speaker Change: This decline was partially offset by a 40 basis point improvement in freight costs and a 20 basis point improvement in shrink compared to Q1 of last year.

Earl Carlton Ford: We remain on track to achieve our full year gross margin guidance of 34.3% to 34.7%. Our SG&A dollars as a percentage of sales increased by 130 basis points, or $12.5 million, compared to Q1 of last year. We de-leveraged 30 basis points on existing store operations, primarily due to the decline in sales volume.

Speaker Change: We remain on track to achieve our full year gross margin guidance of 34, 3% to 34, 7%.

Speaker Change: Our SG&A dollars as a percentage of sales increased by 130 basis points or $12 $5 million compared to Q1 of last year.

Speaker Change: We deleveraged 30 basis points on existing store operations, primarily due to the decline in sales volume.

Earl Carlton Ford: The other 100 basis points of de-leverage were a result of Academy investing in its primary growth initiatives, opening new stores, growing Omnichannel, scaling and leveraging our customer data platform, and modernizing our supply chain. We believe in our long-range plan and are committed to investing in it, while also managing our existing cost structure. Overall, in the first quarter, Academy generated net income of $76.5 million and diluted earnings per share of $1.01. Adjusted net income, which excludes stock-based compensation of $6.1 million and $449,000 of deferred loan costs, was $81.6 million, or $1.08 in adjusted earnings per share.

Speaker Change: Either 100 basis points of deleverage was the result of Academy investing in its primary growth initiatives opening new stores growing omnichannel scaling and leveraging our customer data platform and modernizing our supply chain.

Earl Carlton Ford: Looking at the balance sheet, we ended the quarter with $378 million in cash. Our inventory balance was $1.36 billion, a decrease of 2% compared to Q1 of 2023. Total inventory units were down 11%, and this includes having an additional 15 stores compared to the end of Q1. On a per-store basis, inventory units were down 11.5%.

Speaker Change #100: We believe in our long range plan and are committed to investing in it while also managing our existing cost structure.

Speaker Change #101: Overall in the first quarter Academy generated net income of $76 5 million and diluted earnings per share of one dollar in one sense.

Speaker Change #102: Adjusted net income, which excludes stock based compensation of $6 1 million and 449000 of deferred loan costs was $81 6 million or a dollar and eight cents and adjusted earnings per share.

Speaker Change #103: Looking at the balance sheet, we ended the quarter with 378 million in cash.

Speaker Change #104: Our inventory balance was 1.36 billion a decrease of 2% compared to Q1 of 2023.

Speaker Change #105: Total inventory units were down 11% and this includes having an additional 15 stores compared to the end of Q1 2023.

Speaker Change #105: On a per store basis inventory units were down 11, 5%.

Earl Carlton Ford: In terms of capital allocation, we continue to execute a balanced capital allocation strategy focused on our three priorities. One, maintaining adequate liquidity for financial stability. 2. Self-funding our growth initiatives. And 3. Increasing shareholder return through share repurchases and dividends. In Q1, we generated approximately $200 million of cash from operations. We invested $32 million in our growth initiatives.

In terms of capital allocation, we continue to execute a balanced capital allocation strategy focused on our three priorities one.

Speaker Change #106: Maintaining adequate liquidity for financial stability.

Speaker Change #107: To self funding our growth initiatives and three <unk>.

Speaker Change #108: Increasing shareholder return through share repurchases and dividends.

Speaker Change #109: In Q1, we generated approximately 200 million of cash from operations we.

We invested 32 million and our growth initiatives.

Earl Carlton Ford: Repurchased $124 million worth of shares, or 2.7% of the total outstanding shares of the company, and paid out $8 million in dividends. We are investing in future growth as well as shareholder value, particularly when it is discounted relative to the company's long-term growth potential. Academy had $574 million remaining on its share repurchase authorization at the end of Q1. Lastly, a couple of other notes from the quarter.

Speaker Change #110: Repurchased 124 million worth of shares or two 7% of the total outstanding shares of the company.

Speaker Change #111: And paid out 8 million in dividends.

Speaker Change #112: We are investing in future growth as well as shareholder value, particularly when it is discounted relative to the company's long term growth potential.

Academy: Academy had $574 million remaining on its share repurchase authorization at the end of Q1.

Speaker Change #114: Lastly, a couple of other notes from the quarter.

Earl Carlton Ford: We amended and extended our $1 billion credit facility through March of 2029, and the board recently approved a dividend of $0.11 per share, payable on July 18, 2024, to stockholders of record as of June 20, 2024. Turning to guidance, we expect the economic environment to remain challenging. Therefore, we will continue to efficiently run the business while also making investments to support our long-term strategic opportunity. We are reiterating our previous sales and net income guidance for fiscal 2024 while updating our EPS forecast to reflect the shares repurchased in the first quarter.

We amended and extended our $1 billion credit facility through March of 2029, and the board recently approved a dividend of 11 cents per share payable on July 18th 2024 to stockholders of record as of June 20th 'twenty 'twenty four.

Speaker Change #115: Turning to guidance, we expect the economic environment to remain challenging there.

Therefore, we will continue to efficiently run the business, while also making investments to support our long term strategic opportunities.

Earl Carlton Ford: Net sales are still expected to range from $6.07 billion to $6.35 billion, with comparable sales of negative 4% to positive 1%. Our gross margin rate is still expected to range from 34.3% to 34.7%. Gap Net Income Between $455 million and $530 million. Gap diluted earnings are now expected to range from $6.05 per share to $7.05 per share based on a revised share count of approximately 75 million diluted weighted average shares outstanding for the full year.

Speaker Change #115: We are reiterating our previous sales and net income guidance for fiscal 2024, while updating our EPS forecast to reflect the shares repurchased in the first quarter net.

Speaker Change #115: Net sales are still expected to range from 6.07 billion to $6 35 billion with comparable sales of negative 4% to positive 1%.

Speaker Change #115: Our gross margin rate is still expected to range from 34, 3% to 34, 7%.

Speaker Change #117: And GAAP net income between $455 million and $530 million.

Speaker Change #116: GAAP diluted earnings are now expected to range from $6.05 per share to $7.05 per share based on our revised share count of approximately 75 million diluted weighted average shares outstanding for the full year.

Earl Carlton Ford: This amount does not include any potential future repurchase activity. SG&A expenses are still expected to be approximately 100 basis points higher than in 2023. As a reminder, SG&A includes stock-based compensation expense of $30 million, or approximately 30 cents of earnings per share. We also remain confident in the strength of our cash flows and still expect to generate between $290 million and $375 million of free cash flow, including $225 million to $275 million of capital expenditures. With that, we will now open it up for questions. Thank you.

Speaker Change #116: This amount does not include any potential future repurchase activity.

Speaker Change #116: SG&A expenses are still expected to be approximately 100 basis points higher than in 2020 three.

Speaker Change #118: As a reminder, SG&A includes stock based compensation expense of $30 million or approximately 30 cents of earnings per share.

Speaker Change #119: We also remain confident in the strength of our cash flows and still expect to generate between $290 million at 375 billion of free cash flow, including 225 million to $275 million of capital expenditures with that we will now open it up for questions.

Operator: Thank you. The company will now open the call to your questions. To ask your question, please press star 1. We'll pause for a minute to wait for the queue to fill. Thank you. Thank you. And our first question is from the line of Seth Basham with Wedbush Securities. Please answer your question.

Speaker Change #120: Thank you the company will now open the call up for your questions to.

Speaker Change #121: Ask your question. Please press star one.

Speaker Change #122: For them to wait for the queue to Phil.

Yeah.

Speaker Change #122: Yeah.

Speaker Change #122: Okay.

Speaker Change #122: Thank you and our first question is from the line of Seth Basham with Wedbush Securities. Please proceed with your questions.

Seth Mckain Basham: Thanks a lot and good morning. My first question is just thinking about the balance of the year, with your maintained full-year guidance implying material improvement in both the top line as well as gross margins. Can you reiterate or help us better understand the key drivers of that improvement in the second quarter and beyond?

Seth Mckain Basham: Thanks, a lot and good morning.

Seth Mckain Basham: First question is just thinking about the balance of the year you maintained full year guidance implies a material improvement in both topline as well as gross margins you reiterate our house and spun around your stand the key drivers of that improvement in the second quarter and beyond.

Steven Paul Lawrence: Yeah, so when we talked on the last call, how we described the kind of sequence of the quarters and progression was that we thought Q1 would be the most challenging quarter for us. We saw sequential improvement coming in Q2. We saw the back half getting better than the first half of the year.

Speaker Change #124: Yeah, So I'll start with when we talked on the last call. How we describe the kind of the sequence of the quarters in progression was that we thought Q1 would be the most challenging quarter for us we saw sequential improvement coming in Q2, we saw the back half getting better than the first half of the year. So that that was how we described it.

Steven Paul Lawrence: So that was how we described it, and we're sticking with that as kind of our thoughts on how the quarterly progression goes. In terms of things that we have within our control that we're using to try to drive the business and start moving the needle, obviously, we talked about customer behavior, right? We said customers have clearly demonstrated over the past years a focus on value, newness, and episodic shopping around those key moments on the calendar.

We're sticking with that as kind of our thoughts on how the quarterly progression goes in terms of things that we have within our control that we're using to try to drive the business in and start moving the needle obviously, we talked about the customer behavior right. We said the customers clearly demonstrated over the past years, our focus on value and newness.

Speaker Change #125: And episodic shopping around those key moments in the calendar and so we've really aligned our assortments our marketing.

Steven Paul Lawrence: So we really aligned our assortments, our marketing, and all of our promotions around that. So you'll see very aggressive pushes for us across all fronts during those key time periods on the calendar, such as Father's Day, Fourth of July, back to school, and holidays, and then I think you'll see us pull back a little bit from promotions on the gaps within. So we've got a good game plan from that perspective.

