Q1 2025 Academy Sports & Outdoors Inc Earnings Call

June 10, 2025

Only mode. Following the prepared remarks, there will be a brief question and answer session questions will be limited to analysts and investors. Please limit yourself to one question and one follow up.

Operator: Recorded. All participants are in a listen only mode. Following the prepared remarks, there will be a brief question and answer session. Questions will be limited to analysts and investors. Please limit yourself to one question and one follow-up. To ask a question during the call, please press star one on your telephone keypad. If you require operator assistance during the call, please press star zero. I'll now turn the call over to Dan Aldridge, Vice President of Investor Relations for Academy Sports + Outdoors. Please go ahead.

To ask a question during the call. Please press star one on your telephone keypad.

If you require operator assistance during the call. Please press star zero.

Speaker Change: I'll now turn the call over to Dan Aldridge, Vice President of Investor Relations for Academy Sports and outdoors. Please go ahead.

Dan Aldridge: Good morning, everyone and thank you for joining the Academy sports and outdoors first quarter 2025 financial results call participating on today's call are Steve Lawrence Chief Executive Officer, and Carl <unk>, Chief Financial Officer. As a reminder, today's earnings release and the comments made by management. During this call include forward looking statements.

Dan Aldridge: Good morning, everyone, and thank you for joining the Academy Sports and Outdoors Q1 2025 Financial Results Call. Participating on today's call are Steve Lawrence, Chief Executive Officer, and Carl Ford, Chief Financial Officer. As a reminder, today's earnings release and the comments made by management during this call include 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 our most recent 10-K and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements. 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.academy.com.

Dan Aldridge: 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 our most recent 10-K and 10-Q filings. The company undertakes no obligation to revise any forward looking statements.

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 <unk> Academy Dot Com. This morning, We will review our financial results for the first quarter of fiscal 2025 provide an update on our strategic initiatives and to discuss our outlook for the year.

Dan Aldridge: This morning, we will review our financial results for Q1 of fiscal 2025, provide an update on our strategic initiatives, and to discuss our outlook for the year and share our updated guidance for the full year fiscal 2025. After we conclude the prepared remarks, there will be time for questions at the end. With that, I'll turn the call over to our CEO, Steve Lawrence.

Speaker Change: Year and share our updated guidance for the full year fiscal 2025. After we conclude the prepared remarks, there will be time for questions at the end with that I will turn the call over to our CEO, Steve Lawrence. Thanks.

Steve Lawrence: Thanks, Dan and good morning to everyone on the call I'd like to start by covering the subject that is top of mind for most analysts and investors and that would be how academy is navigating through the additional tariffs that have been levied since our last earnings call.

Steve Lawrence: Thanks, Dan. Good morning to everyone on the call. I'd like to start by covering the subject that is top of mind for most analysts and investors, and that would be how Academy is navigating through the additional tariffs that have been levied since our last earnings call. We, like most people in our business, have been dealing with a fluid situation that's created a lot of complexity in how we forecast and manage our business on a day-to-day basis. We're fortunate that we have a strong team that has navigated through other periods of rapid change, such as the pandemic in 2020, the cotton crisis from 2010 and 2011, and the subprime mortgage crisis in 2008 and 2009. The team has drawn on these past experiences to help strategize how to effectively navigate through the current situation.

Speaker Change: We like most people in our business have been dealing with a fluid situation. That's created a lot of complexity in how we forecast and manage our business on a day to day basis.

Speaker Change: We're fortunate that we have a strong team that has navigated through other periods of rapid change such as a pandemic in 2020.

Speaker Change: Cotton crisis from 2010, and 2011 and the subprime mortgage crisis in 2008 and 2009.

Speaker Change: The team has drawn on these past experiences to help strategize how to effectively navigate through the current situation.

Speaker Change: The first step was for the teams to calculate the impact on our business for the 10% reciprocal tariffs on most countries coupled with the additional tariffs on goods coming out of China, which are currently set at 30% along with the steel and aluminum tariffs.

Steve Lawrence: The first step was for the teams to calculate the impact on the business for the 10% reciprocal tariffs on most countries, coupled with the additional tariffs on goods coming out of China, which are currently set at 30%, along with the steel and aluminum tariffs. Once this work was completed, we moved to our second step, which was to work with our factories and suppliers to look for tariff offsets by reducing costs on product. Using this approach, we worked with each supplier in a partnership fashion to help share some of the burden of the incremental tariffs. From there, we moved to step three, which was to work on strategies to help minimize the impact that these additional costs will have on our customers and our internal P&L. Team has taken the following key actions on this front.

Speaker Change: Once this work was completed we move to our second step, which was to work with our factories and suppliers to look for tariff offsets by reducing costs on product use.

Speaker Change: Using this approach we worked with each supplier in a partnership fashion to help share some of the burden of the incremental tariffs from there move to step three which was to work on strategies to help minimize the impact of these additional costs will have on our customers and our internal P&L.

Speaker Change: The team has taken the following key actions on this front.

Speaker Change: First we paused shipments out of China during the period that the tariff rate was set at 145%.

Steve Lawrence: First, we paused shipments out of China during the period that the tariff rate was set at 145%. Once the rate was lowered, we selectively resumed shipments. Second, we've accelerated our focus on reducing our exposure to products made in China. As we covered in our last earnings call, we've been on a journey over the past couple of years to reduce our direct exposure to China imports, and we're pleased that at the start of the year, our exposure to products sourced from our private brands from China accounted for roughly 9% of our business, which was down from pre-pandemic levels. We have further accelerated our efforts here and will reduce this number down to roughly 6% by the end of the year versus our original goal of 8%.

Speaker Change: Once the rate was lowered we selectively resume shipments.

Speaker Change: Second.

Speaker Change: We've accelerated our focus on reducing our exposure to products made in China.

Speaker Change: As we covered in our last earnings call. We've been on a journey over the past couple of years to reduce our direct exposure to China imports and were pleased that at the start of the year, our exposure product sourced from our private brands from China accounted for roughly 9% of our business, which was down from pre pandemic levels.

Speaker Change: We have further accelerated our efforts here will reduce this number down to roughly 6% by the end of the year. So original goal of 8% we've.

Speaker Change: We've also leveraged our strong balance sheet to pull in domestic inventory on evergreen product at pre tariff prices.

Steve Lawrence: We've also leveraged our strong balance sheet to pull in domestic inventory on evergreen product at pre-tariff prices. You can see this pull forward of receipts in our inventory at the end of the quarter, which was up 6.5% on a units per store basis. Next, we utilize our pricing optimization engine to look for opportunities to offset cost increases through strategic pricing and promotional adjustments. As we work through these changes, our focus was to ensure that the impact on the customer was minimal while also protecting our position as the value leader in our space. We know that when discretionary spending is under pressure, customers look to maximize their spending power by seeking out value, and we plan to capitalize on this and capture market share by continuing to provide the best value in the sports and outdoor space.

Speaker Change: See this pull forward of receipts in our inventory at the end of the quarter, which was up six 5% on a units per store basis.

Speaker Change: Next we utilize our pricing optimization engine to look for opportunities to offset cost increases to strategic pricing and promotional adjustments.

Speaker Change: As we work through these changes our focus was to ensure that the impact on the customer was minimal while also protecting our position as the value leader in our space.

Speaker Change: We know that when discretionary spending is under pressure customers look to maximize their spending power is seeking out value and we plan to capitalize on this and capture market share by continuing to provide the best value in the sports and outdoor space.

Speaker Change: Finally, each of our branded partners has a different exposure to tariffs based off their unique supply chains. We continue to work with each of them on a case by case basis to develop offset strategies.

Steve Lawrence: Finally, each of our branded partners has a different exposure to tariffs based off their unique supply chains. We continue to work with each of them on a case-by-case basis to develop offset strategies. At this point, we believe we've effectively mitigated the cost of tariffs at their current levels while minimizing the impact on our customers. Moving forward, the team will remain nimble and make adjustments if or when the situation changes. Before moving off of the tariff topic, I think it is important to point out that as the situation has evolved, we've continued to see an increase in foot traffic from customers with household incomes over $100,000 annually. This is a pattern we've seen emerge over the past couple of quarters, and it is starting to accelerate.

Speaker Change: At this point, we believe we have effectively mitigated cost of tariffs with the current levels, while minimizing the impact on our customers.

Speaker Change: Moving forward the team will remain nimble and make adjustments if and when the situation changes.

Speaker Change: Before moving off of the tariff topic I think it is important to point out that as the situation has evolved we've continued to see an increase in foot traffic from customers household incomes over $100000 annually. This is a pattern we've seen emerge over the past couple of quarters and it is starting to accelerate.

Speaker Change: We would expect this trend to continue as customers look to stretch their discretionary spending power by seeking out value.

Steve Lawrence: We would expect this trend to continue as customers look to stretch their discretionary spending power by seeking out value. Carl will provide more details on tariff impacts and how we think it could influence our customer spending patterns, along with our updated guidance for the remainder of the year later in the call. Shifting to the Q1 fiscal 2025 results. As you saw from our earnings release earlier this morning, sales came in at $1.35 billion, which was down 0.9% to last year and translated into a negative 3.7% comp. As we shared on our last call, February sales were soft, primarily driven by cold temperatures and winter storms across our footprint. We saw the business sequentially improve in March, and we exited the quarter with momentum, with April finishing with a positive comp.

Speaker Change: Carol will provide more details on tariff impacts and how we think it could influence our customer spending patterns along with our updated guidance for the remainder of the year later in the call.

Carol: Shifting to the first quarter of fiscal 2025 results as you saw from our earnings release earlier. This morning sales came in at $1 $35 billion.

Speaker Change: Which was down <unk>, 9% to last year and translated into a negative three 7% comp.

Speaker Change: As we shared on our last call February sales were soft primarily driven by cold temperatures and winter storms across our footprint.

Speaker Change: We saw the business sequentially improve in March and we exited the quarter with momentum with April finishing with a positive comp.

Speaker Change: Footwear and apparel were the two strongest businesses for the quarter running roughly flat to last year with sports and recreation closely following.

Steve Lawrence: We're in apparel were the 2 strongest businesses for the quarter, running roughly flat for last year, with sports and recreation closely following. All 3 of these businesses start to accelerate once we got past the cold weather in February with warmer temperatures in March and April. Nike was a key sales driver across all 3 areas, and as you'd expect, was one of our best-performing brands in the quarter. outdoor was down low single digits, primarily driven by softer sales and ammo. Fishing, firearms, and coolers and drinkware all posted solid increases for the quarter. We would attribute the momentum we're starting to build in the business to the solid progress we've been making against our long-term objectives and goals. I'd now like to highlight some of the progress we made on our strategic initiatives during the Q1. New store expansion remains our largest long-term growth engine.

Steve Lawrence: We're in apparel were the two strongest businesses for the quarter, running roughly flat for last year, with sports and recreation closely following. All 3 of these businesses start to accelerate once we got past the cold weather in February with warmer temperatures in March and April. Nike was a key sales driver across all 3 areas, and as you'd expect, was one of our best-performing brands in the quarter. outdoor was down low single digits, primarily driven by softer sales and ammo. Fishing, firearms, and coolers and drinkware all posted solid increases for the quarter. We would attribute the momentum we're starting to build in the business to the solid progress we've been making against our long-term objectives and goals. I'd now like to highlight some of the progress we made on our strategic initiatives during the Q1. New store expansion remains our largest long-term growth engine.

Speaker Change: All three of these businesses start to accelerate once we got pass the cold weather in February with warmer temperatures in March and April.

Speaker Change: Thank you as a key sales driver across all three areas and as you'd expect with one of our best performing brands in the quarter.

Speaker Change: Outdoor was down low single digits, primarily driven by softer sales in ammo Fisher.

Speaker Change: Fishing firearms in coolers, and drink, where all posted solid increases for the quarter.

Speaker Change: We would attribute the momentum we're starting to build in the business to the solid progress we are making against our long term objectives and goals.

Speaker Change: I'd now like to highlight some of the progress we've made on our strategic initiatives during the first quarter.

Speaker Change: New store expansion remains our largest long term growth engine. We're pleased to see the 2022 and 2023 vintages, which are both not only in the comp base by positive low single digit comp growth in Q1 <unk>.

Steve Lawrence: We're pleased to see the 2022 and 2023 vintages, which are both now fully in the comp base, drive positive low single-digit comp growth in Q1. As we discussed on our last call, we're applying the learnings from each vintage to subsequent openings to continually improve our site selection process. You can see the impact of this in our 2024 vintage, which while not currently in the comp base, is off to a great start, and we expect them to be strong contributors moving forward. We remain on track to open up 20 to 25 new stores this year and open five locations in Q1, including our first locations in Pennsylvania and Maryland. Our store count at the end of Q1 was 303, and we now include 21 states in our footprint.

Speaker Change: As we discussed on our last call. We're applying the learnings from each finished the subsequent openings to continually improve our site selection process.

Speaker Change: You can see the impact of this in our 2024 vintage which while not currently in the comp base is off to a great start.

Initiatives during the first quarter.

New store expansion remains our largest long term growth engine. We're pleased to see the 2022 and 2023 vintages, which are both now fully in the comp base by positive low single digit comp growth in Q1.

Speaker Change: And we expect them to be strong contributors moving forward.

Speaker Change: We remain on track to open up 20% to 25, new stores this year and open five locations in Q1, including our first locations in Pennsylvania and Maryland.

As we discussed on our last call.

Speaker Change: Our store count at the end of the first quarter with 303, and we now include 21 states in our footprint.

Playing the learnings from each finished the subsequent openings to continually improve our site selection process.

Speaker Change: But we're not ready to give guidance on our targets for 2026, we've thoughtfully slowed the pace of signing deals for 2026 new stores.

You can see the impact of this in our 2024 vintage which while not currently in the comp base is off to a great start.

Steve Lawrence: We're not ready to give guidance on our targets for 2026. We've thoughtfully slowed the pace of signing deals for the 2026 new stores. This will allow us to get a better handle on how the current tariff situation will impact construction costs moving forward. At this point, we don't expect it to change the overall number of new stores, but it will shift the timing of openings that were originally targeted for Q1 into Q2 or Q3. Our goal is to maintain maximum flexibility as we navigate a rapidly changing landscape. Our second growth pillar is to drive accelerated growth in our e-commerce business. We also made progress here during the quarter, with academy.com posting a 10% sales increase and growing in penetration by roughly 100 basis points to over 10%.

Speaker Change: This will allow us to get a better handle on how the current tariff situation will impact construction costs moving forward.

Speaker Change: At this point, we don't expect it to change the overall number of new stores, but it will shift the timing of openings that were originally targeted for Q1 into Q2 or Q3.

Operator: All participants are in a listen-only mode.

Operator: Following the prepared remarks, there will be a brief question-and-answer session. Questions will be limited to analysts and investors. Please limit yourself to one question and one follow-up. To ask a question during the call, please press star 1 on your telephone keypad. If you require operator assistance during the call, please press star zero.

In Maryland.

Store count at the end of the first quarter was 303 and we now include 21 states in our footprint.

Speaker Change: Our goal is to maintain maximum flexibility as we navigate a rapidly changing landscape.

But we're not ready to give guidance on our targets for 2026, we've thoughtfully slowed the pace of signing deals for 2026 new stores.

Speaker Change: Our second growth pillar is to drive accelerated growth in our ecommerce business we.

This will allow us to get a better handle on how the current tariff situation will impact construction costs moving forward.

Speaker Change: We also made progress here during the quarter with Academy Dot Com posted a 10% sales increase and growing in penetration by roughly 100 basis points to over 10%.

Dan Aldridge: I'll now turn the call over to Dan Aldridge, Vice President of Investor Relations for Academy Sports & Outdoors. Good morning, everyone, and thank you for joining the Academy Sports & Outdoors First Quarter 2025 Financial Results Call.

At this point, we don't expect it to change the overall number of new stores, but it will shift the timing of openings that were originally targeted for Q1 into Q2 or Q3.

Speaker Change: Our focus remains on delivering a streamlined experience on our site that is intuitive and inspiring.

Steve Lawrence: Our focus remains on delivering a streamlined experience on our site that is intuitive and inspiring. A lot of the work completed in Q1 was around streamlining and improving the internal search functionality of our site. At the same time, we've also been pushing hard to grow our endless aisle offering with an expanded assortment online supported through drop ship. You can see it reflected in improvements in both conversion rate and average order value during the quarter. Our 3rd growth pillar is to improve the productivity and drive the business within our existing stores. As we discussed during our last call, we have multiple initiatives targeted at achieving this goal. A major tenfold of this strategy is delivering new brands and products that inspire customers to shop more frequently at Academy.

Speaker Change: Our goal is to maintain maximum flexibility as we navigate a rapidly changing landscape.

Speaker Change: A lot of the work completed in Q1 was around streamlining and improving the internal search functionality of our site.

Dan Aldridge: Participating on today's call are Steve Lawrence, Chief Executive Officer, and Karl Ford, Chief Financial Officer. As a reminder, today's earnings release and the comments made by management during this call include 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 our most recent 10-K and 10-Q filings.

Speaker Change: Our second growth pillar is to drive accelerated growth in our ecommerce business.

Speaker Change: At the same time, we've also been pushing hard to grow our endless aisle offering with an expanded assortment online supported for drop ship.

Speaker Change: We also made progress here during the quarter with Academy Dot Com posted a 10% sales increase and growing in penetration by roughly 100 basis points to over 10%.

Speaker Change: The team has made in making solid headway on both fronts and you can see it reflected improvements in both conversion rate and average order value during the quarter.

Speaker Change: Our focus remains on delivering a streamlined experience on our site that is intuitive and inspiring.

Speaker Change: Our third growth pillar is to improve the productivity and drive the business within our existing stores.

Speaker Change: A lot of the work completed in Q1 was around streamlining and improving the internal search functionality of our site.

Speaker Change: As we discussed during our last call we have multiple initiatives targeted to achieving this goal.

Dan Aldridge: The company undertakes no obligation to revise any forward-looking standards. 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.academy.com.

Speaker Change: At the same time, we've also been pushing hard to grow our endless aisle offering with an expanded assortment online supported through drop ship.

Speaker Change: A major tentpole to this strategy is delivering new brands and products that inspire our customers to shop more frequently at Academy.

Speaker Change: To this end on April 23, and launched the Jordan brand and 145 doors and online. This was the first time that we cross merchandise apparel footwear and accessories together by gender into a branded shop concept.

Speaker Change: The team is making solid headway on both fronts and you can see it reflected improvements in both conversion rate and average order value during the quarter.

Steve Lawrence: To this end, on 23 April, we launched the Jordan Brand in 145 doors and online. This was the first time that we cross-merchandised apparel, footwear, and accessories together by gender into a branded shop concept. Our Jordan Brand offering is focused on sports products at accessible price points. For example, a key shoe for us is the Luka .77, which is a game shoe that someone would actually play basketball in, but can also work as a casual shoe. It retails for $99.99. My son is a sneakerhead, and I can show you that I paid over $100 for his first pair of Jordans. While it's still early days, the initial reaction from the customers was strong, and the brand is tracking ahead of initial sales plans.

Dan Aldridge: This morning, we will review our financial results for the first quarter of fiscal 2025, provide an update on our strategic initiatives, and to discuss our outlook for the year and share our updated guidance for the full year of fiscal 2025.

Speaker Change: Our third growth pillar is to improve the productivity and drive the business within our existing stores.

Speaker Change: Jordan brand offerings focus on sports products at accessible price points.

Speaker Change: As we discussed during our last call we have multiple initiatives targeted to achieving this goal.

Dan Aldridge: After we conclude prepared remarks, there will be time for questions at the end.

Speaker Change: For example, a key issue for US is Luca <unk> 77, which is a game shoe that someone would actually play basketball in that can also work as a casual shoe and it retails for 90 999.

Speaker Change: A major tentpole to this strategy is delivering new brands and products that inspire our customers to shop more frequently at Academy.

Steve Lawrence: With that, I'll turn the call over to our CEO, Steve Lawrence. Thanks, Dan, and good morning to everyone on the call. I'd like to start by covering the subject that is top of mind for most analysts and investors. And that would be how Academy is navigating through the additional tariffs that have been levied since her last earnings call. We, like most people in our business, have been dealing with a fluid situation that's created a lot of complexity in how we forecast and manage our business on a day-to-day basis. We're fortunate that we have a strong team that has navigated through other periods of rapid change.

Speaker Change: To this end on April 23, we launched the Jordan brand and 145 doors and online. This was the first time that we cross merchandize apparel footwear and accessories together by gender into a branded shop concept.

Speaker Change: My son is a sneaker had making sure that a bit over 100 Bucks for his first pair jordans.

Speaker Change: While it's still early days the initial reaction of the customers was strong and the brand is tracking ahead of initial sales plans.

Speaker Change: Jordan brand offering is focused on sports products at accessible price points.

Speaker Change: Our goal is to expand key items, such as cleats for football season and to all doors. Later this summer and we anticipate the Jordan brand will be a top 20 brand for us by the end of the year.

Steve Lawrence: Our goal is to expand key items, such as cleats for football season, into all doors later this summer. We anticipate the Jordan Brand will be a top 20 brand for us by the end of the year. Our second tactic under this pillar is to better leverage technology to improve our customer shopping experience. Our focus this spring has been on rolling out RFID scanners to all stores, coupled with new handheld devices for our team members. We just completed the full chain rollout at the end of May. Simplistically, we're leveraging RFID chips already embedded in products from key brands such as Nike, Jordan, and adidas to update store inventories on a weekly basis. When we piloted this technology in 70 stores last year, it led to a 20% improvement in store-level inventory accuracy.

Speaker Change: For example, a key issue for US is the Lucas 77, which is a game shoe that someone would actually play basketball in it can also work as a casual shoe and at retail for 90 999.

Speaker Change: Our second tactic under this pillar is to better leverage technology to improve our customer shopping experience.

Speaker Change: My son is a sneaker had making sure that our paid over 100 Bucks reserves per jordans.

Steve Lawrence: such as the pandemic in 2020, the cotton crisis from 2010 and 2011, and the subprime mortgage crisis in 2008 and 2009. The team is drawn on these past experiences to help strategize how to effectively navigate through the current situation. Our first step was for the teams to calculate the impact on the business for the 10% reciprocal tariffs on most countries, coupled with the additional tariffs on goods coming out of China, which are currently set at 30%, along with the steel and aluminum tariffs. Once this work was completed, we moved to our second step, which was to work with our factories and suppliers to look for tariff offsets by reducing costs on product.

Speaker Change: Our focus as spring has been on rolling out RFID scanners to all stores, coupled with new handheld devices for our team members and we just completed the full chain rollout at the end of May.

Speaker Change: While it's still early days the initial reaction of the customers was strong and the brand is tracking ahead of initial sales plans.

Speaker Change: Our goal is to expand key items, such as cleats for football season into all doors. Later this summer and we anticipate the Jordan brand will be a top 20 brand for us by the end of the year.

Speaker Change: Simplistically, we're leveraging RFID chips already embedded in products from key brands, such as Nike, Jordan and Adidas update store inventories on a weekly basis.

Speaker Change: Our second tactic under this pillar is to better leverage technology to improve our customer shopping experience.

Speaker Change: We piloted this technology in 70 stores last year, it led to a 20% improvement in store level inventory accuracy.

Speaker Change: Our focus this spring has been on rolling out RFID scanners to all stores, coupled with new handheld devices for our team members and we just completed a full chain rollout at the end of May.

Speaker Change: Rolling this technology to all stores will help improve our in stocks, which ultimately will lead to increases in conversion.

Steve Lawrence: Rolling this technology to all stores will help improve our in-stocks, which ultimately will lead to increases in conversion. As we move through 2025, we expect to add more brands to our regular RFID count, such as Levi's, Under Armour, Columbia, Brooks, and Puma. Looking into next year, our goal is to embed RFID tags in most of our private label products, along with working with other national brand suppliers to follow suit where it makes sense. The other new piece of new technologies are handheld devices which have POS functionality integrated into them. With this new capability, if a customer cannot find something in a store and we own it somewhere in the chain, we can save the sale and get the customer what they need, either by shipping it to their home or to their closest store for a BOPUS pickup, whichever is most convenient for them.

Speaker Change: As we move through 2025, we expect to add more brands for a regular RFID counts such as Levi's under armour, Columbia Brooks and Puma.

Speaker Change: Simplistically, we're leveraging RFID chips already embedded in product from key brands, such as Nike, Jordan and Adidas update store inventories on a weekly basis.

Steve Lawrence: Using this approach, we worked with each supplier in a partnership fashion to help share some of the burden of the incremental tariffs. From there, we moved to step three, which was to work on strategies to help minimize the impact that these additional costs will have on our customers and our internal P&L. Team has taken the following key actions on this. First, we paused shipments out of China during the period that the tariff rate was set at 145%. Once the rate was lowered, we selectively resumed shipments.

Speaker Change: Looking into next year, our goal is to embed RFID tags in most of our private label products, along with working with other national brand suppliers to policy, where it makes sense.

Speaker Change: So we piloted this technology in 70 stores last year, it led to a 20% improvement in store level inventory accuracy.

Speaker Change: Rolling this technology to all stores will help improve our in stocks, which ultimately will lead to increases in conversion.

