Q1 2026 Academy Sports & Outdoors Inc Earnings Call

June 9, 2026

Operator 1: Good morning, and welcome to the Academy Sports & Outdoors first quarter 2026 Earnings Conference Call. This call is being recorded, and all participants are on a listen-only mode. Following the prepared remarks, there'll 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 your question during the call, please press star one from your telephone keypad. If you require operator assistance during the call, please press star zero. I will now turn the call over to your host, Dan Aldridge, Vice President, Investor Relations for Academy Sports & Outdoors.

Operator: Good morning, and welcome to the Academy Sports + Outdoors First quarter 2026 Earnings Conference Call. This call is being recorded, and all participants are on a listen-only mode. Following the prepared remarks, there'll 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 your question during the call, please press star one from your telephone keypad. If you require operator assistance during the call, please press star zero. I will now turn the call over to your host, Dan Aldridge, Vice President, Investor Relations for Academy Sports + Outdoors.

Speaker #2: 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.

Speaker #2: To ask your question during the call, please press star 1 on your telephone keypad. If you require operator assistance during the call, please press star 0.

Speaker #2: I will now turn the call over to your host, Dan Aldridge, Vice President Investor Relations for Academy Sports & Outdoors. Good morning, everyone, and thank you for joining the Academy Sports & Outdoors 1st Quarter fiscal 2026 financial results call.

Dan Aldridge: Good morning, everyone, and thank you for joining the Academy Sports & Outdoors first quarter fiscal 2026 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 today's earnings release and in our most recent Form 10-K and Form 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 on our website at investors.academy.com.

Dan Aldridge: Good morning, everyone, and thank you for joining the Academy Sports + Outdoors first quarter fiscal 2026 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 today's earnings release and in our most recent Form 10-K and Form 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 on our website at investors.academy.com.

Speaker #2: 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.

Speaker #2: 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 today's earnings release and in our most recent Form 10-K and Form 10-Q filings.

Speaker #2: 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 on our website at investors.academy.com.

Speaker #2: This morning, we will review our financial results for the first quarter of fiscal 2026, provide an update on our strategic initiatives, and discuss our outlook for the year.

Dan Aldridge: This morning, we will review our financial results for Q1 of fiscal 2026, provide an update on our strategic initiatives, and discuss our outlook for the year. After we conclude prepared remarks, there will be time for questions. With that, I'll turn the call over to Steve.

Speaker #2: After we conclude our prepared remarks, there will be time for questions. With that, I'll turn the call over to Steve.

Speaker #3: Good morning, everyone, and welcome to our first quarter 2026 earnings call. Our plan this morning is to discuss our Q1 results, while also updating you on the progress we're making against our long-term growth initiatives.

Steve Lawrence: Good morning, everyone, and welcome to our Q1 2026 earnings call. Our plan this morning is to discuss our Q1 results while also updating you on the progress we're making against our long-term growth initiatives. Turning to our Q1 results, we were pleased to move back to comp store growth in Q1, with sales coming in at $1.44 billion, which was up 6.7% in total sales and translated into a 2.9% comp increase. Both the comp and total sales were on the high side of the range we communicated in our press release issued on 7 April 2026, in advance of our Analyst Day, where we gave an update to our long-range plan and goals. These results were driven by a combination of a low single-digit positive traffic coupled with a high single-digit AUR increase.

Speaker #3: Turning to our first quarter results, we were pleased to move back to comp store growth in Q1, with sales coming in at $1.44 billion, which was up 6.7% in total sales and translated into a 2.9% comp increase.

Speaker #3: Both the comp and total sales were on the high side of the range we communicated in our press release issued on April 7, 2026, in advance of our analyst day, where we gave an update to our long-range plan and goals.

Speaker #3: These results were driven by a combination of a low single-digit positive traffic coupled with a high single-digit AUR increase. Units per transaction were down slightly, which we would attribute to the increased AUR.

Steve Lawrence: Units per transaction were down slightly, which we would attribute to the increased AUR. Positive results were broad-based, with our.com business comping up 17% in all four of our divisions running increases for the quarter. Outdoor was our best performing category at up 12%, driven by strength in fishing and shooting sports categories. Beneath the surface, our ammo business, which was a headwind for us most of last year, turned positive in February and accelerated after the conflict in the Middle East began. Our firearms business also continues to be a bright spot, and utilizing NICS checks data as a proxy, we have grown market share in this category for eight consecutive quarters.

Speaker #3: Positive results were broad-based, with our dot-com business comping up 17%, and all four of our divisions running increases for the quarter. Outdoor was our best-performing category, up 12%, driven by strength in the fishing and shooting sports categories beneath the surface.

Speaker #3: Our ammo business, which was a headwind for us most of last year, turned positive in February and accelerated after the conflict in the Middle East began.

Speaker #3: Our firearms business also continues to be a bright spot. And, utilizing NICS checks data as a proxy, we have grown market share in this category for eight consecutive quarters.

Speaker #3: To help build on the momentum in the shooting sports business, we launched the Suppressors category into a limited door count during the first quarter, with a gold rolled them out to over 100 stores by the end of the year.

Steve Lawrence: To help build on the momentum in the shooting sports business, we launched the suppressors category into a limited door count during the first quarter with a goal to roll them out to over 100 stores by the end of the year. This is a rapidly growing category in the industry with a strong attachment rate to firearms and high AURs. Since suppressors are totally new to our assortment, this business should be 100% accretive and provide an additional tailwind for the shooting sports category throughout the remainder of this year and next. Sports and recreation was our second-best business at +6%, with the increase driven by solid gains in baseball, which fueled our team sports business during the first quarter. We also saw a double-digit growth in our front-end business.

Speaker #3: This is a rapidly growing category in the industry, with a strong attachment rate to firearms and high AURs. Since suppressors are totally new to our assortment, this business should be 100% accretive and provide an additional tailwind for the shooting sports category throughout the remainder of this year and next.

Speaker #3: Sports and recreation was our second-best business at plus 6%, with the increase driven by solid gains in baseball, which fueled our team sports business during the first quarter.

Speaker #3: We also saw a double-digit growth in our front-end business. Normally, we don't call out front-end, but we're seeing rapid growth in this area driven by the collectible trading card business, which has benefited from our increased investment in this category.

Steve Lawrence: Normally, we don't call out front end, but we're seeing rapid growth in this area driven by the collectible trading card business, which has benefited from our increased investment in this category. In addition, we continue to see solid improvements in our outdoor speakers business, driven by the leadership position we've taken in Turtlebox. Apparel sales were also positive at +5%, with particular strength in our outdoor and work businesses, supported by expanded assortments from Carhartt, Burlebo, Levi's, and our own Magellan Outdoors brand. We will continue to lean into the Work Western lifestyle trend with the addition of roughly 100 Ariat shops in the back half of the year. On the athletic side of the business, gains were driven by continued momentum in the Nike and Jordan brand, coupled with double-digit increases in our better private brands of Freely and R.O.W.

Speaker #3: In addition, we continue to see solid improvements in our outdoor speakers business, driven by the leadership position we've taken in TurboBox. Apparel sales were also positive, up 5%, with particular strength in our outdoor and work businesses.

Speaker #3: Supported by expanded assortments from Carhartt, Berliebo, Levi's, and our own Academy Sports & Outdoors brand, we will continue to lean into the WorkWestern lifestyle trend with the addition of roughly 100 area shops in the back half of the year.

Speaker #3: On the athletic side of the business, gains were driven by continued momentum in the Nike & Jordan brand, coupled with double-digit increases in our better private brands of Freely & Rowe.

Speaker #3: In the second quarter, we plan to add 55 Jordan brand shops on our apparel pads, which will take our Jordan brand shop count to 200 stores, and continue to fuel the growth in this business.

Steve Lawrence: In Q2, we plan to add 55 Jordan brand shops on our apparel pads, which will take our Jordan brand shop count to 200 stores and continue to fuel the growth in this business. Footwear sales were up 3% for the quarter. Key drivers of growth in Q1 were our cleated business, driven by baseball, along with our summer seasonal businesses driven by Crocs and Birkenstock. We also remain encouraged by the momentum we're seeing in the performance running category, fueled by key platforms such as the Nike Vomero, the Adidas Adizero SL, the New Balance FuelCell Rebel, and the Brooks Glycerin. Our plan is to continue to build out our assortment and space devoted to this category as we progress throughout the remainder of the year.