Speaker Change #126: And all of our promotions around that so you'll see very aggressive pushes for us across all fronts. During those key time periods on the calendar.

Speaker Change #127: Such as fathers day fourth of July back to school and holiday and then I think you'll see us pull back a little different promotions on the gas with and.

Speaker Change #128: So we've got a good a good game plan from that perspective, we got a couple of categories that are a resurgent.

Steven Paul Lawrence: We've got a couple of categories that are resurgent. Our outdoor business has been positive now for two quarters in a row, so we're excited about that. That had been a drag on the business for at least a couple of years going back to 22 and the early part of 23, so we feel good about that. The dot-com business has had two back-to-back quarters of positive growth as well.

Speaker Change #129: Our business has been positive now for two quarters in a row. So we're excited about that that had been a drag on the business for at least a couple of years going back to 22 in the early part of 'twenty. Three so we feel good about that the dotcom business has had two back to back quarters deposit growth as well and we expect that continues to move through the year.

Steven Paul Lawrence: We expect that to continue as we move through the year. As we get deeper into the year, some of the other initiatives start to kick in. Obviously, we talked about the 22 vintage of new stores running a positive comp for the first quarter. We expect those to continue to be a positive comp for us, and then as the 23 vintages start feeding into the comps, we would believe that those would also inflect a positive. And then we start opening up our 24 stores. We only have three stores so far opened up.

Speaker Change #129: It gets deeper into the year some of the other initiatives start to kick in and obviously, we talked about the 22 vintage of our new stores are running a positive comp for first quarter. We expect those to continue to positive comp for us and that is the 23 vintages.

Speaker Change #130: Start feeding into the comps we would believe that those that also inflected positive and then we start opening up our 24 stores. We only have three stores. So far we opened up we guided.

Steven Paul Lawrence: We guided 15 to 17, so the back end of the year is where most of those stores are gonna open up and start contributing, so that's another driver for us. A couple of other things, you know. We've talked a lot about loyalty in our new CDP on the last couple of calls. So I think we're about a year into now having that customer data platform in place, and we're getting smarter about how we leverage that in terms of targeted marketing to our customers.

Speaker Change #131: 15% to 17, so the back end to the other years, where most of those stores are going to open up and start contributing so that's another driver for us.

Speaker Change #132: A couple of other things you know we've talked a lot about loyalty and our new C. D. P. On the last couple of calls.

Speaker Change #133: So I think we're about a year into now having that customer data platform in place, we're getting smarter about how we how we leverage that in terms of targeted marketing to our customer.

Steven Paul Lawrence: I think the new MyAcademy reward that we're rolling out is an outgrowth of that, and it gives us another tool to interact and engage with our customers, particularly those who haven't been using our credit card. And, lastly, we've got an improving apparel and footwear business. Both of those businesses were better in Q1 than they were in Q4, so we've got those businesses moving in the right direction. So those are all the reasons why we believe that we're going to start seeing steady improvement throughout the remainder of the year.

I think the new my Academy reward that we're rolling out is an outgrowth of that and it gives us another tool to interact and engage with our customers, particularly those who havent been using a credit card.

Speaker Change #134: And then lastly, we've got an improving apparel and footwear business. Both of those businesses were better in Q1 than they were in Q4. So we've got those businesses moving in the right direction. So those are all the reasons why we believe that we're going to start seeing steady improvement throughout the remainder of the year.

Speaker Change #135: That's really helpful and just a follow up on that last point apparel and footwear still lagging category. It seems like industry lives better opposite for you either.

Speaker Change #136: Key initiatives are key brands that will help drive improvement in that business as we move through the year.

Steven Paul Lawrence: Yeah, so footwear for us was a drag in Q4. It was actually one of the better businesses for us in Q1.

Speaker Change #137: Yeah. So footwear for US you know it was a was a drag in Q4. It was actually one of the better businesses for us in Q1.

Steven Paul Lawrence: You know, there's certainly things going on in the performance running sector that we don't have access to a couple of those brands. That being said, we're working with our core suppliers, you know, the Nikes, the New Balances, the Adidas of the world to continue to get expanded access to premium footwear there. We're also working with our other brands where, you know, one of the things that's

Speaker Change #138: There certainly are things going on in the in the performance running sector that we.

Speaker Change #139: We don't have access to a couple of those brands that being said, we're working with our core suppliers you know the the Nike new balance as it is as the world continues to get expanded.

Speaker Change #140: Access to premium footwear there.

Speaker Change #140: We're also working with our other brands.

Speaker Change #141: Your you know one of the things that's good about our business is it's not just active footwear right. We have a work boot business, we have a casual shoe business or working with brands like Skechers to really drive the slip in piece that working with our work with vendors to drive that piece of it and we continue to add new brands.

Speaker Change #142: It was broken stock, which has only been in the store by year, we expanded the presentation of that now into more doors. We just added ultra trail running shoes for Q1 as well as Shaco sandals. So it's a mixture of working with our existing brands to get access to the things that we currently havent had access to.

Speaker Change #143: Layering on new brands, and expanding new brands rapidly as they prove successful and that's how we're going to drive growth in footwear.

Speaker Change #144: Thank you.

Speaker Change #144: Yeah.

Operator: Our next questions are from the line of Justin Cleaver with Baird. So, let's just see what their questions are.

Speaker Change #144: Our next questions are from the line of Justin Kleber with Baird see with your question.

Justin Cleaver: Good morning, everyone. Thanks for taking the questions. Steve, you mentioned the positive comp in new stores. I was hoping you could expand on that a bit. You know, how did the 22 vintage comp and aggregate compare to what you would anticipate from normal maturation? Just trying to understand, you know, the comp benefit from new store maturation versus how your mature stores are performing.

Justin Kleber: Hey, good morning, everyone. Thanks for taking the questions. Steve you mentioned the positive comp and new stores was hoping you could expand on that a bit how did the.

Speaker Change #146: The 22 vintage comp in aggregate, how does that compare to what you would anticipate from.

Speaker Change #146: From normal maturation, just trying to understand you have the comp benefit from from new store maturation versus how.

Speaker Change #146: Your mature stores are performing yeah.

Steven Paul Lawrence: Yeah, I would say it was in line with how we modeled it based on, if you remember, we talked a little bit about how, when we initially came forward with our forecast, we were kind of looking at stores that had some influence from the pandemic. So we went back and looked at stores in the 14, 15, 16 vintages to kind of get a sense of what year two would look like.

Steve: Yeah, I would say it was in line with how we modeled it based off of if you remember we talked a little bit about how when we initially came forward with our forecast we were kind of looking at stores that had some influence from the pandemic. So we went back and looked at stores in the 14, 15, 16 vintages to kind of get a sense of what you are to look like.

Steven Paul Lawrence: And that's how we modeled it. So I would say that they were in the, you know, mid single digits from a comp, mid to low single digits from a comp perspective, and it was significantly better than the remainder of the stores.

Steve: And that's how we modeled it so I would say that they were in the you know mid single digits from a comp mid to low single digits from a comp perspective, it was significantly better than the remainder of the stores. So we definitely saw an inflection there our expectation would be that is about 23, then just start to mature and feet and we'd see similar behavior.

Steven Paul Lawrence: So we definitely saw an inflection there. You know, our expectation would be that as the 23 vintages start to mature and feed in, we'd see similar behavior. You know, as a reminder, the 22 vintage was somewhat opportunistic and tested a lot of different things. We applied those tests to the 23 vintage. And as we've been tracking them, they're tracking to higher year-one volume than the 22 vintage did, and our expectation is we'll see the same thing with the 24 vintage.

Speaker Change #148: As a reminder, you know the <unk>.

Speaker Change #149: Two vintage was somewhat opportunistic we tested a lot of different things, we applied those tests to the 23 vintage and as we've been tracking them, they're tracking to a higher year, one volumes into 'twenty two vintage dead and our expectation is we'll see the same thing with the 24 advantage. So this is something that's going to take a while to build you know it's a little bit of that flywheel is we're trying to get it going.

Steven Paul Lawrence: So this is something that's going to take a while to build. You know, it's a little bit of that flywheel as we're trying to get it going. It's encouraging to see the 22 vintages perform much better than the rest of the chain. And as we get more of these vintages 23 and 24 feeding into that, I think it's just going to help accelerate our comps.

Speaker Change #149: Encouraging to see the 'twenty two vintages perform much better than the rest of the chain and as we get more of these vintages 'twenty three 'twenty four feeding into that I think it's just going to help accelerate our comps.

unknown: It's helpful. Thanks.

Speaker Change #149: Okay. That's helpful. Thanks, and then maybe a question for Karl just on gross margin curious how <unk> came in relative to your expectations and if you could just help US bridge the gap between the <unk> gross margin rate for the full year guide.

Earl Carlton Ford: And then maybe a question for Carl just on gross margin. Curious how 1Q came in relative to your expectations, and if you could just help us bridge the gap between the 1Q gross margin rate and the full year guide. I know 2Q, and 3Q historically have higher, are historically higher margin rate quarters, but just how do you anticipate merch margins evolving over the balance of the year and what are your assumptions for freight within the four-year guide? Thanks.

I know <unk> historically have higher are historically higher margin rate quarters, but just how do you envision merch margins.

Karl: Evolving over the balance of year and whats your assumptions.

Speaker Change #151: For freight outlet within our full year guide thanks.

Earl Carlton Ford: Yeah, so last year came in at 34.3 gross margin. We got it to 34.3 to 34.7. So on the high side, 40 basis points of growth. Where we thought that would come from would be two real places.

Karl: So last year came in at $34 three gross margin, we guided to 34 three to 34 seven so on the high side 40 basis points of growth.