Speaker Change: The other new piece of new technologies, our handheld devices, which have Pos functionality integrated into them.

Speaker Change: As we move through 2025, we expect to add more brands for a regular RFID count such as Levi's under armour, Columbia Brooks and Puma.

Speaker Change: With this new capability is a customer cannot find something in a store and we owned it somewhere in the chain, we can save the sale and get the customer what they need by shipping it to their home or to their closest store for both his pickup whichever is most convenient for them.

Steve Lawrence: Second. We've accelerated our focus on reducing our exposure to products made in China. As we covered in our last earnings call, we've been on a journey over the past couple of years to reduce our direct exposure to China imports, and we're pleased that at the start of the year, our exposure products sourced from our private brands from China accounted for roughly 9% of our business, which was down from pre-pandemic levels. We have further accelerated our efforts here, and we'll reduce this number down to roughly 6% by the end of the year, which is our original goal of 8%.

Speaker Change: As stores have started to use this new technology, we're seeing there save the sale revenue increased 900% on average per store.

Steve Lawrence: As stores have started to use this new technology, we're seeing their save the sale revenue increase 900% on average per store. The last thing I'll cover on our long-range plan is the work we've done to improve our marketing reach and effectiveness. In late April, we launched a new campaign, which was created by our new agency of record, McGarrah Jesse, and features our new tagline, "Fun Can't Lose." We believe that this new campaign is authentically Academy and is resonating well with our customers. It serves a dual purpose in both driving top-of-mind brand awareness while also reinforcing our strong value messaging. In addition, we're increasing our advertising spend by 10 basis points this year to 2.7% of sales to support this campaign, while also spotlighting our Jordan Brand introduction and our new store rollouts.

Speaker Change: The other new piece of new technologies, our handheld devices, which have Pos functionality integrated into them.

Speaker Change: The last thing I'll cover on our long range plan is the work we've done to improve our marketing reach and effectiveness and.

Speaker Change: With this new capability, it's a customer cannot find something in a store and we owned it somewhere in the chain, we can save the sale and get the customer what they need by shipping it to their home or their closest store for both his pickup whichever is most convenient for them.

Speaker Change: In late April and launched a new campaign, which was created by a new agency of record <unk> chassis and features our new tagline fund can't lose.

Speaker Change: We believe this new campaign is authentically Academy and is resonating well with our customers.

Steve Lawrence: We've also leveraged our strong balance sheet to pull in domestic inventory on Evergreen products at pre-tariff prices. You can see this pull forward of receipts in our inventory at the end of the quarter, which is up 6.5% on a units per store basis. Next, we utilize our pricing optimization engine to look for opportunities to offset cost increases through strategic pricing and promotional adjustments. As we worked through these changes, our focus was to ensure that the impact on the customer was minimal while also protecting our position as the value leader in our space. We know that when discretionary spending is under pressure, customers look to maximize their spending power by seeking out value, and we plan to capitalize on this and capture market share by continuing to provide the best value in the sports and outdoors.

Speaker Change: <unk> stores have started to use this new technology, we're seeing there save the sale revenue increased 900% on average per store.

Speaker Change: It serves a dual purpose and both driving top of mind brand awareness, while also reinforcing our strong value messaging.

Speaker Change: The last thing I'll cover on our long range plan is the work we've done to improve our marketing reach and effectiveness and.

Speaker Change: In addition, we're increasing our advertising spend by 10 basis points. This year to two 7% of sales support. This campaign will also spotlighting, our Jordan brand introduction and our new store Rollouts.

Speaker Change: In late April and launched a new campaign, which was created by a new agency of record <unk> chassis and features our new tagline fun camp moves.

Speaker Change: Another key focus on the marketing front is to leverage our new loyalty program to drive value for the consumer.

Speaker Change: We believe this new campaign is authentically Academy and is resonating well with our customers.

Steve Lawrence: Another key focus on the marketing front is to leverage our new loyalty program to drive value for the consumer. We're planning to add an additional 2 million customers to myAcademy Rewards in 2025, which should take us to over 13 million members by year-end. Growing our loyalty program membership will drive growth for us both now and in the long term. Loyal, more engaged customers tend to shop Academy 2 to 3 times more in a year than an average customer, and spend 4 to 5 times more on an annual basis. While we're excited about the progress we're making against our long-term initiatives and the momentum we're starting to see in the business, we're also sober about the fragile state of the US consumer and the inflationary pressures we could face as the year progresses.

Speaker Change: We're planning to add an additional 2 million customers to my Academy rewards in 2025, which should take us over 13 million members by year end.

Speaker Change: It serves a dual purpose and both driving top of mind brand awareness, while also reinforcing our strong value messaging.

Speaker Change: During our loyalty program membership will drive growth for us both now and in the long term.

Speaker Change: Oil more engaged customers tend to shop Academy, two to three times more than a year and an average customer and spend four to five times more on an annual basis.

Steve Lawrence: Finally, each of our branded partners has a different exposure to tariffs based off their unique supply chain. We continue to work with each of them on a case-by-case basis to develop offset strategies. At this point, we believe we have effectively mitigated the cost of tariffs at the current levels while minimizing the impact on our customers. Moving forward, the team will remain nimble and make adjustments if or when the situation changes. Before moving off of the tariff topic, I think it is important to point out that as the situation has evolved, we continue to see an increase in foot traffic from customers to household incomes over $100,000 annually.

Speaker Change: Another key focus on the marketing front is to leverage our new loyalty program to drive value for the consumer.

Speaker Change: While we're excited about the progress, we're making against our long term initiatives and the momentum we're starting to see in the business. We're also sober about the fragile state of the U S consumer and the inflationary pressures that could face as the year progresses.

Speaker Change: We're planning to add an additional 2 million customers to my Academy rewards in 2025, which should take us over 13 million members by year end.

Speaker Change: During our loyalty program membership will drive growth for us both now and in the long term.

Speaker Change: As noted in our Q1 fiscal 2025 earnings release, we're widening our comp sales guidance to account for an expanded range of outcomes.

Steve Lawrence: As noted in our Q1 fiscal 2025 earnings release, we're widening our comp sales guidance to account for an expanded range of outcomes. Our balance sheet is strong, and we're confident that we have the right team and strategy in place to effectively navigate through the short-term disruptions for the consumer. On a longer-term basis, we believe our long-range planning strategies and investments are just starting to bear fruit and have a long runway ahead of them, and that the future is bright for Academy. I'll now turn the call over to Carl to review the financials in more detail and provide an update on our guidance. Carl?

Speaker Change: Oil more engaged customers tend to shop Academy, two to three times more than a year and an average customer and spend four to five times more on an annual basis.

Speaker Change: Our balance sheet is strong and we're confident we have the right team and strategy in place to effectively navigate through the short term disruptions for the consumer.

Speaker Change: But we're excited about the progress, we're making against our long term initiatives and the momentum we're starting to see in the business. We're also sober about the fragile state of the U S consumer and the inflationary pressures, we could face as the year progresses.

Speaker Change: On a longer term basis, we believe our long range planning strategies and investments are just starting to bear fruit and have a long runway ahead of them and that the future is bright for academy.

Steve Lawrence: This is a pattern we've seen emerge over the past couple of quarters, and it is starting to accelerate. We would expect this trend to continue as customers look to stretch their discretionary spending power by seeking out value. Karl will provide more details on tariff impacts and how we think it could influence our customer spending patterns, along with our updated guidance for the remainder of the year, later in the talk.

Speaker Change: As noted in our Q1 fiscal 2025 earnings release, we're widening our comp sales guidance to account for an expanded range of outcomes.

Speaker Change: I'll now turn the call over to Carl to review the financials in more detail provide an update on our guidance Karl.

Carl: Thanks, Steve net sales for the first quarter were 135 billion with a comp decline of three 7% as Steve mentioned, we saw sequential comp improvement throughout the quarter, culminating in a positive comp in April and our E. Commerce channel posted a positive 10 comp for the quarter.

Speaker Change: Our balance sheet is strong and we're confident we have the right team and strategy in place to effectively navigate through the short term disruptions for the consumer.

Carl Ford: Thanks, Steve. Net sales for Q1 were $1.35 billion with a comp decline of 3.7%. As Steve mentioned, we saw sequential comp improvement throughout the quarter, culminating in a positive comp in April, and our e-commerce channel posted a positive 10 comp for the quarter. Breaking down the comp, transactions were down 5.2% and ticket was up 1.5%. Looking at performance by category, footwear and apparel continued to perform well, and we saw strength in kids apparel, women's athletic apparel, and men's athletic footwear. Athletic footwear posted a positive 4.5% comp, led by brands like Nike and Brooks. To be clear, Jordan Brand products were only in stores for the last 2 weeks of the quarter, but it beat our internal plan in April and in May.

Steve Lawrence: Shifting to the first quarter fiscal 2025 results, as you saw from our earnings release earlier this morning, sales came in at $1.35 billion, which was down 0.9% to last year and translated into a negative 3.7% comp. As we shared on our last call, February sales were soft, primarily driven by cold temperatures and winter storms across our footprint. We saw the business sequentially improve in March, and we exited the quarter with momentum, with April finishing with a positive comp. But we're in a peril where the two strongest businesses for the quarter, running roughly flat for last year, the sports and recreation closely following.

Carl: Breaking down the comp transactions were down five 2% and ticket was up one 5%.

Speaker Change: I'll now turn the call over to Carl to review the financials in more detail provide an update on our guidance Karl.

Carl: Thanks, Steve net sales for the first quarter were $135 billion with a comp decline of three 7% as Steve mentioned, we saw sequential comp improvement throughout the quarter, culminating in a positive comp in April and our E. Commerce channel posted a positive 10 comp for the quarter.

Speaker Change: Looking at performance by category footwear, and apparel continue to perform well and we saw strength in kids apparel women's athletic apparel and men's athletic footwear.

Speaker Change: <unk> footwear posted a positive four 5% comp led by brands like Nike and Brooks to be clear Jordan brand products were only in stores for the last two weeks of the quarter, but it beat our internal plan in April and in May.

Steve Lawrence: All three of these businesses start to accelerate once we got past the cold weather in February with warmer temperatures in March and April. Thank you is a key sales driver across all three areas. And as you'd expect, was one of our best performing brands in the quarter. Outdoor was down most single digits, primarily driven by softer stealth and ammo. Fishing, Firearms, Coolers, and Drink were all posted solid increases for the quarter. We would attribute the momentum we're starting to build in the business to the solid progress we've been making against our long-term objectives and goals.

Carl: Breaking down the comp transactions were down five 2% and ticket was up one 5%.

Speaker Change: Looking at performance by category footwear, and apparel continue to perform well and we saw strength in kids apparel women's athletic apparel and men's athletic footwear.

Speaker Change: Additionally, over 25% of Jordan brand sales have come from our E Commerce channel.

Carl Ford: Additionally, over 25% of Jordan Brand sales have come from our e-commerce channel, which you will recall only has a 10% penetration for the total business. Within our sports and recreation category, outdoor cooking and baseball posted positive comps as spring started to materialize across the country, especially in our footprint. While we saw encouraging results in baseball, total team sports underperformed, primarily coming from softness in basketball and a slower start to the quarter in golf. In outdoors, fishing and firearms performed well, while ammunition, paddle, and power marine remained challenged. We continue to de-emphasize the marine categories in lieu of more productive additions like Jordan Brand. In ammunition, we continue to see industry pressure on AUR, so we're implementing some new tactics like bulk promos to try and offset this impact.

Speaker Change: You will recall only has a 10% penetration for the total business.

Speaker Change: Within our sports and recreation category outdoor cooking and baseball posted positive comps at spring started to materialize across the country, especially in our footprint.

Steve Lawrence: I'd now like to highlight some of the progress we've made on our strategic initiatives during the first quarter. New Store Expansion remains our largest long-term growth engine. We're pleased to see the 2022 and 2023 vintages, which are both now fully in the comp phase, have positive low single-digit comp growth in Q1. As we discussed in our last call, we're applying the learnings from each vintage to subsequent openings to continually improve our site selection process. You can see the impact of this in our 2024 vintage, which, while not currently in the comp base, is off to a great start.

Speaker Change: While we saw encouraging results in baseball total team sports underperformed, primarily coming from softness in basketball and a slower start to the quarter and golf.

Speaker Change: Additionally, over 25% of Jordan brand sales have come from our E Commerce channel.

Speaker Change: Which you will recall only has a 10% penetration for the total business.

Speaker Change: And outdoors fishing in firearms performed well, while ammunition paddle and power Marine remained challenged.

Speaker Change: Within our sports and recreation category outdoor cooking and baseball posted positive comps as spring started to materialize across the country, especially in our footprint.

Speaker Change: We continue to deemphasize the marine categories in lieu of more productive additions like Jordan brands.

Speaker Change: While we saw encouraging results in baseball total team sports underperformed, primarily coming from softness in basketball and a slower start to the quarter and golf.

Speaker Change: And ammunition, we continue to see industry pressure on AUR. So we're implementing some new tactics like bolt promos to try and offset this impact.

Steve Lawrence: We expect them to be strong contributors moving forward. We remain on track to open up 20 to 25 new stores this year and open five locations in Q1, including our first locations in Pennsylvania and Maryland. Our store count at the end of the first quarter was 303, and we now include 21 states in our footprint.

Speaker Change: These three categories outdoor is performing very well and in fact would have posted a positive comp.

Speaker Change: And outdoors fishing in firearms performed well, while ammunition paddle and power Marine remained challenged.

Carl Ford: Absent these three categories, outdoor is performing very well and, in fact, would have posted a positive comp. Gross margin came in at 34%, 60 basis points higher than last year, driven by 40 basis points of merch margin expansion and 10 basis points of favorable shrink. The merch margin was impacted by a greater mix of soft goods. The improvement in shrink is a testament to the work our store and supply chain teams have done to improve inventory accuracy, including the rollout of RFID. SG&A came in at 28.8% of sales for Q1, an increase of $36 million or 290 basis points. The increase was primarily driven by growth initiatives for new store support, higher labor in key markets to support the Jordan Brand launch and Nike assortment expansion, and investments in digital and supply chain technologies.

Speaker Change: Gross margin came in at 34% 60 basis points higher than last year, driven by 40 basis points of merch margin expansion and 10 basis points of favorable shrink.

Speaker Change: We continue to deemphasize the marine categories in lieu of more productive additions like Jordan brand.

Speaker Change: And ammunition, we continue to see industry pressure on AUR. So we're implementing some new tactics like bolt promos to try and offset this impact.

Speaker Change: The merch margin was impacted by a greater mix of soft goods and the improvement in shrink is a testament to the work our store and supply chain teams have done to improve inventory accuracy, including the rollout of RFID.

Speaker Change: Offset these three categories outdoor is performing very well and in fact would have posted a positive comp.

Speaker Change: Gross margin came in at 34% 60 basis points higher than last year, driven by 40 basis points of merch margin expansion and 10 basis points of favorable shrink.

Speaker Change: SG&A came in at 28, 8% of sales for the first quarter, an increase of $36 million or 290 basis points.

Steve Lawrence: Our second growth pillar is to drive accelerated growth in our e-commerce. We also made progress here during the quarter with academy.com posting a 10% sales increase and growing in penetration by roughly 100 basis points to over 10%. Our focus remains on delivering a streamlined experience on our site that is intuitive and inspiring. A lot of the work completed in Q1 was around streamlining and improving the internal search functionality of our site. At the same time, we've also been pushing hard to grow our endless aisle offering with an expanded assortment online supported for dropshipping. The team is making solid headway on both fronts, and you can see it reflected in improvements in both conversion rate and average order value during the quarter.

Speaker Change: The increase was primarily driven by growth initiatives, our new store support higher labor and key markets to support the Jordan brand launch at Nike assortment expansion and investments in digital and supply chain technologies 150 basis points were attributable to new store growth and 60 basis points.

Speaker Change: SG&A came in at 28, 8% of sales for the first quarter, an increase of $36 million or 290 basis points.

Carl Ford: 150 basis points were attributable to new store growth, and 60 basis points went to support Jordan Brand's launch and the Nike expansion. To put that into perspective, we invested over $7 million into the launch and expansion that included resetting half of the stores in our fleet. 20 basis points was related to technology investments in digital and supply chain. As mentioned on the last call, these strategic growth investments would most heavily impact Q1, and the associated revenue would not be realized until the following quarters. We expect SG&A to normalize as we head through the year and the investments are completed. Operating income was $69.3 million and diluted EPS was $0.68. Adjusted EPS was $0.76.

Speaker Change: Went to support Jordan brand's launch and the Nike expansion.

Speaker Change: To put that into perspective, we invested over $7 million into the launch and expansion that included resetting half of the stores in our fleet.

Speaker Change: The increase was primarily driven by growth initiatives, our new store support higher labor and key markets to support the Jordan brand launch and Nike assortment expansion and investments in digital and supply chain technologies 150 basis points were attributable to new store growth and 60 basis points.

Speaker Change: 20 basis points was related to technology investments and digital and supply chain.

Steve Lawrence: Our third growth pillar is to improve the productivity and drive the business within our existing stores. As we discussed during our last call, we have multiple initiatives targeted at achieving this goal. A major tentpole to this strategy is delivering new brands and products that inspire customers to shop more frequently at academies.

Speaker Change: As mentioned on our last call. These strategic growth investments would most heavily impact the first quarter and the associated revenue would not be realized until the following quarters.

Speaker Change: Went to support Jordan brand's launch and the Nike expansion.

Speaker Change: To put that into perspective, we invested over $7 million into the launch and expansion that included resetting half of the stores in our fleet.

Speaker Change: We expect SG&A to normalize as we had through the year and the investments are completed.

Steve Lawrence: To this end, on April 23rd, we launched the Jordan brand in 145 doors and online.

Speaker Change: Operating income was $69 3 million and diluted EPS was <unk> 68.

Speaker Change: 20 basis points was related to technology investments and digital and supply chain.

Steve Lawrence: This was the first time that we crossed merchandised apparel, footwear, and accessories together by gender into a branded shop concept. Our Jordan Brand offering is focused on sports products at an accessible price. For example, a key shoe for us is a Luka 77, which is a game shoe that someone would actually play basketball in. It can also work as a casual shoe, and it retails for $99.99. My son has a sneaker head and I can assure you that I've paid over $100 for his first pair of Jordans. While it's still early days, the initial reaction of the customers was strong, and the brand is tracking ahead of initial sales.

Speaker Change: Adjusted EPS was <unk> 76.

Speaker Change: As mentioned on the last call. These strategic growth investments with most heavily impact the first quarter and the associated revenue would not be realized until the following quarters.

Speaker Change: Our inventory per store is elevated with units per store up six 5% and dollars per store up seven 8%.

Carl Ford: Our inventory per store is elevated, with units per store up 6.5% and dollars per store up 7.8%. This is an example of using the strength of our balance sheet to invest in the business. We have purposefully made decisions to manage inventory as tightly as possible and have taken the following strategic actions to mitigate tariff impacts and ensure we have value-priced products for our customers. 1. We pulled forward $85 million in domestic inventory receipts in Q1 at pre-tariff prices. The majority of this is evergreen products such as bicycles or free weights, which have no seasonal or obsolescence risk. 2. Partnered with factories and overseas suppliers to reduce cost. 3. Reduced over $120 million in inventory receipts to maintain maximum flexibility to respond to evolving landscapes.

Carl Ford: Our inventory per store is elevated, with units per store up 6.5% and dollars per store up 7.8%. This is an example of using the strength of our balance sheet to invest in the business. We have purposefully made decisions to manage inventory as tightly as possible and have taken the following strategic actions to mitigate tariff impacts and ensure we have value-priced products for our customers. One, we pulled forward $85 million in domestic inventory receipts in Q1 at pre-tariff prices. The majority of this is evergreen products such as bicycles or free weights, which have no seasonal or obsolescence risk. Two, partnered with factories and overseas suppliers to reduce cost. Three, reduced over $120 million in inventory receipts to maintain maximum flexibility to respond to evolving landscapes.

Speaker Change: We expect SG&A to normalize as we head through the year and the investments are completed.

Speaker Change: This is an example of using the strength of our balance sheet to invest in the business. We have purposefully made decisions to manage inventory as tightly as possible and have taken the following strategic actions to mitigate tariff impacts and ensure we have value priced products for our customers.

Speaker Change: Operating income was $69 3 million and diluted EPS was <unk> 68.

Speaker Change: Adjusted EPS was <unk> 76.

Speaker Change: Our inventory per store is elevated with units per store up six 5% and dollars per store up seven 8%.

Steve Lawrence: Our goal is to expand key items such as cleats for football season into all doors later this summer, and we anticipate the Jordan brand will be a top 20 brand for us by the end of the year.

Speaker Change: One.

Speaker Change: We pulled forward $85 million in domestic inventory receipts in the first quarter at pre tariff prices.

Speaker Change: The majority of this is evergreen products, such as bicycles or free weights, which have no seasonal or obsolescence risk.

Steve Lawrence: Our second tactic under this pillar is to better leverage technology to improve our customer shopping experience. Our focus this spring has been on rolling out RFID scanners to all stores, coupled with new handheld devices for our team members. We just completed the full chain rollout at the end of May. Simplistically, we're leveraging RFID chips already embedded in products from key brands such as Nike, Jordan, and Adidas to update store inventories on a weekly basis. When we piloted this technology in 70 stores last year, it led to a 20% improvement in store-level inventory accuracy. Rolling this technology to all stores will help improve our in-stocks, which ultimately will lead to increases in conversion.

Speaker Change: <unk> partnered with factories in overseas suppliers to reduce cost.

Speaker Change: <unk> reduced over $120 million in inventory receipts to maintain maximum flexibility to respond to evolving landscapes.

Speaker Change: One.

Speaker Change: We pulled forward $85 million in domestic inventory receipts in the first quarter at pre tariff prices.

Speaker Change: <unk> shifted product out of China to alternative countries of origin, like Cambodia and Bangladesh.

Speaker Change: The majority of this is evergreen products, such as bicycles or free weights, which have no seasonal or obsolescence risk.

Carl Ford: Four, shifted product out of China to alternative countries of origin like Cambodia and Bangladesh. Finally, reduced fiscal year 2025 capital expenditures and expenses. These actions have positioned us well to support the spring selling season. We will continue to evaluate the environment and take further actions as deemed necessary. We anticipate our inventory levels will normalize as we move through the year. We ended the quarter with $285 million in cash and maintained strong liquidity with an untapped $1 billion revolver. Despite the challenged sales environment, we have been able to deliver approximately 8% in free cash flow as a rate of sales, which allows us to make continued investments and return capital to shareholders. In fact, we returned over $100 million of our free cash flow to investors in Q1.

Speaker Change: And finally reduced fiscal year 2025 capital expenditures and expenses.

Speaker Change: <unk> partnered with factories in overseas suppliers to reduce cost.

Speaker Change: These actions have positioned us well to support the spring selling season, and we will continue to evaluate the environment and take further actions as deemed necessary.

Speaker Change: <unk> reduced over $120 million in inventory receipts to maintain maximum flexibility to respond to evolving landscapes.

Steve Lawrence: As we move through 2025, we expect to add more brands to our regular RFID count, such as Levi's, Under Armour, Columbia, Brooks, and Puma. Looking into next year, our goal is to embed RFID tags in most of our private label products, along with working with other national brand suppliers to follow suit where it makes The other new piece of new technologies are handheld devices which have POS functionality integrated into them. With this new capability, if a customer cannot find something in a store and we own it somewhere in the chain, we can save the sale and get the customer what they need by shipping it to their home or to their closest store for a boatless pickup, whichever is most convenient for them.

Speaker Change: We anticipate our inventory levels will normalize as we move through the year.

Speaker Change: Four shifted product out of China to alternative countries of origin, like Cambodia, and Bangladesh and.

Speaker Change: We ended the quarter with $285 million in cash and maintain strong liquidity with an untapped $1 billion revolver.

Speaker Change: And finally reduced fiscal year 2025 capital expenditures and expenses.

Speaker Change: These actions have positioned us well to support the spring selling season, and we will continue to evaluate the environment and take further actions as deemed necessary.

Speaker Change: Despite the challenged sales environment, we have been able to deliver approximately 8% and free cash flow as a rate of sales, which allows us to make continued investments and return capital to shareholders.

Speaker Change: We anticipate our inventory levels will normalize as we move through the year.

Speaker Change: In fact, we returned over $100 million of our free cash flow to investors in the first quarter.

Speaker Change: We ended the quarter with $285 million in cash and maintain strong liquidity with an untapped $1 billion revolver.

Steve Lawrence: As stores have started to use this new technology, we're seeing their state-of-the-sale revenue increase 900% on average per store.

Speaker Change: Turning to capital allocation, we remain committed to balanced and disciplined deployment.

Carl Ford: Turning to capital allocation, we remain committed to balanced and disciplined deployment. During the quarter, we repurchased approximately 99 million in our shares under our current repurchase program, paid approximately $8.7 million in dividends, and invested over $50 million in strategic initiatives, including store openings, RFID rollouts, and omni-channel infrastructure. We have the flexibility to adjust our capital allocation priorities during periods of disruption and uncertainty, allowing us to either redirect cash to other strategic initiatives or retain it for financial stability. The cost of materials and construction in our 2025 new store plan are already accounted for. As Steve mentioned, we have slowed the pace of signing new store leases for 2026. This allows us to better assess the environment and any impacts on construction costs.