Speaker #3: Sales were up 3% for the quarter. Key drivers of growth in Q1 were our cleated business, driven by baseball, along with our summer seasonal businesses, driven by Crocs and Birkenstock.

Speaker #3: We also remain encouraged by the momentum we're seeing in the performance running category. Fueled by key platforms such as the Nike Vimero, the Adidas Evo SL, the New Balance Ellipse, and the Brooks Glycerin.

Speaker #3: Our plan is to continue to build out our assortment in space devoted to this category as we progress throughout the remainder of the year.

Speaker #3: Based on the solid start to the year, we saw growth in market share across all of our businesses, both for the quarter and on a rolling 12-month basis.

Steve Lawrence: Based on a solid start to the year, we saw growth in market share across all of our businesses, both for the quarter and on a rolling 12-month basis. We've also driven a positive comp over that same 12-month period. We would attribute the momentum we're building in the business and the market share gains to the continued progress we're making against our three core growth strategies, which I will now give you a brief update on. New store expansion remains our number one growth lever, and we're starting to build critical mass behind this strategy. We began the year with 39 stores from our 2022 through 2024 vintages in our comp base. This tranche of stores continues to perform well, with sales comping in the high single digits.

Speaker #3: We've also driven a positive comp over that same 12-month period. We would attribute the momentum we're building in the business and the market share gains to the continued progress we're making against our three core growth strategies, which I'll now give you a brief update on.

Speaker #3: New store expansion remains our number one growth lever, and we're starting to build critical mass behind this strategy. We began the year with 39 stores from our 2022 through 2024 vintages in our comp base.

Speaker #3: This tranche of stores continues to perform well, with sales comping in the high single digits. We anticipate this tailwind should accelerate as the 24 stores from our 2025 vintage start to flow into the comp base as we progress through the year.

Steve Lawrence: We anticipate this tailwind should accelerate as the 24 stores from our 2025 vintage start to flow into the comp base as we progress through the year. During Q1, we opened up 2 new stores in Canton, Ohio, and Muskogee, Oklahoma, both of which support our strategy to grow in mid-sized markets. These are underserved communities and tend to over-index with our core customer, the Always Gain family. During Q2, we will open up 3 more stores with locations in Altoona, Pennsylvania, North Knoxville, Tennessee, and Morristown, Tennessee. The remaining 15 to 20 stores are expected to open in H2 of the year with a heavy focus in legacy and existing markets. As we head into 2027 and beyond, we expect to have a more balanced mix of openings between H1 and H2 of each year.

Speaker #3: During the first quarter, we opened up two new stores in Canton, Ohio, and Muskogee, Oklahoma, both of which support our strategy of growing mid-sized markets.

Speaker #3: These are underserved communities and tend to over-index with our core customer, the always-game family. During the second quarter, we will open up three more stores, with locations in Altoona, Pennsylvania; North Knoxville, Tennessee; and Morristown, Tennessee.

Speaker #3: The remaining 15 to 20 stores are expected to open in the back half of the year with a heavy focus in legacy and existing markets.

Speaker #3: As we head into 2027 and beyond, we'd expect to have a more balanced mix of openings between the first half and the second half of each year.

Speaker #3: Our second growth strategy is to improve the productivity of our existing businesses. There are multiple initiatives focused on driving comps in our legacy stores and improving the core business during the second quarter.

Steve Lawrence: Our second growth strategy is to improve the productivity of our existing businesses. There are multiple initiatives focused on driving comps in our legacy stores and improving the core business during Q2. Initiatives that will have the biggest impact on our comp sales through the remainder of the year will be the relaunch of our myAcademy Rewards program, which is being integrated into our loyalty ecosystem. The newly integrated program features a 3-tiered structure. The base tier is myAcademy Rewards and does not require a credit card to access savings. The key element of the value proposition at this level includes both a $15 off welcome offer and birthday reward, a $25 off reward and a $500 spend threshold, and free shipping on all dot com orders over $25.

Speaker #3: The initiatives that will have the biggest impact on our comp sales through the remainder of the year will be the relaunch of our My Academy Rewards program, which is being integrated into our loyalty ecosystem.

Speaker #3: The newly integrated program features a three-tiered structure. The base tier is My Academy Rewards and does not require a credit card to access savings.

Speaker #3: The key element of the value proposition at this level includes both a $15 off welcome offer and birthday reward, a $25 off reward at a $500 spend threshold, and free shipping on all dot com orders over $25.

Speaker #3: The middle tier of My Academy Rewards requires an Academy private label credit card, which gives you access to 5% off your purchases at Academy.

Steve Lawrence: The middle tier of myAcademy Rewards requires an Academy private label credit card, which gives you access to 5% off your purchases at Academy. It's important to note that the customer gets these savings instantaneously at point of sale versus having to wait for a reward certificate that they can redeem against future purchases, which is the case with most of the competitive offers in the marketplace. This tier also qualifies for free shipping on all dot com purchases with no minimum purchase requirement. The top tier is unlocked by our new co-branded myAcademy Rewards Mastercard, which we call the official card of fun. Customers in this tier get all the benefits from the other tiers while also getting a higher credit limit coupled with a best-in-market 2% back on all spend outside of Academy in the form of rewards that can only be redeemed at Academy.

Speaker #3: It's important to note that the customer gets these savings instantaneously at point of sale, versus having to wait for rewards certificate that they can redeem against future purchases, which is the case with most of the competitive offers in the marketplace.

Speaker #3: This tier also qualifies for free shipping on all dot com purchases with no minimum purchase requirement. The top tier is unlocked by our new co-branded My Academy Rewards Mastercard, which we call the official card of fun.

Speaker #3: Customers in this tier get all the benefits from the other tiers, while also receiving a higher credit limit, coupled with a best-in-market 2% back on all spend outside of Academy, in the form of rewards that can only be redeemed at Academy.

Speaker #3: We're in the process of reaching new cards to all of our current cardholders and plan to be complete by the end of June. We're already seeing an uplift in sales from this initiative, driven by increased enrollment and card utilization.

Steve Lawrence: We're in the process of reissuing new cards to all of our current cardholders and plan to be complete by the end of June. We're already seeing an uplift in sales from this initiative driven by increased enrollment and card utilization. We believe customers are leveraging our best-in-market value proposition as a way to offset the rising costs they're dealing with in their everyday lives. Enrollment in myAcademy Rewards is up double digits year over year, with our goal being to add an additional 2 million new members this year, which will grow our total loyalty program to over 15 million members. As we shared before, summer is one of our prime selling seasons, and we're well positioned this year to help fuel the fun for our customers. Our in-stocks continue to run up over 200 basis points versus last year, driven by our expanded utilization of RFID.

Speaker #3: We believe customers are leveraging our best-in-market value proposition as a way to offset the rising costs they're dealing with in their everyday lives. Enrollment in My Academy Rewards is up double digits year over year, with our goal being to add an additional 2 million new members this year, which would grow our total loyalty program to over 15 million members.

Speaker #3: As we've shared before, summer is one of our prime selling seasons, and we're well-positioned this year to help fuel the fun for our customers.

Speaker #3: Our in-stocks continue to run up over 200 basis points versus last year, driven by our expanded utilization of RFID. In addition, we have several non-comp tailwinds this year, including the World Cup being played in venues across our footprint, coupled with America's 250th birthday.

Steve Lawrence: We have several non-comp tailwinds this year, including the World Cup being played in venues across our footprint, coupled with America's 250th birthday. We're well stocked in World Cup gear, summer essentials, and all things red, white, and blue, so we can maximize the opportunities ahead of us in Q2. Shifting gears to our omni-channel business, we continue to make solid progress, which is evidenced by the 17% growth in sales and the 100 basis point expansion in penetration we experienced in Q1. We have two key focuses during Q2. First, we're expanding our same-day delivery platforms to include Uber Eats and Instacart as a complement to our existing partnership with DoorDash.

Speaker #3: We are well stocked in World Cup gear, summer essentials, and all things red, white, and blue, so we can maximize the opportunities ahead of us in the second quarter.

Speaker #3: Shifting gears to our omnichannel business, we continue to make solid progress, which is evidenced by the 17% growth in sales and the 100 basis point expansion and penetration we experienced in Q1.

Speaker #3: We have two key focuses during the second quarter. First, we're expanding our same-day delivery platforms to include Uber Eats and Instacart as a complement to our existing partnership with DoorDash. Our research shows there is minimal overlap between the customer bases for each of these services, so expanding our online presence to include these additional same-day delivery platforms should be mostly accretive and expose our brand and product categories to a broader audience.