Karl: Where we thought that would come from would be two two real places one would be on distribution Center operations. Steve mentioned that we went live with the Manhattan active products are in our twigs County, Georgia distribution Center.

Earl Carlton Ford: One would be on distribution center operations. Steve mentioned that we went live with the Manhattan Active product in our Twigs County, Georgia, distribution center, which is our least productive. We're happy with what we're seeing coming out of there in terms of productivity, and so we think that getting out of, you know, the corridor of implementation, if you will, that there's upside potential associated with DC operations. Second, it would be around merchandise margins. You know, call it 20 basis points of upside potential associated with that.

Which is our least productive and we're happy with what we're seeing coming out of there in terms of productivity and so we think that getting out of the car.

Steve: Quarter of implementation, if you will that there's upside potential associated with D. C operations second would be around merchandise margins.

Steve: Call It 20 basis points of.

Speaker Change #152: Of upside potential associated with that our inventories are pretty clean guys. We're proud of how we manage inventory we're proud of how we manage promotions.

Earl Carlton Ford: Our inventories are pretty clean, guys. We're proud of how we manage inventory. We're proud of how we manage promotions. So, you know, we have a clean inventory balance. Don't need to promote into things to clear it.

Speaker Change #153: So we're cleaning.

Speaker Change #153: Clean inventory balance don't need to promote into things to clear its what we would promote is on this key traffic driving time periods, where we want to.

Earl Carlton Ford: You know, what we would promote is during those key traffic driving time periods where we want to incentivize the customer to come in. As it relates specifically to Q1, you know, gross margin was down 40 basis points. That was 80 basis points of merchandise margin decline, 40 basis points of freight improvement year over year, and 20 basis points of shrink improvement. You know, I would really expect shrink to be flat for the year, year over year.

Speaker Change #154: Incentivize the customer to come in as it relates specifically to Q1.

Speaker Change #155: You know our gross margin was down 40 basis points that was 80 basis points of merch margin decline of.

40 basis points of freight improvement year over year, and 20 basis points of shrink improvement.

Speaker Change #155: I would really expect a shrink to be flat for the year year over year, I think we've got opportunity areas and we're focused on it.

Earl Carlton Ford: I think we've got opportunity areas, and we're focused on them. You know, coming out of the gate 20 basis points better than last year on the inventories that we did. You know, I'm pleased with it, but I would, you know, tell you to think about it as a flat opportunity. And then freight overall, I think it'll generally be flat for the year within our guidance. You know, we'll have some pressure associated with imports. But we've got opportunities on the outbound side from a DC to store standpoint. I think those will generally be flat. The two upside potentials are DC operations and merchandise margin.

Speaker Change #155: Coming out of the gate 20 basis points better than last year on the inventories that we did you know I'm I'm pleased with it but I would I would tell you to think about it as a flat opportunity and then freight overall I think it will generally be them be flat for the year within our guidance, we will have some pressure associated with it.

Speaker Change #156: Import we've got opportunities on the outbound side from a from a D. C to store standpoint, I think there's it'll generally be flat, but see upside potentials are D. C operations in merch margin, Yeah, I would I would jump in and just say that the merch margin coming in a little lower than last year I think it was really the effect of two things first right.

Steven Paul Lawrence: Yeah, I would jump in and just say that the merchandise margin coming in a little lower than last year was really affected by two things. First, we talked about how Outdoor performed better within the quarter, and that certainly has a lower margin port profile, so that mixes us down a little bit. Then I'd also say that we were talking about customers being under pressure, and they're gravitating towards value.

Speaker Change #157: We talked about how outdoor.

Speaker Change #158: <unk> performed better within the quarter and that certainly has a lower margin profile for that mixes us down a little bit.

Speaker Change #159: And then I'd also say that we were talking about the costs were being under pressure and they're gravitating towards value.

Steven Paul Lawrence: Early in the season, one of the number one ways we deliver value is clearance, and so we certainly saw a higher take rate on some of the clearance promotions that we ran early in the season, with the customer gravitating toward those. That being said, I think we've got a solid plan and visibility of the gross margin, and we think merch margins over the course of the year will be roughly flattish. That's how we're thinking about it.

Speaker Change #160: Early in the season, one of the number one way, we deliver values clearance and so we certainly saw a higher take rate on some of the clearance promotions that we ran early in the season customer gravitating towards those.

Speaker Change #161: That being said I think we've got a solid plan and visibility of the gross margin and we think merch margins over the course you'd be roughly flattish is how we're thinking about it.

unknown: Alright guys, thanks for all the color. Best of luck.

Speaker Change #162: Hi, guys. Thanks for all the color best of luck.

Speaker Change #162: Thank you.

Michael Lasser: Our next question is from the line of Michael Lasser with UBS. Please proceed with your question.

Speaker Change #162: Our next question is from the line of Michael Lasser with UBS. Please proceed with your question.

Steven Paul Lawrence: Good morning. Thank you so much for taking my question. So it sounds like the consumer has been responding to some of the promotional activity and discounting that the Academy's been doing. How aggressive is the Academy willing to be with its gross margin in order to drive sales given what's happening in this environment?

Speaker Change #163: Good morning. Thank you so much for taking my question.

Speaker Change #164: It sounds like the consumer has been responding to some of the promotional.

Speaker Change #164: Activity in discounting.

Speaker Change #165: <unk> been doing how aggressive you can be willing to be with its gross margin in order to drive sales.

Speaker Change #166: Given what's happening in this environment.

Steven Paul Lawrence: Yeah, Michael, I think what we shared with you in the past, and I think it's held true candidly in terms of the behavior we've seen in the first quarter, in periods where there's not a reason for the customer to shop, promoting aggressively has not really driven incremental traffic. You know, it's just basically been an AUR erosion.

Speaker Change #167: Yeah, So Michael I think what we shared with you.

Speaker Change #167: In the past and I think it has held true candidly in terms of the behavior, we've seen in the first quarter.

Speaker Change #168: And in periods, where there's not a reason for the customer to shop promoting aggressively has not really driven incremental traffic.

Steven Paul Lawrence: And so, what our game plan has been and will remain is we know that the customer's coming out and shopping during those key moments on the calendar. You know, so we've got a couple of the big ones ahead of us. I mean, we really activate over the summer, as you all know. And as we get into Father's Day, which is, you know, one of the larger weeks of the year for us, and Fourth of July and back to school, we have promotions lined up and will be more promotional than last year.

Speaker Change #168: It's basically been in AUR erosion and so.

Speaker Change #169: What our game plan has been and will remain as we know that the customers coming out and shopping.

Speaker Change #170: What's key moments on the calendar. So we've got a couple of the big ones ahead of US I mean, we really activate over the summer as you well know.

Speaker Change #171: And as we get into father's day, which as you know one of the larger weeks of the year for us and fourth of July and back to school, we have promotions lined up and we'll be more promotional than last year that being said it's in.

Steven Paul Lawrence: Anticipated in our gross margin forecast, you know, we pull back on kind of the gaps in between when the customer isn't showing as much willingness to shop based on discounts. We've got it modeled in there, but you're going to see us be promotional during those key time periods and then pull back on the gaps in between, and that's what has worked for us over the past, you know, six to twelve months, and you're going to see us lean more into that.

Speaker Change #172: And anticipated in our gross margin forecast when we pulled back on kind of the gaps between when the customer isn't showing as much willingness to shop. They stopped discounts. We've got it modeled in there, but youre going to see us be promotional during those key time periods and then pull back on the gaps in between and that's that's worked for us over the past six to 12 months, I mean, youre going to see us lean more into that.

Steven Paul Lawrence: My follow-up question is on the momentum you talked about in April. Has that continued into the current quarter?

Speaker Change #173: My follow up question is on the momentum that you talked about in April has that continued in Q.

Speaker Change #174: Current quarter end.

Steven Paul Lawrence: And Steve, there's a lot of skepticism about Academy's ability to hit at least the low end of the guidance for the rest of the year. What's implied in that is that comps do make a meaningful improvement. You've outlined several factors that you think will drive the improvement. If you don't see that improvement, what actions are you going to take in order to preserve profitability and manage the business?

Speaker Change #174: Steve There's a lot of skepticism on academies ability to hit but at the low end of the guidance for.

Speaker Change #175: The rest of the year within.

Steve: Whats implied in that is that comps do you make a meaningful improvement you outlined.

Steve: Several factors that.

Steve: You think will drive the improvement.

Speaker Change #176: You don't see that improvement what actions are you going to peak in order to preserve the profitability and manage the business. Thank you.

unknown: Thank you.

Steven Paul Lawrence: Yeah, so I would tell you that yes, you're right. If you look at the guidance, I mean, obviously, Q1 is down five, seven; it's outside the low end of the guidance. So it does imply that we see improvement as we move forward. The thing I'll point out is, you know, we really haven't had any of those major customer shopping moments on the calendar in Q1. We're not obviously a big Easter business; there aren't a lot of outdoor activities going on during that time period, etc.

Speaker Change #177: Yeah. So yeah I would tell you is that yes, you're right. If you look at the guidance I mean, obviously Q1 is down five seven its outside the low end of the guidance. So it does imply that we see improvement as we move forward the thing I'll point out is.

Speaker Change #178: We really haven't had any of those major kind of customer shopping moments on the calendar in Q1.

Speaker Change #179: We're not obviously, a big Easter business, there's not a lot of outdoor activities going on during that time period et cetera, So really our sweet spot and we've described this I think in a lot of different venues is that kind of memorial day through back to school time period that 13 week period is a very big time period for us that's what we've lined up a lot.

Steven Paul Lawrence: So really, our sweet spot, and we've described this, I think, in a lot of different venues, is that kind of Memorial Day through back-to-school time period. That 13-week period is a very big time period for us, because we've lined up a lot of our marketing initiatives, and we've lined up a lot of our promotions. That's why we're launching, you know, a lot of new capabilities, such as our new loyalty program, same-day delivery with DoorDash, things like that, around that time period to really take advantage of it.