Steve Lawrence: The last thing I'll cover on our long-range plan is the work we've done to improve our marketing reach and effectiveness. In late April, we launched a new campaign, which was created by our new agency of record, Garagesi, which features our new tagline, Fun Can't Lose. We believe that this new campaign is authentically Academy, and it's resonating well with our customers.

Speaker Change: During the quarter, we repurchased approximately $99 million in our shares under our current repurchase program.

Speaker Change: Paid approximately $8 $7 million in dividends.

Speaker Change: And invested over $50 million in strategic initiatives, including store openings, RFID Rollouts and Omnichannel infrastructure.

Speaker Change: In fact, we returned over $100 million of our free cash flow to investors in the first quarter.

Unknown Executive: Associates.

Speaker Change: Turning to capital allocation, we remain committed to balanced and disciplined deployment.

Steve Lawrence: Thank you. In addition, we're increasing our advertising spend by 10 basis points this year to 2.7% of sales to support this campaign, while also spotlighting our Jordan brand introduction and our new store rollout. Another key focus on the marketing front is to leverage our new loyalty program to drive value for the consumer. We're planning to add an additional 2 million customers to MyAcademy Rewards in 2025, which should take us to over 13 million members by year-end. Program Membership will drive growth for us both now and in the long term. Oil, more engaged customers tend to shop Academy two to three times more in a year than an average customer and spend four to five times more on an annual Well, we're excited about the progress we're making against our long-term initiatives and the momentum we're starting to see in the business.

Speaker Change: We have the flexibility to adjust our capital allocation priorities during periods of disruption and uncertainty, allowing us to either redirect cash to other strategic initiatives or retain it for financial stability.

Speaker Change: During the quarter, we repurchased approximately $99 million in our shares under our current repurchase program.

Speaker Change: Paid approximately $8 $7 million in dividends.

Speaker Change: The cost of materials and construction in our 2025, New store plan are already accounted for and as Steve mentioned, we have slowed the pace of signing new store leases for 2026.

Speaker Change: And invested over $50 million in strategic initiatives, including store openings, RFID Rollouts and Omnichannel infrastructure.

Speaker Change: This allows us to better assess the environment and any impacts on construction costs.

Speaker Change: Moving to guidance, we are updating our guidance range to account for multiple tariff scenarios as we move forward in this uncertain demand environment.

Carl Ford: Moving to guidance, we are updating our guidance range to account for multiple tariff scenarios as we move forward in this uncertain demand environment. Our base case, which is reflected by the midpoint of the range, is that tariffs remain at current levels for the remainder of the year. The high end of the range assumes reciprocal tariffs at 10% for all other countries, including China. The low end of the range assumes China reverts to 145% and the original reciprocal tariffs announced on 2 April remain. We now expect sales in the range of $5.97 billion to $6.26 billion and comp sales of -4% to +1%. We expect gross margin to be unchanged and earnings per share of $5.10 to $5.90.

Speaker Change: The cost of materials and construction in our 2025, New store plan are already accounted for and as Steve mentioned, we have slowed the pace of signing new store leases for 2026.

Speaker Change: Our base case, which is reflected by the midpoint of the range is it tariffs remain at current levels for the remainder of the year.

Steve Lawrence: We're also sober about the fragile state of the U.S. consumer and the inflationary pressures it could face as the year progresses. As noted in our Q1 Fiscal 2025 earnings release, we're widening our comp sales guidance to account for an expanded range of outcomes. Our balance sheet is strong, and we're confident that we have the right team and strategy in place to effectively navigate through the short-term disruptions for the consumer. On a longer-term basis, we believe our long-range planning strategies and investments are just starting to bear fruit and have a long runway ahead of them, and that the future is bright for Academy.

Speaker Change: High end of the range assumes reciprocal tariffs at 10% for all other countries, including China.

Speaker Change: This allows us to better assess the environment and any impacts on construction costs.

Speaker Change: Moving to guidance, we are updating our guidance range to account for multiple tariff scenarios as we move forward in this uncertain demand environment.

Speaker Change: The low end of the range assumes China reverts to 145% and the original reciprocal tariffs announced on April 2nd remain.

Speaker Change: We now expect sales in the range of $5 97 billion to $6 two 6 billion.

Speaker Change: Our base case, which is reflected by the midpoint of the range is it tariffs remain at current levels for the remainder of the year.

Speaker Change: Comp sales of negative 4% to positive 1%.

Speaker Change: The high end of the range assumes reciprocal tariffs at 10% for all other countries, including China.

Karl Ford: I'll now turn the call over to Carl to review the financials in more detail and provide an update on our guidance. Carl? Thanks, Steve. Net sales for the first quarter were $1.35 billion, with a comp decline of 3.7%. As Steve mentioned, we saw sequential comp improvement throughout the quarter, culminating in a positive comp in April, and our e-commerce channel posted a positive 10 comp for the quarter. Breaking down the comp, transactions were down 5.2% and ticket was up 1.5%. Looking at performance by category, footwear and apparel continued to perform well, and we saw strength in kids' apparel, women's athletic apparel, and men's athletic footwear.

Speaker Change: We expect gross margin to be unchanged in earnings per share of $5 10.

Speaker Change: The low end of the range assumes China reverts to 145% and the original reciprocal tariffs announced on April 2nd remain.

Speaker Change: To $5 90.

Speaker Change: We expect adjusted earnings per share to be in the range of $5 45.

Carl Ford: We expect adjusted earnings per share to be in the range of $5.45 to $6.25. We are also partnering with our national branded vendors to help mitigate costs for the consumer. In the case of price increases from these vendors, we will remain a steward of value for our customers and look to maintain our best-in-market pricing on key items while using our price optimization tool to offset these initiatives. To close, I also wanted to touch on the customer shift opportunity Steve mentioned. We continue to see an acceleration in trade down from the upper-income customer tiers as they discover the value offered by Academy. During Q1, we saw growth in store traffic by customers earning over $100,000 increase by double digits.

Speaker Change: We now expect sales in the range of $5 $97 billion to $6 two 6 billion.

Speaker Change: To $6 25.

Speaker Change: We are also partnering with our national branded vendors to help mitigate cost for the consumer.

Speaker Change: And comp sales of negative 4%.

Speaker Change: Positive 1%.

Steve Lawrence: In the case of price increases from these vendors, we will remain a steward of value for our customers and look to maintain our best in market pricing on key items, while using our price optimization tool to offset these initiatives to close I also wanted to touch on the customer shift opportunity Steve mentioned.

Speaker Change: We expect gross margin to be unchanged in earnings per share of $5 10.

Speaker Change: To $5 90.

Speaker Change: We expect adjusted earnings per share to be in the range of $5 45.

Speaker Change: To $6 25.

Karl Ford: Athletic footwear posted a positive 4.5% comp led by brands like Nike and Brooks. To be clear, Jordan brand products were only in stores for the last two weeks of the quarter, but it beat our internal plan in April and in May. Additionally, over 25% of Jordan brand sales have come from our e-commerce channel, which you will recall only has a 10% penetration for the total business. Within our sports and recreation category, outdoor cooking and baseball posted positive comps as spring started to materialize across the country, especially in our footprint. While we saw encouraging results in baseball, total team sports underperformed, primarily coming from softness in basketball and a slower start to the quarter in golf.

Speaker Change: We are also partnering with our national branded vendors to help mitigate cost for the consumer.

Speaker Change: We continue to see an acceleration in trade down from the upper income customer tiers as they discover the value offered by Academy.

Speaker Change: In the case of price increases from these vendors, we will remain a steward of value for our customers and look to maintain our best in market pricing on key items, while using our price optimization tool to offset these initiatives to close I also wanted to touch on the customer shift opportunity Steve mentioned.

Speaker Change: During the first quarter, we saw growth in store traffic by customers, earning over 100000 increased by double digits. We believe these trends will continue to grow as new customers discover the value offered by Academy.

Carl Ford: We believe these trends will continue to grow as new customers discover the value offered by Academy.

Speaker Change: Thank you with that the company will now open the call up for your questions to ask a question. Please press star one to allow for as many questions as possible. We ask that you each keep to one question and one follow up.

Speaker Change: We continue to see an acceleration in trade down from the upper income customer tiers as they discover the value offered by Academy.

Operator: Thank you. With that, the company will now open the call up for your questions. To ask your question, please press star one. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. We'll pause a moment to wait for the queue to fill up. At the end of the Q&A session, CEO Steve Lawrence will make closing comments. Our first question comes from the line of Jonathan Matuszewski with Jefferies. Please proceed with your question.

Speaker Change: We will pause a moment to wait for the queue to fill up.

Speaker Change: At the end of the Q&A session CEO, Steve Lawrence.

Speaker Change: Closing comments.

Karl Ford: In outdoors, fishing and firearms performed well, while ammunition, paddle, and power marine remained challenged. We continue to de-emphasize the marine categories in lieu of more productive additions like Jordan Brand. In ammunition, we continue to see industry pressure on AUR, so we're implementing some new tactics like bulk promos to try and offset this impact. Absent these three categories, Outdoor is performing very well and in fact would have posted a positive comment. Gross Margin came in at 34%, 60 basis points higher than last year, driven by 40 basis points of merged margin expansion and 10 basis points of favorable shrink.

Speaker Change: Our first question comes from the line of Jonathan Matuszewski with Jefferies. Please proceed with your question.

Jonathan Matuszewski: Great. Good morning, and thanks for taking my questions. The first one was on the higher income consumer and nice to hear about the ongoing traffic flows from that cohort I think you started to observe that dynamic maybe two quarters ago. So curious if you could comment on the retention of those higher income consumers that you.

Jonathan Matuszewski: Great. Good morning, and thanks for taking my questions. The first one was on the higher income consumer. Nice to hear about the ongoing traffic flows from that cohort. I think you started to observe that dynamic maybe two quarters ago. Curious if you could comment on the retention of those higher income consumers that you initially maybe welcomed, you know, six-plus months ago and anything you're seeing from a repeat shopping behavior perspective with that cohort. That's my first question. Thanks.

Speaker Change: I'll pause a moment to wait for the queue to fill up.

Speaker Change: At the end of the Q&A session CEO, Steve Lawrence.

Speaker Change: My closing comments.

Speaker Change: Our first question comes from the line of Jonathan Matuszewski with Jefferies. Please proceed with your question.

Jonathan Matuszewski: Initially may be welcomed six plus months ago, and anything youre seeing from a repeat shopping behavior perspective with that cohort. That's my first question. Thanks.

Karl: Yes, Jonathan Thanks for the question Karl Yeah, we.

Carl Ford: Yeah. Jonathan, thanks for the question. It's Carl. Yeah, we started to see a customer demographic shift beginning in Q3 2024. We were really focused on quintiles 4 and 5, so customers above $100,000. It accelerated into Q4. It accelerated even more into Q1. From a retention fit, it's a mix of new customers

Speaker Change: Starting to see.

Speaker Change: <unk> demographic shift beginning of the third quarter of 2024, and we were really focused on <unk> four and five so customers above 100000, and accelerated into Q4 and it accelerated even more into Q1.

Karl Ford: The merch margin was impacted by a greater mix of soft goods, and the improvement and shrink is a testament to the work our store and supply chain teams have done to improve inventory accuracy, including the rollout of RFID. SG&A came in at 28.8% of sales for the first quarter, an increase of $36 million, or 290 basis points. The increase was primarily driven by growth initiatives for new store support, higher labor in key markets to support the Jordan brand launch and Nike assortment expansion, and investments in digital and supply chain technology. 150 basis points were attributable to new store growth and 60 basis points went to support Jordan Brand's launch and the Nike expansion.

Speaker Change: Initially may be welcomed six plus months ago, and anything youre seeing from a repeat shopping behavior perspective with that cohort. That's my first question. Thanks.

Speaker Change: From a retention.

Speaker Change: Our mix of new customers as.

Speaker Change: As well as customers to just make more money that are shopping more frequently with us and from a retention standpoint, they're sticking with us they're shopping across the store. They are not just there for national brands are experiencing our private brand value as well.

Speaker Change: Yes, Jonathan Thanks for the question Karl Yeah, we.

Steve Lawrence: As well as customers that just make more money that are shopping more frequently with us. From a retention standpoint, they're sticking with us. They're shopping across the store. They're not just there for national brands. They're experiencing our private brand value as well.

Carl Ford: As well as customers that just make more money that are shopping more frequently with us. From a retention standpoint, they're sticking with us. They're shopping across the store. They're not just there for national brands. They're experiencing our private brand value as well.

Speaker Change: Starting to see.

Speaker Change: Customer demographic shifts beginning of the third quarter of 2024, and we were really focused on <unk> four and five so customers above 100000 and accelerated into Q4.

Speaker Change: That's helpful. Thanks for the color there and then nice to hear about the positive comp in April I think you mentioned, the Jordan outperformance versus internal expectations continued into May curious if that implies the first couple of weeks of <unk> is also showing that positive comp.

Jonathan Matuszewski: That's helpful. Thanks for the color there. Nice to hear about the positive comp in April. I think you mentioned the Jordan outperformance versus internal expectations continued into May. Curious if that implies the first couple of weeks of Q2 is also showing that positive comp. Thanks for any color.

Speaker Change: It accelerated even more into Q1.

Speaker Change: From a retention.

Speaker Change: A mix of new customers as.

Karl Ford: To put that into perspective, we invested over $7 million into the launch and expansion that included resetting half of the stores in our fleet. 20 Basis Points was related to technology investments in digital and supply chain. As mentioned on the last call, these strategic growth investments would most heavily impact the first quarter, and the associated revenue would not be realized until the following quarters. We expect SG&A to normalize as we head through the year and the investments are completed. Operating income was $69.3 million and diluted EPS was $0.68. Adjusted EPS was 76 cents. Our inventory per store is elevated with units per store up 6.5% and dollars per store up 7.8%.

Speaker Change: Thanks for any color.

Speaker Change: Yes, So Jordan continues to perform very well relative to our expectations. We're very excited about it.

Steve Lawrence: Yeah. Jordan continues to perform very well relative to our expectations. We're very excited about it. In terms of May, you know, I would tell you we've seen a pretty choppy shopping environment during the first half of this year. We talked a lot about that in our Q1 results. May right now ran down low single digits. It's trending better than Q1 did, but it is down slightly. That being said, we're still very optimistic about Q2 being a very strong quarter for us. You know, the customers have shown a predilection to come out and shop during the big moments on the calendar. We've got some of those big moments still ahead of us. This week is Father's Day week.

Speaker Change: That's helpful. Thanks for the color there and then nice to hear about the positive comp in April I think you mentioned that Jordan to outperformance versus internal expectations continued into May curious if that implies the first couple of weeks of <unk> is also showing that positive comp.

Speaker Change: In terms of Mei.

Speaker Change: I would tell you we've seen a pretty choppy shopping environment. During the first half of this year, we talked a lot about that in our Q1 results may right now brand down low single digits, it's trending better than first quarter did but it is down slightly.

Speaker Change: Thanks for any color.

Speaker Change: That being said, we're still very optimistic about Q1, or I'm, sorry, Q2, being a very strong quarter for us.

Speaker Change: Yes, So Jordan continues to perform very well relative to our expectations. We're very excited about it.

Speaker Change: The customer has shown a predilection to come out and shop during the big moments on the calendar. We got some of those big moment still ahead of US. This week his father's day week, it's the biggest week of the year for us prior to Black Friday so.

Speaker Change: In terms of Mei.

Steve Lawrence: It's the biggest week of the year for us prior to Black Friday. A lot riding on this weekend. Obviously, we've got back to school kicking off at the tail end of July. Still very optimistic about the quarter, although, you know, the customers being very choppy in terms of their shopping patterns right now.

Speaker Change: A lot riding on this weekend and then obviously, we got back to school kicking off at the tail end of July so still very optimistic about the quarter, although the customers.

Speaker Change: That being said, we're still very optimistic about Q1, or I'm, sorry, Q2, being a very strong quarter for us.

Karl Ford: This is an example of using the strength of our balance sheet to invest in the business. We have purposefully made decisions to manage inventory as tightly as possible and have taken the following strategic actions to mitigate tariff impacts and ensure we have value priced products for our customers.

Speaker Change: Being very choppy in terms of their shopping patterns right now.

Speaker Change: Thanks, and best of luck.

Speaker Change: The customer has shown a predilection to come out and shop during the big moments on the calendar. We got some of those big moment still ahead of US This week as father's day week, it's the biggest week of the year for us prior to Black Friday so.

Speaker Change: Thank you.

Jonathan Matuszewski: Thanks, and best of luck.

Speaker Change: Thank you. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.

Steve Lawrence: Thank you.

Operator: Thank you. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.

Speaker Change: Good morning. Thank you for having me this is Pedro Gil on for Simeon maybe just to follow up on that last question. That's my first question. If you could double click on May and maybe talk a little bit about the health of the consumer.

Speaker Change: A lot riding on this weekend and then obviously, we've got back to school kicking off at the tail end of July so still very optimistic about the quarter although customers.

Pedro Gil: Hi. Good morning. Thank you for having me. This is Pedro Gil for Simeon. Maybe just to follow up on that last question as my first question, if you could double-click on May and maybe talk a little bit about the health of the consumer. If you could sort of parse out the gains through the quarter, the impact of weather, the Easter shift, and then, you know, what the development is in May as far as the category mix and launch of-

Karl Ford: 1. We pulled forward $85 million in domestic inventory receipts in the first quarter at pre-tariff prices. The majority of this is evergreen products such as bicycles or freeweights which have no seasonal or obsolescence risk. Partners With Factories and Overseas Suppliers to Reduce Cost. 3. Reduced over $120 million in inventory receipts to maintain maximum flexibility to respond to evolving landscapes. 4. Shifted product out of China to alternative countries of origin like Cambodia and Bangladesh, and finally, reduced fiscal year 2025 capital expenditures and expenses. These actions have positioned us well to support the spring selling season, and we will continue to evaluate the environment and take further actions as deemed necessary.

Speaker Change: Being very choppy in terms of their shopping patterns right now.

Speaker Change: Thanks, and best of luck.

Speaker Change: Could sort of parse out the cadence through the quarter.

Speaker Change: Thank you.

Speaker Change: The impact of weather or the Easter shift and then.

Speaker Change: Thank you. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.

Speaker Change: What.

Speaker Change: What the development is in may as far as the category mix.

Speaker Change: Sure Yeah. So.

Speaker Change: In terms of the quarter I'll talk about first quarter and I think we covered this in prepared remarks.

Steve Lawrence: Yeah. In terms of the quarter, I'll talk about Q1, and I think we covered this in prepared remarks. You know, the early part of the quarter was down in February. We think that was a lot of storm impact, cold weather moving across the geography. March improved, was still negative. April inflected to positive, as we said on the call. I think the things that drove April to positive were the Jordan launch, the Nike expansion, and somewhat the Easter shift out of March into April. You know, I think as we got into the early part of Q2 with the month of May, you know, you have Mother's Day. We're not a big Mother's Day store. Business started off a little soft.

Speaker Change: The early part of the quarter was down in February we think that was a lot of storm impact cold weather moving across the geography.

Speaker Change: Could sort of parse out the cadence through the quarter.

Speaker Change: March improved was still negative but April inflected to positive as we said on the call I think the things that drove April to positive were.

Speaker Change: The impact of weather or the Easter shift and then.

Speaker Change: What.

Speaker Change: What the development is in may as far as the category mix.

Speaker Change: Jordan launch the Nike expansion and somewhat the Easter shift out of March into April.

Speaker Change: Sure Yeah. So.

Speaker Change: In terms of the quarter I'll talk about first quarter and I think we covered this in the prepared remarks.

Speaker Change: I think as we got into the early part of Q2 with the month of May you have mother's day, we're not a big mother's day store.

Karl Ford: We anticipate our inventory levels will normalize as we move through the year. We ended the quarter with $285 million in cash and maintained strong liquidity with an untapped $1 billion revolver. Despite the challenged sales environment, we have been able to deliver approximately 8% in free cash flow as a rate of sales, which allows us to make continued investments and return capital to shareholders. In fact, we returned over $100 million of our free cash flow to investors in the first quarter. Turning to capital allocation, we remain committed to balanced and disciplined deployment. During the quarter, we repurchased approximately $99 million in our shares under our current repurchase program.

Speaker Change: The early part of the quarter was down in February we think that was a lot of storm impact cold weather moving across the geography.

Speaker Change: Started off a little soft.

Speaker Change: March improved was still negative but April inflected to positive as we said on the call I think the things that drove April to positive were.

Speaker Change: I think there is still some cooler temperatures were dealing with in there, although I wouldn't ascribe too much whether I think its just choppiness from a consumer perspective, I think the consumers under pressure right now.

Steve Lawrence: You know, I think there was still some cooler temperatures we're dealing with in there, although I wouldn't ascribe too much to weather. I think it's just choppiness from a consumer perspective. I think the consumer's under pressure right now. I think that they are being very careful when and how they shop and spend their money. I think they're waiting to see kinda how this whole tariff situation, trade war situation plays out. I think they're gravitating towards value, which is why we're excited to start seeing some trade down in those higher income consumers. You know, that's something we've been waiting to see for a long time, and we really started seeing happen last year and saw it accelerate into, you know, this quarter, Q1 and into Q2.

Speaker Change: Jordan launch the Nike expansion and somewhat the Easter shift out of March into April.

Speaker Change: I think that they are being very careful when and how.

Speaker Change: They shop and spend their money and I think they are waiting to see kind of how this whole tariff situation trade war situation plays out and I think they're gravitating towards value, which is why we're excited to start seeing some trade down and those higher income consumers. You know that's something we've been waiting to see for a long time, and we really started seeing happened last year and saw it accelerate into.

Speaker Change: I think as we got into the early part of Q2 with the month of May you have mother's day, we're not a big mother's day store.

Speaker Change: Started off a little soft.

Speaker Change: I think theres still some cooler temperatures were dealing with in there, although I wouldn't describe too much whether I think its just choppiness from a consumer perspective, I think the consumers under pressure right now.

Speaker Change: This quarter Q1 and into Q2.

Speaker Change: I think that they are being very careful when and how.

Speaker Change: And our expectation is that will continue as we move forward as we go throughout the remainder of Q2. We've got obviously this is the first quarter, we're going to be fully leveraging the benefit of Jordan and Nike expansion.

Steve Lawrence: Our expectation is that that will continue as we move forward. As we go throughout the remainder of Q2, you know, obviously, this is the first quarter we're gonna be fully leveraging the benefit of Jordan and the Nike expansion. The rollout that we had on the new technology we talked about, whether it's the handheld devices for our store associates or RFID, those were not really fully rolled out until, honestly, last week. They're now in all stores, and we really should start seeing some benefit from that in all stores moving forward. We're excited about the momentum we have in our dot-com business. We're excited about the momentum we're seeing in our new stores. There's a lot of positive kinda green shoots beneath the surface.

Karl Ford: Paid approximately $8.7 million in dividends. Invested over $50 million in strategic initiatives, including store openings, RFID rollouts, and omni-channel infrastructure. We have the flexibility to adjust our capital allocation priorities during periods of disruption and uncertainty, allowing us to either redirect cash to other strategic initiatives or retain it for financial stability. The cost of materials and construction in our 2025 new store plan are already accounted for, and as Steve mentioned, we have slowed the pace of signing new store leases for 2026. This allows us to better assess the environment and any impacts on construction costs.

Speaker Change: The rollout that we had on the new technology, we talked about whether its the handheld devices for our store associates or RFID those were not really fully rolled out until honestly last week. So theyre now in all stores and we really should start seeing some benefit from that in all stores moving forward. We're excited about the momentum we have in our dot com business. We're excited about the momentum we're seeing in our new.

Speaker Change: This quarter Q1 and into Q2.

Speaker Change: Stores, so theres a lot of positive kind of green shoots beneath the surface.

Speaker Change: Thats being counteract that a little bit by choppy consumer.

Steve Lawrence: That's being counteracted a little bit by choppy consumer, shopping patterns, but we believe we've got a lot of opportunities still ahead of us in the quarter.

Speaker Change: <unk> patterns, but we believe we've got a lot of opportunities still ahead of us in the quarter.

Speaker Change: Got it that's helpful and my follow up is on your gross margin guidance, which you kept our gross margin rate guidance kept unchanged.

Pedro Gil: Got it. That's helpful. My follow-up is on your gross margin guidance, which you kept gross margin rate guidance unchanged. I'm a little surprised in the low-end scenario for guidance where you're factoring in the full 145% tariff on China and the full reciprocal tariff, as was initially announced on 2 April on all the other countries, yet you're keeping the gross margin rate assumption unchanged at 34.0%, relative to what you gave on 20 March. Could you elaborate a little bit your thinking there, and what are the puts and takes?

Speaker Change: Little surprised in the low end scenario for guidance when you're factoring in.