Steve Lawrence: Our research shows there is minimal overlap between the customer bases for each of these services, expanding our online presence to include these additional same-day delivery platforms should be mostly accretive and expose our brand and product categories to a broader audience. We plan to migrate the search platform from our site to be powered by Google's AI Commerce Search and Gemini Enterprise customer experience as we turn the corner into back to school. We believe customers are increasingly utilizing AI agents to aid them as they shop online, moving our search to be powered by AI is a natural evolution and will be intuitive for them. As we continuously evolve our online capabilities, we expect the sales momentum we've built over the past year in this business will continue to provide a strong comp tailwind for our overall sales.

Speaker #3: In addition, we plan to migrate the search platform from our site to be powered by Google's AI commerce search and Gemini Enterprise customer experience as we turn the corner into back to school.

Speaker #3: We believe customers are increasingly utilizing AI agents to aid them as they shop online, so moving our search to be powered by AI is a natural evolution and will be intuitive for them.

Speaker #3: As we continue to see our online capabilities evolve, we expect the sales momentum we've built over the past year in this business will continue to provide a strong comp tailwind to our overall sales.

Speaker #3: In summary, our belief is that high gas prices and other inflationary pressures will persist and continue to negatively impact discretionary spending for the American consumer throughout the remainder of the year.

Steve Lawrence: Our belief is high gas prices and other inflationary pressures will persist and continue to negatively impact discretionary spending for the American consumer throughout the remainder of the year. In the face of this pressure, we are committed to remaining a steward of value for our customers while we methodically execute against our long-range plans and objectives. As our strategies mature and we build critical mass across each of them, we believe this will provide a strong tailwind which will allow us to sustain the positive momentum we built in Q1. Based on the solid start to the year, we're raising our annual sales guidance to be +3% to +5%, which would translate into a flat to +2% comp sales increase for fiscal 2026.

Speaker #3: In the face of this pressure, we are committed to remaining a steward of value for our customers while we methodically execute against our long-range plans and objectives.

Speaker #3: As our strategies mature and we build critical mass across each of them, we believe this will provide a strong tailwind, which will allow us to sustain the positive momentum we built in the first quarter.

Speaker #3: Based on the solid start to the year, we're raising our annual sales guidance to be plus 3% to plus 5%, which would translate into a flat to plus 2% comp sales increase for fiscal 2026.

Speaker #3: Now I will turn it over to Carl, who will give you a deeper dive into the Q1 financial results along with the additional information on our updated 2026 guidance.

Steve Lawrence: Now, I will turn it over to Carl, who will give you a deeper dive into the Q1 financial results along with the additional information on our updated 2026 guidance. Carl?

Speaker #3: Carl?

Speaker #2: Thanks, Steve. Net sales for the first quarter were 1.44 billion, an increase of 6.7% with comparable sales up 2.9%. E-commerce remained a strength in the quarter, with over 17% growth, which accelerated versus fiscal 2025 levels.

Carl Ford: Thanks, Steve. Net sales for Q1 were $1.44 billion, an increase of 6.7% with comparable sales up 2.9%. E-commerce remained a strength in the quarter with over 17% growth, which accelerated versus fiscal 2025 levels. We expect e-commerce to remain a tailwind throughout the year as we continue to expand our endless aisle, enhance search functionality, and expand same-day delivery. As expected, gross margin for the quarter was 33.2%, down 71 basis points year-over-year. The decline was driven by tariffs and was partially offset by favorability in freight and shrink. We expect Q1 to be the largest tariff impact for the year and for the pressure to subside as we move through 2026. SG&A was 28.1% of sales, an improvement of 77 basis points, primarily driven by the 2.9% comp.

Speaker #2: We expect e-commerce to remain a tailwind throughout the year as we continue to expand our endless aisle, enhance search functionality, and expand same-day delivery.

Speaker #2: As expected, gross margin for the quarter was 33.2%, down 71 basis points year over year. The decline was driven by tariffs and was partially offset by favorability in freight and shrink.

Speaker #2: We expect the first quarter to have the largest tariff impact for the year, and for the pressure to subside as we move through 2026.

Speaker #2: SG&A was 28.1% of sales, an improvement of 77 basis points, primarily driven by the 2.9% comp. Additionally, we are lapping $7.5 million related to the Nike expansion and Jordan brand rollout from the prior year.

Carl Ford: Additionally, we are lapping $7.5 million related to the Nike expansion and Jordan Brand rollout from the prior year. The improvement was partially offset by a $3.6 million increase in stock compensation expense year-over-year. Operating income for the quarter was $74.7 million. Diluted earnings per share was $0.80, an increase of 17.6%, and adjusted earnings per share, which excludes stock compensation, was $0.93, an increase of 22.4%. From a balance sheet and cash flow standpoint, we remain in a position of strength. Our inventory has continued to improve versus last year, with total inventory dollars per store down 0.8% and units per store down 6.8%. We ended the quarter with strong liquidity and generated healthy free cash flow of $121.6 million, representing a 14.2% increase year-over-year. This allows us to continue investing in the business while returning capital to shareholders.

Speaker #2: The improvement was partially offset by a 3.6 million dollar increase in stock compensation expense year over year. Operating income for the quarter was 74.7 million dollars, diluted earnings per share was 80 cents, and increase of 17.6%, an adjusted earnings per share which excludes stock compensation was 93 cents.

Speaker #2: An increase of 22.4%. From a balance sheet and cash flow standpoint, we remain in a position of strength. Our inventory has continued to improve versus last year, with total inventory dollars per store down 0.8% and units per store down 6.8%.

Speaker #2: We ended the quarter with strong liquidity and generated healthy free cash flow of 121.6 million dollars representing a 14.2% increase year over year. This allows us to continue investing in the business while returning capital to shareholders.

Speaker #2: Our cash balance was 338 million dollars at the end of the first quarter, and we have an untapped 1 billion dollar revolver. Our capital allocation philosophy has not changed.

Carl Ford: Our cash balance was $338 million at the end of Q1, and we have an untapped $1 billion revolver. Our capital allocation philosophy has not changed. Approximately 50% of cash flow from operations is reinvested back into the business, and we expect to return the remainder to shareholders through dividends and share repurchases. During Q1, we repurchased approximately 1.7 million of our shares, representing about 2.5% of our shares outstanding, paid $9.6 million in dividends, and continued to fund strategic investments, including new stores, omni-channel capabilities, and technology initiatives. At the end of Q1, we had $338 million remaining on our share repurchase authorization. In May, we refinanced our outstanding long-term debt at a 5.875% rate and amended and extended our ABL, which will generate approximately $2.5 million in annual interest savings for the next 5 years.

Speaker #2: Approximately 50% of cash flow from operations is reinvested back into the business, and we expect to return the remainder to shareholders through dividends and share repurchases.

Speaker #2: During the first quarter, we repurchased approximately 1.7 million of our shares representing about 2.5% of our shares outstanding. Paid 9.6 million dollars in dividends and continued to fund strategic investments including new stores, omnichannel capabilities, and technology initiatives.

Speaker #2: At the end of the first quarter, we had $338 million remaining on our share repurchase authorization. In May, we refinanced our outstanding long-term debt at a 5.875% rate, and amended and extended our ADL.

Speaker #2: Which will generate approximately 2.5 million dollars in annual interest savings for the next five years. The maturity date on each is 2031, and additional details were provided in our May 14th press release which can be found on our investor relations site.

Carl Ford: The maturity date on each is 2031, and additional details were provided in our 14 May press release, which can be found on our investor relations site. Before getting into guidance, I wanted to share a few thoughts on the consumer and how ongoing trends played into how we think about the shape of the year. The consumer environment remains pressured as high gas prices largely offset the benefit of tax refunds in Q1, particularly for lower income households, which continues to weigh on discretionary spending. At the same time, we continue to see higher income consumers, which are our largest and fastest-growing cohort, trade into Academy in search of value. During Q1, trips from consumers who make over $100,000 grew by mid-single digits.

Speaker #2: Before getting into guidance, I wanted to share a few thoughts on the consumer and how ongoing trends played into how we think about the shape of the year.

Speaker #2: The consumer environment remains pressured as high gas prices largely offset the benefit of tax refunds in the first quarter, particularly for lower-income households, which continues to weigh on discretionary spending.

Speaker #2: At the same time, we continue to see higher-income consumers which are our largest and fastest growing cohort trade into academy in search of value.