Speaker Change #179: Of our marketing initiatives that's why.

Speaker Change #179: End up a lot of our promotions.

Speaker Change #180: That's why we're launching a lot of new capabilities, such as our new loyalty program. Our same day delivery with door dash things like that around that time period to really take advantage of it. So our belief is we're going to see that inflection during that time period.

Steven Paul Lawrence: So our belief is we're going to see that inflection during that time period. Back to the start of your question, I would tell you that the start of May was a little softer than we wanted. I think it's been pretty well documented that we had some pretty tough weather and a lot of our geographies with a lot of stores shut down for periods of time. That being said, when we got to Memorial Day and we got some clean kind of weather, we actually saw Memorial Day behave as we thought it should, and we were pretty happy with how it inflected, you know.

Speaker Change #181: Back to the start of your question I would tell you that the start of May was a little softer than we want it and I think it's been pretty well documented.

Speaker Change #181: Had some pretty tough weather in a lot of our geographies with a lot of stores shut down for periods of time that being said when we got to memorial day, and we got some clean kind of whether we actually saw memorial day behaved as we thought it should and we were pretty happy with how memorial day inflected and all that being said, we've got a lot of volume still out of US. This is a big week for US fourth of July is a big week for us and obviously back to school.

Steven Paul Lawrence: That being said, we have got a lot of lines to do for a lot of us. This is a big week for us. The Fourth of July is a big week for us, and obviously, back to school is a big week for us. So we're going to lean into those things, and then after we get through all those time periods, we're going to assess where we're at and make audibles based off of what we're reading in the business from that point forward.

Speaker Change #181: Weak for us so we're going to lean into those things and then after we get through all those time periods, we're going to assess where we're at.

Speaker Change #181: And call Audibles based off of what we're reading in the business from that point forward.

unknown: Thank you very much and good luck.

Speaker Change #182: Thank you very much and good luck.

Thanks, Michael.

Simeon Ari Gutman: Our next questions are from the line of Simeon Gutman with Morgan Stanley. Please proceed with your questions.

Speaker Change #182: My next question is from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.

Steven Paul Lawrence: Good morning, everyone. My first question is on new stores. Can you talk about the newness in terms of the, you said new vintages are comping positive, does that include all stores? And then can you assess why the 24 class is, or the 23 class, sorry, is comping well ahead or at higher levels, like how do you diagnose that? And is there any cannibalization happening across neighboring stores?

Simeon Ari Gutman: Good morning, everyone. My first question is on new stores can you talk about.

Simeon Ari Gutman: Like the newness in terms of the you said new vintages are Comping positive does that include all stores and then can you assess why.

Speaker Change #184: The 24 class is or the 23 class sorry is comping well ahead or at higher levels like how do you diagnose that and is there any is there any cannibalization happening across neighboring stores.

Steven Paul Lawrence: So, first off, I want to be clear. When we're talking about new stores comping positive, the only ones we're referencing right now are the 22 vintages because the 23 vintage, you know, candidly, most of them opened up in the back half of the year, so they haven't even lapped themselves yet. So, we're pleased that the 22 vintage, which are the first vintage feeding into comps, are comping positive. What we've commented on is we've seen the 23 vintages start off to a higher year one volume trajectory than the year two vintage, and we would attribute that to the fact that we took a lot of the learnings from the 22 vintage and applied them to the 23 vintage in terms of how we grand opened and ran the marketing cadence, you know, a longer period up front of seeding those stores, a longer sustainment time period, those kind of things, better localized merchandising, better staffing models.

Speaker Change #185: So first off I want to be clear when we're talking about new stores Comping positive. The only once we're referencing right now are the 22 vintages because the 23 vintage you know candidly most of them open up in the back half of the year Saturday to lap themselves yet.

Speaker Change #186: So we're pleased that the 20th advantage, which are the first vintage seating and our comps are positive. We've commented on is we've seen the 'twenty three than just start off to a higher year, one volume trajectory in the year two vintage and we would attribute that to the fact that we took a lot of the learnings from the 22 vintage and apply them to the 23 vintage in terms.

With how we Grand opened and ran the marketing cadence you know a longer period upfront of seeding those stores are longer sustainment time periods, those kind of things are better.

Speaker Change #187: Better localized merchandising better staffing model. So we just took the learning supply to them, we're seeing the payoff on that and our anticipation is for 'twenty four is going to be off to a good start we've had three stores. We have opened up this year you know one of the things. We're really pleased with this two of them I think I called out in the comments.

Steven Paul Lawrence: So, we just took the learnings and applied them to them. We're seeing the payoff on that, and our anticipation is that the 24 is going to be off to a good start. We've had three stores we opened up this year. You know, one of the things we're really pleased with are two of them. I think I called them out in the comments, Knightdale, North Carolina, and Zanesville, which are, you know, I would characterize as not in our current footprint.

Speaker Change #188: At night, they all North Carolina.

Speaker Change #189: Haynesville, which are you know I would characterize it as not in our current footprint those are relatively new markets for us are both doing very well so.

Steven Paul Lawrence: Those are relatively new markets for us, and they are both doing very well. So, I think it's taking some of those learnings we've had as we've gone to new markets and applying those to getting them off to a good start, and our belief is that the 24 vintage is going to be off to a higher volume in year one than the 23 vintage.

Speaker Change #189: So I think it's taking some of those applying some of those learnings we've had as we've gone into new markets and applying those to getting off to a good start and our belief is that the 24 vintage is going to be off to a higher volume in the 'twenty three benches.

Steven Paul Lawrence: Okay, and a follow-up regarding the cadence for the rest of the year. You said customers were more discerning, and you talked about promotion, and then, you know, you have more newness and activities, I guess, initiatives as it goes on. So the question is, how do you balance the more discerning, maybe more value-oriented customer with the, you know, I guess the slope now that's implied for the rest of the year to drive the events or to drive the comp. So I would say a couple things you're going to see.

Speaker Change #189: Okay.

A follow up regarding the cadence for the rest of the year.

Speaker Change #190: You said the customers being more discerning and you talked about promotion and then you have more.

Speaker Change #190: Newness.

Speaker Change #190: And activities I guess initiatives as it goes on so again.

Speaker Change #191: The question is how do you balance the more discerning maybe more value oriented customer with.

Speaker Change #191: The you know the.

Speaker Change #191: Yes, the slope now that's that's implied for the rest of the year to drive the events are to drive the comp.

Steven Paul Lawrence: So I would say a couple things. You're going to see us lean into value in a couple of different ways. First, we view ourselves as an everyday value price retailer. About 75% of what we sell is a regular price, right?

Speaker Change #192: So I would say a couple of things youre going to see us lean into value a couple of different ways first we view ourselves as an everyday value price retailer about 75% of what we sell is at regular price right. We got great everyday value on our private label, we got everyday value and a lot of our national brand offerings and sometimes we're not sure.

Steven Paul Lawrence: We've got great everyday value on our private label. We've got everyday value in a lot of our national brand offerings. And, you know, sometimes we're not sure we're being as obvious as we should about that.

Steven Paul Lawrence: So you're going to see us really lean into that as a marketing message. You're going to see us sign it more aggressively in stores. You're going to see it more prominently featured on our website and in our marketing. So you're going to see it across every touchpoint.

Speaker Change #192: We're being as Albert as we shed about that so you're going to see us really lean into that from a marketing message youre going to see us sign it more aggressively and stores youre going to see it more prominently featured in our website and our marketing so youre going to youre going to see it across every touch point at the same time, we also use promotion strategically during those key moments on the calendar.

Steven Paul Lawrence: At the same time, we also use promotions strategically during those key moments on the calendar, like Father's Day and back to school, to drive traffic. And so during those time periods, we're going to have more broader-based promotions and somewhat deeper promotions in certain key categories to drive traffic and win the driveway decision. And, of course, we've got that modeled into our margin.

Speaker Change #193: Like a father's day like back to school to drive traffic and so during those time periods, we're going to have a more a broader based promotions and somewhat deeper promotions in certain key categories to drive traffic and when the driveway decision and of course, we've got that modeled into our margin one of the things Thats really been helpful with new customer data platform.

Steven Paul Lawrence: One of the things that's really been helpful with the new customer data platform that we have is that we can start seeing customer behavior. So we know within our customers who the more value-based customers are. And we're targeting a lot of that marketing towards that customer. Conversely, we also have a customer who we can tell is more triggered by or activated by newness. And so we're using our CDP to really target them with more of the new offerings and some of the new brands that we're launching.

Speaker Change #194: One that we have is we can start seeing customer behavior. So we know within our customers who's a more value based customers and where we're targeting a lot of that marketing towards that customer commercially. We also have a customer who we can tell there's more triggered by our activated by newness and so we're using our CDP to really target them with more of a new offerings in some of the new brands with the launching so.

Speaker Change #194: That's really how we're going about it using CDP as a way to kind of targeted messaging and making sure. We've got good fuel from a promotional perspective or a newness perspective to send to those customers based off of what they are gravitating towards.

Steven Paul Lawrence: So that's really how we're going about it, using CDP as a way to kind of target those messaging and making sure we've got good fuel from a promotional perspective or a newness perspective to send to those customers based on what they're gravitating towards. Thank you.

Speaker Change #195: Thank you good luck thank.

Speaker Change #194: Thank you.

Christopher Michael Horvers: Our next questions are from the line of Christopher Horvers with J.P. Morgan. Please proceed with your question. Mr. Horvers, you may proceed with your questions.

Speaker Change #196: Our next questions are from the line of Christopher Horse with J P. Morgan. Please proceed with your question.

Speaker Change #196: Okay.

Speaker Change #196: Mr. Oliver as you May proceed with your questions.