Karl Ford: Moving to guidance, we are updating our guidance range to account for multiple tariff scenarios as we move forward in this uncertain demand environment. Our base case, which is reflected by the midpoint of the range, is that tariffs remain at current levels for the remainder of the year. The high end of the range assumes reciprocal tariffs at 10% for all other countries, including China. The low end of the range assumes China reverts to 145%, and the original reciprocal tariffs announced on April 2nd remain. We now expect sales in the range of $5.97 billion to $6.26 billion and comp sales of negative 4% to positive 1%.

Speaker Change: 445% tariff on China and to full reciprocal tariff.

Speaker Change: Stores, so theres a lot of positive kind of green shoots beneath the surface.

Speaker Change: It was initially announced on April 2nd on all the other countries yet keeping the gross margin rate assumption unchanged.

Speaker Change: That's being counteracted, a little bit by choppy consumer.

Speaker Change: Shopping patterns, but we believe we've got a lot of opportunities still ahead of us in the quarter.

Speaker Change: Got it that's helpful and my follow up is on your gross margin guidance, which you kept our gross margin rate guidance kept unchanged.

Speaker Change: 34 <unk> percent.

Speaker Change: Relative to what you gave on March 20th.

Speaker Change: Could you elaborate a little bit your thinking there and what are the puts and takes.

Speaker Change: Little surprised in the low end scenario for guidance or you're factoring in.

Speaker Change: Absolutely, yes, so last year, we were at a 33, 9% gross margin rate guidance for this year is 34 $34 five.

Steve Lawrence: Absolutely. Yeah. Last year, we were at a 33.9% gross margin rate. Guidance for this year is 34 on the low, 34.5. Q1 was up 60 basis points. The bulk of it was merch margin. We did quote shrink, but there were some other things around the edges. I think the risk for tariffs, I'm gonna start really broadly, is on how much money consumers have to spend. There's so much discussion about the pressure being put on gross margin rates. The pressure that the American consumer is gonna feel is on how much money they have to spend on things. We've pulled forward inventory.

Carl Ford: Absolutely. Yeah. Last year, we were at a 33.9% gross margin rate. Guidance for this year is 34 on the low, 34.5. Q1 was up 60 basis points. The bulk of it was merch margin. We did quote shrink, but there were some other things around the edges. I think the risk for tariffs, I'm gonna start really broadly, is on how much money consumers have to spend. There's so much discussion about the pressure being put on gross margin rates. The pressure that the American consumer is gonna feel is on how much money they have to spend on things. We've pulled forward inventory.

Speaker Change: 445% tariff on China in the full reciprocal Paris.

Speaker Change: It was initially announced on April 2nd on all the other countries yet you're keeping the gross margin rate assumption unchanged.

Speaker Change: Q1 was up 60 basis points. The bulk of that was merch margin, we did quote shrink, but there were some other things around the edges.

Speaker Change: 34%.

Speaker Change: I think the risk.

Speaker Change: Relative to what you gave on March 20th.

Speaker Change: For tariffs I'm going to start really broadly is is on how much money consumers have to spend so there's.

Karl Ford: We expect gross margin to be unchanged and earnings per share of $5.10 to $5.90. We expect adjusted earnings per share to be in the range of $5.45 to $6.25. We are also partnering with our national branded vendors to help mitigate costs for the consumer. In the case of price increases from these vendors, we will remain a steward of value for our customers and look to maintain our best in market pricing on key items while using our price optimization tool to offset these initiatives.

Speaker Change: Could you elaborate a little bit your thinking there and what are the puts and takes.

Speaker Change: Absolutely, yes, so last year, we were at a 33, 9% gross margin rate guidance for this year is 34 $34 five.

Speaker Change: There's been so much pressure, there's so much discussion about the pressure being put on gross margin rates.

Speaker Change: The pressure that the American consumer is going to feel is on how much money. They have to spend on things. So we've pulled forward inventory I feel really proud of the work that the teams did in <unk>.

Speaker Change: Q1 was up 60 basis points. The bulk of it was merch margin, we did quote shrink, but there were some other things around the edges.

Steve Lawrence: I feel really proud of the work that the teams did, in the thinking that, you know, in July and August, we don't know what these expirations are gonna do, what happens on the back of those expirations. We've shifted out of China. We talked a little bit about our path that we started many years ago on that. It's obviously accelerating with what's going on this year. We feel confident in our gross margin guidance given the tactics that the merchants are really employing, primarily related to inventory positioning.

Carl Ford: I feel really proud of the work that the teams did, in the thinking that, you know, in July and August, we don't know what these expirations are gonna do, what happens on the back of those expirations. We've shifted out of China. We talked a little bit about our path that we started many years ago on that. It's obviously accelerating with what's going on this year. We feel confident in our gross margin guidance given the tactics that the merchants are really employing, primarily related to inventory positioning.

Speaker Change: I think the risk.

Speaker Change: Thinking that in July and August we don't know what these explorations are gonna do what happens on the back of those explorations, we have shifted out of China. We thought we talked a little bit about our path that we started many years ago on that it's obviously accelerating with what's going on this year and.

Speaker Change: For tariffs on we'll start really broadly is is on how much money consumers have to spend so.

Speaker Change: There's been so much pressure, there's so much discussion about the pressure being put on gross margin rates.

Speaker Change: The pressure is the American consumer is going to feel is on how much money. They have to spend on things. So we've pulled forward inventory I feel really proud of the work that the teams did in the in the <unk>.

Karl Ford: To close, I also wanted to touch on the customer shift opportunity Steve mentioned. We continue to see an acceleration in trade down from the upper income customer tiers as they discover the value offered by Academy. During the first quarter, we saw growth in store traffic by customers earning over $100,000, increased by double digits. We believe these trends will continue to grow as new customers discover the value offered by Academy. Thank you.

Speaker Change: And we feel confident in our gross margin guidance given the the tactics that the merchants are really employing primarily related to inventory positioning.

Speaker Change: Thinking that in July and August we don't know what these explorations are going to do what happens on the back of those explorations.

Speaker Change: Okay got it.

Speaker Change: Wouldn't we be seeing a perhaps a lower gross margin rate if we win.

Pedro Gil: Okay. Got it. Wouldn't we be seeing perhaps a lower gross margin rate if we went to China 145 and all the other countries at higher tariff rate than that?

Speaker Change: Shifting out of China, we thought we talked a little bit about our path that we started many years ago on that it's obviously accelerating with what's going on this year and we feel confident in our gross margin guidance given the the tactics that the merchants are really employing primarily related to inventory positioning.

Speaker Change: At $1 45, and all the other countries.

Speaker Change: Okay great.

Speaker Change: Yes, yes.

Speaker Change: If China goes back to 145%.

Carl Ford: Yes. Yeah. I mean, if China goes back to 145%, a lot of things in America are gonna change. We pulled forward inventory, and we've shifted out of it, and that's our focus area. We're pulling inventory out of China, and we feel good about the inventory that we're carrying at those pre-tariff pricing.

Operator: With that, the company will now open the call up for your questions. To ask your question, please press star 1 to allow for as many questions as possible. We ask that you each keep to one question and one follow-up. We'll pause a moment to wait for the queue to fill up.

Speaker Change: A lot of things in America are going to change.

Speaker Change: And so we've pulled forward inventory and we've shifted out of it and.

Speaker Change: Okay got it.

Speaker Change: Wouldn't we be seeing a perhaps a lower gross margin rate. If we went to $1 45 and all the other countries.

Speaker Change: That's our focus area, we're pulling inventory out of.

Speaker Change: Out of China, and we feel good about the inventory that we're carrying at those pre tariff pricing, but to be clear that gross margin guidance that we gave.

Operator: At the end of the Q&A session, CEO Steve Lawrence will make closing comments.

Speaker Change: Yes right.

Speaker Change: Yes, yes.

Speaker Change: If China goes back to a 145%.

Steve Lawrence: To be clear, the gross margin guidance that we gave anticipates we gave you more of a sales-based scenario based off a different tariff exposure. At the high end, it assumes, you know, world goes to 10%. Base case that we're operating the business off of assumes kinda steady state from where we're at today. The low end of the guidance scenario anticipates the pauses that were put on reciprocal tariffs end, and things go back to kind of what they originally planned at for both China and the rest of the world. That being said, in all those scenarios, you know, we built in different offsets in terms of pricing and inventory management to deal with the gross margin impact.

Jonathan Matsitsky: Our first question comes from the line of Jonathan Matsitsky with Jefferies. Please proceed with your question. Great. Good morning, and thanks for taking my questions. The first one was on the higher-income consumer. Nice to hear about the ongoing traffic flows from that cohort.

Speaker Change: Anticipates, we gave you more of a sales base scenario based off of different tariff exposure. So at the high end it assumes.

Speaker Change: A lot of things in America are going to change.

Speaker Change: And so we've pulled forward inventory and we've shifted out of it and that's our focus area, we're pulling inventory out of <unk>.

Speaker Change: World goes to 10%.

Speaker Change: This case that we're operating the business off of assumes kind of steady state from where we're at today.

Speaker Change: The low end of the guidance scenario anticipates, the the pauses that we've put on a reciprocal tariffs.

Karl Ford: I think you started to observe that dynamic maybe two quarters ago, so curious if you could comment on the retention of those higher-income consumers that you initially maybe welcomed six-plus months ago, and anything you're seeing from a repeat shopping behavior perspective with that cohort. That's my first question. Thanks.

Speaker Change: Out of China.

Speaker Change: And we feel good about the inventory that we're carrying at those pre tariff pricing, but to be clear that gross margin guidance that we gave.

Speaker Change: And and things go back.

Speaker Change: Two kind of what they originally planned to add for both China and the rest of the world that being said in all those scenarios we built in.

Speaker Change: Anticipates, we gave you more of a sales pace scenario based off of different tariff exposure. So at the high end assumes world goes to 10%.

Speaker Change: Different offsets in terms of pricing and inventory management to a deal with the gross margin impact, but I think for Carl's trying to highlight is that we see the impact probably be more on the sales side and how the customer would react.

Karl Ford: Yeah, Jonathan, thanks for the question.

Speaker Change: Base case that were operating in the business off of assumes kind of steady state from where we're at today.

Karl Ford: It's Carl. Yeah, we started to see a customer demographic shift beginning of the third quarter of 2024, and we were really focused on quintiles 4 and 5, so customers above 100,000. It accelerated into Q4, and it accelerated even more into Q1. From a retention, it's a mix of new customers, as well as customers that just make more money that are shopping more frequently with us. And from a retention standpoint, they're sticking with us. They're shopping across the store. They're not just there for national brands. They're experiencing our private brand value as well. That's helpful. Thanks for the color there.

Steve Lawrence: I think what Carl's trying to highlight is that we see the impact probably be more on the sales side and how the customer would react to, you know, more of an inflationary environment if those tariffs go back into place. I have to believe candidly that if those reciprocal tariffs go back into place at 145%, you know, prices are going up virtually on everything. Our goal would be to maintain our value positioning in the space and make sure we've got the best value on products, but we would expect that there would be some price increases there that would offset, you know, margin erosion.

Speaker Change: The low end of the guidance scenario anticipates, the the pauses that we've put on reciprocal tariffs.

Speaker Change: More of an inflationary environment, if those tariffs go back into place because.

Speaker Change: And things go back.

Speaker Change: I have to believe candidly that if those reciprocal tariffs go back into place at 145% now prices are going up virtually everything and our goal would be to maintain our value positioning in the space and make sure. We've got the best value on products, but we would expect that there would be some price increases there that would offset margin erosion.

Speaker Change: Two kind of what they originally planned AD for both China and the rest of the world that being said in all those scenarios we built in.

Speaker Change: Offsets in terms of pricing and inventory management to a deal with the gross margin impact, but I think Carl is trying to highlight is that we see the impact probably be more on the sales side and how the customer would react.

Speaker Change: Thank you. Our next question comes from the line of Christopher <unk> with Jpmorgan. Please proceed with your question.

Speaker Change: More of an inflationary environment as those tariffs go back into place because.

Operator: Thank you. Our next question comes from the line of Christopher Horvers with JP Morgan. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Christopher Horvers with J.P. Morgan. Please proceed with your question.

Speaker Change: I have to believe candidly that if those reciprocal tariffs go back into place at 145% now prices are going up virtually on everything and our goal would be to maintain our value positioning in the space and make sure. We've got the best value on products, but we would expect that there will be some price increases there that would offset margin erosion.

Speaker Change: Hi, This is Joey Wasserman answer Chris. Our first question is about the April benefit from Easter when Youre looking at March and April together and just how are you looking at the business given the March to May with the Easter trend combined with your weather commentary and on top of that was there any lift from Nike built into that.

Jolie Wasserman: Hi, this is Jolie Wasserman on for Chris. Our first question is about the April benefit from Easter when you're looking at March and April together. Just how are you looking at the business given the March to May with the Easter trend combined with your weather commentary? On top of that, was there any lift from Nike built into that in terms of how you're thinking about it?

Karl Ford: And then nice to hear about the positive comp in April. I think you mentioned the Jordan outperformance versus internal expectations continued into May. Curious if that implies the first couple of weeks of 2Q is also showing that positive comp. Thanks for any color. Yeah, so Jordan continues to perform very well relative to our expectations. We're very excited about it. In terms of May, you know, I would tell you we've seen a pretty choppy shopping environment during the first half of this year. We talked a lot about that in our Q1 results. May right now ran down low single digits.

Speaker Change: Thank you. Our next question comes from the line of Christopher <unk> with Jpmorgan. Please proceed with your question.

Speaker Change: In terms of how youre thinking about it.

Speaker Change: Yes. So if you look at Marple combined I think it was down like low low single digits, but.

Steve Lawrence: Yeah. If you look at apparel, combined, I think it was down like low, low single digits. In aggregate, we think that, you know, what we really saw at Benefit April was the combination of Easter shift. I would also lean more into the Nike Jordan launch. That was a big boost for us. Traditionally, after we get out of the holiday, we kinda hit a lull, and we really didn't hit that lull this year because we had the Nike and Nike expansion, and Jordan was positioned right after Easter, and I think that kind of helped us avoid that lull. We would attribute a lot of the comp positive in April to that launch. You know, as we move in, I kinda highlighted this earlier.

Speaker Change: In aggregate, we think that what we really saw benefit April was the combination of the Easter shift, but I would also lean more into the Nike Jordan launch that was a big boost for US traditionally after we get out of the holiday, we kind of hit a lull and we really didn't hit that all this year, because we had the Nike and Nike expansion in Jordan was positioned right after Easter and I think that kind of.

Karl Ford: It's trending better than first quarter did, but it is down slightly. That being said, we're still very optimistic about Q1, or I'm sorry, Q2 being a very strong quarter for us. You know, customers showing a predilection to come out and shop during the big moments on the calendar. We've got some of those big moments still ahead of us this week. It's Father's Day week. It's the biggest week of the year for us prior to Black Friday. So a lot riding on this weekend. And then obviously we've got back to school kicking off at the tail end of July.

Speaker Change: In terms of how youre thinking about it.

Speaker Change: Yes. So if you look at Marple combined I think it was down like low low single digits, but in App.

Speaker Change: Helped us avoid that low so we would attribute a lot of the comp positive in April to that launch.

Speaker Change: As we move in I kind of highlighted this earlier, we only really got the benefit of that.

Speaker Change: Aggregate, we think that what we really saw benefit April was the combination of the Easter shift, but I would also lean more into the Nike Jordan launch that was a big boost for US traditionally after we get out of the holiday, we kind of hit a lull and we really didn't hit that all this year, because we had the Nike and Nike expansion in Jordan was positioned right after Easter and I think that kind of helped.

Steve Lawrence: We only really got the benefit of that for about 2 weeks in April. If you go back to March, one of the things that also probably impacted us a little bit in March was our floors were pretty disrupted. You know, we were resetting the Nike shops, clearing out room for Jordan. We did this on a rolling basis across almost 150 stores on a week by week basis, but the stores were pretty kinda disrupted during this time period. So I think that probably had a little bit more impact on March than we initially anticipated, but we're pleased with the rebound that we saw coming out of that in April.

Speaker Change: For about two weeks in April and if you go back to March.

Speaker Change: One of the things that also probably impacted us a little bit in March was our floors are pretty disrupted.

Karl Ford: So still very optimistic about the quarter, although, you know, the customers being very choppy in terms of their shopping patterns right now. Thanks and best of luck. Thank you.

Speaker Change: We were resetting the Nike shops clearing out room for Jordan we.

Speaker Change: We did this on a rolling basis across almost 150 stores on a week by week basis with the stores, we're pretty kind of disrupted during this time period.

Speaker Change: Avoid that low so we would attribute a lot of the comp positive in April to that launch.

Speaker Change: As we move in I kind of highlighted this earlier, we only really got the benefit of that.

Speaker Change: And so I think that probably had a little bit more impact on March than we initially anticipated, but we're pleased with the rebound that we saw coming out of that in April.

Simeon Gutman: Our next question comes from the line of Simeon Gutman with Morgan Stanley. Hi, good morning. Thank you for having me.

Speaker Change: For about two weeks in April and if you go back to March.

Speaker Change: One of the things that also probably impacted us a little bit in March was our floors are pretty disrupted.

Speaker Change: Got it that makes sense and just moving to the promotion side I think you touched on it a little bit earlier, we noticed that too.

Pedro Gilan: This is Pedro Gilan. Maybe just to follow up on that last question, that's my first question. DoubleClick on May. Executive Parse at the King's for the quarter, the impact of weather, the Easter shift, and then... Yeah, so in terms of the quarter, I'll talk about the first quarter, and I think we covered this in prepared remarks. You know, the early part of the quarter was down in February. We think that was a lot of storm impact, cold weather moving across the geography. March improved was still negative, but April inflected the positive, as we said on the call.

Jolie Wasserman: Got it. That makes sense. Just moving to the promotion side, I think you touched on it a little bit earlier. We noticed that quarter to date promotions did take up a bit year-over-year. We saw an additional $20 off 100 coupons that also got extended, some additional e-gift card promotions, et cetera. Also, we saw several promotions like a 25% off Under Armour. Is it fair to say, like, net net that quarter to date promotions are higher year-over-year? How much of that is for clearing out for the newness of Nike and Jordan? How much of that is just related to an overall weaker Academy consumer since a lot of these incremental promotions are entire basket?

Speaker Change: We were resetting the Nike shops clearing out room for Jordan.

Speaker Change: To date promotions did tick up a bit year over year, we saw an additional $20 off a 100 coupons that also got extended some additional you gift card promotions et cetera. Also we saw several promotions like a 25% of under armour. So is it fair to say like net net that quarter to date promotions or higher.

Speaker Change: We did this on a rolling basis across almost 150 stores on a week by week basis with the stores, we're pretty kind of disrupted during this time period.

Speaker Change: And so I think that probably had a little bit more impact on March than we initially anticipated, but we're pleased with the rebound that we saw coming out of that in April.

Speaker Change: Got it that makes sense and just moving to the promotion side I think you touched on it a little bit earlier, we noticed that too.

Speaker Change: Year over year, and how much of that work.

Speaker Change: Clearing out for the newness with Nike and Jordan and how much of that is just related to an overall weaker academy consumer since a lot of these incremental promotion our entire basket and just a quick aside on promotions. We also saw the internists family water bottle was about 40% off so when exactly.

Speaker Change: Q to date promotions did tick up a bit year over year, we saw an additional $20 off 100 coupons that extended some additional gift card promotions et cetera. Also we saw several promotions like a 25% of under armour. So is it fair to say like net net debt.

Jolie Wasserman: Just a quick aside on promotions, we also saw the infamous Stanley water bottle was about 40% off. When exactly did that begin? Speaking to the broader impact of hydration promotions would be great.

Karl Ford: I think the things that drove April to positive were the Jordan launch, the Nike expansion, and somewhat the Easter shift out of March into April. You know, I think as we got into the early part of Q2 with the month of May, you know, you have Mother's Day. We're not a big Mother's Day store. Business started off a little soft. You know, I think there were still some cooler temperatures we're dealing with in there, although I wouldn't describe too much of the weather. I think it's just shockiness from a consumer perspective. I think the consumer is under pressure right now.

Speaker Change: Did that begin and speaking to the broader impact of hydration promotions that would be great.

Speaker Change: Yes, sure Theres a lot wrapped up in that question I'll do my best to answer it.

Speaker Change: We're clearing out for the newness with Nike and Jordan and how much of that is just related to an overall weaker academy consumer since a lot of these incremental promotion our entire basket and just a quick aside on promotions. We also saw that into.

Steve Lawrence: Yeah, sure. There's a lot wrapped up in that question. I'll do my best to answer it. I would characterize promotions candidly, quarter to date, as fairly consistent with last year. I mean, we're an everyday value-based retailer, and we've cited multiple times that means about 75% of what we sell is at our everyday price. We do have promotions. Those promotions generally happen around the big holiday and events on the calendar. That for us is Memorial Day, that for us is Father's Day, Fourth of July, and back to school. You will see promotional activity during those time periods. When we looked at it, I would tell you it's fairly consistent with last year.

Speaker Change: I would characterize promotions candidly quarter to date is fairly consistent with last year. I mean, we're we're an everyday value based retailer and we've cited multiple times that means about 75% of what we sell is at our everyday price.

Speaker Change: And as Stanley water bottle was about 40% off so when exactly did that begin and speaking to the broader impact of hydration promotions that would be great.

Speaker Change: We do have promotions those promotions generally happen around the big.

Speaker Change: Holiday and events on the calendar so that for US is memorial day that for US is father's day.

Karl Ford: I think that they are being very careful when and how they shop and spend their money. I think they're waiting to see kind of how this whole tariff situation, trade war situation plays out. And I think they're gravitating towards value, which is why we're excited to start seeing some trade down in those higher income consumers. You know, that's something we've been waiting to see for a long time, and we really started seeing happen last year. And so it accelerated into, you know, this quarter, Q1 and into Q2. And our expectation is that that will continue as we move forward.

Speaker Change: Yes, sure Theres a lot wrapped up in that question I'll do my best to answer it.

Speaker Change: Fourth of July and back to school, So you will see promotional activity.

Speaker Change: I would characterize promotions candidly quarter to date is fairly consistent with last year. I mean, we're an everyday value based retailer and we've cited multiple times that means about 75% of what we sell is that our everyday price.

Speaker Change: During those time periods and when we looked at it I would tell you it's fairly consistent with last year.

Speaker Change: In regards to some of the global offers I think deciding those may be more drilling either through our app or through our site. We're certainly.

Steve Lawrence: In regards to some of the global offers I think you're citing, those may be more driven either through our app or through our site. You know, we're certainly focused very hard on getting people to join our loyalty program. The reason we're focused on that is because we know that we can get somebody into our ecosystem and we can start target marketing to them and getting them to shop with us more frequently. A more loyal customer shops with us two to three times more a year. They shop and buy a bigger basket. They tend to be more profitable customers for us and spend almost 4 to 5x what a normal customer does.

Speaker Change: We do have promotions those promotions generally happen around the big.

Speaker Change: It's very hard on getting people to join our loyalty program. The reason we're focused on that is because we know that we can get somebody into our ecosystem and.

Speaker Change: Holiday and events on the calendar so that for US is memorial day that for US is father's day.

Karl Ford: As we go throughout the remainder of Q2, you know, we've got, obviously, this is the first quarter we're going to be fully leveraging the benefit of Jordan and the Nike expansion. The rollout that we had on the new technology we talked about, whether it's the handheld devices for our store associates or RFID, those were not really fully rolled out until, honestly, last week. So they're now in all stores, and we really should start seeing some benefit from that in all stores. Moving forward, we're excited about the momentum we have in our dot-com business. We're excited about the momentum we're seeing in our new stores.

Speaker Change: Fourth of July and back to school, So you will see promotional activity.

Speaker Change: And we can start target marketing to them and getting them to shop with us more frequently.

Speaker Change: During those time periods and when we looked at it I would tell you it's fairly consistent with last year.

Speaker Change: More loyal customer shops with us two to three times more year they shop.

Speaker Change: In regards to some of the global offers I think deciding those may be more drilling either through our app or through our site. We're certainly.

Speaker Change: And by a bigger basket are they tend to be more profitable customers for us and spend almost four years to five X what our normal customer does so one of the things youre seeing as test into a little bit is trying to offer some good promotions to get people to kind.

Speaker Change: It's very hard on getting people to join our loyalty program. The reason we're focused on that is because we know that we can get somebody into our ecosystem and.

Steve Lawrence: One of the things you're seeing us test into a little bit is trying to offer some good promotions to get people to kind of embed themselves into our ecosystem. That, you know, when you look at it, we're looking at the price of that one-time discount relative to the lifetime value of the customer more than pays for itself, so I wouldn't read too much into that. In regards to Stanley. You know, Stanley's been on a run for, you know, obviously a couple of years now, and I think they have been in a place, a very rarefied place where they haven't had to take any markdowns on discontinued colors. I think they're starting to have to deal with some colors that are, you know, moving out of the assortment moving forward.

Speaker Change: Kind of embed themselves into our ecosystem and that when you look at it we're looking at the price. It at one time discount relative to lifetime value of that customer more than pays for itself. So I wouldn't read too much into that in regards to Stanley.

Speaker Change: And we can start target marketing to them and getting them to shop with us more frequently.

Karl Ford: So there's a lot of positive kind of green shoots beneath the surface. That's being counteracted a little bit by choppy consumer shopping patterns, but we believe we've got a lot of opportunities still ahead of us in the quarter. Got it. That's helpful.