Speaker #2: During the first quarter, trips from consumers who make over $100,000 grew by mid-single digits. Consumer confidence remains bifurcated with materially higher confidence levels among upper-income households versus lower-income cohorts.

Carl Ford: Consumer confidence remains bifurcated, with materially higher confidence levels among upper income households versus lower income cohorts, where there is less optimism about their future financial prospects. This dynamic continues the de-risking of our consumer base that began at the end of 2024 and reinforces confidence in Academy's value-driven positioning. Turning to guidance, we are updating select elements of our full year outlook to reflect the Q1 sales performance while also planning for higher gas and freight prices, tariff dynamics, and the timing of new store openings. We now expect sales to be in the range of $6.23 billion to $6.35 billion, or growth of 3% to 5%, and comp sales of flat to +2%. We are maintaining our gross margin rate guidance of 34.5% to 35.0% for the year.

Speaker #2: Where there is less optimism about their future financial prospects, this dynamic continues the de-risking of our consumer base that began at the end of 2024 and reinforces confidence in Academy's value-driven positioning.

Speaker #2: Turning to guidance, we are updating select elements of our full-year outlook to reflect the first quarter sales performance, while also planning for higher gas and freight prices tariff dynamics and the timing of new store openings.

Speaker #2: We now expect sales to be in the range of $6.23 billion to $6.35 billion, or growth of 3% to 5%, and comp sales of flat to up 2%.

Speaker #2: We are maintaining our gross margin rate guidance of 34.5% to 35.0% for the year. We are raising the midpoint of our net income guidance and now expect a range of $390 million to $415 million.

Carl Ford: We are raising the midpoint of our net income guidance and now expect a range of $390 to $415 million. We expect earnings per share of $5.95 to $6.35 and adjusted earnings per share to be in the range of $6.40 to $6.80. At the midpoint, we expect comp sales to be approximately 1%. Gross margin to be roughly flat and modest SG&A leverage for the full year, resulting in EPS growth of over 10% when compared to fiscal year 2025. This EPS guidance does not include any impact from future share repurchases. Looking at the shape of the year, we expect our strategic initiatives to drive positive sales.

Speaker #2: We expect earnings per share of $5.95 to $6.35, and adjusted earnings per share to be in the range of $6.40 to $6.80. At the midpoint, we expect comp sales to be approximately 1%, gross margin to be roughly flat, and modest SG&A leverage for the full year.

Speaker #2: Resulting in EPS growth of over 10% when compared to fiscal year 2025. This EPS guidance does not include any impact from future share repurchases.

Speaker #2: Looking at the shape of the year, we expect our strategic initiatives to drive positive sales. As a reminder, we had no IEPA tariff impact to gross margin in the first quarter of 2025, and costs attributable to tariffs increased throughout the year as we used the weighted average method of inventory accounting, with their full impact hitting average unit cost in the fourth quarter of 2025.

Carl Ford: As a reminder, we had no IEEPA tariff impact to gross margin in Q1 2025, and costs attributable to tariffs increased throughout the year as we use the weighted average method of inventory accounting, with their full impact hitting average unit cost in Q4 2025. We continue to expect modest gross margin pressure in H1 2026, followed by modest expansion in H2, resulting in approximately flat gross margin at the midpoint of our full-year guidance. On SG&A, we continue to expect leverage in H1, with potential deleverage in H2 as new store openings accelerate, ultimately arriving at modest leverage for the full year at the midpoint of our outlook. To close, we continue to operate in a bifurcated consumer environment.

Speaker #2: We continue to expect modest gross margin pressure in the first half of 2026 followed by modest expansion in the back half resulting in approximately flat gross margin at the midpoint of our full-year guidance.

Speaker #2: On SG&A, we continue to expect leverage in the first half with potential de-leverage in the back half as new store openings accelerate. Ultimately, arriving at modest leverage for the full year at the midpoint of our outlook.

Speaker #2: To close, we continue to operate in a bifurcated consumer environment. Higher-income consumers are increasingly trading into academy in search of value while lower-income consumers remain under pressure.

Carl Ford: Higher income consumers are increasingly trading into Academy in search of value, while lower income consumers remain under pressure. Against this backdrop, we are executing a rock-solid plan with clear growth tactics, supported by our strong balance sheet, disciplined expense management, and relentless focus on value. Together, these position us well to navigate the current environment and drive long-term value for our shareholders. With that, we're ready for Q&A. Operator?

Speaker #2: Against this backdrop, we are executing a rock-solid plan with clear growth tactics supported by our strong balance sheet, disciplined expense management, and relentless focus on value.

Speaker #2: Together, these position us well to navigate the current environment and drive long-term value for our shareholders. With that, we're ready for Q&A. Operator?

Speaker #1: Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad.

Operator 2: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up. One moment, please, while we poll for questions. Our first question comes from Jeff Lick with Stephens. Your line is now live.

Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up. One moment, please, while we poll for questions. Our first question comes from Jeff Lick with Stephens. Your line is now live.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star two if you’d like to remove your question from the queue.

Speaker #1: As a reminder, we ask that you please limit to one question and one follow-up. One moment, please, while we poll for questions. Our first question comes from Jeff Lick with Stevens.

Speaker #1: Your line is now live.

Speaker #3: Good morning. Thanks for taking my question. Congrats on a nice quarter. I guess I'll throw this out to anyone. I'm just curious, since the Analyst Day, maybe you could just comment on what has surprised you or, in either direction, what's been incremental. How are you seeing the gas prices manifest themselves in consumption patterns?

Jeff Lick: Good morning. Thanks for taking my question. Congrats on a nice quarter. I guess I'd throw this out to anyone. I'm just curious, since the Analyst Day, maybe you could just comment on what has surprised you in either direction, what's been incremental, and how are you seeing the gas prices manifest itself in consumption patterns? I guess my follow-up would be, given the World Cup and America 250 is in Q2, I think you've mentioned previously you were expecting Q2 to be the weakest quarter in terms of comp. Is that still going to be the case?

Speaker #3: And just my follow-up would be, given the World Cup and America 250 is in Q2, I think you've mentioned previously we were expecting Q2 to be the weakest quarter in terms of comp.

Speaker #3: Is that still going to be the case?

Speaker #4: Yeah, I'll start. Thanks for the question. So yeah, gas prices definitely are a headwind for the American consumer. I saw an article, I think, a week or so ago that said on a monthly basis it's pulling out about 17 and a half billion dollars of consumer discretionary spending each month.

Steve Lawrence: Yeah, I'll start. Thanks for the question. Yeah, gas prices definitely are a headwind for the American consumer. I saw an article, I think, a week or so ago that said on a monthly basis, it's pulling out about $17.5 billion of consumer discretionary spending each month. That definitely is impacting the consumer. I'd say as we've gotten into Q2, we've seen a little bit of a slowdown from the consumer, which we would attribute to gas prices. That being said, we kind of look at the quarter as three legs of a race. The first leg is getting through Memorial Day, which is our first big event. Total sales through Memorial Day are tracking up low single digits, roughly flat comp.

Speaker #4: So that definitely is impacting the consumer. I'd say as we've gotten into Q2, we've seen a little bit of a slowdown from the consumer, which we would attribute to gas prices.

Speaker #4: That being said, we kind of look at the quarter as three legs of a race. The first leg is getting through Memorial Day, which is our first big event.

Speaker #4: Total sales through Memorial Day are tracking up, low single digits, roughly flat comp. And while we'd like to be playing with a lead, what we're excited about is that we still have a lot of the initiatives that we're counting on to drive business ahead of us.

Steve Lawrence: While we'd like to be playing with the lead, what we're excited about is we still have a lot of the initiatives that we're counting on to drive business ahead of us. We got the World Cup, as you just said, kicks off on Thursday. We've got our credit card relaunch, which is taking place right now. We're issuing new plastic to consumers, and that should be in people's hands, and that has a reactivation reward associated with it. We think that'll help drive business for the next leg of the race with Father's Day. Then, of course, we've got America's 250 ahead of us.

Speaker #4: We got the World Cup, as you just said, kicks off on Thursday. We've got our credit card relaunch, which is taking place right now.

Speaker #4: And we're issuing new plastic to consumers, and that should be in people's hands, and that has a reactivation reward associated with it. So we think that'll help drive business for the next leg of the race with Father's Day.

Speaker #4: And then, of course, we've got America's 250 ahead of us. So definitely seeing an impact a little bit of a slowdown from what we saw in Q1 with the consumer tracking flat through Memorial Day, but optimistic about the opportunity still ahead of us with a lot of initiatives still to play out.