Steven Paul Lawrence: Thanks, good morning. So in terms of the improvement in the back half, can you talk a little more specifically about the categories that you expect to turn positive? You know, to what extent is mixed going to play out in the gross margin as it relates to that? And to what extent are you, you know, expecting, you know, maybe the hunt category to see some lift around the election?

Christopher Michael Horvers: Thanks, Good morning, so in terms of the improvement in the back half can you talk a little more specifically about the categories.

Oliver Wintermantel: That you expect to turn positive.

Oliver Wintermantel: To what extent is mix going to play out in the gross margin as it relates to that.

Oliver Wintermantel: And to what extent are you.

Speaker Change #199: Expecting you know maybe the hunt category to see some lift around the election.

Steven Paul Lawrence: Yeah, so you hit on the first one where you're asking which categories to expect to continue to drive for us, drive sales. I think certainly outdoor is one of those.

Speaker Change #199: Yeah.

Speaker Change #200: Yeah. So you hit on the first one where you're asking which categories do you expect to continue to drive for us to drive sales I think certainly outdoor is one of those you know it's it's it's lapped itself in terms of some really tough comps and it's been now two quarters of pretty good performance and we'd expect that to continue through the year I think that would be broad based you know one of the things.

Steven Paul Lawrence: You know, it's lapped itself in terms of some really tough comps, and it's been now two quarters of pretty good performance. We'd expect that to continue through the year. I think that would be broad-based. You know, one of the things on the call that we called out was the camping category, really fueled by Stanley and Yeti.

Speaker Change #201: On the call we called out was the camping category really fueled by <unk>.

Steven Paul Lawrence: We think that's going to continue. We also expect that the business will be good as we turn the quarter into hunting, and we expect fishing to be good over the summer. So I think all those categories should continue to be drivers for us.

Speaker Change #202: Stanley and Yeti, we think that's going to continue through we also expect that the hunt business will be good as we turn the quarter into hunting and we expect fishing to be good over the summer.

Speaker Change #203: So I think all of those categories should continue to be drivers for us the impact of the election on it you know.

Steven Paul Lawrence: The impact of the election on it is hard to tell at this point in time. We really haven't modeled a ton of activity off of that. We don't know when we go back and look at election years, we see that businesses are active around those time periods. But, you know, we're not really banking on that. If that happens, that would certainly be a positive. We expect the dot-com business to continue to be profitable, and we expect the apparel and footwear business to steadily improve. At the low end of our guidance... Down4Comp.com.

Speaker Change #204: Hard to tell at this point in time, we really haven't model a ton of activity off of that we didn't know when we go back and look in election years. So we see that business activate or almost time periods, but we're not really banking on that if it happens that would certainly be a positive.

Speaker Change #205: I would expect the dotcom business continue to be positive and we expect the apparel and footwear business.

Speaker Change #206: Italy improve.

Speaker Change #207: At the low end of our guidance to down four comp at <unk>.

Steven Paul Lawrence: That implies the customer remains under pressure and doesn't really improve in terms of how they're shopping and us leaning into our activities and focusing from a newness, value, and experience perspective. Kind of gets us below into the guidance. If we can see some inflection from the hunting category based on election, and we can see some of the newness, and value offerings really kick in from an apparel forward perspective and those with the positive, that's how we get to the high end of our guidance.

Speaker Change #208: And imply the customer remains under pressure and you know it doesn't it doesn't really improve in terms of how they're shopping and oscillating into our activities.

Speaker Change #209: And focus is from a newness value experience perspective.

Speaker Change #210: You know kind of get us the low end of the guidance. If we can see some inflection from the.

Speaker Change #211: The hunting category based off election, and we can see some of the newness.

Speaker Change #211: And our value offerings really taken from an apparel perspective, and most of the positive. That's how you get to the high end of our guidance. So that's why we didn't we didn't narrow the range at this point in time, we're only 25% of the way through the year. We think we still have a lot of outcomes ahead of us.

Steven Paul Lawrence: So that's why we didn't narrow the range at this point in time. We're only 25% of the way through the year. We think we still have a lot of outcomes ahead of us that are undetermined. And as we get deeper into the year, we'll certainly share what we're seeing in the business once we get through Q2, because we've got a lot of key events right now ahead of us.

Speaker Change #212: Or undetermined.

Speaker Change #212: And as we get deeper in the year, we'll certainly share.

What we're seeing in the business once we get through Q2, because we've got a lot of key events right now in front of us.

unknown: Got it. And then, you know, just to clarify, so in the gross margin, supply chains are tailwinds, shrinks flat, merchandise margin is flat. Is that right? Am I missing any pieces? And then that merchandising margin, you know, are you expecting it to be positive and then essentially offset more promotions year on year?

Speaker Change #212: Got it and then you know.

Speaker Change #213: Just to clarify so in the gross margin.

Speaker Change #214: Supply chains are tailwind shrinks flat.

Merchandise margin is flat is that right am I am I missing any pieces and then that merch margin are you expecting mix to be a positive and then essentially offset more promotions year on year.

Steven Paul Lawrence: So we're expecting, I think you have the puts and takes right, we're expecting a flat merchandise margin. We've modeled in some deleverage from the, you know, the hard goods, big ticket side of the business, particularly outdoor, which has a lower margin profile, but we expect that, you know, certainly the footwear and apparel margins are going to be strong as we progress.

Speaker Change #215: So we're expecting I think you have the puts and takes right.

Speaker Change #216: We're expecting a flat merch margin we've modeled in some deleverage from the you know the hard goods big ticket side of the business, particularly outdoor which has a lower margin profile.

Speaker Change #217: But we expect that you know certainly the footwear and apparel margins are going to be strong as we progress through the year.

Speaker Change #217: Got it thanks very much.

Speaker Change #217: Thank you.

unknown: Got it.

Speaker Change #217: The next questions are from the line of Kate Mcshane with Goldman Sachs. Please proceed with your question.

Katharine Amanda McShane: The next questions are from the line of Kate McShane with Goldman Sachs. A pleasure to see you with your questions.

Katharine Amanda McShane: Hi, Good morning, Thanks for taking my question first.

Katharine Amanda McShane: First question was just on my Academy loyalty program I, just wondered if you could give us a little bit more detail on the timing of the rollout of that and is the guidance capturing any kind of upside potential from that or any kind of margin implications as a result of.

Speaker Change #219: The promotions and offerings that go along with it.

Steven Paul Lawrence: Hi, good morning. Thanks for taking our question. Our first question was just on the MyAcademy loyalty program. I just wondered if you could give us a little bit more detail on the timing of the rollout of that, and is the guidance capturing any kind of upside potential from that or any kind of margin implications as a result of the promotions and offerings that go along with it?

Speaker Change #220: Sure Good morning, Kate.

Speaker Change #221: So I'd start with that from a timing perspective, it's going to roll out over the summer we wanted to have it in place prior to back to school.

Steven Paul Lawrence: Sure. Good morning, Kate.

Steven Paul Lawrence: So I'd start with, from a timing perspective, it's going to roll out over the summer. We want to have it in place prior to back to school. As you know, our back to school starts a little earlier.

Speaker Change #221: As you know our back to school starts a little earlier. So it starts kind of at the tail end of July. So I'd expect we'll have it fully rolled out to all stores.

Steven Paul Lawrence: So it starts kind of at the tail end of July. So I'd expect we'll have it fully rolled out to all stores by the first or second week of July. Really, the goal is we have a pretty powerful loyalty program right now with our credit card. That being said, we have several customers who either A, don't want another credit card, or B, maybe in some cases, don't qualify for the credit card.

Speaker Change #221: By the first or second week of July.

Speaker Change #222: The goal is we haven't we have a pretty powerful loyalty program right now with a credit card.

Speaker Change #223: That being said, we have we have several customers who either don't want another credit card a.

Steven Paul Lawrence: And so we wanted to offer them a lot of the same sort of values. And so we talked on the call, that's your initial sign-up discount of 10% on all orders up to $200, and that's free shipping over $25.

Speaker Change #224: Or maybe in some cases don't qualify for the credit card and so we wanted to offer them a lot of the same sort of values until we talked on the call. That's you know initial sign up discount of 10% of up to $200. That's free shipping over $25. That's targeted discounts Ah you know so all those things that are kind of an endemic to a lot of loyalty program.

Steven Paul Lawrence: That's targeted discounts. You know, all those things that are kind of, you know, endemic to a lot of loyalty programs we're going to have. The only thing you don't get with MyAcademy that you do get with the credit card primarily is the 5% off every day.

Speaker Change #225: We're gonna have the only thing you don't get with my Academy that he didn't give them the credit card primarily 5% off every day.

Steven Paul Lawrence: We certainly believe that's going to be a sales driver for us. We have that modeled in as part of our improvement. That's one of the ways we see, you know, getting from the negative five and seven we had in Q1 to our guidance ranging down forward to up one. From a margin erosion perspective, we've repurposed other discounts that we've been running toward this. So it's not really, from our perspective, going to be initially gross margin decretive because we've offset other promotions to fund it.

Speaker Change #226: We certainly believe that's going to be a sales driver for us we have that modeled in as part of our improvement. That's one of the ways, we see getting from the negative five seven we had in Q1 two.

Speaker Change #227: Our guidance range of down four to up one from a margin erosion perspective, we've we've repurposed other discounts that we've been running towards this so it's not really from our perspective is going to be initially gross margin accretive because we've offset other promotions to fund it.

Steven Paul Lawrence: And certainly, over time, we're going to test, you know, how targeted offers work. And if certain offers resonate more than others, we might add those into, you know, benefits, hard benefits that we'll run going forward. But we started off a little light, and our goal would be to add to this over time as we test our way into offering customers.

Speaker Change #228: Certainly over time, we're going to test how targeted offers work at certain offers resonate more than others, we might add those into <unk>.