Speaker Change: More loyal customer shops with us two to three times more year they shop.

Speaker Change: And by a bigger basket are they tend to be more profitable customers for us and spend almost four years to five X weather normal customer does so one of the things youre seeing as test into a little bit is trying to offer some good promotions to get people to kind.

Speaker Change: Stanley has been on a run for obviously a couple of years now and I think they have been in a place very verified place where they haven't had to take any markdowns on discontinued colors.

Karl Ford: And my follow up is on your gross margin guide. R.A.T. guy... I'm a little surprised in the low-end scenario for guidance or your faculty. Full 145% Tariff on China and Full Reciprocal Tariff on China. Could you elaborate a little bit your thinking there? Absolutely. Yeah, so last year, we were at a 33.9% gross margin rate. Guidance for this year is 34 on the low, 34.5. Q1 was up 60 basis points. The bulk of it was merged margin. We did, quote, shrink, but there were some other things around the edges. I think the risk I'm going to start really broadly, is on how much money consumers have to spend.

Speaker Change: I think they're starting to have to deal with some some colors that are moving out of the assortment moving forward and so they had a map break on some discontinued colors that we along with I think everybody who carried the colors participated and.

Speaker Change: Kind of embed themselves into our ecosystem and that when you look at it we're looking at the price of that onetime discount relative to lifetime value of the customer more than pays for itself. So I wouldn't read too much into that in regards to Stanley.

Steve Lawrence: They had a MAP break on some discontinued colors that we along with, I think everybody who carried those colors participated in. That's been going on for about a week now. I think this is just part of a normal course of evolution of the business that as the business gets bigger and matures, they have to deal with the obsolete colors, and I think that's what you're seeing there.

Speaker Change: That's been going on for about a week now and I think this is just part of a normal course of evolution of the business that as the business gets bigger and matures they have to deal with the obsolete colors and I think thats, what youre seeing there.

Speaker Change: Stanley has been on a run for obviously a couple of years now and I think they have been in a place very rarefied place, where they haven't had to take any markdowns on discontinued colors.

Speaker Change: Great. Thank you.

[Analyst] (Citigroup): Great. Thank you.

Jolie Wasserman: Great. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Paul Lajoie with Citigroup. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Paul Lejuez with Citigroup. Please proceed with your question.

Speaker Change: Hey, guys. This is Kelly on for Paul. Thanks for taking my question just want to follow up on the tariff commentary so it sounds like the pull forward of tariffs.

[Analyst] (Citigroup): Hey, guys, this is Kelly on for Paul. Thanks for taking our question. Just want to follow up on the tariff commentaries. It sounds like the pull forward of tariffs is accounting for quite a bit of the mitigation this year. How do we think about the impact of tariffs as we look to F26, and then I have a follow-up? Thanks.

Kelly Crago: Hey, guys, this is Kelly on for Paul. Thanks for taking our question. Just want to follow up on the tariff commentaries. It sounds like the pull forward of tariffs is accounting for quite a bit of the mitigation this year. How do we think about the impact of tariffs as we look to F26, and then I have a follow-up? Thanks.

Speaker Change: That's been going on for about a week now and I think this is just part of the normal course of the evolution of the business that as the business gets bigger and matures they have to deal with the absolutely colors and I think thats, what youre seeing there.

Speaker Change: Is it is accounting for quite a bit of the mitigation is here. So how do we think about the impact of tariffs as we look to F. 'twenty six and then you have a follow up thanks.

Speaker Change: Great. Thank you.

Speaker Change: I'd love to answer that question I mean, this thing changes so rapidly.

Speaker Change: Thank you. Our next question comes from the line of Paul Lajoie with Citigroup. Please proceed with your question.

Steve Lawrence: You know, I'd love to answer that question. I mean, this thing changes so rapidly. I feel like we've done a really good job of getting this year mitigated and having a good handle on it. What's gonna happen between now and the end of the year, I think is anybody's guess. We're not gonna speculate on that. I think the strategies that we're focused on in terms of diversifying our sourcing base, reducing our exposure to China, and candidly making sure that we don't have too much in any one basket, I think is in any one country's basket, I think is gonna be important moving forward because you never know what the next country that's gonna be kind of focused on.

Karl Ford: So there's been so much pressure, there's so much discussion about the pressure being put on gross margin rates, the pressure that the American consumer is going to feel is on how much money they have to spend on things. So we've pulled forward inventory. I feel really proud of the work that the teams did in the thinking that, you know, in July and August, we don't know what these expirations are going to do, what happens on the back of those expirations. We've shifted out of China. We talked a little bit about our path that we started many years ago on that.

Speaker Change: I feel like we have done a really good job of getting this year.

Speaker Change: Hey, guys. This is Kelly on for Paul. Thanks for taking my question just wanted to follow up on the tariff commentary it sounds like the pull forward of tariffs.

Speaker Change: Mitigated and having a good handle on it.

Speaker Change: What's going to happen between now and the end of the year I think is anybody's guess, we're not going to speculate on that I think the strategies that we're focused on in terms of diversifying our sourcing base, reducing our exposure to China and candidly, making sure that we don't have too much in any one.

Speaker Change: Is is accounting for quite a bit of the mitigation. This year. So how do we think about the impact of tariffs and see what the F. 'twenty six.

Speaker Change: Thanks.

Speaker Change: You know I'd love to answer that question I mean, this thing changes so rapidly.

Speaker Change: Basket I think as in any one country's baskets I think theres going to be important moving forward because you never know what the next country.

Speaker Change: I feel like we've done a really good job of getting this year mitigated.

Speaker Change: That's going to be kind of focused on so I think gone are the days, where you can just say hey, we're going to get out of China and not worry about it.

Speaker Change: <unk> mitigated and having a good handle on it whats going to happen between now and the end of the year. I think is anybody's guess, we're not going to speculate on that I think the strategies that we're focused on in terms of diversifying our sourcing base, reducing our exposure to China and candidly, making sure that we don't have too much in any one.

Karl Ford: It's obviously accelerating with what's going on this year. And we feel confident in our gross margin guidance, given the tactics that the merchants are really employing, primarily related to inventory positions. Okay, got it. Wouldn't we be seeing a perhaps a lower... Yes, yeah, I mean, if China goes back to 145%, A lot of things in America are going to change, and so we've pulled forward inventory, and we've shifted out of it, and that's our focus area. We're pulling inventory out of China, and we feel good about the inventory that we're carrying at those pre-tariff pricing.

Steve Lawrence: I think gone are the days where we can just say, Hey, we're gonna get out of China, and not worry about it. You know, Vietnam had a pretty high reciprocal tariff put on them as well as other countries. I think having a diversified sourcing base is what our focus is there. We move forward, though, into next year, we really believe that leaning into who we are, our value proposition in this space and making sure we're the value leader, leaning into our growth initiatives in terms of new store growth, leaning into our dot-com opportunities we have. I think all those things make us optimistic about the back half of this year and the next year. I can't tell you what the tariff situation is gonna be next year at this time.

Speaker Change: <unk> had a pretty high reciprocal tariff put on them as well as other countries and so I think having a diversified sourcing base is.

Speaker Change: What our focus is there as we move forward, though into next year, we really believe that leaning into who we are our value proposition in this space and making sure the value leader leading into our growth initiatives in terms of new store growth learning into our dotcom opportunities. We have I think all those things make us optimistic about the back half of this year and into next year, but I can't tell.

Speaker Change: Basket I think as in any one country's basket I think is going to be important moving forward because you never know what the next country.

Speaker Change: That's going to be kind of focused on so I think gone are the days, where we can just say hey, we're going to get out of China not worried about it.

Speaker Change: <unk> had a pretty high reciprocal tariff put on them as well as other countries and so I think having a diversified sourcing base is.

Speaker Change: What the tariff situation is going to be next year at this time.

Speaker Change: Okay got it and then.

Speaker Change: Just want to follow up on that on the gross margin guidance is that the.

[Analyst] (Citigroup): Okay. Got it. Just want to follow up on the gross margin guide. Is the current guidance, I guess, is that assuming all merchandise margin improvement driven? I guess within that pricing assumptions, what sort of, you know, ticket increases are you embedding in that guide? Thank you.

Kelly Crago: Okay. Got it. Just want to follow up on the gross margin guide. Is the current guidance, I guess, is that assuming all merchandise margin improvement driven? I guess within that pricing assumptions, what sort of, you know, ticket increases are you embedding in that guide? Thank you.

Speaker Change: The current guidance I guess is that assuming all merchandise margin improvement driven and then I guess within that pricing assumptions like what.

Speaker Change: Sort of ticket.

Speaker Change: Ticket increases are you embedding in that guide thank you.

Karl Ford: But to be clear, the gross margin guidance that we gave anticipates we gave you more of a sales-based scenario based off of different tariff exposures. So at the high end, it assumes, you know, world goes to 10%. Base case that we're operating the business off of assumes kind of steady state from where we're at today. The low end of the guidance scenario anticipates the clauses that were put on reciprocal tariffs, and things go back to kind of what they originally planned at for both China and the rest of the world. That being said, in all those scenarios, you know, we built in different offsets in terms of pricing and inventory management to deal with the gross margin impact.

Speaker Change: What the tariff situation is going to be next year at this time.

Speaker Change: I think we'll probably tag team. This one I'll take I'll take the first part of that so our guidance on top line as well as all the way down the P&L kind of models and three different scenarios. The midpoint you can think of as.

Steve Lawrence: I think we'll probably tag team this one. I'll take the first part of that. Our guidance on top line as well as all the way down the P&L kind of models in three different scenarios. The midpoint you can think of as the tariffs that are in place right now on the high end, it's basically every country at 10%. Then on the low end, it's everything that was paused, reversed back in July and August upon those expiration dates. We pulled forward inventory. We feel good about carrying that inventory at pre-tariff pricing. We have no regrets associated with that inventory position. It's gonna serve us well throughout.

Carl Ford: I think we'll probably tag team this one. I'll take the first part of that. Our guidance on top line as well as all the way down the P&L kind of models in three different scenarios. The midpoint you can think of as the tariffs that are in place right now on the high end, it's basically every country at 10%. Then on the low end, it's everything that was paused, reversed back in July and August upon those expiration dates. We pulled forward inventory. We feel good about carrying that inventory at pre-tariff pricing. We have no regrets associated with that inventory position. It's gonna serve us well throughout.

Speaker Change: Okay got it and then.

Speaker Change: Just wanted to follow up on the on the gross margin guidance is is they did.

Speaker Change: The current guidance I guess is that assuming.

Speaker Change: Our merchandize margin improvement driven and then I guess within that pricing assumptions.

Speaker Change: The tariffs that are in place right now on the high end.

Speaker Change: It's basically every country at 10%.

Speaker Change: What sort of ticket.

Speaker Change: Ticket increases are you embedding in that guide thank you.

Speaker Change: And then on the low end, it's everything it was paused.

Speaker Change: Reverts back in in July and August upon those expiration dates.

Speaker Change: Pulled forward inventory, we felt good about carrying that inventory at pre tariff pricing, we have no regrets associated with that inventory position thats going to serve us well throughout.

Karl Ford: But I think what Carl's trying to highlight is that we see the impact probably more on the sales side and how the customer would react to, you know, more of an inflationary environment if those tariffs go back into place. Because, you know, I have to believe candidly that if those reciprocal tariffs go back into place at 145%, you know, prices are going up virtually on everything. And our goal would be to maintain our value positioning in the space and make sure we've got the best value on products. But we would expect that there would be some price increases there that would offset, you know, margin erosion.

Speaker Change: The tariffs that are in place right now on the high end.

Speaker Change: Yes, I'd say so embedded in this I mean, it's I don't think it's all going to translate into price increases. So first we talked about partnering with our factories. So they are bearing some of the brunt of this and where we have a national brand partner in a lot of cases, they are bearing some of the brunt of this right.

Speaker Change: It's basically every country at 10%.

Steve Lawrence: Yeah, I'd say, embedded in this, I don't think it's all going to translate into price increases. First, you know, we talked about partnering with our factories, so they're bearing some of the brunt of this. Where we have a national brand partner in a lot of cases, they're bearing some of the brunt of this, right? We're looking at how we're pricing and approaching this from a pricing offset perspective. We've got a pretty sophisticated pricing optimization engine called Revionics, and there's multiple ways to get at AUR increases to offset this. First, through promotional optimization. You know, we're looking at how long we ran promotions last year versus this year and maybe looking at shorter windows. We're looking at the depth of promotions during those windows. Another way to get at it is through markdown optimization.

Speaker Change: And then on the low end, it's everything that was paused.

Speaker Change: Reverse back in in July and August upon those expiration dates and so we've pulled forward inventory we felt good about carrying that inventory at pre tariff pricing, we have no regrets associated with that inventory position thats going to serve us well throughout.

Speaker Change:

Speaker Change: We're looking at.

Speaker Change: Yeah.

Speaker Change: How were pricing in approaching this from a pricing offset perspective, we've got a pretty sophisticated.

Unknown Executive: Thank you.

Speaker Change: Reising optimization engine called <unk>, and Theres multiple ways to get at AUR increases to offset this first through promotional optimization. We're looking at how long we ran promotions last year versus this year and maybe looking at shorter windows were looking at the depth of promotions during those windows another way to get at it is through markdown optimization.

Christopher Horvers: Our next question comes from the line of Christopher Horvers with J.P. Morgan.

Speaker Change: Yes, I'd say so embedded in this I mean, I don't think it's all going to translate into price increases so first.

Jolie Wasserman: Hi, this is Jolie Wasserman on for Chris. Our first question is about the April benefit from Easter. When you're looking at March and April together, and just how are you looking at the business given the March to May with the Easter trend combined with your weather commentary? And on top of that, was there any lift from Nike built into that, in terms of how you're thinking about it? Yeah, so if you look at MarPL combined, I think it was down like low, low single digits. But in aggregate, we think that, you know, what we really saw at Benefit April was a combination of Easter Shift, but I would also lean more into the Nike Jordan launch.

Speaker Change: <unk> talked about partnering with our factories. So they are bearing some of the brunt of this and where we have a national brand partner in a lot of cases, they are bringing some of the brunt of this right.

Speaker Change:

Speaker Change: We're looking at.

Speaker Change: We take goods and mark them down at the end of their lifecycle leveraging that as a way to maybe gain some AUR and really so overall pricing increases ticket increases is kind of the last resort.

Speaker Change: Yeah.

Speaker Change: How were pricing in approaching this from a pricing offset perspective, we've got a pretty sophisticated.

Steve Lawrence: We take goods and mark them down at the end of their life cycle, leveraging that as a way to maybe gain some AURs. Really, overall pricing increases, ticket increases is kind of the last resort. If and when we have to do that, our goal is a couple things. First, we know that there are some key price points on our private brand, national brands that really drive traffic, protect those to make sure that the customer isn't seeing price increases there. If we have to take price increases, it would be on, you know, ancillary categories that are less obvious to the consumer.

Speaker Change: <unk> optimization engine called <unk>, and Theres multiple ways to get at AUR increases to offset this first through promotional optimization. We're looking at how long we ran promotions last year versus this year and maybe looking at shorter windows were looking at the depth of promotions during those windows another way to get at it is through markdown optimization.

Speaker Change: And if and when we have to do that our goal is a couple of things first.

Speaker Change: We know that there are some key price points on our private brand national brands that really drive traffic protect those to make sure that the customers are seeing price increases there.

Karl Ford: That was a big boost for us. Traditionally, after we get out of the holiday, we kind of hit a lull. And we really didn't hit that lull this year, because we had the Nike and Nike expansion and Jordan was positioned right after Easter. And I think that kind of helped us avoid that lull. So we would attribute a lot of the comp positive in April to that launch. You know, as we move in, I kind of highlighted this earlier, we only really got the benefit of that for about two weeks in April. And if you go back to March, one of the things that also probably impacted us a little bit in March was our floors were pretty disrupted.

Speaker Change: So if we have to take price increases it would be an ancillary categories that are less obvious to the consumer I think one of the examples we used.

Speaker Change: Take goods and mark them down at the end of their lifecycle leveraging that as a way to maybe gain some AUR and really so overall pricing increases ticket increases as kind of the last resort.

Steve Lawrence: I think one of the examples we used in the last call was, you know, if a bike is kind of the razor, you know, the razor blade might be the, you know, the bike seat, the bike pump, or the bike lock. Can we take some pricing up on some of the ancillary categories around it so it's less obvious for the customer and they still can find a great price on that key item they're coming in for? You can take that same example and spread it across, you know, grills and fitness equipment and all those other big ticket things as well. I think it's a combination of ways that we're getting at mitigating this, and how we're getting at price increases with kind of the last resort being physically raising prices.

Speaker Change: In the last call was if.

Speaker Change: A bike is kind of the razor razorblade might be the.

Speaker Change: And if and when we have to do that our goal is a couple of things first.

Speaker Change: The bike seats of Ike pump or the bike locked in can we take some pricing up on some of the ancillary categories around it was obvious for the customer and they still can find the great price on that key item, they're coming in for and you can take that same example, and spread it across grills fitness equipment and all those other big ticket things as well. So I think it's a combination of ways that we're getting.

Speaker Change: So if we have to take price increases it would be an ancillary categories that are less obvious to the consumer I think one of the examples we used.

Karl Ford: You know, we were resetting the Nike shops, clearing out room for Jordan. We did this on a rolling basis across almost 150 stores on a week by week basis, but the stores were pretty kind of disrupted during this time period. And so I think that probably had a little bit more impact on March than we initially anticipated. But we're pleased with the rebound that we saw coming of that in April. Got it. That makes sense.

Speaker Change: In the last call was if.

Speaker Change: At mitigating this.

Speaker Change: A bike is kind of the razor razorblade might be the.

Speaker Change: And how we're getting at price increases with kind of a last resort being physically raising prices.

Speaker Change: The bike seats provide pump or the bike locked in can we take some pricing up on some of the ancillary categories around it was obvious for the customer and they still can find the great price on that key items coming in for and you can take that same example, and spread it across grills fitness equipment and all those other big ticket things as well. So I think it's a combination of ways that we're getting.

Speaker Change: Got it and if I could just squeezing one more could you just talk about what the April comp was.

[Analyst] (Citigroup): Got it. If I could just squeeze in one more. Could you just tell us what the April comp was at the Easter shift?

Kelly Crago: Got it. If I could just squeeze in one more. Could you just tell us what the April comp was at the Easter shift?

Speaker Change: Ex Easter chest.

Speaker Change: We don't have that broken out I can tell you is.

Steve Lawrence: We don't have that broken out. I can tell you it was mid to low single digits in total.

Speaker Change: Mid to low single digits in total well.

Karl Ford: And just moving to the promotion side, I think you touched on it a little bit earlier. We noticed that two Q2 date promotions did take up a bit year over year. We saw an additional $20 off 100 coupons that also got extended, some additional e-gift card promotions, etc. Also, we saw several promotions like a 25% off Under Armour. So is it fair to say like net-net that quarter-to-date promotions are higher year over year? And how much of that is for clearing out for the newness of Nike and Jordan? And how much of that is just related to an overall weaker Academy consumer since a lot of these incremental promotions are entire basket?

Speaker Change: Yes.

Speaker Change: Mid to mid to low single digits.

[Analyst] (Citigroup): Mid to low single digits.

Speaker Change: The total.

Kelly Crago: Mid to low single digits.

Speaker Change: At mitigating this.

Speaker Change: Total comp.

Steve Lawrence: Positive

[Analyst] (Citigroup): ... in total.

Kelly Crago: In total.

Steve Lawrence: Total comp.

Speaker Change: And how we're getting price increases with kind of a last resort being physically raising prices.

Speaker Change: Great for April, including Easter shift.

[Analyst] (Citigroup): For April, including the Easter shift.

Kelly Crago: For April, including the Easter shift.

Speaker Change: Yes, I mean Easter was in the month of April this year correct.

Speaker Change: Got it and if I could just squeeze in one more could you just talk about with the April comp.

Steve Lawrence: Yes. I mean, Easter was in the month of April this year, correct?

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Well, it's ex Easter shifts.

[Analyst] (Citigroup): Okay. I'll follow up later. Thanks.

Kelly Crago: Okay. I'll follow up later. Thanks.

Speaker Change: We don't have that broken out I can tell you it was mid to low single digits until well.

Speaker Change: Thank you. Our next question comes from the line of Robbie <unk> with Bank of America. Please proceed with your question Hey, Good morning, guys. Thanks for taking my question really just too.

Operator: Thank you. Our next question comes from the line of Robert Ohmes with Bank of America. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Robby Ohmes with Bank of America. Please proceed with your question.

Speaker Change: Yeah.

Speaker Change: Mid to mid to low single digits.

Steve Lawrence: Hey, good morning, guys. Thanks for taking my question. Really just two, one quick one and maybe the other one might be quick as well. Just the softness in basketball and golf that you called out, was that all weather, or was there anything else there? My other question is, I know it's, you know, early days, but would love to get initial thoughts on the Dick's Foot Locker merger, and if that might create, you know, some opportunities for you or how you guys are thinking about that, you know, competitively, but would love to get your thoughts on that. Yeah, the first question, I would say you're right. It was probably more weather related than anything. You know, in terms of the Dick's Foot Locker merger, listen, Dick's is a great company.

Robby Ohmes: Hey, good morning, guys. Thanks for taking my question. Really just two, one quick one and maybe the other one might be quick as well. Just the softness in basketball and golf that you called out, was that all weather, or was there anything else there? My other question is, I know it's, you know, early days, but would love to get initial thoughts on the Dick's Foot Locker merger, and if that might create, you know, some opportunities for you or how you guys are thinking about that, you know, competitively, but would love to get your thoughts on that.

Speaker Change: The total.

Speaker Change: One quick one and maybe the other one might be quick as well.

Speaker Change: Total comp.

Speaker Change: Great for April, including the Easter shift.

Speaker Change: Just the softness in basketball and golf that you called out was that all weather or was there anything else. There and then my other question is.

Speaker Change: Yes, I mean Easter was in the month of April this year correct.

Karl Ford: And just a quick aside on promotions, we also saw the infamous Stanley water bottle was about 40% off. So when exactly did that begin? And speaking to the broader impact of hydration promotions would be great. Yeah, sure. There's a lot wrapped up in that question. I'll do my best to answer it. I would characterize promotions candidly, quarter to date, as fairly consistent with last year. I mean, we're, we're an everyday value based retailer. And we've cited multiple times, that means about 75% of what we sell within our everyday We do have promotions. Those promotions generally happen around the big holiday and events on the calendar.

Speaker Change: Okay I'll follow up later thanks.

Speaker Change: No.

Speaker Change: Early days, but would love to get initial thoughts on the Dick's and foot locker merger and if that might create.

Speaker Change: Thank you. Our next question comes from the line of Robbie <unk> with Bank of America. Please proceed with your question.

Speaker Change: Some opportunities for you or how you guys are thinking about that competitively, but would love to get your thoughts on that.

Speaker Change: Hey, good morning, guys. Thanks for taking my question.

Speaker Change: Just two.

Speaker Change: One quick one and maybe the other one might be quick as well.

Speaker Change: Yes. The first question I would say you're right it was probably more weather related than anything.

Steve Lawrence: Yeah, the first question, I would say you're right. It was probably more weather related than anything. You know, in terms of the Dick's Foot Locker merger, listen, Dick's is a great company.

Speaker Change: This is just the softness in basketball and golf that you called out was that all weather or was there anything else. There and then my other question is.

Speaker Change: In terms of the Dick's foot locker merger.

Speaker Change: Listen there.

Speaker Change: It's a great company there.

Speaker Change: I know it's.

Speaker Change: They are great competitors of ours, we're not going to comment on the rationale for their strategy or what they're doing we're more focused on what we think our opportunities are.

Speaker Change: Early days, but would love to get initial thoughts on the Dick's and foot locker merger and if that might create.

Steve Lawrence: They're great competitors of ours. We're not gonna comment on the rationale for their strategy, or what they're doing. We're more focused on what we think our opportunities are. You know, as we look at this year, we're excited about the trade-down we're seeing in higher-end traffic. We're excited about the performance of the new stores. We're excited about the growth we're seeing in our dot com business. We really see an opportunity the remainder of this year in executing our strategy. You know, we're a full line sports and outdoor retailer and are pretty different than a lot of our competition. You know, we focus on not only sporting goods as well as, you know, shoes and apparel, we have a big outdoor business that really resonates with our consumer.

Karl Ford: So that for us is Memorial Day, that for us is Father's Day, Fourth of July, and back to school. So you will see promotional activity during those time periods. And when we looked at it, I would tell you it's fairly consistent with last year. In regards to some of the global offers I think you're citing, those may be more driven either through our app or through our site. We're certainly focused very hard on getting people to join our loyalty program. The reason we're focused on that is because we know that we can get somebody into our ecosystem and we can start target marketing to them and getting them to shop with us more frequently.

Speaker Change: Some opportunities for you or how you guys are thinking about that competitively, but would love to get your thoughts on that.

Speaker Change: And as we look at this year, we're excited about the trade down we are seeing in higher end traffic. We're excited about the performance of the new stores. We're excited about.