Steve Lawrence: Definitely seeing an impact, a little bit of a slowdown from what we saw in Q1 with the consumer tracking flat through Memorial Day, optimistic about the opportunities still ahead of us with a lot of initiatives still to play out.

Speaker #3: You asked about what surprised us from our April 7 Analyst Day. I would say this quarter generally came in as expected. We were at the high side of the guidance that we gave from a top-line perspective.

Carl Ford: You asked about what surprised us from our 7 April Analyst Day. I would say this quarter generally came in as expected. We were at the high side of the guidance that we gave from a top-line perspective. We had indicated that we knew that there would be gross margin pressure associated with anniversarying last year's Q1 that didn't have that IEEPA tariff burden in it. From an expense management standpoint, we knew that we weren't re-anniversarying the Jordan launch costs and the Nike expansion costs. That was $7.5 million. I would generally say that the quarter played out like we thought that it would, it was towards the high side of the guidance that we put out there.

Speaker #3: We had indicated that we knew that there would be gross margin pressure associated with anniversary last year's Q1 that didn't have that IEPA tariff burden in it.

Speaker #3: And from an expense management standpoint, we knew that we weren't re-anniversarying the Jordan launch costs and the Nike expansion costs. That was seven and a generally say that the quarter played out like we thought that it would, but it was towards the high side of the guidance that we put out there.

Speaker #5: Awesome. Thanks very much, and I'll let others jump in.

Jeff Lick: Awesome. Thanks very much, I'll let others jump in.

Speaker #4: Thanks, Jeff.

Steve Lawrence: Thanks, Jeff.

Speaker #1: Our next question comes from Kate McShane with Goldman Sachs. Your line is now live.

Operator 2: Our next question comes from Kate McShane with Goldman Sachs. Your line is now live.

Operator: Our next question comes from Kate McShane with Goldman Sachs. Your line is now live.

Speaker #6: Hi, good morning. Thanks for taking our question. We wanted to focus on gross margins with the strength in ammo just being a lower margin category.

Kate McShane: Hi, good morning. Thanks for taking our question. We wanted to focus on gross margins. With the strength in ammo just being a lower margin category, did that contribute at all to some of the pressure or the GPM shortfall that we saw in the quarter? Just how should we think about the cadence of some of the tariff pressures that we have saw in Q1 for the rest of the year?

Speaker #6: Did that contribute at all to some of the pressure or the GPM shortfall that we saw in the quarter? And just how should we think about the cadence of some of the tariff pressures that we saw in the first quarter for the rest of the year?

Speaker #3: Yeah, I'm going to answer this very directly. So if you look at the 71 basis points of gross margin degradation to Q1 of last year, 110 basis points was driven by tariffs, essentially having the full burden of that IEPA impact in Q1 of this year versus really nothing last year.

Carl Ford: Yeah, I'm going to answer this very directly. If you look at the 71 basis points of gross margin degradation to Q1 of last year, 110 basis points was driven by tariffs, essentially having the full burden of that IEEPA impact in Q1 of this year versus really nothing last year. That 110 basis points of tariff headwind was offset by 20 basis points of good news in shrink and 10 basis points as it relates to shipping. Think of transportation, e-com, shipping, things of that nature. That's how you arrive at the big components of it. From an ammo perspective, total field was up 12% during the quarter, field carries a lower margin profile.

Speaker #3: And that 110 basis points of tariff headwind was offset by 20 basis points of good news in shrink and 10 basis points as it relates to shipping.

Speaker #3: So think of transportation, e-comm, shipping, things of that nature. That's how you kind of arrive at the big components of it. From an ammo perspective, total field was up 12% during the quarter.

Speaker #3: And so field carries a lower margin profile. Ammo is certainly in the overall outdoor category. And so it was a headwind as it related to, but I would say it was offset by other puts and takes in the mix.

Carl Ford: Ammo is certainly in the overall outdoor category, it was a headwind as it related to, I would say it was offset by other puts and takes in the mix.

Speaker #6: Thank you.

Kate McShane: Thank you.

Speaker #4: Thanks, Kate.

Steve Lawrence: Thanks, Kate.

Speaker #1: Our next question comes from Chris Harvers with JPMorgan. Your line is now live.

Operator 2: Our next question comes from Christopher Horvers with J.P. Morgan. Your line is now live.

Operator: Our next question comes from Christopher Horvers with J.P. Morgan. Your line is now live.

Speaker #7: Thanks. Good morning, guys. So, my first question is on Decker's latest earnings call. They talked about planning to continue to selectively expand wholesale distribution.

Rachel Smith: Thanks. Good morning, guys. My first question is on Deckers' latest earnings call. They talked about planning to continue to selectively expand wholesale distribution with a few thoughtfully chosen tests with new partners this fall. Just curious if you can comment if you are a part of that planned test?

Chris Horvers: Thanks. Good morning, guys. My first question is on Deckers' latest earnings call. They talked about planning to continue to selectively expand wholesale distribution with a few thoughtfully chosen tests with new partners this fall. Just curious if you can comment if you are a part of that planned test?

Speaker #7: With a few thoughtfully chosen tests with new partners this fall, just curious if you can comment if you're a part of that planned test.

Speaker #4: Yeah, I'll give you the same answer I give every time I get asked this question. If and when we're ready to announce something, you guys aren't going to have to ask us.

Steve Lawrence: Yeah, I will give you the same answer I give every time I get asked this question. If and when we are ready to announce something, you guys are not going to have to ask us. We will tell you. Nothing new to announce at this moment in time.

Speaker #4: We'll let you know. Nothing new to announce at this moment in time.

Speaker #7: Got it. Thank you. And then I guess just stepping back as you think about how you think about the balance of the year, I guess what's changed versus what you initially thought is ammo expected to be a continued tailwind for the balance of the year more than you originally thought?

Rachel Smith: Got it. Thank you. I guess just stepping back as you think about how you think about the balance of the year, I guess what has changed versus what you initially thought? Is ammo expected to be a continued tailwind for the balance of the year more than you originally thought? What is your read on Memorial Day weekend, and what that says about Father's Day and July 4th and the 250th anniversary as well as World Cup? Can you maybe take us through the puts and takes of maybe how you are more optimistic versus something that is more balanced because you basically kept the balance of the year on the comp side. Thank you.

Chris Horvers: Got it. Thank you. I guess just stepping back as you think about how you think about the balance of the year, I guess what has changed versus what you initially thought? Is ammo expected to be a continued tailwind for the balance of the year more than you originally thought? What is your read on Memorial Day weekend, and what that says about Father's Day and July 4th and the 250th anniversary as well as World Cup? Can you maybe take us through the puts and takes of maybe how you are more optimistic versus something that is more balanced because you basically kept the balance of the year on the comp side. Thank you.

Speaker #7: What's your read on Memorial Day weekend, and what that says about Father's Day and July 4th, and the 250th anniversary, as well as the World Cup?

Speaker #7: So can you maybe take us through the puts and takes of how you're more optimistic versus something that's more balanced? Because you basically kept the balance of the year on the comp side.

Speaker #7: Thank you.

Speaker #4: Yeah, I would say what we saw happen as we progressed through the quarter is I think it's pretty widely documented that increased tax returns were out there fueling consumer spending.

Steve Lawrence: Yeah, I would say what we saw happen as we progressed through the quarter is I think it is pretty widely documented that increased tax returns were out there fueling consumer spending, and I think that helped mute the impact of gas prices as we got through Q1. I think we are past that now, as we have seen the exit rate coming out of the quarter move from up three-ish comp to more of a flat. I think that is what we have seen happen with the health of the consumer. What gives us confidence about the remainder of the year is a lot of the initiatives that we have, right? We talked about our credit card relaunch and integrating that with our loyalty program. We think that is a big deal for us, probably going to have the most impact on our business moving forward.

Speaker #4: And I think that helped kind of mute the impact of gas prices. As we got through Q1, I think we're kind of past that now.

Speaker #4: And as we've seen, kind of the exit rate coming out of the quarter move from an up 3-ish comp to more of a flat, I think that's kind of what we've seen happen with the health of the consumer.

Speaker #4: What gives us confidence about the remainder of the year is a lot of the initiatives that we have, right? We've talked about our credit card relaunch and kind of integrating that with our loyalty program.