Speaker Change #229: Benefits hard benefits that will run going forward, but we started off a little light and our goal would be to add to this over time as we test our way into offers with the customer response to it.

Steven Paul Lawrence: Thank you. And our second question just concerns your comment about some of the key brands that you are currently carrying in footwear. How much do you think this specifically is challenging traffic to the store? Well, you know, we certainly do.

Speaker Change #230: Thank you and our second question just around your comment around some of the key brands that you aren't currently.

Speaker Change #231: Carrying in footwear, how much do you think this specifically is challenging traffic to the store.

Steven Paul Lawrence: Well, you know, we certainly pay a lot of attention to market share data and what's going on. You know, the brands we've been most questioned about, you know, on this call last time and certainly in other calls, have been around Hokanon. And if you look at those two brands, they've more than tripled their market share over the past two years. So I think it's a meaningful driver out there for running footwear

Speaker Change #232: Well you know we certainly.

Speaker Change #232: Pay a lot of attention to market share data and what's going on.

Speaker Change #233: You know the brands we've been most question about on this call last time and certainly in in other calls because their own Hogan on and if you look at those two brands.

Speaker Change #234: They have more than tripled their market share over the past two years. So I think it's a meaningful driver are out there for running footwear.

Steven Paul Lawrence: And you know, not having it, I think it's certainly something that we would love to have as part of our assortment, so it could help drive traffic for us. That being said, you know, we're not sitting around waiting for them to open us up. We certainly are having dialogues with them and believe at some point, we'll get access to that. But it's all the work we're doing with our existing brands to get access to things we currently don't have access to that are more premium for them.

Speaker Change #235: And you know not having it I think it's certainly something that we would love to have as part of our assortment. So that could help drive traffic for us that being said, we're not sitting around waiting for them.

Speaker Change #236: Open us up we certainly are having dialogues with them and believe at some point, we will get access to that but it's it's all the work we're doing with our existing brands to get access to.

Speaker Change #237: We currently don't have access to more premium for them.

Speaker Change #237: Adding in new brands that help us complement our assortment.

Steven Paul Lawrence: It's adding new brands that help us complement our assortment. It's all those things that we're going to be focused on, while we also simultaneously work with those brands we don't have to gain access to. Our next question is from the line of Robbie Ohms.

Speaker Change #237: It's all of those things that we're going to be focused on while we also simultaneously work with.

Speaker Change #238: With those brands, we don't have to gain access to them.

Thank you.

Speaker Change #238: Our next questions are from the line of Ravi homes with Bank of America proceed with your question.

Robert Frederick Ohmes: Our next questions are from the line of Robbie Ohmes with Bank of America. Oh, hey, thanks for taking my question. Maybe for Carl, just on the store opening cadence.

Speaker Change #238: Oh, Hey, Thanks for taking my question, maybe for Carl just on the store opening cadence for the year any thing you can tell us about how that may or may not pressure certain quarters Preopening expense, just timing of store openings being back half weighted.

Earl Carlton Ford: Yeah, so the balance of our stores that we're going to open are going to be in the second half of the year. As you think about pre-opening costs, we really modeled those into the 100 basis points of D-Leverage that we put in the SG&A guide.

Carl <unk>: Yeah. So the balance of our stores that were opened are going to be in the second half of the year. As you think about preopening costs, we really modeled those into the 100 basis points of deleverage that we are that we.

Carl <unk>: But in the SG&A guide.

Earl Carlton Ford: So that's really what's driving the year-over-year D-Leverage is our investments in new stores. And we like the way that they're starting off. We like the way that they're comping once they get past that 14th month. And we think this is a big driver for the long-range plan. So we're going to continue to do that.

Carl <unk>: So that's really what's driving the year over year deleverage as our investments into new stores and we like the way that they're starting off we like the way they're comping once they get past that 14th month and we think this is a big driver for the for the long range plan. So we're going to continue to do that it will deleverage US you know our average.

Earl Carlton Ford: It will D-Leverage us. You know, our average store did $22 million in sales volume last year. And, you know, these new stores we're guiding, you know, $12 to $16 million in year one. So there's D-Leverage associated with it, but that's what's essentially baked into the 100 basis points of D-Leverage that's embedded within our guidance.

Carl <unk>: Stored at $22 million in sales volume last year and these new stores, we're guiding at 12% to 16 million in year. One so there's there's deleverage associated with it but that's what's essentially baked into the 100 basis points of deleverage, it's embedded within our guidance.

Speaker Change #239: Got you and then can you walk us through the economics of the door Dash deal was that is.

Speaker Change #240: Is that very favorable to you guys how is that structured.

Speaker Change #241: I can't obviously.

Steven Paul Lawrence: [inaudible] Southern California. I won't divulge all the details of it, obviously, from a contractual perspective, but basically, they have a couple of different ways they model it. In the initial phase for us, the way it works is the customer can shop through the DoorDash app and find Academy products. The DoorDasher will actually physically come into the store, find the product, purchase it, and then we pay a commission on that.

Speaker Change #241: Divulge all the details of it obviously from a contractual perspective, but basically.

Speaker Change #242: Basically they have a couple of different ways to model it.

Speaker Change #243: And in the initial phase for us.

Speaker Change #244: It works as a customer can shop through the door dash App and find a you know academy product.

Speaker Change #244: The door Dasher will actually physically come in the store find the product purchase it and then we pay a commission or after the fact on that over time, we see this is probably going to a model where it looks more like a bolus order for us.

Steven Paul Lawrence: Over time, we see this probably going to a model where it looks more like a bulk order for us, where we pick the goods and deliver them to the DoorDash person outside who has a slightly different rate associated with it, and then, longer term, the goal would be to integrate it, as we talked about in the call, into our website so you can pick that as an option. One of the things that we've been studying customer behavior and seeing what they're reacting to, what they're not reacting to, time is one of those things.

Speaker Change #245: Where we pick the goods and delivered to the door dash person outside that is a slightly different rate associated with it and then longer term the goal would be to integrated as we talked about in the call into our into our website. So you can take that as an option.

Speaker Change #246: One of the things that that as we've been studying the customer behavior and seeing what you know what the reacting to what they're not reacting to you know time is one of those things they they're voting for convenience.

Steven Paul Lawrence: They're voting for convenience, and us not having this as an option. I mean, we had both as we could pick it up, but think about the use case where the customer is at the field, and they forgot a pair of cleats or a mouth guard, and they want to have it delivered to them while they're at the tournament. We can now do that where we couldn't do that before. When we looked at the customer overlap between their file and our file, it's mostly acquisitive.

Speaker Change #247: And us not having this as an option I mean, we had both as where you could pick it up but you know think about the use case, where our customers in the field and they forgot to percolate to the mouth guard and they want to have it delivered to them. While they are at the tournament. We can we can now do that we couldn't do that before.

Speaker Change #248: When we looked at the customer overlap between their file in our file it's mostly accretive theres not a lot of overlap there and so for all those reasons, we decided to add this capability. We think it's gonna be a nice add for us of course store to ash makes the delivery fee that that's embedded in their fee structure.

Steven Paul Lawrence: There's not a lot of overlap there, and so for all those reasons, we've decided to add this capability. We think it's going to be a nice addition for us. Of course, DoorDash makes the delivery fee that's embedded in their fee structure, but like I said, we're pretty happy with it so far. It's really early days as we roll it out, and we think it's going to help us reach a customer we haven't met before. Robbie, the only thing that I would add to that is, obviously, somebody's not going door to door.

Speaker Change #248: But like I said, we're pretty happy with it so far it's really early days as we roll it out and we think it's going to help us reach customers. We haven't reached before probably the only thing that I would add to that is obviously somebody's not going to your door dash of guns, and say for a kayak or some of these bigger ticket items that tended to be lower in margin rate.

Earl Carlton Ford: Robby, the only thing that I would add to that is, obviously, somebody's not going to door dash a gun for a kayak or some of these bigger ticket items that tend to be lower in margin rates. So, there is a royalty commission associated with it, but the margin profile that gets sold should be elevated based on our whole...

Speaker Change #249: So there.

Speaker Change #250: There is a there is a royalty of commission associated with it but the margin profile of the goods sold should be elevated based off our holistic product assortment.

Speaker Change #250: Got it thank you.

Gregory Scott Melich: Our next question is from the line of Greg Melich with Evercore ISI. Please proceed with your question. Mr. Melich, you may proceed with your questions.

Speaker Change #250: Our next question is from the line of Greg Melick with Evercore ISI.

Speaker Change #251: With your question.

Speaker Change #251: Okay.

Speaker Change #251: Yeah.

Speaker Change #251: Mr. Mallow, you May proceed with your question.

Speaker Change #251: Mr. Malik perhaps your line is muted.

Operator: I'll move to the next one, Rob.

Speaker Change #252: Let's move to the next.

Anthony Chinonye Chukumba: Thank you. The next question will be coming from the line of Anthony Chukumba with Loop Capital Markets. Please proceed with your questions.

Anthony Chinonye Chukumba: Thank you yes. The next question will be coming from the line of Anthony <unk> with loop capital markets. Please proceed with your questions.

Speaker Change #254: Good morning. Thank you so much for taking my question I won't add my I won't give my usual on and how quick question. Given you already been uncovered so I guess I'll have to come up with something else I guess my question.

Steven Paul Lawrence: I guess my question is just about the competitive promotional environment. I mean, you've been talking now for a while about the fact that, you know, you're not promoting much, if at all, between, you know, big sale events, which makes a lot of sense. What are you seeing from your competitors? I mean, are your competitors doing a similar thing in terms of the timing of their promotions? And how would you just sort of compare, you know, maybe just year over year or maybe now versus pre-pandemic, just, you know, kind of the overall competitive promotional environment? Thank you.