Speaker Change: Yes. The first question I would say you're right. It was probably more weather related than anything in.

Speaker Change: The growth, we're seeing in our dot com business.

Speaker Change: In terms of the Dick's foot locker merger.

Speaker Change: And we really see an opportunity of the remainder of this year in executing our strategy. We are a full line sports and outdoor retailer and are pretty different than a lot of our competition. We focus on not only sporting goods as well as you know shoes and apparel, we have a big outdoor business that really resonates with our consumer we also.

Speaker Change: Listen there is a great company.

Speaker Change: They're great competitors of ours, we're not going to comment on the rationale for their strategy or what they're doing we're more focused on what we think our opportunities are.

Speaker Change: And as we look at this year, we're excited about the trade down we are seeing in higher and traffic. We're excited about the performance of the new stores. We're excited about.

Speaker Change: <unk> attracted a slightly different customer younger family, that's really kind of starting up our journey through sport and so we're going to focus on serving our customer and executing our strategy.

Karl Ford: A more loyal customer shops with us two to three times more a year. They shop and buy a bigger basket. They tend to be more profitable customers for us and spend almost 4 to 5x what a normal customer does. So one of the things you're seeing us test into a little bit is trying to offer some good promotions to get people to kind of embed themselves into our ecosystem. And that, you know, when you look at it, we're looking at the price of that one-time discount relative to the lifetime value of the customer more than pays for itself.

Steve Lawrence: We also, I think, attract a slightly different customer, a younger family that's really, again, is starting out their journey through sport. We're gonna focus on serving our customer and executing our strategy, and I'm sure, they're gonna focus on theirs and be very successful executing what they're doing. Sounds great. Thank you. Thanks.

Speaker Change: The growth, we're seeing in our dot com business.

Speaker Change: And we really see an opportunity the remainder of this year in executing our strategy. We are a full line sports and outdoor retailer and are pretty different than a lot of our competition. We focus on not only sporting goods as well as you know shoes and apparel, we have a big outdoor business that really resonates with our consumer we also.

Speaker Change: And I'm sure they're going to focus on there are some theatres successful executing what theyre doing.

Speaker Change: Sounds great. Thank you.

Robby Ohmes: Sounds great. Thank you.

Speaker Change: Thanks.

Steve Lawrence: Thanks.

Speaker Change: Thank you. Our next question comes from the line of Kate Mcshane with Goldman Sachs. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with your question.

Emily: Hi, This is Emily <unk> on for Keith.

Karl Ford: So I wouldn't read too much into that. In regards to Stanley, you know, Stanley's been on a run for, you know, obviously a couple years now. And I think they have been in a place, a very rarefied place, where they haven't had to take any markdowns on discontinued colors. I think they're starting to have to deal with some colors that are, you know, moving out of the assortment, moving forward. And so they had a map break on some discontinued colors that we, along with, I think, everybody who carried those colors participated in. That's been going on for about a week now.

Emily Ghosh: Hi, this is Emily Ghosh on for Kate. We were wondering, is your tariff outlook incorporating any elasticity impact from you raising prices? How does your outlook take into account the overall health of the consumer in a higher priced environment? Thank you.

Emily: We're wondering is your tariff outlook, incorporating any elasticity impact from you raising prices and then how does your outlook take into account. The overall health of the consumer in a higher priced environment. Thank you.

Speaker Change: And I'm sure they're going to focus on there are some theatres successful executing what they were doing.

Speaker Change: Sounds great. Thank you.

Speaker Change: Yes, Im sure Karl and I will tag team. This I would first say that.

Steve Lawrence: Yeah, I'm sure Carl and I will tag team this. You know, I would first say that, if, you know, in a world where prices are going up, we use our pricing tool to measure elasticity. You know, certainly I think there's some assumption that if AURs go up, there is some erosion in unit demand. One of the things Carl talked about in his prepared remarks was getting out in front of and canceling some receipts. You know, some of that's to cover the inventory pull forward that we did, but some of it's to give us some dry powder so that we can react to what's happening in the marketplace and maybe take advantage of off-price opportunities.

Speaker Change: Thanks.

Speaker Change: If in a world where prices are going up we use our pricing tool that's measure elasticity. So certainly I think there's some assumption that if aur's go up there is some erosion in unit demand and so one of the things Karl talked about in his prepared remarks was getting out in front of us and canceling some receipts some of that is to cover the inventory pull forward that we do.

Speaker Change: Thank you. Our next question comes from the line of Kate Mcshane with Goldman Sachs. Please proceed with your question.

Speaker Change: Hi, This is Emily <unk> on for Keith.

Speaker Change: We're wondering is your tariff outlook, incorporating any elasticity impact from you raising prices and then how does your outlook take into account. The overall health of the consumer in a higher priced environment. Thank you.

Karl Ford: And I think this is just part of a normal course of evolution of the business, that as the business gets bigger and matures, they have to deal with the obsolete colors. Thank you.

Speaker Change: But give us some dry powder, so that we can react to what's happening in the marketplace, maybe take advantage of off price opportunities I.

Speaker Change: Yeah, Im sure Karl and I will tag team. This I would first say that.

Paul Lejoy: Our next question comes from the line of Paul Lejoy with Citigroup. Please proceed with your question. Hey, guys, this is Kelly on for Paul. Thanks for taking our question. I'm just going to follow up on the tariff commentaries. It sounds like the pull forward of tariffs is, is accounting for quite a bit of the mitigation this year. So how do we think about the impact of tariffs as we look to F-26 and have a follow up? Thanks.

Speaker Change: If in a world where prices are going up we use our pricing tool to measure elasticity. So certainly I think there's some assumption that if aur's go up there is some erosion in unit demand and so one of the things Karl talked about in his prepared remarks was getting out in front of us and canceling some receipts some of thats to cover the inventory pull forward that we do.

Speaker Change: I would say second bill in terms of how does this impact the consumer and what is the health of the consumer and I think the consumers a little skittish right now and I think we've seen that in choppy traffic.

Steve Lawrence: I would say second, though, in terms of how does this impact, you know, the consumer and what is the health of the consumer? I mean, I think the consumer is a little skittish right now, and I think we've seen that in choppy traffic. As we think about the remainder this year and you think about a world where, you know, inflation is probably realistic to think about, you know, you break it down between discretionary and non-discretionary spend. From a non-discretionary spend perspective, you know, you've got food. About 85% of what Americans eat is produced here. We think that that part of non-discretionary is gonna be somewhat insulated from tariffs.

Speaker Change: As we think about the remainder of this year and you think about a world where inflation is probably realistic to think about.

Speaker Change: You break it down between discretionary and non discretionary spend from a non discretionary spend perspective.

Speaker Change: But give us some dry powder, so that we can react to what's happening in the marketplace, maybe take advantage of off price opportunities I.

Karl Ford: You know, I'd love to answer that question. I mean, this thing changes so rapidly. I feel like we've done a really good job of getting this year mitigated, and having a good handle on it. What's going to happen between now and the end of the year, I think, is anybody's guess. We're not going to speculate on that. I think the strategies that we're focused on in terms of diversifying our sourcing base, reducing our exposure to China, and candidly making sure that we don't have too much in any one basket, I think, is in any one country's basket, I think is going to be important moving forward, because you never know what the next country that's going to be kind of focused on.

Speaker Change: You've got food.

Speaker Change: About 85% of what Americans eat is produced here.

Speaker Change: And so we think that that part of non discretionary is going to be somewhat.

Speaker Change: Insulated from tariffs I mean, obviously I saw some articles yesterday about like prices steel impacting canned food, but we think that food prices should not.

Speaker Change: But as we think about the remainder of this year and you think about a world where inflation is probably realistic to think about.

Steve Lawrence: I mean, obviously I saw some articles yesterday about, like, price of steel impacting canned food, but we think that food prices should not feel as big a brunt as the rest of, you know, kind of merchandise, general merchandise in America feels. On gas front, you know, you've got the industry or I'm sorry, the administration very focused on holding down pricing there. I think on the non-discretionary spend, I think the customer is gonna be okay. What that puts you in a place of is on the discretionary side, the customer is gonna really hopefully have the same amount of money, but wanna maximize their spending power. We think when they do that, they're gonna trade into value.

Speaker Change: Not feel bigger branches the rest of <unk>.

Speaker Change: Merchandise General Merchandize in America feels on gas front, you've got the industry Im sorry the.

Speaker Change: You break it down between discretionary and non discretionary spend from a non discretionary spend perspective.

Speaker Change: Got food.

Speaker Change: Administration very focused on holding down pricing there. So I think on the non discretionary spend I think customers can be a case of what that puts you in a place of is on the discretionary side the customer is going to really.

Speaker Change: About 85% of what Americans eat is produced here.

Speaker Change: And so we think that that part of non discretionary is going to be somewhat.

Karl Ford: And so I think gone are the days where we can just say, hey, we're going to get out of China and not worry about it. You know, Vietnam had a pretty high reciprocal tariff put on them, as well as other countries. And so I think having a diversified sourcing base is what our focus is there. As we move forward, though, in the next year, we really believe that leaning into who we are, our value proposition in this space, making sure the value leader, leaning into our growth initiatives in terms of new store growth, learning into our dot-com opportunities we have, I think all those things make us optimistic about the back half of this year and the next year.

Speaker Change: Insulated from tariffs I mean, obviously I saw some articles yesterday about what the price of steel impacting cancer, but we think that food prices should not feel that bigger branches the rest of.

Speaker Change: Hopefully at the same amount of money, but but want to maximize our spending com, we think when they do that they're going to trade into value and we think that by remaining true to who we are being the value provided in our space. We think we're going to benefit from that and have more people trade into academy and so that's really how we're thinking about the health of the customer and how this all plays out the remainder of the year.

Steve Lawrence: We think that by remaining true to who we are, being the value provider in our space, we think we're gonna benefit from that and have more people trade into Academy. That's really how we're thinking about the health of the customer and how this all plays out for the remainder of the year.

Speaker Change: Kind of merchandise general merchandize in America feels on gas front, you've got the industry Im sorry the.

Speaker Change: Administration very focused on holding down pricing there. So I think on the non discretionary spend I think the customers can be a case of what that puts you in a place of is on the discretionary side. The customer is going to really hopefully have the same amount of money, but but want to maximize their spending com. We think when they do that they're going to trade into value and we think that by remaining true to who we are.

Speaker Change: Thank you.

Emily Ghosh: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Greg Miller with Evercore ISI. Please proceed with your question.

Karl Ford: But I can't tell you what the tariff situation is going to be next year. Okay, got it.

Steve Lawrence: Thank you.

Operator: Thank you. Our next question comes from the line of Greg Melich with Evercore ISI. Please proceed with your question.

Speaker Change: Hi.

Karl Ford: And then just going to follow up on the gross margin guide. So is the current guidance, I guess, is that assuming all merchandise margin improvement driven? And then, I guess, within that pricing assumptions, what sort of ticket increases are you embedding in that guide? Thank you. I think we'll probably tag team this one. I'll take, I'll take the first part of that. So our guidance on top line, as well as all the way down the P&L kind of models in three different scenarios. The midpoint you can think of as the tariffs that are in place right now on the high end, it's basically every country at 10%.

Greg Miller: Question really on margins in sort of two parts first on the gross margin I just want to make sure I get the cadence right here.

Steve Lawrence: Hi. I had a question really on margins in sort of two parts. First, on the gross margin, just wanna make sure I get the cadence right here. With the up 60 in Q1, I think the midpoint of your guide being up 25 basis points or something, with that inventory that you bought, does that give you one, two, or three quarters before we'd start to see? You know, you basically get through that inventory, then we could see some pressure in gross margin offsetting the benefits from mix. Yeah. I think the $85 million that we pulled forward was in very strategic categories. I think we think that that's going to get us to the other side of July and August expirations.

Greg Melich: Hi. I had a question really on margins in sort of two parts. First, on the gross margin, just wanna make sure I get the cadence right here. With the up 60 in Q1, I think the midpoint of your guide being up 25 basis points or something, with that inventory that you bought, does that give you one, two, or three quarters before we'd start to see? You know, you basically get through that inventory, then we could see some pressure in gross margin offsetting the benefits from mix.

Speaker Change: Being the value provider in our space, we think we're going to benefit from that and have more people trade into academy and so that's really how we're thinking about the health of the customer and how this all plays out the remainder of the year.

Speaker Change: With the up 60 in the first quarter and I think the midpoint of your guide being up 25 bps or something with that inventory that you bought does that give you one two or three quarters before we'd start to see some of the.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Greg Miller with Evercore ISI. Please proceed with your question.

Speaker Change: You basically got through that inventory and then we could see some pressure in gross margin offsetting the benefits from mix.

Greg Miller: Hi, I had a question really on margins in sort of two parts first on the gross margin I just want to make sure I got the cadence right here with the up 60 in the first quarter and I think the midpoint of your guide being up 25 bps or something with that inventory that you bought does that give you one two or three quarters before we'd start to.

Speaker Change: Yes, I think the $85 million that we pulled forward was in very strategic categories. I think we think that that's going to get us to the other side of <unk>.

Carl Ford: Yeah. I think the $85 million that we pulled forward was in very strategic categories. I think we think that that's going to get us to the other side of July and August expirations.

Speaker Change: July.

Speaker Change: <unk> exploration I think at that point.

Karl Ford: And then on the low end, it's everything that was paused reverts back in, in July and August upon those expiration dates. And so we pulled forward inventory, we feel good about carrying that inventory at pre tariff pricing, we have no regrets associated with that inventory position, it's going to serve us well throughout. Yeah, I'd say so embedded in this, I mean, it's, I don't think it's all going to translate into price increases. So first, you know, we talked about partnering with our factories. So they're bearing some of the brunt of this and where we have a national brand partner, in a lot of cases, they're bearing some of the brunt of this, right.

Speaker Change: Look we're going to have to see what the administration does associated with it but we felt good about holding onto the value proposition through all of this I really want to underscore that is what's driving these upper quintile customers to us.

Steve Lawrence: I think at that point, look, we're going to have to see what the administration does associated with it. We feel good about holding on to the value proposition through all of this. I really want to underscore that is what's driving these upper quintile customers to us. Just to be clear, the character of this merchandise that we pulled in, and we described it as evergreen, it is things that by definition do not have a markdown liability generally associated with them. Bikes do not go obsolete. Free weights do not go obsolete. Fitness equipment generally does not go obsolete. It is a pull forward of goods that we would have received in the back half of this year.

Carl Ford: I think at that point, look, we're going to have to see what the administration does associated with it. We feel good about holding on to the value proposition through all of this. I really want to underscore that is what's driving these upper quintile customers to us.

Greg Miller: See some of the you basically get through that inventory and then we could see some pressure in gross margin offsetting the benefits from mix.

Speaker Change: Yes, I think the $85 million that we pulled forward was in very strategic categories.

Speaker Change: But just to be clear the character of this merchandise that we pulled in and we described it is evergreen. It is things that by definition don't have a markdown liability generally associated with them by extent go obsolete free weights don't go obsolete fitness equipment generally doesn't go obsolete. So it's a pull forward of <unk>.

Steve Lawrence: Just to be clear, the character of this merchandise that we pulled in, and we described it as evergreen, it is things that by definition do not have a markdown liability generally associated with them. Bikes do not go obsolete. Free weights do not go obsolete. Fitness equipment generally does not go obsolete. It is a pull forward of goods that we would have received in the back half of this year.

Speaker Change: We think that that's going to get us to the other side of it.

Speaker Change: July and August explorations, I think at that point.

Speaker Change: Look we're going to have to see what the administration does associated with it but we felt good about holding on to the value proposition through all of this I really want to underscore that is what's driving these upper quintile customers to us.

Speaker Change: <unk> that we would have receded in the back half of this year is on product that is not seasonal in nature.

Karl Ford: We're looking at how we're pricing and approaching this from a pricing offset perspective. We've got a pretty sophisticated pricing optimization engine called Revionics. And there's multiple ways to get it at AUR increases to offset this first through promotional optimization. You know, we're looking at how long we ran promotions last year versus this year, and maybe looking at shorter windows. We're looking at the depth of promotions during those windows. Another way to get at it is through markdown optimization. We take goods and mark them down at the end of their life cycle, leveraging that as a way to maybe gain some AURs.

Steve Lawrence: It is on product that is not seasonal in nature. It's at prices that are pre-tariff. It should allow us to maintain and hold our value proposition as we go into the, you know, Q3 and even Q4 in some cases for some of these categories. I don't think you have to worry about this inventory having some sort of a markdown or margin impact down the road. It will not and should not.

Speaker Change: And it's at prices that are pre tariff. So it should allow us to maintain and hold our value proposition as we go into the third and even fourth quarter in some cases for some of these categories. So I don't think youll have to worry about.

Speaker Change: This inventory, having some sort of a mark down our margin impact down the road it will not and should not.

Speaker Change: Got it that's very helpful. And then on SG&A I, just want to make sure I got it got it right the $7 million on the Jordan launches that the portion of the pressure.

Speaker Change: That we would have receded in the back half of this year is on product that is not seasonal in nature.

Greg Melich: Got it. That's very helpful. Then on SG&A, I just wanna make sure I got it right. The $7 million on the Jordan launch, is that the portion of the pressure in Q1 that we can just assume goes away going forward, and the other things, the new stores and the other investments sorta stick around?

Speaker Change: And at prices that are pre tariff so it should allow us to maintain and hold our value proposition as we go into the third and even fourth quarter in some cases for some of these categories. So I don't think youll have to worry about.

Speaker Change: And <unk> that we can just assume that goes away going forward in that but the other thing is the new stores and the other investments sort of stick around.

Karl Ford: And really, so overall pricing increases, ticket increases, is kind of the last resort. And if and when we have to do that, our goal is a couple things. First, we know that there's some key price points on our private brand, national brands that really drive traffic. Protect those and make sure that the customer isn't seeing price increases there. So if we have to take price increases, it would be on, you know, ancillary categories that are less obvious to the consumer. I think one of the examples we used in the last call was, you know, if a bike is kind of the razor, you know, the razor blade might be the, you know, the bike seat, the bike pump, or the bike lock, and can we take some pricing up on some of the ancillary categories around it so it's less obvious for the customer, and they still can find a great price on that key item they're coming in for.

Speaker Change: Yeah, absolutely. It was it was seven $5 million.

Speaker Change: This inventory, having some sort of a mark down our margin.

Carl Ford: Yeah, absolutely. It was, it was seven and a half million dollars, the precise amount that hit Q1. You should not think about that as impacting Q2 and later. If you look at the composition of the $36 million in gross, about $20 million of it was new stores. We've got 19 new stores, Q1 compared to Q1. We talked about the seven and a half million, which was really just centric to Q1 and launching something that we're very proud of, associated with the Jordan and the Nike expansion. Then there was a little bit of technology costs.

Speaker Change: The precise amount that hit Q1, you should not think about that is impacting Q2 and later if you look at the composition of the $36 million and grows about $20 million of it was a it wasn't new stores. We've got 19, new stores Q1 compared to Q1, we talked about the seven 5 million which are.

Speaker Change: <unk> down the road it will not and should not.

Speaker Change: Got it that's very helpful. And then on SG&A I, just want to make sure I got it got it right the $7 million on the Jordan launches that the portion of the pressure.

Speaker Change: And <unk> that we can just assume that goes away going forward in that but the other thing is the new stores and the other investments sort of stick around.

Speaker Change: Really just centric to Q1 and launching something that we're very proud of.

Speaker Change: Yeah, absolutely it was seven $5 million.

Speaker Change: Associated with the Jordan and Nike expansion and then there was a little bit of technology.

Speaker Change: The precise amount that hit Q1, you should not think about that is impacting Q2 and later if you look at the composition of the $36 million and grows about $20 million of it was a it was new stores. We've got 19, new stores Q1 compared to Q1, we talked about the seven 5 million which was.

Speaker Change: Technology costs recorded supply chain, we quoted omni.

Carl Ford: You know, we quoted supply chain, we quoted omni, but it's also some like customer, you know, some of the solutions that we're using to help us, you know, identify that customer and target them better. I think the first and the third ones of those, you should expect to continue. The guidance that we put out there, still contemplates 100 basis points of deleverage for the year. I think what you guys have seen from us over the last couple of years is we manage inventory well, and we manage costs pretty well. We're proud of the fact that we're investing in these initiatives, these things that we've told you that we're gonna stand for.

Speaker Change: But it's also something like customer.

Karl Ford: And you can take that same example and spread that across, you know, grills and fitness equipment and all those other big ticket things as well. So I think it's a combination of ways that we're getting at mitigating this and how we're getting at price increases with kind of the last resort being physically raised. Got it.

Speaker Change: Some of the solutions that we're using to help us.

Speaker Change: Identify that customer and target them better I think the first and the third one to those you should expect to continue.

Speaker Change: Really just centric to Q1 and launching something that we're very proud of.

Speaker Change: The guidance that we put out there still contemplates 100 basis points of deleverage for the year.

Speaker Change: Associated with the Jordan Nike expansion and then there was a little bit of.

Karl Ford: And if I could just squeeze in one more, could you just tell us what the April comp was X the Easter chest? We don't have that broken out. I can tell you it was mid to low single digits in total. Mid to Low Single-Digit. Okay, so it sounds like everybody has been outed. for April, for April, including the Easter ship. Yes, I mean, Easter was in the month of April this year. Okay, I'll follow up later. Thanks.

Speaker Change: And I think what you guys have seen from us over the last couple of years, as we manage inventory well and we manage costs pretty well.

Speaker Change: Technology costs, we quoted supply chain, we quoted omni.

Speaker Change: But it's also something like customer.

Speaker Change: Some of the some of the solutions that we're using to help us.

Speaker Change: Sure.

Speaker Change: Proud of the fact that we're investing in these initiatives. These things that we've told you that where we're going to stand for so where you can look for us to continue to invest and where all of that deleverage will come for them is the strength of the strategy.

Speaker Change: Identify that customer and target them better I think the first and the third one to those you should expect to continue.

Carl Ford: Where you can look for us to continue to invest and where all of that deleverage will come from is these strategies that are embedded within our long range plan.

Speaker Change: The guidance that we put out there still contemplates 100 basis points of deleverage for the year.

Speaker Change: That are embedded within our long range plan.

Speaker Change: And I think what you guys have seen from us over the last couple of years, as we manage inventory well and we manage costs pretty well, but we're.

Speaker Change: That's great. Thanks, and good luck guys. Thanks appreciate it.

Greg Melich: That's great. Thanks, and good luck, guys.

Robbie Ohms: Thank you. Our next question comes from the line of Robbie Ohms with Bank of America. Please proceed. Hey, good morning, guys. Thanks for taking my question. Really just to one quick one, and maybe the other one might be quick as well.

Carl Ford: Thanks. Appreciate it.

Steve Lawrence: Thanks. Appreciate it.

Speaker Change: Thank you. Our next question comes from the line of John <unk> with Guggenheim Partners. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of John Heinbockel with Guggenheim Partners. Please proceed with your question.

Speaker Change: Proud of the fact that we're investing in these initiatives. These things that we've told you that we're going to stand for so where you can look for us to continue to invest in and where all of that deleverage will come for them is the strategy.

John: Thanks, Steve wanted to start with I think you've got right now I think 80 or 90.

John Heinbockel: Hey, Steve, wanted to start with, I think you've got right now, I think 80 or 90 Jordan items SKUs, something like that. Where do you think that ultimately shakes out? You had cleats and maybe some other categories. You know, is it 2x that and that's where it stays, and then you freshen it up? Then the other part of that was: When you think about the comp lift, do you think having Jordan drives traffic that benefits other categories, or that's hard to tell?

Robbie Ohms: Just the softness in basketball and golf that you call that, was that all weather? Or was there anything else there?

John: Jordan item skews.

John: Something like that where do you think that ultimately shakes out.

Speaker Change: That are embedded within our long range plan.

John: Yes, it <unk>, maybe some other categories.

Karl Ford: And then my other question is, I know it's, you know, early days, but we'll love to get initial thoughts on the Dix Foot Locker merger. And if that might create, you know, some opportunities for you or how you guys are thinking about that, you know, competitively, but we'd love to get your thoughts on that. Yeah, the first question, I would say you're right. It was probably more weather-related than anything. You know, in terms of the Dixit Locker merger, listen, Dixit is a great company. They're great competitors of ours. We're not going to comment on the rationale for their strategy or what they're doing.

Speaker Change: That's great. Thanks, and good luck guys. Thanks.

John: To X that that's where it stays when you freshen it up and then the other part of that was when you think about the comp lift do you think having Jordan drives traffic that benefits other categories.

Speaker Change: Thanks appreciate it.

Speaker Change: Thank you. Our next question comes from the line of John <unk> with Guggenheim Partners. Please proceed with your question.

John: Thank you Steve I wanted to start with I think you've got right now I think 80 or 90, Jordan items Skus, something like that where do you think that ultimately shakes out.

John: Or that is hard to tell.

John: So I'll start with the first part so.