Speaker #4: We think that's a big deal for us. It's probably going to have the most impact on our business moving forward. We think it's well-timed, particularly in an environment where consumers are looking for value.

Steve Lawrence: We think it's well timed, particularly in an environment where consumers looking for value. The fact that we're going to give them 5% off every day with the Academy credit card, which we've had before, now 2% back on outside spend, I think is a big deal. I think we've got other things that we've self-created kind of tailwinds like leaning into that work Western wear category, rolling out Ariat shops, leaning into newness with brands like HYROX and Brunt coming into the assortment. The dotcom growth we're seeing. I think all those things provide a little bit of a tailwind for us that helps us overcome some of the headwinds. I think it's going to be a cautious consumer out there.

Speaker #4: The fact that we're going to give them 5% off every day with the Academy credit card, which we've had before, but now 2% back on Upside spend.

Speaker #4: I think is a big deal. I think we've got other things that we've created, self-created kind of tailwinds like leaning into that work Western work category, rolling out area at shops, leaning into newness with brands like High Rocks and Brunt coming into the assortment.

Speaker #4: The dot-com growth we're seeing—I think all those things kind of provide a little bit of a tailwind for us that helps us overcome some of the headwinds.

Speaker #4: But I think it's going to be a cautious consumer out there. They're clearly being very cautious about when they shop and are choosy about buying more on promotion or in clearance.

Steve Lawrence: They're clearly being very cautious about when they shop and choiceful about buying more on promotion or on clearance, that's something we're going to have to think about. Ammo specifically, I think was a tailwind for us before the conflict with Iran happened. It accelerated a little bit in Q2. Or Q1, I'm sorry, that sort of died off as we've gotten deeper into the conflict. I think it'll move from being a pretty good tailwind to still being a tailwind throughout the remainder of the year. We're lapping pretty tough ammo business. What we believe in is that the initiatives we put in place, the self-help initiatives, are going to be the things that are going to help us continue to drive the business throughout the remainder of the year.

Speaker #4: And so that's something we're going to have to think about. Ammo, specifically, I think was a tailwind for us before the conflict with Iran happened.

Speaker #4: It accelerated a little bit in Q2. That sort of died or Q1, I'm sorry. That sort of died off as we've gotten deeper into the conflict.

Speaker #4: I think it’ll move from being a pretty good tailwind to still being a tailwind throughout the remainder of the year. We’re lapping pretty tough ammo business.

Speaker #4: But we believe in is that the initiatives we put in place, the self-help initiatives, are going to be the things that are going to help us continue to drive the business throughout the remainder of the year.

Speaker #7: Thanks and best of luck with peak season.

Rachel Smith: Thanks. Best of luck with peak season.

Chris Horvers: Thanks. Best of luck with peak season.

Speaker #4: Thanks. Appreciate it.

Steve Lawrence: Thanks. Appreciate it.

Speaker #1: Our next question comes from Jonathan Matuszewski with Jefferies. Your line is now live.

Operator 2: Our next question comes from Jonathan Matuszewski with Jefferies. Your line is now live.

Operator: Our next question comes from Jonathan Matuszewski with Jefferies. Your line is now live.

Speaker #8: Great. Good morning, and thanks for the time. My first question is on Nike and Jordan. I think last year there were a couple of quarters where that combined business was growing.

Jonathan Matuszewski: Great. Good morning. Thanks for the time. My first question was on Nike and Jordan. I think last year there were a couple of quarters where that combined business was growing somewhere between high single and maybe low double digits. I think we're at maybe a point where we've maybe lapped the initial rollouts of Converse and Jordan. Maybe just an update on the trends you're seeing in that combined business and what type of growth is embedded for the remainder of the year in the updated guide. Thank you.

Speaker #8: Somewhere between high single and maybe low double digits. I think we're at maybe a point where we've maybe lapped the initial kind of rollouts of Converse and Jordan.

Speaker #8: So maybe just an update on how you're seeing the trends in that combined business, and what type of growth is embedded for the remainder of the year in the updated guide.

Speaker #8: Thank you.

Speaker #4: Yeah. So we're still in a place we launched Jordan, if you remember, last year in April. That being said, we did have product on the floor in March.

Steve Lawrence: Yeah. We're still in a place. We launched Jordan, if you remember, last year in April. That being said, we did have product on the floor in March. If you look at the combined Nike Jordan business for us, that was up mid-single digits. We lapped the launch and ran an increase that week, which we're excited about. It's still healthy for us, and we consider or expect that the trend that we're seeing for Q1 to continue out throughout the remainder of the year. We think Nike is a growth engine for us. We're really excited about some of the expansion we're going to have in some of the performance running categories like Vomero, we're going to have that in roughly 150 doors going into back to school, which is about double the door count we had last year.

Speaker #4: So if you look at the combined Nike-Jordan business for us, that was up mid-single digits. We lapped the launch and ran an increase that week, which we're excited about.

Speaker #4: So, it's still healthy for us, and we consider or expect that the trend we're seeing through the first quarter will continue up throughout the remainder of the year.

Speaker #4: We think Nike is a growth engine for us. We're really excited about some of the expansion we're going to have and some of the performance running categories like Vimero we're going to have that in roughly 150 doors going into back to school, which is about double the door count we had last year.

Speaker #4: And it feels like they're just starting to get their innovation pipeline really moving.

Steve Lawrence: It feels like they're just starting to get their innovation pipeline really moving.

Speaker #8: Great, that's helpful. And then just to follow up, I guess just regional trends—NBA championships, Spurs—maybe if you could give some commentary on kind of related fanware implications for demand, and maybe kind of dispersion you're seeing in Texas versus other markets would be great.

Jonathan Matuszewski: Great. That's helpful. Just to follow up, I guess, just regional trends, NBA championship, Spurs, maybe if you could give some commentary on kind of related fan wear

Steve Lawrence: Yeah

Jonathan Matuszewski: Implications for demand, maybe kind of dispersion you're seeing in Texas versus other markets would be great. Thank you.

Speaker #8: Thank you.

Speaker #4: Yeah, I would say the licensed team business has been a tailwind for us, and will probably continue to be a tailwind throughout the summer.

Steve Lawrence: Yeah. I would say the licensed team business for us has been a tailwind for us and will probably be a tailwind throughout the summer. That's where a lot of the World Cup product lives. We expect that obviously to continue into July as the World Cup plays out. The Spurs is certainly a little bit of a tailwind for us. You got to remember, though, we're also up against last year, the Thunder winning the championship, and that's in our geography. While we have fewer stores in Oklahoma City, kind of the whole state activates when they won. It's pretty similar to what we're seeing with the Spurs. Certainly, we hope that the Spurs win. We don't have any stores in the New York area, so the Knicks winning wouldn't be a good thing for us.

Speaker #4: That's where a lot of the World Cup product lives. And we expect that obviously to continue into July. As the World Cup plays out, the Spurs is certainly a little bit of a tailwind for us.

Speaker #4: You got to remember, though, we're also up against last year the Thunder winning the championship. And so that's in our geography and while we have fewer stores in Oklahoma City, kind of a whole state activates when they won.

Speaker #4: So it's pretty similar to what we're seeing with the Spurs. Certainly, we hope that the Spurs win. We don't have any stores in the New York area, so the next winning wouldn't be a good thing for us.

Speaker #4: But we're pretty happy so far with the licensed business and expect it to be a tailwind primarily driven by the World Cup throughout the remainder of the quarter.

Steve Lawrence: We're pretty happy so far with the licensed business and expect it to be a tailwind, primarily driven by the World Cup throughout the remainder of the quarter.

Speaker #8: Thanks and best of luck.

Jonathan Matuszewski: Thanks, best of luck.

Speaker #4: Thanks.

Steve Lawrence: Thanks.

Speaker #1: Our next question comes from Joseph Cisello with Truist Securities. Your line is now live.

Operator 2: Our next question comes from Joseph Feldman with Truist Securities. Your line is now live.

Operator: Our next question comes from Joseph Feldman with Truist Securities. Your line is now live.

Speaker #9: Hey, guys. Thanks so much for taking my question. I just wanted to see if you could provide any color on early June post-memorial day and if anything in recent trends like you mentioned with the gas prices.

Joseph Feldman: Hey, guys. Thanks so much for taking my question. I just wanted to see if you could provide any color on early June post Memorial Day and if anything in recent trends, like you mentioned with the gas prices, has impacted your view on what the World Cup might deliver.