Speaker Change #255: Just on the competitive promotional environment I mean, you've been talking now for a while about the fact that youre not promoting.

Speaker Change #255: Much if at all.

Between big sale events, which makes a lot of sense.

Speaker Change #256: What are you seeing from your competitors I mean, our competitors do.

Speaker Change #256: A similar thing in terms of the timing of their promotions and how would you just sort of compare.

Speaker Change #257: Maybe just year over year, or maybe now versus pre pandemic, just kind of the overall competitive promotional environment. Thank you.

Steven Paul Lawrence: Yeah, so I would characterize it similar to how we talked about in previous quarters. I mean, it's certainly not back to where it was pre-pandemic.

Speaker Change #257: Yeah, So I would I would characterize it somebody how we've talked about in previous quarters. I mean, it's it's certainly not back to where it was pre pandemic.

Speaker Change #257: It seems that each year, it's getting a little more promotional.

Steven Paul Lawrence: It seems that each year it's getting a little more promotional. You know, as I mentioned earlier, we don't have a ton of big events for us. In the first half of the first quarter of the year, we really start hitting that time period right around now: Memorial Day, Father's Day, Fourth of July, back to school. Early reading so far is that it seems like it's a little more promotional than last year, but certainly not.

Speaker Change #258: As I mentioned earlier, we don't have a ton of big events for us in the first half of the first quarter of the year, we really started hitting at that time period right around now memorial day father's day.

Speaker Change #259: Why back to school.

Speaker Change #259: Early read so far is that it seems like it's a little more promotional last year, but certainly not crazy or.

Steven Paul Lawrence: Crazy, but not irrational. It feels like people are, you know, promoting the categories you'd expect them to promote right now. A lot of the summer categories, grilling, you know, pool, things like that. So I would characterize it as still very rational. And candidly, I would say Q1, it wasn't terribly promotional outside of the clearance cycle that I think everybody went through.

Speaker Change #259: Not irrational it feels like people are promoting the categories you'd expect them to promote right now a lot of the summer categories growing you know.

Speaker Change #259: Things like that so I would characterize it is it's still very rational.

Speaker Change #259: And candidly I would say Q1, it wasn't terribly promotional outside of the clearance cycle that that I think everybody went through.

Steven Paul Lawrence: Got it. And then just one quick follow-up. Um, you mentioned that your shrink was down 20 basis points year over year. Is there anything in particular that was driving that? And do you expect continued shrink improvement over the remainder of the year? Thanks.

Speaker Change #260: Got it and then just one quick follow up you mentioned that you're shrinking down.

Speaker Change #260: 20 basis points year over year.

Speaker Change #261: Is there anything in particular that that was driving that and do you expect continued to shrink improvement over the remainder of the year.

Earl Carlton Ford: Yeah, so Shrink was, just to be clear, Shrink was up last year, and so being 20 basis points off of, 20 basis points better than being up year over year, it's better. The things that we're doing are we've deployed some technology solutions around license plate readers or dwell sensors, things that are in stores that kind of give us a heads up on when something's not going well. In certain cases where the product has been stolen and it's not available for sale, we're doing precautions like locking up the product and putting a customer service button right there to help the customer.

Speaker Change #262: Yeah. So shrink was just to be clear shrink was up last year, and so being 20 basis points off of.

Speaker Change #263: 20 basis points better than being up year over year, it's better the things that we're doing is we've deployed some technology solutions around license plate readers or dwell sensors things that are in store that kind of give us a heads up on when something's not going well.

Speaker Change #264: And in certain cases, where the product has been stolen and is not available for sale, where we're doing precautions like walking a product and putting our customer service button right. There to help the customer we partner closely with local law enforcement and we keep a beat on this overall the cycle counts and physical.

Earl Carlton Ford: We partner closely with local law enforcement, and we keep a beat on this through all the cycle counts, you know, and physical inventories throughout the year. You know, the things that are driving it. I think theft is still up across the market. I think this is a big retail issue. I think we're taking steps to correct it, but, you know, and address it, but it's not like it's suddenly dropped off of a cliff.

Speaker Change #265: Inventories throughout the year you know the.

Speaker Change #266: Things that are driving it I think fastest still up across the market. I think this is a big retail issue I think.

Speaker Change #267: Taking issues to correct, it but address it but it's not like it suddenly dropped off of a cliff.

Speaker Change #267: Yes.

I would tell you that the Manhattan system within the distribution center space, There's a lot more methodical than our previous warehouse management system.

Earl Carlton Ford: I would tell you that the Manhattan system within the distribution center space is a lot more methodical than our previous warehouse management system, and we do carry a fair amount of inventory in our distribution centers, and so accounting for that correctly, that was a little bit of a source of goodness year over year, but 20 basis points, you know; we're probably halfway through our physical inventories for the year now. We feel like we've got a pulse on where it's going. We're happy with 20 basis points, but I would

Speaker Change #267: And we do carry a fair amount of inventory in our distribution centers and so accounting for that correctly that was a little bit of a source of goodness over over year over year, but.

Speaker Change #268: 20 basis points, there were probably halfway through our physical inventories for the year now we feel like we've got a beat on where it's going.

Speaker Change #269: We're happy with 20 basis points, but I would I would guide you to flat for the year.

unknown: I would guide you flat for the year. Got it. Good luck with the remainder of the year.

Speaker Change #270: Got it good luck with the remainder of the year.

Anthony: Thanks Anthony.

John Edward Heinbockel: Our next questions are from the line of John Kernan with T.D. Cowan. I'm pleased to see you with your questions.

Anthony: Our next questions are from the line of John Kernan with TD Cowen. Please proceed with your questions.

unknown: Good morning. Thanks for taking my question.

John Edward Heinbockel: Good morning, Thanks for taking my question.

Earl Carlton Ford: So Carl, just on the SG&A rate, looks like SG&A dollars were up about 4% in the first quarter. How should we think about SG&A dollars and the rate in the back half of the year and in the different scenarios of comps that you laid out? [inaudible] I'm just thinking how that rate might trend given the high and low end of the comp guide.

John Edward Heinbockel: So Carl just on the SG&A rate looks like SG&A dollars were up about 4% in the first quarter.

John Edward Heinbockel: How should we think about SG&A dollars in rate in the back half of the year and in the different scenarios that comps that you laid out.

Speaker Change #273: It's a fairly wide range yet.

Speaker Change #274: Yes down, Florida up once I'm, just thinking how that right Mike.

Speaker Change #274: My trend and given them.

Speaker Change #275: The high and low end I think the top guys.

Earl Carlton Ford: Yeah, it's a good question, and it's one that I'm kind of proud of the team on, so SG&A dollars quarter over quarter up twelve and a half million dollars or a hundred and thirty basis points. And this is for Q1. As it relates to $12.5 million, more than all of that was associated with the investment in new stores, primarily, but also some technology solutions around the customer database platform, e-com user experience, and now the go-live of the WMS system. So that's what's driving more than all of the dollars and almost all of the leverage. I think we de-leveraged pretty modestly on the negative comp base, the negative 5.7%.

Speaker Change #276: Yes, it's a good question and it's one that I'm kind of proud of the team Orange, So SG&A dollars quarter over quarter up 12, and a half million dollars or 130 basis points.

And this is for Q1 as it relates to 12 and a half million dollars more than all of that was associated with the investment in new stores, primarily but also some technology solutions around the customer database platform economy user experience and now the go live of the WNS system.

Speaker Change #277: So that's what's driving more than all of the dollars in almost all of the leverage I think we've deleveraged.

Speaker Change #278: Pretty modestly on the negative comp base, the negative five 7% and what John what that shows is our responsiveness by the team we understand how to pull levers and inside the quarter and very responsive to what we're going to do and not do and how that plays out.

Earl Carlton Ford: And what John, what that shows is a responsiveness by the team. You know, we understand how to pull levers inside the quarter, and we're very responsive to what we're going to do and not do and how that plays out. You know, I would tell you customer satisfaction has never been higher. The polls that we get, the overall satisfaction of the customer. So we think, you know, we're flexing with things that the customer still perceives as they're really getting good service.

Speaker Change #280: I would tell you the customer satisfaction has never been higher the poles that we get.

Speaker Change #279: The overall satisfaction of the customer so we think we're.

Speaker Change #281: We're flexing with things that the customer is still perceive that they're really getting good service as it relates to the balance of the year when its really on a full year guide of 100 100 basis points is how I would counsel you on the on the high end of low if we if we hit the low there'll be some more give back associated with incentive comp and things of that nature.

Earl Carlton Ford: As it relates to the balance of the year, what's really in the full-year guide, yeah, 100 basis points is how I would counsel you on the high and the low. If we hit the low, there'll be some more give-back associated with incentive comp and things of that nature, and on the high, we flex pretty well. But as it relates to controlling promotions, controlling inventory, and controlling the expense profile of a company, the team is really united here. What we are investing in are these new stores, and then we're offsetting internally in a way that the customer is not displeased with.

Speaker Change #282: Hi, we flex pretty well, but as it relates to controlling promotions controlling inventory and controlling the expense profile of the company. The team is really United here. What we are investing in is these as these new stores and then we're offsetting internally.

Speaker Change #283: In a way that the customer is not.

Speaker Change #284: I'm just pleased with.

Steven Paul Lawrence: That's helpful, Carl. Steve, just on the merchandising front, I think footwear has been a big driver of one of your biggest Peers comps recently. What are you doing in terms of working with the vendors, working with the in-store presentation within footwear because the category obviously has a lot of momentum right now. It's not all just with On and Hoka, and you have a big Nike business, New Balance, and others.

Speaker Change #285: That's helpful call Okay.

Speaker Change #285: On the merchandising right.

Speaker Change #286: Footwear has been a big driver of one of your big ticket.

Speaker Change #287: Biggest peers comps.