Steve Lawrence: I'll start with the first part. We expect the assortment to continue to grow as we progress through this year and into next year. I don't have off the top of my head, you know, a number that it's gonna be 2x or whatever the current size is. You're gonna see, I think we said on the prepared remarks, you know, as we get into new categories like football cleats, backpacks, things like that for back to school, you're gonna see those expand beyond the 145 doors that the core assortments in. Obviously, we will continue to grow. I think the footwear assortment's already more than doubled since we launched. You'll see that continue to grow. You'll see apparel continue to grow. I think you'll see it extend into new categories.

John: We expect the assortment of continuing to grow as with growth for this year and into next year I don't have off top my head.

Speaker Change: Ed Cleats, and maybe some other categories.

John: That it can be two or whatever their current sizes youre going to see I think we said on the prepared remarks as we did in new categories like football cleats.

Speaker Change: <unk> and that's where it stays then you freshen it up and then.

Speaker Change: Part of that was when you think about the comp lift do you think having jordan drives traffic that benefits other categories or that.

Steve Lawrence: We're more focused on what we think our opportunities are. And as we look at this year, we're excited about the trade now we're seeing in higher-end traffic. We're excited about the performance of the new stores. We're excited about the growth we're seeing in our dot-com business. And we really see an opportunity the remainder of this year in executing our strategy. You know, we're a full-line sports and outdoor retailer and are pretty different than a lot of our competition. You know, we focus on not only sporting goods as well as, you know, shoes and apparel. We have a big outdoor business that really resonates with our consumer.

John: Backpacks things like that for back to school Youre going to see those expand beyond the 145 doors with the core assortments.

Speaker Change: It's hard to tell.

John: But obviously, we will continue to grow I think the footwear assortment is already more than doubled since we launched that youll see that continue to grow obviously apparel continue to grow and I think you'll see it extend into new categories.

Speaker Change: So I'll start with the first part so.

Speaker Change: We expect the assortment to continue to grow as we grow through this trend into next year I don't have off top my head a number that it can be two or whatever the current sizes.

John: And we think this is not just a once and done we expect that to continue into next year I think the Jordan brand is going to offer us a growth platform for several years to come candidly as we expand in more categories and into more stores in the next year.

Steve Lawrence: We think this is not just a once and done. We expect that to continue into next year. I think the Jordan Brand is gonna offer us a growth platform for, you know, several years to come, candidly, as we expand into more categories and into more stores in the next year. I do believe it helps bring in a different customer for us. I mean, we certainly picked it up because it was the number one most requested brand on our site that we didn't have access to. There was some internal searches for it, and that was probably customers who were shopping with us, certainly they had to go other places to find it.

Speaker Change: Youre going to see I think we said on the prepared remarks, as we did in new categories like football cleats.

Speaker Change: Backpacks things like that for back to school Youre going to see those expand beyond the 145 doors with the core Assortments and but obviously, we will continue to grow I think the footwear assortment is already more than doubled since we launched that youll see that continue to grow you'll see apparel continue to grow.

John: I do believe it helps to bring in a different customer for us I mean, we certainly picked it up because it.

Steve Lawrence: We also, I think, attract a slightly different customer, a younger family that's really getting and starting out their journey through sport. And so we're going to focus on serving our customer and executing our strategy. And I'm sure they're going to focus on theirs and be very successful executing what they're doing.

John: It was the number one most requested brand on our site that we didn't have access to so there was some internal searches for it and that was probably customers who are shopping with Hercules that had to go other places to find it but from looking at the traffic data that we're getting through placement. We believe it's bringing in an incremental new customer and we think that's evidenced by that acceleration and kind of trade across what we're seeing at the higher <unk>.

Speaker Change: And I think youll see it extend into new categories.

Speaker Change: And we think this is not just a once and done we expect that to continue into next year I think the Jordan brand is going to offer us a growth platform for several years to come candidly as we expand in more categories and into more stores in the next year.

Steve Lawrence: Sounds great. Thank you. Thanks. Thank you.

Steve Lawrence: From looking at the traffic data that we're getting through Placer.ai, we believe it's bringing in an incremental new customer, and we think that's evidenced by that acceleration and kinda trade-across that we're seeing at the higher end consumers. We're seeing more new consumers who didn't shop us before making north of $100,000 a year, finding us and bringing, you know, their dollars to spend with us, and we think a chunk of that is because of Jordan.

Kate Mcshane: Our next question comes from the line of Kate McShane with Goldman Sachs.

Speaker Change: I do believe it helps to bring in a different customer for us I mean, we certainly picked it up because.

John: And consumers, we are seeing more new consumers, who didn't shop, this before making north of a $100000 a year.

Emily Ghosh: Hi, this is Emily Ghosh on for Kate. We were wondering, is your tariff outlook incorporating any elasticity impact from you raising prices? And then how does your outlook take into account the overall health of the consumer in a higher priced environment? Thank you. Yeah, I'm sure Carl and I will tag team this, you know, I would first say that If, you know, in a world where prices are going up, we use our pricing tool to measure elasticity. So, you know, certainly I think there's some assumption that if AURs go up, there is some erosion in unit demand.

Speaker Change: It was the number one most requested brand on our site that we didn't have access to so there was some internal searches for it and that was probably customers who are shopping with Hercules that had to go other places to find it but from looking at the traffic data that we're getting through placement. We believe it's bringing in an incremental new customer and we think that's evidenced by that acceleration and kind of trade across what we're seeing at the higher.

John: Us and bringing their dollars to spend with us and we think a chunk of that is because of Jordan.

John: And then just secondly, how do you think about.

John Heinbockel: Just secondly, I know seasonal, you wanna be careful with receipts. How do you think about chasing in the back half of the year and the ability to do that, or you just the prudent thing is to leave some sales on the table if you have to?

John: Seasonal do you want to be careful with.

John: Receipts.

John: The thing about chasing in the back half of the year and the ability to do that or just pre.

John: Prudent thing is to leave some sales on the table.

Speaker Change: And consumers, we are seeing more new consumers, who didn't shop, this before making north of a $100000 a year.

John: I have two.

John: I think we have done a good job the merchants have done a really good job of keeping our powder dry and maintaining liquidity. So if we see a trend happen and there is inventory available and we think it's at the right price we will definitely chase. It if we think it's going to convert into sales.

Steve Lawrence: I think we have done a good job. The merchants have done a really good job of keeping our powder dry and maintaining liquidity. If we see a trend happen and there's inventory available and we think it's at the right price, we will definitely chase it if we think it's gonna convert into sales. We're not gonna, you know. I think one of the things that Carl said earlier that I would agree with is, I think inventory management is probably one of the strong suits of Academy over the past 5 or 6 years. We're gonna be good stewards of the inventory, but we're not gonna be so focused on that we ignore opportunities. I mean, I think a great example of that is what we did in Q1.

Karl Ford: And so one of the things Carl talked about in his prepared remarks was getting out in front of and canceling some receipts. You know, some of that's to cover the inventory pull forward that we did, but some of it's to give us some dry powder so that we can react to what's happening in the marketplace, maybe take advantage of off-price opportunities. I would say second, though, in terms of how does this impact, you know, the consumer and what is the health of the consumer. And I think the consumer is a little skittish right now, and I think we've seen that in choppy traffic.

Speaker Change: Finding us and bringing their dollars to spend with us and we think a chunk of that is because of Jordan.

Speaker Change: And then just secondly, how do you think about it.

Speaker Change: Seasonal do you want to be careful with.

Speaker Change: Receipts.

Speaker Change: We're not going to I think one of the things that Carl said earlier that I would I would agree with is I think inventory management is probably one of the strong suits mcadams over the past five or six years and so we're going to be good stewards of the inventory, but we're not going to be.

Speaker Change: Do you think about chasing in the back half of the year and the ability to do that or just.

Speaker Change: Prudent thing is to leave some sales on the table.

Speaker Change: I have two.

Speaker Change: I think we have done a good job the merchants have done a really good job of keeping our powder dry and maintaining liquidity. So if we see a trend happen and there is inventory available and we think it's at the right price we will definitely chase. It if we think it's going to convert into sales.

Karl Ford: But as we think about the remainder of this year, and you think about a world where, you know, inflation is probably realistic to think about, you know, you break it down between discretionary and non-discretionary spend. And from a non-discretionary spend perspective, you know, you've got food. About 85% of what Americans eat is produced here. And so we think that that part of non-discretionary is going to be somewhat insulated from tariffs. I mean, obviously, I saw some articles yesterday about, like, price of steel and packed and canned food. But we think that food prices should not feel as big a brunt as the rest of, you know, kind of merchandise, general merchandise in America feels.

John: So focused on that that we ignore opportunities I mean, I think a great example of that is what we did in Q in Q1.

John: Normally we would not have inventory up almost 15% in dollars six 5% units per store, we saw an opportunity to leverage our balance sheet to grab some good inventory that didn't have a markdown liability at attached to it at pre tariff prices. When we took it and I think youre going to see us continue that kind of mindset as we progress throughout the remainder of the year.

Steve Lawrence: You know, normally we would not have inventory up, you know, almost 15% in $, 6.5% units per store. We saw an opportunity to leverage our balance sheet to grab some, you know, good inventory that didn't have a markdown liability attached to it at pre-tariff prices, and we took it. I think you're gonna see us continue that kinda mindset as we progress throughout the remainder of the year.

Speaker Change: I think one of the things that Carl said earlier that I would I would agree with is I think inventory management is probably one of the strong suits mcadams over the past five or six years and so we're going to be good stewards of the inventory, but we're not going to be.

Speaker Change: So focused on that that we ignore opportunities I mean, I think a great example of that is what we did in Q in Q1.

John: I haven't gotten any over questions on inventory, so I kind of wanted to double click on that just a little bit.

Carl Ford: Yeah. I haven't gotten any overt questions on inventory, so I kinda wanna just double-click on that just a little bit. You know, inventory up 15% on the face of the balance sheet, that's $200 million. If you look at it on per store standpoint, plus 7.8%, that $85 million pull forward, which I'm proud of. Like, I think the merchants did a great job of identifying domestic product and not paying 10% to 30% more for this in the back half of the year. If you back that out, cost per store is up, like, 2%.

John: Tori up 50, 15% on a on the face of the balance sheet, that's $200 million.

Speaker Change: Normally we would not have inventory up almost 15% in dollars six 5% units per store.

Karl Ford: On gas front, you know, you've got the industry very – I'm sorry, the administration very focused on holding down price in there. So I think on the non-discretionary spend, I think the customer is going to be okay. So what that puts you in a place of is on the discretionary side, the customer is going to really hopefully have the same amount of money, but want to maximize their spending power. And we think when they do that, they're going to trade in the value. And we think that by remaining true to who we are, being the value provider in our space, we think we're going to benefit from that and have more people trade into Academy.

John: If you look at it.

John: <unk> per store standpoint, plus seven 8% that $85 million pull forward, which I'm proud of.

Speaker Change: We saw an opportunity to leverage our balance sheet to grab some good inventory that didn't have a markdown liability at attached to it at pre tariff prices. When we took it and I think youre going to see us continue that kind of mindset as we progress throughout the remainder of the year.

John: I think the merchants did a great job of identifying domestic product.

John: And not paying 10% to 30% more for this in the back half of the year, if you back that out.

Speaker Change: I haven't gotten any over questions on inventory, so I kind of wanted to double click on that just a little bit of inventory up 50, 15% on a on the face of the balance sheet, that's $200 million.

John: Cost per store is up like 2% and then I do want to highlight terraform in an effect on.

Carl Ford: I do want to highlight, tariffs went in effect on 4 February, I think was when the first announcement was. We've got about $30 million embedded within that inventory on the balance sheet. That's a year-over-year growth over last year. If you adjust for those two things, I think our inventory is tracking down, you know, negative 0.5%, which is pretty in line.

Speaker Change: If you look at it.

Karl Ford: So that's really how we're thinking about the health of the customer and how this all plays out for the remainder of the year. Thank you.

John: On February 4th I think was when the first announcement was we got about $30 million embedded within that inventory on the balance sheet. That's a year over year growth over last year. If you adjust for those two things I think our inventory is tracking down.

Speaker Change: <unk> per store standpoint, plus seven 8% that $85 million pull forward, which I'm proud of like I.

Speaker Change: I think the merchants did a great job of identifying domestic product and not paying 10% to 30% more for this in the back half of the year, if you back that out.

Greg Melich: Our next question comes from the line of Greg Melich with Evercore ISI. I had a question really on margins and sort of two parts. First, on the gross margin, just want to make sure I get the cadence right here. With the up 60 in the first quarter, and I think the midpoint of your guy being up 25 bips or something, with that inventory that you bought, does that give you one, two, or three quarters before we'd start to see some of the, you know, you basically get through that inventory, and then we could see some pressure in gross margin offsetting the benefits from it?

John: Hatton negative half a percent, which is pretty important store per store.

Speaker Change: Cost per store is up like 2% and then I do want to highlight terraform in an effect on.

John: With with where we are from an overall sales perspective at down <unk>, 9%. So I'm proud of the team for inventory management and I think it's going to be an asset a strength for ours during the balance of this year.

Steve Lawrence: Per store.

Carl Ford: Per store, with where we are from an overall sales perspective, that's down 0.9%. I'm proud of the team for inventory management, and I think it's gonna be an asset, a strength for ours during the balance of this year.

Speaker Change: On February 4th I think was when the first announcement was we got about $30 million embedded within that inventory on the balance sheet. That's a year over year growth over last year. If you adjust for those two things I think our inventory is tracking down.

Speaker Change: Thank you. Our next question comes from the line of Michael Lasser with UBS. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Michael Lasser with UBS. Please proceed with your question.

Speaker Change: Hatton negative half a percent, which is pretty important store per store.

Karl Ford: Yeah, I think the $85 million that we pulled forward was in very strategic categories. I think we think that that's going to get us to the other side of July and August expirations. I think at that point, look, we're going to have to see what the administration does associated with it, but we feel good about holding on to the value proposition through all of this. I really want to underscore that is what's driving these upper quintile customers to us. But just to be clear, the character of this merchandise that we pulled in, we described it as evergreen.

Michael Lasser: Good morning. Thank you so much for taking my question. So coordinated Dave the comps negative yes, Jordan has outperformed what you would expected it to be does this suggest that.

Speaker Change: With with where we are from an overall sales perspective, it down <unk>, 9%. So I'm proud of the team for inventory management and I think it's going to be an asset a strength for ours during the balance of this year.

Michael Lasser: Good morning. Thank you so much for taking my question. Quarter to date, the comp's negative, yet Jordan has outperformed what you would expected it to be. Does this suggest that the assortment excluding Jordan has actually gotten a little bit worse, such that Jordan may not be as incremental as anticipated? Does this not beg the question of if the Q2 is negative despite the Jordan launch, what will it take for Academy to now produce a positive comp? Thank you. I have a follow-up.

Michael Lasser: Excluding Jordan.

Speaker Change: <unk> gotten a little bit worse.

Speaker Change: Thank you. Our next question comes from the line of Michael Lasser with UBS. Please proceed with your question.

John: Jordan may not be as incremental as anticipated and.

John: And does this not beg the question.

Michael Lasser: Good morning. Thank you so much for taking my question, so quota and indeed, the comps negative yes, Jordan has outperformed what you would expected it to be does this suggest that.

John: The second quarter is negative despite that Jordan launch what will it take for Academy.

Karl Ford: It is things that, by definition, don't have a markdown liability generally associated with it. Bikes don't go obsolete, free weights don't go obsolete, fitness equipment generally doesn't go obsolete. So it's a pull forward of goods that we would have received in the back half of this year. It is on product that is not seasonal in nature, and it's at prices that are pre-tariff, so it should allow us to maintain and hold our value proposition as we go into the, you know, third and even fourth quarter in some cases for some of these categories. So I don't think you have to worry about this inventory having some sort of a markdown or margin impact down the road.

Speaker Change: All produce positive comp. Thank you and then I have a follow up.

Speaker Change: Excluding rewarding it's actually gotten a little bit worse.

John: So no I don't think it implies some weakness in the overall assortment.

Steve Lawrence: Yeah. No, I don't think it implies some weakness in the overall assortment. You know, certainly Jordan is a lift force, but, you know, it's only in half the doors at this point, and it's not dramatically moving the needle yet. I think the Nike expansion that we put out there is right now driving a bigger comp increase for us because it's just a bigger vendor for us. I think some of the softness we saw in Q1 in terms of, you know, episodic shopping, you know, and the customer kind of contracting back when there's not a reason to spend, I think continues into Q2, and I think that's gonna continue all the way throughout the remainder of this year, and we plan that in.

John: Certainly Jordan is a lift for us.

Speaker Change: You bet, Jordan may not be as incremental as anticipated and.

John: <unk> only in half the doors at this point and it's not.

Speaker Change: And does this not beg the question.

John: Dramatically moving the needle yet I think the Nike expansion that we put out there is right now driving a bigger comp increase for us.

Speaker Change: If the second quarter is 90 days despite that joining launch what will it take for Academy.

John: Because it's just a bigger vendor for us I think some of the softness we saw in the first quarter in terms of episodic shopping.

Speaker Change: All produce positive comp. Thank you and then I have a follow up.

John: The customer kind of contracting back when there's not a reason to spend I think continues into Q2 and I think that's going to continue all the way throughout the remainder of this year and we plan that in I think some of the categories. We called out that were soft, particularly ammo that was soft in the first quarter continued into Q2.

Speaker Change: So no I don't think it implies some weakness in the overall assortment.

Karl Ford: It will not. Got it. That's very helpful.

Speaker Change: Certainly Jordan is a lift for us.

Speaker Change: <unk> only in half the doors at this point and it's not.

Karl Ford: And then on SG&A, I just want to make sure I got it right. The $7 million on the Jordan launch, is that the portion of the pressure in 1Q that we can just assume goes away going forward? But the other things, the new stores and the other investments sort of stick around? Yeah, absolutely. It was $7.5 million, the precise amount that hit Q1. You should not think about that as impacting Q2 and later. If you look at the composition of the $36 million in gross, about $20 million of it was new stores. We've got 19 new stores, Q1 compared to Q1.

Steve Lawrence: I think some of the categories we called out that were soft, you know, particularly ammo, that was soft in Q1, continued into Q2. I think, you know, what moves us to positive comps throughout this year is leaning into the strategies that we've articulated. I think, you know, we're also, as we get later into this quarter, up against a pretty big slowdown from last year, post Father's Day, where we were bringing in a new warehouse management system that impacted our ability to fill a chunk of our stores, you know, down in the Atlanta area, coupled with some storms. I think we're still optimistic about the remainder of the quarter and don't feel like there's some underlying softness there that we haven't accounted for in our forecast and projections.

Speaker Change: Dramatically moving the needle yet I think the Nike expansion that we put out there is right now driving a bigger comp.

John: I think what.

Speaker Change: <unk> for us.

John: Moves us to positive comps.

Speaker Change: Because it's just a bigger vendor for us I think some of the softness we saw in the first quarter in terms of episodic shopping.

John: Throughout this year is leaning into the strategies that we've.

John: Articulated.

John: And I think.

John: We're also as we get later into this quarter up against a pretty big slowdown from last year.

Speaker Change: On the customer kind of contracting back when there's not a reason to spend I think continues into Q2 and I think thats going to continue all the way throughout the remainder of this year and we plan that in I think some of the categories. We called out that were soft, particularly ammo.

John: Post father's day, where we were bringing in a new warehouse management system that impacted our ability to fulfill a chunk of our stores down in the Atlanta area.

Speaker Change: Soft in the first quarter continued into Q2.

John: With some storm so I think we're still optimistic about the remainder of the quarter and don't feel like there's some underlying softness there that we haven't accounted for in our forecast and projections.

Speaker Change: I think what.

Speaker Change: Moves us to positive comps.

Speaker Change: Throughout this year is leaning into the strategies that we have.

Karl Ford: We talked about the $7.5 million, which was really just centric to Q1 and launching something that we're very proud of associated with the Jordan and the Nike expansion. And then there was a little bit of technology costs. We quoted supply chain. We quoted Omni. But it's also some customer, some of the solutions that we're using to help us identify that customer and target them better. I think the first and the third ones of those, you should expect to continue. The guidance that we put out there still contemplates 100 basis points of deleverage for the year.

Speaker Change: Articulated and I think.

Speaker Change: Okay. My follow up question is Academy is now looking at.

Michael Lasser: Okay. My follow-up question is Academy is now looking at a broader sporting goods retail landscape, where not only is there the potential combination of two of its larger competitors, but also a key vendor that is rapidly growing its wholesale distribution footprint again, across the online-only players as well as some entry price point players. Does this not suggest that Academy should proactively lower its margins to drive sales before the market forces it to do so as a result of increased competition over time? Thank you very much.

Speaker Change: We're also as we get later into this quarter up against a pretty big slowdown from last year.

John: Rotter sporting goods retail landscape, where not only is there the potential combination of two of its larger competitors, but also a key vendor that is rapidly growing its wholesale distribution footprint again.

Speaker Change: Post father's day, where we were bringing in a new warehouse management system that impacts our ability to fulfill a chunk of our stores down in the Atlanta area, coupled with some storm. So I think we're still optimistic about the remainder of the quarter and don't feel like Theres. Some underlying softness there that we haven't accounted for in our forecast and projections.

John: The online only players as well as some entry price point players does this not suggest that.

Speaker Change: Okay. My follow up question is Academy is now looking at.

John: Academy should proactively lower its margins to drive sales before the market forces to do so as a result of increased competition over time. Thank you very much.

Speaker Change: A broader sporting goods retail landscape, where not only is there the potential combination of two of its larger competitors.

Karl Ford: And I think what you guys have seen from us over the last couple of years is we manage inventory well and we manage costs pretty well, but we're I'm proud of the fact that we're investing in these initiatives, these things that we've told you that we're going to stand for. So where you can look for us to continue to invest and where all of that de-leverage will come from is these strategies that are embedded within our long-range plan.

Speaker Change: Also a key vendor that is rapidly growing its wholesale distribution footprint again across the online only players as well as some entry price point players.

Speaker Change: Well I mean, it's you kind of veiling. Your question, there, but I mean, I guess, what I would say is.

Steve Lawrence: Well, I mean, it's, you're kind of veiling your question there, but, I mean, I guess what I would say is, you know, the combination of two competitors that already existed in the marketplace, I don't think changes the dynamic that much for us. I mean, you know, Michael, I said this earlier. We're more broad-based than just footwear and apparel. You know, we sell. Certainly footwear and apparel is a chunk of our business, but, big outdoor business, hunting, fishing, and camping. We do a big recreation business, backyard grilling, et cetera, that I think puts us in a pretty unique space in the marketplace in terms of the breadth of our assortment. We're gonna continue to lean into those things that we're good at and make us different and set us apart.

John: The combination of two competitors that already existed in the marketplace I don't think changes the dynamic that much for us.

Speaker Change: This is not to suggest that.

Speaker Change: You know Michael I said this earlier were more broad based than just footwear and apparel.

Speaker Change: Ketamine shouldn't look proactively lower its margins to drive sales before the market forces to do so as a result of increased competition over time. Thank you very much.

Unknown Executive: That's great. Thanks and good luck, guys. Thanks. Appreciate it. Thank you.

John: We sell certainly footwear and apparel is a chunk of our business but.

John: Big outdoor business hunting fishing camping, and we do a big recreation business backyard, grilling et cetera that I think puts us in a pretty unique space.

John Heinbockel: Our next question comes from the line of John Heinbockel with Guggenheim Partners. Hey Steve, wanted to start with, I think you've got right now I think 80 or 90 Jordan item SKUs, something like that. Where do you think that ultimately shakes out? You had cleats and maybe some other categories. You know, is it 2x that and that's where it stays and then you freshen it up? And then the other part of that was, when you think about the comp lift, do you think having Jordan drives traffic that benefits other categories? Or that's hard to tell?

Speaker Change: Well I mean, it's kind of early in your question, there, but I mean, I guess, what I would say is the.

Speaker Change: The combination of two competitors that already existed in the marketplace I don't think changes the dynamic that much for us I mean.

John: In the marketplace in terms of the breadth of our assortment and we're going to continue to lean into those things that we're good at and make us different and set us apart.

Speaker Change: Michael I said this earlier, where we're more broad based than just footwear and apparel.

John: At the same time I think we already do offer really good value relative to I think both the competitors you mentioned and we're not going to lose side of that we're going to continue to maintain.

Steve Lawrence: At the same time, I think, we already do offer a really good value relative to, I think both the competitors you mentioned. We're not gonna lose sight of that. We're gonna continue to maintain our value and our value positioning in the space to make sure that any kind of pricing increases that create their way into the marketplace, that we're still very focused on maintaining our relative value to competition. I don't see this changing the dynamic that much for us. You know, we're off mall. A lot of the stores you're talking about are on mall. We're attacking a different customer. We're in more mid-sized markets outside of Texas versus large markets. I think there's plenty of room for both to coexist.

Speaker Change: We sell certainly footwear and apparel is a chunk of our business but.

Speaker Change: Big outdoor business hunting fishing camping, and we do a big recreation business backyard, grilling et cetera that I think puts us in a pretty unique space.

John: Our value.

John: And our value positioning in the space to make sure that any kind of pricing increases that create their way into the marketplace that we're still very focused on maintaining a relative value to competition. So I don't see this changing the dynamic that much for us.