Joseph Civello: Hey, guys. Thanks so much for taking my question. I just wanted to see if you could provide any color on early June post Memorial Day and if anything in recent trends, like you mentioned with the gas prices, has impacted your view on what the World Cup might deliver.

Speaker #9: Has it impacted your view on what the World Cup might deliver?

Speaker #4: Yeah. So the World Cup is still early. We just set that. At the start of or at the front of our stores in the markets where the World Cup matches a big plate, it's saying it's roughly 40 doors.

Steve Lawrence: Yeah. The World Cup is still early. We just set that at the front of our stores in the markets where the World Cup matches are being played. It's hanging. It's roughly 40 doors. We've seen an acceleration in that product once we set it. We set it right after Memorial Day weekend. I think it's still early, but initial signs are pretty good. In terms of trends, I'll stick with what I told you. We kind of are looking at Q2 as kind of a three-legged race, right? First leg is Memorial Day. We came out of that running flat comps up low single digits. The next one's Father's Day. Father's Day is a week later on the calendar, so we're still kind of in the middle of that.

Speaker #4: And we've seen an acceleration in that product once we set it. We set it right after Memorial Day weekend. So I think it's still early, but initial signs are pretty good.

Speaker #4: In terms of trends, I'll stick with what I told you. We kind of are looking at Q2 as kind of a three-legged race, right?

Speaker #4: First leg is Memorial Day. We came out of that running flat comps, up low single digits. The next one is Father's Day. Father's Day is a week later on the calendar, so we're still kind of in the middle of that.

Speaker #4: And then from there, we move into 4th of July with kind of back to school at the tail end of the quarter. So so far, so good.

Steve Lawrence: From there, we move into Fourth of July with kind of back to school at the tail end of the quarter. So far, so good. A lot still ahead of us.

Speaker #4: Lot's still ahead of us.

Speaker #9: Yeah. From a fuel-specific standpoint, we think that fuel prices at an elevated level are going to be persistent throughout the majority of this year.

Carl Ford: Yeah, from a fuel specific standpoint, we think that fuel prices at an elevated level are going to be persistent throughout the majority of this year. We talked a little bit about the sensitization that we did at that on our last call. I would now say that we've encapsulated that within our gross margin guidance. As it relates to it weighing on the consumer, $4 plus gas, look, we think being a steward of value is a really good thing in times like these, and we continue to see customers, those upper income levels, quintiles 4 and 5, transacting more with us year-over-year. That trend has been consistent since the back part of 2024, and we saw a lessening of that somewhat in Q1, which we think could be a turning point.

Speaker #9: We talked a little bit about the sensitization that we did on our last call. So, I would now say that we've encapsulated that within our gross margin guidance.

Speaker #9: As it relates to it weighing on the consumer, $4-plus gas, look, we think being a steward of value is a really good thing in times like these.

Speaker #9: And we continue to see customers, those upper-income levels, quintiles four and five, transacting more with us year over year. That trend has been consistent since the back part of 2024.

Speaker #9: And we saw a lessening of that somewhat in Q1, which we think could be a turning point.

Speaker #8: Got it. Thanks so much. And then just to follow up on the tariff assumptions that are in for the guidance, how should we think about rates and refunds and stuff like that through the rest of the year?

Joseph Feldman: Got it. Thanks so much. Just to follow up on the tariff assumptions that are in for the guidance. As we think about rates and refunds and stuff like that through the rest of the year, what's baked in?

Joseph Civello: Got it. Thanks so much. Just to follow up on the tariff assumptions that are in for the guidance. As we think about rates and refunds and stuff like that through the rest of the year, what's baked in?

Speaker #8: What's baked in?

Speaker #9: Yeah. From a tariff perspective, we have disclosed to you guys that we sold our right to a refund for a portion of the IEPA tariffs from last year.

Carl Ford: Yeah. From a tariff perspective, we have disclosed to you guys that we sold our right to a refund for a portion of the IEEPA tariffs from last year. We disclosed it in the 10K last year as well as in Q3. We monetized about $10.5 million. Included in our guidance for this year is recognition of that $10.5 million. There's also for the portion that we did not sell the rights to, we have included that in our tariff guidance. That's what's included.

Speaker #9: We disclosed it in the 10-K last year as well as in the third quarter. And so that we monetized about 10 and a half million dollars included in our guidance for this year is recognition of that 10 and a half million dollars.

Speaker #9: There's also, for the portion that we did not sell the rights to, we have included that in our tariff guidance. And that's what's included.

Speaker #8: So, the portion that you didn't sell is also embedded. Got it. Okay, thank you.

Joseph Feldman: The portion that you didn't sell is also embedded. Got it. Okay. Thank you.

Joseph Civello: The portion that you didn't sell is also embedded. Got it. Okay. Thank you.

Speaker #9: Yes. For clarity, we did not receive any tariff refunds in the first quarter. There is nothing associated with refunds in the first quarter.

Carl Ford: Yeah. I guess for clarity there, we did not receive any tariff refunds in Q1. There is nothing associated with refunds in Q1. We have started to see those flow in Q2, what's embedded in our guidance is what we monetize as well as what we expect to receive.

Speaker #9: We have started to see those flow in the second quarter. And so what's embedded in our guidance is what we monetized as well as what we expect to receive.

Speaker #8: Got it. Thanks so much.

Joseph Feldman: Got it. Thanks so much.

Joseph Civello: Got it. Thanks so much.

Speaker #4: Thanks.

Carl Ford: Thanks.

Speaker #1: Our next question comes from Paul LaWay with Citi. Your line is now live.

Operator 2: Our next question comes from Paul Lejuez with Citi. Your line is now live.

Operator: Our next question comes from Paul Lejuez with Citi. Your line is now live.

Paul Lejuez: Hey. Thanks. Just to clarify on that last point, did you guys record a receivable that is flowing through the P&L? I guess, does this represent a change versus what you had baked into guidance as of last quarter?

Speaker #10: Hey. Thanks. Just to clarify on that last tariff point, did you guys record a receivable that is flowing through the P&L? And I guess is this represent a change versus what you had baked into guidance as of last quarter?

Speaker #9: No. In order to book a receivable from an accounting standpoint, we would have had to recognize that last year. We did not. We put it on our balance sheet essentially as a contingent liability pending clarification from the administration associated with how refunds would play out.

Carl Ford: No, in order to book a receivable from an accounting standpoint, we would have had to recognize that last year. We did not. We put it on our balance sheet essentially as a contingent liability pending clarification from the administration associated with how refunds would play out. I think we're seeing some clarity in that. The $10.5 million that was in our cash flow and our balance sheet and spoken to at year-end within our 10K, we are anticipating that being recognized this year versus recognizing it last year with a receivable, if that makes sense.

Speaker #9: I think we're seeing some clarity in that. So the 10 and a half million dollars that was in our cash flow and our balance sheet and spoken to at year-end within our 10-K, we are anticipating that being recognized this year versus recognizing it last year with a receivable, if that makes sense.

Speaker #10: Yeah. And which quarters are benefiting from that 10 and a half running through the P&L?

Paul Lejuez: Yeah. Which quarter is it benefiting from that $10.5 running through the P&L?

Speaker #9: We don't give quarterly guidance. I will tell you that there was no recognition in the first quarter. But it is in our annual guidance, that 10 and a half million dollars.

Carl Ford: We don't give quarterly guidance. I will tell you that there was no recognition in the Q1. It is in our annual guidance, that $10.5 million.

Speaker #10: Got it. And then, just relative to the updated comp guidance range that you gave today, can you talk about where you expect each quarter to fall relative to that range, specifically?

Paul Lejuez: Got it. Just relative to the updated comp guidance range that you gave today, can you just talk about where you expect each quarter to fall relative to that range? Specifically, interested in how you're thinking about Q2, but would love to hear your thoughts on each quarter relative to the full year range.

Speaker #10: I'm interested in how you're thinking about Q2, but would love to hear your thoughts on each quarter relative to the full-year range.

Speaker #4: Yeah. We obviously, as Carl just said, we don't give quarterly guidance as was noted earlier. I think by somebody Q2 is our best quarter last year.

Steve Lawrence: Yeah, obviously, as Carl just said, we don't give quarterly guidance. As was noted earlier, I think by somebody, Q2 is our best quarter last year. We're up against a modest comp gain. I think it was up 0.2 last year. As we mentioned earlier, we're tracking flat through Memorial Day. We still got a lot ahead of us. We're optimistic that the remainder of the year, we're going to be somewhere between that flat to up 2 comp. That would be inclusive of what we think is going to happen in Q2.