Speaker Change #288: Comps recently, what are you doing in terms of working with the vendors working with the in store presentation within footwear category.

Speaker Change #289: Category, obviously has a lot of momentum right now and it's not all just with on it. Okay. And then you have a big Nike business.

New balance and others.

Speaker Change #291: What are you doing in terms of allocations as we get into the back half of the year.

Steven Paul Lawrence: Yeah, no, that's a good question. So, you know, we continue to work with our existing partners. Nike is certainly our biggest vendor in the store. It's our largest vendor in footwear, and we work with them to get access to better footwear. For example, 270s was on a limited door count last year.

Steven Paul Lawrence: So just what are you doing in terms of allocations as we get into the back half of the year? Yeah, no, that's, that's a good question. So, you know, we can

Speaker Change #290: Yes, that's a good question. So we continue to work with our existing partners certainly Nike is our biggest vendor.

Speaker Change #292: In the store.

Speaker Change #293: Centre in footwear, and working with them to get access to better but we're so example, 200 seventy's that was an unlimited door count last year, it's going to be in over 150 doors. This year, we've done an elevated presentation for it in our store.

Steven Paul Lawrence: It's going to be in over 150 doors this year. We've done an elevated presentation for it in our store. We're working with them on other footwear as they move forward to get access to that. Same conversations, candidly, with, you know, New Balance and Adidas as well.

Speaker Change #294: We're working with them on other footwear as they move forward to get access to that same conversations candidly with with new balance and Adidas as well.

Steven Paul Lawrence: But the thing that I want to also make sure that I land the point is, you know, athletic is a big chunk of our business, but it's winning in the other categories, too. Like I said, we do a big work booth business. We do a big seasonal footwear business. We do a big casual wear business. So, leaning into things like Birkenstock, which is in an expanded door count for us this year, and taking a brand last year like Culebra by UGG that we had in a very limited door count and expanding that out more broadly this fall.

Speaker Change #295: But the thing that I want to also make sure that Atlanta point as you know athletic is a big chunk of our business, but it's winning in the other categories too like I said, we do a big work boot business, we did a big seasonal footwear business the casual business.

Speaker Change #296: Leaning into things like Birkenstock, which isn't an expanded door count for us this year, taking our brand last year like Culebra buyout that we had in a very limited door count expanding that out more broadly. This fall I think there are a lot of ways for us to win in footwear. The team is really working broadly with the broad based vendors to make sure we can do that.

Steven Paul Lawrence: I think there are a lot of ways for us to win in footwear. The team is really working broadly with broad-based vendors to make sure we can do that. And I'm optimistic about our opportunities in footwear as we move forward with all the newness that we're driving.

Speaker Change #296: And I'm I'm optimistic about our opportunities in footwear as we move forward with all the newness that we're driving there.

Speaker Change #297: That's great. Thank you.

John Edward Heinbockel: Thank you. At this time, we have time for one final question, which will be coming from the line of John Heinbockel with Guggenheim. Please proceed with your question.

Speaker Change #297: Thank you.

unknown: That's great. Thank you. Thank you. At this time, we have time for one final question which will be coming from the line of John Heinbockel with Guggenheim. Please proceed with your question. Steve, two men to release.

John Edward Heinbockel: At this time or is that for one final question, which will be coming from the line of John <unk> with Guggenheim. Please proceed with your question.

John Edward Heinbockel: Hey, Steve to two related questions right, we've talked a lot about.

Speaker Change #298: Driving business in the episodic periods.

John Edward Heinbockel: But in the periods in between right. When you think about using CVP to go after heavy users right.

Speaker Change #299: Whether it's fishing or outdoor cooking, but what do you see is that opportunity.

Speaker Change #299: In those periods and then during the promotional periods.

Speaker Change #300: You're getting a better sense of promotional elasticity.

Speaker Change #301: By customer right such that your promotions are more effective than they were a year or two ago.

Steven Paul Lawrence: Yeah, I'll start with the first part of your question. So one of the new use cases we've really started leaning into is, you know, we do our traditional customer segmentation. And so one of the customer segments that we've identified, for example, is a, you know, high-value first time purchaser. So think about somebody who came in and purchased, you know, a grill or an elliptical or something like that, with their first purchase, and we haven't really seen them shop like this before.

Speaker Change #301: Yeah, I'll start with the.

Speaker Change #302: The first part of your question. So one of them wanted to new use cases, we really started leaning into as you know we've done our traditional customer segmentation and so one of the customer segments that we've identified for example is a.

Speaker Change #303: High value first time purchasers, so think about somebody who came in and purchased a grill or an elliptical or something like that with their first purchase and we haven't really seen them shop. This before so we're using kind of those loans, where we're targeting those types of customers to come in and drive whatever the attachment as in the case of the grille, maybe its more fuel.

Steven Paul Lawrence: So we're using kind of those lulls where we target those types of customers to come in and drive whatever the attachment is. In the case of a grill, maybe it's more fuel, some of the spices and rubs we sell or cover, and turning those customers into kind of high-value one-time shoppers into loyalists over time. And so really leaning on offers during those time periods has been one of the things we've used the CDP for. I think your second question, kind of observation, is spot on.

Speaker Change #304: Spices, and rubs, we sell or cover.

Speaker Change #305: And turning those customers into kind of high value onetime shoppers into.

Speaker Change #306: Loyalists over time, and so really leaning to offers during those time periods has been one of the things we would use the CDP for I think your second question kind of observation is spot on as we've gotten deeper into.

Speaker Change #306: Do you use cases on our CDP I think we are getting a better sense of which types of promotions resonate with which customers and so I think that's something that we're just going to continue to refine and be sharper and sharper on in terms of.

Steven Paul Lawrence: As we've gotten deeper into the use cases on our CDP, I think we are getting a better sense of which types of promotions resonate with which customers. And so I think that's something that we're just going to continue to refine and be sharper and sharper on in terms of the types of promotions we deliver to the customers, delivering the right ones to the customers who activate against them. You know, as I mentioned earlier, some customers really gravitate towards value.

Speaker Change #306: The types of promotions, we delivered to the customers delivering the right once through the customers, who activate against them and as I mentioned earlier, some customers really gravitate towards value so leaning into promotions with them versus the customers, who really are more about newness. So maybe if you can be a little shallower with those customers in terms of discounts, we offer but really focus in future newness in those.

Steven Paul Lawrence: So, you know, leaning into promotions with them versus the customers who really are more about newness. So we maybe can be a little shallower with those customers in terms of discounts we offer, but really focus on and feature newness in those. So, you know, we're still a year into this. I think we're a lot smarter today than we were a year ago.

Steven Paul Lawrence: We still have a lot of opportunities to continue to bring this out, and I think the My Academy Rewards program that we're launching is going to help us get even deeper and mesh with our customers in terms of them engaging with us and us engaging with them in ways that they really want to be engaged with. Thank you.

Speaker Change #306: So it's still we're a year into this I think we're a lot smarter today than we were a year ago, we still have a lot of opportunities to continue to bring this out and I think that.

Speaker Change #307: My Academy rewards program that we're launching is going to help us get even deeper and matched with our customer in terms of.

Speaker Change #308: Down engaging with us and us engaging with them in ways that they really wanted to engage with.

Thank you.

Speaker Change #308: Thank you.

Steven Paul Lawrence: Okay, first, I want to say that the team has done a really good job of managing through the current economic environment while steadily executing against our long-range plan objectives. We're committed to helping active young families that are under financial pressure stretch their dollars and have fun out there by providing compelling assortments coupled with an outstanding value proposition. We still have three quarters of the year and most of our most important shopping seasons ahead of us.

Speaker Change #308: Okay.

Speaker Change #309: First I wanted to say that I think the team has done a really good job of managing through the current economic environment, while steadily executing against our long range plan objectives, we're committed to helping active young families that are under financial pressure stretch their dollars and have fun out there by providing compelling assortments, coupled with an outstanding value proposition.

Steven Paul Lawrence: We remain optimistic about the opportunities in front of us throughout the remainder of the year. Beyond 2024, we're also investing in the business to drive long-term shareholder value. These critical investments are linked to the strategies of our long-term plan, which are opening new stores, growing omnichannel, driving our existing business by improving our connection to customers to improve merchandising and marketing, and leveraging our supply chain. We believe that remaining true to this strategy will allow us to break through and deliver against our vision to be the best sports and outdoor retailer in the country.

Speaker Change #309: We still have three quarters of the year and most of our most important shopping seasons ahead of us and we remain optimistic about the opportunities in front of us throughout the remainder of the year.

Speaker Change #310: Beyond 2024, we're also investing in the business to drive long term shareholder value. These critical investments are linked to the strategies of our long range plan, which are opening new stores growing omnichannel trading our existing business by improving our connection to customers through improved merchandising and marketing and leveraging scaling our supply chain.

Speaker Change #311: We believe that remaining true to the strategy will allow us to break through and deliver against our vision to be the best sports and outdoor retailer in the country.

Steven Paul Lawrence: In closing, I want to thank all 22,000 of our Academy 10 members for the hard work and effort we've put in over the past quarter. We continue to believe that our associates are the key ingredient in our secret sauce, and I know that every one of them is committed to delivering an outstanding shopping experience to all of our customers. Thanks for joining us today, and have a great rest of your day.

Speaker Change #312: In closing I want to thank all 22000 of our Academy 10 members for the hard work and effort they've put in over the past quarter. We continue to believe that our associates are the key ingredient of our secret sauce and I know that every one of them is committed to delivering an outstanding shopping experience to all of our customers. Thanks for joining today and have a great rest of your day.

Operator: Ladies and gentlemen, the call is now concluded. Thank you for your participation. You may now disconnect.

Speaker Change #313: Ladies and gentlemen, the call has now concluded. Thank you for your participation you may now disconnect.