Steve Lawrence: So I'll start with the first part. So we expect the assortment to continue to grow as we grow through this year and into next year. I don't have off the top of my head, you know, a number that it's going to be 2x or whatever the current size is. You're going to see, I think we said on the prepared remarks, you know, as we get into new categories like football cleats, backpacks, things like that for back to school, you're going to see those expand beyond the 145 doors that the core assortments in. But obviously, we will continue to grow.

Speaker Change: In the marketplace in terms of the breadth of our assortment and we're going to continue to lean into those things that we're good at and make us different and set us apart are.

Speaker Change: At the same time I think we already do offer really good value relative to I think both the competitors you mentioned and we're not going to lose sight of that we're going to continue to maintain our value.

John: We are off mall, a lot of the stores Youre talking about our on mall. So were attacking a different customer we're in more mid sized markets outside of Texas versus large market. So I think there is plenty of room for both coexist.

John: And at.

Speaker Change: And our value positioning in the space to make sure that any kind of pricing increases that create their way into the marketplace that we're still very focused on maintaining a relative value to competition. So I don't see this changing the dynamic that much for us.

John: At the heart of your question, if we thought lowering margins would drive.

Steve Lawrence: You know, at the heart of your question, if we thought lowering margins would drive more market share and more top-line sales, we could hold margin dollars constantly, we'd certainly look at that. We haven't seen anything to indicate that that would actually play out yet.

Steve Lawrence: I think the footwear assortments already more than doubled since we launched. You'll see that continue to grow. You'll see the apparel continue to grow. And I think you'll see it extend into new categories. And we think this is not just a once and done. We expect that to continue into next year. I think the Jordan brand is going to offer us a growth platform for, you know, several years to come candidly as we expand in more categories and into more stores in the next year. I do believe it helps bring in a different customer for us.

John: More market share and more top line sales and to hold margin dollars constantly certainly looked at that we haven't seen anything to indicate that that would actually play out yet.

Speaker Change: We are off mall a lot of the stores you are talking about our on mall. So were attacking a different customer we're in more mid sized markets outside of Texas versus large market. So I think there's plenty of room for both coexist.

Speaker Change: Understood. Good luck with the rest of the second quarter. Thank you very much.

Michael Lasser: Understood. Good luck with the rest of the Q2. Thank you very much.

John: Michael.

John: I think we've got time for one more question.

Steve Lawrence: Thanks, Michael. I think we got time for one more question.

Speaker Change: And at the heart of your question, if we thought lowering margins.

John: Thank you.

Speaker Change: Our final question. This morning comes from the line of Anthony to come back with loop capital markets. Please proceed with your question.

Operator: Thank you. Our final question this morning comes from the line of Anthony Chukumba with Loop Capital Markets. Please proceed with your question.

Steve Lawrence: I mean, we certainly picked it up because it was the number one most requested brand on our site that we didn't have access to. So there was some internal searches for it. And that was probably customers who were shopping with us regularly who had to go other places to find it. But from looking at the traffic data that we're getting through Placer, we believe it's bringing in an incremental new customer. And we think that's evidenced by that acceleration and kind of trade across that we're seeing at the higher end consumers. We're seeing more new consumers who didn't shop this before making north of $100,000 a year, finding us and bringing, you know, their dollars to spend with us.

Speaker Change: Drive.

Speaker Change: More market share and more top line sales and can hold margin dollars constantly certainly look at that we haven't seen anything to indicate that that would actually play out yet.

John: Yes.

Anthony: Thanks for squeezing me in I appreciate it so you talked about the.

Anthony Chukumba: Thanks for squeezing me in. I appreciate it. You talked about the, you know, the strength in higher income cohorts, which is certainly encouraging. You know, how would you characterize the traffic with more of your, kind of your core customer? You know, 'cause I'm just thinking that, you know, if you had strong growth with the higher income customers and you sort of net out at mid-single digits for traffic decline, you know, I'm just trying to see what that implies for your lower income customers. Thanks. Or core customers.

Anthony: The strength in higher income cohorts, which is certainly encouraging.

Speaker Change: Understood. Good luck with the rest of the second quarter. Thank you very much.

John: How was how would you characterize the traffic with more of your kind of your core customer.

Speaker Change: Michael.

Speaker Change: I think we've got time for one more question.

John: Because I'm just thinking that you know if you had strong growth with the with the with the with the higher income customers.

Speaker Change: Thank you.

Speaker Change: Our final question. This morning comes from the line of Anthony to come back with loop capital markets. Please proceed with your question.

John: Can you sort of net out at mid single digits.

John: For traffic decline I'm, just trying to see what that implies for lower income customers.

Speaker Change: Yes.

Anthony: Thanks for squeezing me in I appreciate it so you talked about the.

Steve Lawrence: And we think a chunk of that is because of Jordan.

Steve Lawrence: And just secondly, how do you think about, I know seasonal you want to be careful with receipts. How do you think about chasing in the back half of the year and the ability to do that or just the prudent thing is to leave some sales on the table if you have to? I think we have done a good job, the merchants have done a really good job of keeping our powder dry and maintaining liquidity. So if we see a trend happen and there's inventory available and we think it's at the right price, we will definitely chase it if we think it's going to convert into sales.

Speaker Change: The strength in higher income cohorts, which is certainly encouraging.

John: Yeah.

John: Look at it the same way that what you're asking so basically a third of our.

Carl Ford: Yeah. I mean, we look at it the same way that what you're asking. Basically a third of our customers are in quintiles four and five. They're growing. A third of our customers are in quintiles one and two, basically households that make less than $50,000. They're shrinking, but the growth in Q4 and five is outpacing the shrinking in quintiles one and two. A third makes about $50,000 to $100,000, which is kind of our sweet spot, our core. You know, we saw that quintile three, what you call the core customer, those that make $50,000 to $100,000 inflect positive in April. I think we're going to continue to see quintiles four and five growing at a outpaced rate to what we're losing at below $50,000.

Speaker Change: How was how would you characterize the traffic with more of your kind of your core customer.

John: Customers are in Quintiles, four and five they are growing.

Speaker Change: Because I'm just thinking that you know if you had strong growth with the with the with the with the higher income customers and you can you sort of net out at mid single digits.

John: Third of our customers arent Quintiles, one and two so basically households that make less than 50000, they're shrinking.

Speaker Change: For traffic decline I am just trying to see what that implies for your lower income customers.

John: But the growth in Q4, and five is outpacing the shrinking and Quintiles, one and two and then a third makes about 50 to $100000 that's kind of our sweet spot. Our core we saw that that quintile three what you call. It a core customer or does that make 50 to 100 inflect positive.

Speaker Change: Yes.

Speaker Change: Yeah, I mean, we look at it the same way that what you're asking so basically a third of our.

Steve Lawrence: We're not going to, you know, I think one of the things that Carl said earlier that I would agree with is I think inventory management is probably one of the strong suits of the inventory, but we're not going to be so focused on that that we ignore opportunities. I mean, I think a great example of that is what we did in Q1. You know, normally we would not have inventory up, you know, almost 15% in dollars, 6.5% in units per store, but we saw an opportunity to leverage our balance sheet to grab some, you know, good inventory that didn't have a markdown liability yet attached to it at pre-tariff prices and we took it and I think you're going to see us continue that kind of mindset as we progress throughout the remainder of the year.

Speaker Change: Customers are in Quintiles, four and five they are growing.

Speaker Change: Third of our customers arent Quintiles, one and two so basically households that make less than 50000, they're shrinking.

John: In April.

John: I think we're going to continue to see Quintiles, four and five growing at a outpaced rate to what we're losing at below 50000, and I think making sure that we have initiatives that are in our base markets that attract those 50 to 100000 customers to us or to shop more frequently.

Speaker Change: But the growth in Q4, and five is outpacing the shrinking and Quintiles, one and two and then a third makes about 50 to $100000 that's kind of our sweet spot. Our core we saw that that quintile three what you call. It a core customer or those that make 50 to 100 inflect positive.

Carl Ford: I think making sure that we have initiatives that are in our base markets that attract those 50,000 to 100,000 customers to us or to shop more frequently is really important. I think the stuff that we're doing with customer and customer targeting, we've come a long way there. I think e-commerce lifts all boats. I'm really excited about kind of these technology rollouts that we're doing in stores. We're seeing a lot of lift associated with the say it to sale kind of associate handheld device and RFID things that we're doing. Jordan. I think these are things that kind of are in that 50,000 to 100,000, and I think that's. You know, if we get three of those quintiles, I think that's a really good outcome.

John: Is really important I think the stuff that we're doing with customer and customer targeting we'd come up along the way there I think e-commerce lifts all boats I'm really excited about kind of these technology rollouts that we're doing in stores, we're seeing a lot of lift associated with the sand to sale kind of associate handheld device.

Speaker Change: In April.

Speaker Change: I think we're going to continue to see Quintiles, four and five growing at a outpaced rate to what we're losing at below 50000, and I think making sure that we have initiatives that are in our base markets that attract those 50 to 100000 customers to us or to shop more frequently.

Karl Ford: Yeah, I haven't gotten any overt questions on inventory, so I kind of want to double click on that just a little bit. You know, inventory up 15% on the face of the balance sheet, that's $200 million. If you look at it on per store standpoint, plus 7.8%, that $85 million pull forward, which I'm proud of. Like, I think the merchants did a great job of identifying domestic product and not paying 10% to 30% more for this in the back half of the year. If you back that out, cost per store is up like 2%. And then I do want to highlight tariffs in effect on February 4th, I think was when the first announcement was.

John: This and RFID things.

John: Things that were doing them in Jordan I think these are things that kind of are in that 50 to 100000, and I think thats. If we get three of those Quintiles I think that's a really good outcome.

Speaker Change: Is really important I think the stuff that we're doing with customer and customer targeting we can come up along the way there I think e-commerce lifts all boats I'm really excited about kind of east technology Rollouts that we're doing in stores, we're seeing a lot of lift associated with the sand to sale kind of associate handheld.

John: Got it that's helpful. And then just one quick follow up.

Anthony Chukumba: Got it. That's helpful. Just one quick follow-up. You mentioned, and I just want to get a clarification, so we're opening 20 to 25 stores this year, and I'm just trying to think about, you know, what's a reasonable expectation for next year, particularly given your commentary on potentially you know, kind of moving back store openings because of potential tariff impact.

John: So you mentioned and I just want to kind of clarification sake. We're opening 2025 stores this year and I'm just trying to think about.

John: What's the reasonable expectation for next year, particularly given your commentary on potentially.

Speaker Change: Ice and.

Speaker Change: RFID.

Speaker Change: Things that we're doing and in Jordan I think these are things that kind of are in that 50 to 100000, and I think thats. If we get three of those Quintiles I think that's a really good outcome.

John: Kind of moving back store openings because of potential tariff impact.

Karl Ford: We've got about $30 million embedded within that inventory on the balance sheet that's a year-over-year growth over last year. If you adjust for those two things, I think our inventory is tracking down negative half a percent, which is pretty in line per store with where we are from an overall sales perspective at down 0.9%. So, I'm proud of the team for inventory management, and I think it's going to be an asset, a strength for ours during the balance of this year.

John: Yes, so what we're trying to signal there is we're not giving guidance for next year.

Steve Lawrence: Yeah. What we're trying to signal there is, we're not giving guidance for next year. If you go back and look at our original long-range plan, I mean, there was an acceleration from year to year. I will tell you this year, I think we scaled that number back. I think we're supposed to be 30 to 35 and, you know, we're like 20 to 25. I think you could imply probably something accelerating based off whatever we're thinking about this year. Right now, what we've done is just hit pause on signing a lot of new leases until we can get a bead on what the construction costs are gonna be. At this point, we would see, you know, what we initially would open up in Q1 moving into Q2.

John: But if you go back and look at our original long range plan. I mean, there was an acceleration from year to year I will tell you. This year I think we scaled that number back I think we're supposed to be 30% to 35, and we're like $20 to 25. So I think you would you could imply probably something.

Speaker Change: Got it that's helpful. And then just one quick follow up.

Speaker Change: So you mentioned and I just wanted clarification. So we're opening 2025 stores this year and I'm just trying to think about.

Speaker Change: What's the reasonable expectation for next year, particularly given your commentary on potentially kind.

John: Accelerating based off what we're thinking about this year, but right now what we've done is just hit pause on signing a lot of new leases.

Speaker Change: Kind of moving back store openings because of potential tariff impact.

Speaker Change: Yes, so what we're trying to signal there is we're not giving guidance for next year.

John: Until we can get a bead on what the construction costs are going to be at.

John: At this point, we would see what we have initially we have opened up in Q1 moving into Q2.

Speaker Change: But if you go back and look at our original long range plan. I mean, there was an acceleration from year to year I will tell you. This year I think we scaled that number back I think we're supposed to be 30 to 35, and we're like $20 to 25. So I think you would you could imply probably something.

Michael Lasser: Thank you.

Michael Lasser: Our next question comes from the line of Michael Lasser with UBS. Good morning. Thank you so much for taking my question. So, quarter to date, the comp's negative, yet Jordan has outperformed what you had expected it to be. Does this suggest that the assortment excluding Jordan has actually gotten a little bit worse, such that Jordan may not be as incremental as anticipated? And does this not beg the question of, if the second quarter is negative, despite the Jordan launch, what will it take for Academy to now produce a positive comp? Thank you.

John: So we will give you more details on that as we get more color on it but I don't see a change in the overall number for next year I think it's just maybe shifting a little bit more out of Q1 into Q2 and as you know we tried to move more up in the front part of the year. So I just wanted to signal that that may be a little more Q2 weighted mixture than we'd hoped for just based off of trying to make sure. We get a good bead on what's happening from a costing for those.

Steve Lawrence: We'll give you more details on that as we get more color on it. I don't see it changing the overall number for next year. I think it's just maybe shifting a little bit more out of Q1 into Q2. As you know, we try to move more up in the front part of the year. We just wanted to signal that that may be a little more Q2-weighted next year than we'd hoped for, just based off of trying to make sure we get a good bead on what's happening from a costing for those stores.

Speaker Change: Accelerating based off what we're thinking about this year, but right now what we've done is just hit pause on signing a lot of new leases.

Speaker Change: Until we can get a bead on what the construction costs are going to be at.

John: Stores.

Speaker Change: At this point, we would see you know what we have initially we will open up the Q1 moving into Q2.

John: Got it thank you.

Anthony Chukumba: Got it. Thank you.

John: Thank you.

Speaker Change: Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. Lawrence for any final comments.

Steve Lawrence: Thank you.

Speaker Change: So we'll give you more details on that as we get more color on it but I don't see a change in the overall number for next year I think it's just maybe shifting a little bit more out of Q1 into Q2 and as you know we tried to move more up in the front part of the year. So I just wanted to signal that that may be a little more Q2 weighted mixture that we'd hoped for just based off of trying to make sure. We get a good view on what's happening from a costing for those.

Operator: Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Lawrence for any final comments.

Speaker Change: Thanks as.

Speaker Change: As I always do I want to sincerely. Thank our 22000 plus Academy team members, who tirelessly work to give our customers an outstanding shopping experience.

Steve Lawrence: Thanks. As I always do, I wanna sincerely thank our 22,000 plus Academy team members who tirelessly work to give our customers an outstanding shopping experience. I also wanna thank our analysts, investors, and vendors for listening to our call today. Despite the uncertainty we all face, we feel very confident in our strategy and believe that we're well positioned to not only meet the current challenges, but to come out of this year better positioned than ever to serve our customers and deliver long-term growth. I wanna leave you by reiterating a few proof points that give us confidence that our strategies are starting to take hold. First, all the work we've put in has helped our e-commerce business run a 10% increase during Q1. Second, the 2022 and 2023 vintages of stores continue to comp positive.

John: I also want to thank our analysts investors and vendors for listening to our call today.

Steve Lawrence: And then I have a follow-up. Yeah, so no, I don't think it implies some weakness in the overall assortment. You know, certainly Jordan is a lift for us, but you know, it's only in half the doors at this point, and it's not dramatically moving the needle yet. I think the Nike expansion that we put out there is right now driving a bigger comp increase for us, because it's just a bigger vendor for us. I think some of the softness we saw in the first quarter in terms of, you know, episodic shopping, you know, and the customer kind of contracting back when there's not a reason to spend, I think continues into Q2, and I think that's going to continue all the way throughout the remainder of this year, and we plan that in.

Speaker Change: Stores.

John: Despite the uncertainty we all face we feel very confident in our strategy and believe that we're well positioned to not only meet the current challenges, which come out of this year better positioned than ever to serve our customers and deliver long term growth.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Speaker Change: Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. Lawrence for any final comments.

Speaker Change: Thanks <unk>.

John: I want to leave you by reiterating a few proof points that give us confidence that our strategies are starting to take hold.

Speaker Change: I always do I want to sincerely. Thank our 22000 plus Academy team members, who tirelessly work to give our customers an outstanding shopping experience.

John: First all the work we've put in has helped our ecommerce business around a 10% increase during Q1.

Speaker Change: I want to thank our analysts investors and vendors for listening to our call today.

John: The 2022, and 2023 vintages of stores continue to comp positive third we're gaining market share in the face of the challenged consumer environment, driven by an acceleration in customer traffic and consumers as households make $100000 in greater and fourth our Jordan brand launched Nike expansion plans are just starting to bear fruit and should provide a tailwind to remainder of the year. Thanks for joining.

Speaker Change: Spite the uncertainty we all face we feel very confident in our strategy and believe that we're well positioned to not only meet the current challenges, which come out of this year better positioned than ever to serve our customers and deliver long term growth.

Steve Lawrence: Third, we're gaining market share in the face of a challenging consumer environment, driven by an acceleration in customer traffic and consumers whose households make $100,000 and greater. Fourth, our Jordan Brand launch and Nike expansion plans are just starting to bear fruit and should provide a tailwind the remainder of the year. Thanks for joining us today, and have a great rest of your day.

Steve Lawrence: I think some of the categories we called out that were soft, you know, particularly ammo, that was soft in the first quarter, continued into Q2. I think, you know, what moves us to positive comps throughout this year is leaning into the strategies that we've articulated, and I think, you know, we're also, as we get in later into this quarter, up against a pretty big slowdown from last year, post-Father's Day, where we were bringing in a new warehouse management system that impacted our ability to fill a chunk of our stores, you know, down in the Atlanta area, a couple of some storms. So, I think we're still optimistic about the remainder of the quarter, and don't feel like there's some underlying softness there that we haven't accounted for in our forecasts and projections.

Speaker Change: Want to leave you by reiterating a few proof points that give us confidence that our strategies are starting to take hold.

John: US today and have a great rest of your day.

Speaker Change: All the work we put in has helped our ecommerce business around a 10% increase during Q1.

Speaker Change: Thank you. This concludes today's conference Center Conference call. You may disconnect. Your lines at this time. Thank you for your participation.

Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: The 2022, and 2023 vintages of stores continue to comp positive third we're gaining market share in the face of a challenged consumer environment, driven by an acceleration in customer traffic and consumers, whose households make $100000 in greater and fourth our Jordan brand launched Nike expansion plans are just starting to bear fruit and should provide a tailwind to remainder of the year. Thanks for joining.

Speaker Change: US today and have a great rest of your day.

Speaker Change: Thank you. This concludes today's conference Center Conference call. You may disconnect. Your lines at this time. Thank you for your participation.

Steve Lawrence: Okay.

Steve Lawrence: My follow-up question is Academy is now looking at a broader sporting goods retail landscape where not only is there the potential combination of two of its larger competitors, but also a key vendor that is rapidly growing its wholesale distribution footprint again across the online only players as well as some entry price point players. Does this not suggest that Academy should proactively lower its margins to drive sales before the market forces it to do so as a result of increased competition over time. Thank you very much. Well, I mean, it's you're kind of veiling your question there.

Steve Lawrence: But I mean, I guess what I would say is, you know, the combination of two competitors that already existed in the marketplace, I don't think changes the dynamic that much for us. I mean, You know, Michael, I said this earlier, we're, we're more broad based than just footwear and apparel. You know, we sell certainly footwear and apparel is a chunk of our business, but big outdoor business, hunting, fishing, camping, we do a big recreation business, backyard, grilling, etc. That I think puts us in a pretty unique space in the marketplace in terms of the breadth of our assortment.

Steve Lawrence: And we're going to continue to lean into those things that we're good at and make us different and set us apart. At the same time, I think we already do offer really good value relative to, I think, both competitors you mentioned, and we're not going to lose sight of that. We're going to continue to maintain our value and, and our value positioning in the space to make sure that any kind of pricing increases that creep their way into the marketplace that we're still very focused on maintaining our relative value to competition. So I don't see this changing the dynamic that much for us.

Steve Lawrence: You know, we're off mall. A lot of the stores you're talking about are on mall. So we're attacking a different customer. We're in more mid-sized markets outside of Texas versus large markets. So I think there's plenty of room for both to coexist. And, you know, at the heart of your question, if we thought lowering margins would drive more market share and more top line sales and could hold margin dollars constantly, we'd certainly look at that. We haven't seen anything to indicate that that would actually play out yet. Understood. Good luck with the rest of the second quarter.

Steve Lawrence: Thank you very much.

Anthony Chukumba: I think we've got time for one more question. Thank you. Our final question this morning comes from the line of Anthony Chukumba with Loop Capital Markets. Please proceed with your question. Thanks for squeezing me in, I appreciate it. So you talked about the strength in higher income cohorts, which is certainly encouraging. How would you characterize the traffic with more of your core customer? Because I'm just thinking that if you had strong growth with the higher income customers and you sort of net out at mid-single digits for traffic decline, I'm just trying to see what that implies for your lower income customers.

Karl Ford: Koch. Yeah, I mean, we look at it the same way that what you're asking. So basically, a third of our customers are in quintiles four and five, they're growing. A third of our customers are in quintiles one and two. So basically, households that make less than $50,000, they're shrinking. But the growth in Q4 and five is outpacing the shrinking in quintiles one and two. And then a third makes about $50,000 to $100,000, which is kind of our sweet spot, our core. You know, we saw that quintile three, what you call the core customer, those that make $50,000 to $100,000, inflect positive in April.

Karl Ford: I think we're going to continue to see quintiles four and five growing at an outpaced rate to what we're losing at below $50,000. And I think making sure that we have initiatives that are in our base markets that attract those $50,000 to $100,000 customers to us or to shop more frequently is really important. I think the stuff that we're doing with customer and customer targeting, we've come a long way there. I think e-commerce lifts all boats. I'm really excited about kind of these technology rollouts that we're doing in stores. We're seeing a lot of lifts associated with the sale to sale kind of associate handheld device and RFID things that we're doing.

Karl Ford: And then Jordan, I think these are things that kind of are in that $50,000 to $100,000. And I think that's, you know, if we get three of those quintiles, I think that's a really good outcome. Got it. That's helpful.

Steve Lawrence: And then just one quick follow up. So you mentioned, and I just want to kind of clarification, so we're opening 20 to 25 stores this year. And I'm just trying to think about, you know, what's a reasonable expectation for next year, particularly given your commentary on potentially, you know, kind of moving back store openings because of potential tariff. Yeah, so what we're trying to signal there is, we're not getting guidance for next year. But if you go back and look at our original long range plan, I mean, there was an acceleration from year to year.

Steve Lawrence: I will tell you this year, I think we scaled that number back, I think we're supposed to be 30 to 35. And, you know, we're like 20 to 25. So I think you would, you could imply probably something accelerating based off whatever we're thinking about this year. But right now, what we've done is just hit pause on signing a lot of new leases, until we can get a beat on what the construction costs are going to be. At this point, we would see, you know, what we initially would open up in Q1 moving into Q2.

Steve Lawrence: So we'll give you more details on that as we get more color on it. But I don't see it changing the overall number for next year. I think it's just maybe shifting a little bit more out of Q1 into Q2. And as you know, we, we try to move more up in the front part of the year. So we just wanted to signal that that may be a little more Q2 way to make sure that we hope for just based off of trying to make sure we get a good view on what's happening from a costing for those stores.

Operator: got it. Thank you. Ladies and gentlemen, that concludes our time allowed for questions.

Steve Lawrence: I'll turn the floor back to Mr. Lawrence for any final comments. Thanks. As I always do, I want to sincerely thank our 22,000 plus Academy team members who tirelessly work to give our customers an outstanding shopping experience. I also want to thank our analysts, investors, and vendors for listening to our call today. Despite the uncertainty we all face, we feel very confident in our strategy and believe that we're well positioned to not only meet the current challenges, but to come out of this year better positioned than ever to serve our customers and deliver long-term growth.

Steve Lawrence: I want to leave you by reiterating a few proof points that give us confidence that our strategies are starting to take hold. First, all the work we've put in has helped our e-commerce business run a 10% increase during Q1. Second, the 2022 and 2023 advantages of stores continue to count positive. Third, we're gaining market share in the face of a challenging consumer environment driven by an acceleration in customer traffic and consumers whose households make $100,000 and greater. And fourth, our Jordan brand launch and Nike expansion plans are just starting to bear fruit and should provide a tailwind the remainder of the year.

Steve Lawrence: Thanks for joining us today and have a great rest of your day. Thank you.

Operator: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Q1 2025 Academy Sports & Outdoors Inc Earnings Call

Request a DemoDemo

ASO

Academy Sports & Outdoors

Earnings