Speaker #4: We're up against a modest comp gain. I think it was up 0.2% last year. As we mentioned earlier, we're tracking flat through Memorial Day.

Speaker #4: We still got a lot ahead of us. We're optimistic that the remainder of the year, we're going to be somewhere between that flat to up to comp.

Speaker #4: And that would be inclusive of what we think is going to happen in Q2.

Speaker #10: Got it. And then just last one on World Cup-related product. Do you view those sales as incremental, or do you feel that that's a substitute for something else in the store?

Paul Lejuez: Just last one on World Cup related product. Do you view those sales as incremental, or do you feel that that's a substitute for something else in the store?

Speaker #4: I think it's mainly incremental. Obviously, having the world's largest soccer tournament in the US soil and having people cheer for their team that they do once every four years come in and celebrate that, I think that's mostly incremental.

Steve Lawrence: I think it's mainly incremental. Obviously, having the world's largest soccer tournament in the US soil and having people cheer for their team that they do once every four years come in and celebrate that, I think that's mostly incremental. I don't see that as a trade-off from a college or a pro football fan. I think it's incremental.

Speaker #4: I don't see that as a trade-off from a college or a pro football fan. I think it's incremental.

Speaker #10: Thank you. Good luck.

Paul Lejuez: Thank you. Good luck.

Speaker #4: Thanks.

Steve Lawrence: Thanks.

Speaker #1: Our next question comes from Ike Boruchow with Wells Fargo. Your line is now live.

Operator 2: Our next question comes from Ike Boruchow with Wells Fargo. Your line is now live.

Operator: Our next question comes from Ike Boruchow with Wells Fargo. Your line is now live.

Speaker #8: Hey, morning, guys. Two from us. The gross margins inflecting in the back half—can you just comment on the drivers there? Is that just, effectively, the tariff headwinds kind of rolling off or getting less bad?

Ike Boruchow: Hey, morning, guys. Two from us. The gross margins inflecting in the back half, can you just comment on the drivers there? Is that just effectively the tariff headwinds kind of rolling off or getting less bad, or is there something else within the model that's kind of shifting as you move through the year?

Speaker #8: Or is there something else within the model that's kind of shifting as you kind of move through the year?

Speaker #9: That is absolutely the main thing that you should be thinking about. We bore the full burden of that weighted average cost impact of the IEPA tariffs towards the back part of last year.

Carl Ford: That is absolutely the main thing that you should be thinking about. We bore the full burden of that weighted average cost impact of the IEEPA tariffs towards the back part of last year. Q1 was, you're up against something where there was none of that. You'll see that tariff burden moderate throughout the year. My hope is that the shrink improvement that we saw in Q1 will continue. I think fuel will be a headwind for the year is what it's looking like. I think the main driver of that inflection will be the diminishment of the Q1 tariff headwind that we experienced in Q1 of 2026.

Speaker #9: Q1 was you're up against something where there was none of that. You'll see that tariff burden moderate throughout the year. And so I think my hope is that the shrink improvement that we saw in the first quarter will continue.

Speaker #9: I think fuel will be a headwind for the year is what it's looking like. But I think the main driver of that inflection will be the diminishment of the Q1 tariff headwind that we experienced in Q1 of '26.

Speaker #8: Got it. On the store, just two more. The store count, the ramp through the year—I think it's three in the second quarter. Can you just give us three Q versus four Q, the plan for the 15 to 20?

Ike Boruchow: Got it. Just two more. The store count, the ramp through the year, I think it's 3 in Q2. Can you just give us Q3 versus Q4, the plan for the 15 to 20?

Speaker #4: We haven't broken that down. We're a little more back-weighted this year than we wanted to be. If you remember, when we were kind of looking at the class of 2026 stores, it was right when the whole tariff situation kind of changed.

Steve Lawrence: We haven't broken that down. We're a little more back weighted this year than we wanted to be. If you remember, when we were kind of looking at the class of 2026 stores, it was right when the whole tariff situation kind of changed, and we weren't sure what the impact was going to be in terms of steel, construction costs, et cetera. We're more H2 weighted. Our goal is obviously to get all the new stores opened up prior to Thanksgiving. It'll be fairly balanced across both quarters, more H2 weighted than we initially would like. Next year, expect it to be more balanced.

Speaker #4: And we weren't sure what the impact was going to be in terms of steel, construction costs, etc. So we're more back half weighted. Our goal is obviously to get all the new stores opened up prior to Thanksgiving.

Speaker #4: But it'll be fairly balanced across both quarters, though more back-half weighted than we initially would like. Next year, we're expecting it to be more balanced.

Speaker #8: Got it, thank you. And the last one from us—just the commentary on the flat comp to Memorial Day. I understand that, but can you comment on the last two weeks?

Ike Boruchow: Got it. Thank you. The last one from us, just the commentary on the flat comp to Memorial Day, I understand that. Can you just comment the last two weeks? I assume they've slowed a little more considering your comment on the consumer. Can you just give us either the last two weeks or the quarter to date in totality? Sorry to harp on it, but I feel like it's relevant.

Speaker #8: I assume they've slowed a little more considering your comment on the consumer. But can you just give us either the last two weeks or the quarter-to-date in totality?

Speaker #8: I'm sorry to harp on it, but I feel like it's relevant.

Speaker #4: Well, we're in a period right now where Father's Day is a week later, so it's a little murky. But we're happy with the trends we're seeing.

Steve Lawrence: Well, we're in a period right now where Father's Day is a week later, so it's a little murky. We're happy with the trends we're seeing, and we're still optimistic about being somewhere between that flat to up 2 for the year.

Speaker #4: And we're still optimistic about being somewhere between that flat to up to for the year.

Speaker #8: Got it. Thanks, guys.

Ike Boruchow: Got it. Thanks, guys.

Speaker #1: Our next question comes from Simeon Gutman with Morgan Stanley. Your line is now live.

Operator 2: Our next question comes from Simeon Gutman with Morgan Stanley. Your line is now live.

Operator: Our next question comes from Simeon Gutman with Morgan Stanley. Your line is now live.

Speaker #7: Good morning. This is Pedro Gale on for Simeon. Thank you for taking our question. Nice quarter. I wanted to ask you about the comp guidance for the rest of the year.

Pedro Gil: Good morning. This is Pedro Gil on for Simeon. Thank you for taking our question. Nice quarter. I wanted to ask you about the comp guidance for the rest of the year and the shape of the quarters. Should we expect Q2 to be sort of the strongest quarter in the year as you have World Cup and the 250th anniversary and the rollout of the loyalty program? Or is it more of an even cadence for the remaining three quarters in the year?

Speaker #7: And the shape of the quarters, should we expect the second quarter to be sort of the strongest quarter in the year as you have World Cup and the 250th anniversary and the rollout of the loyalty program?

Speaker #7: Or is it more of an even cadence for the remaining three quarters in the year?

Speaker #9: Pedro, sitting where I am today, I think the 2.9% comp that we experienced in the first quarter is obviously outside the range of 0 to 2.

Carl Ford: Pedro, sitting where I'm at today, I think the 2.9% comp that we experienced in Q1, it's obviously outside the range of the zero to two. I think it's going to be the strongest quarter. I think we've got a difference in the year-over-year base related to Q1 versus Q2 of last year. We're excited about the credit card relaunch. We're excited about the World Cup and the 250th and some of the new brand launches that we have. I think the rest of the quarters will be within those navigational beacons.

Speaker #9: I think it's going to be the strongest quarter. I think we've got a difference in the year-over-year base related to Q1 versus Q2 of last year.

Speaker #9: We're excited about the credit card relaunch. We're excited about the World Cup and the 250th and some of the new brand launches that we have.

Speaker #9: But I think the rest of the quarters will be within those navigational beacons.

Speaker #7: Okay. That's helpful. And as a follow-up, I wanted to ask you about the work you're doing in supply chain. Can you give us an update on the efficiencies you're driving and how should we think about transportation costs for the rest of the year?

Pedro Gil: Okay. That's helpful. As a follow-up, I wanted to ask about the work you're doing in supply chain. Can you give us an update on the efficiencies you're driving, and how should we think about transportation costs for the rest of the year?

Speaker #9: Yeah. So we brought in a new chief supply chain officer, Rob Howell, who had a background with Cisco Foods. How long ago was that now?

Pedro Gil: Yeah. We brought in a new Chief Supply Chain Officer, Rob Howell, who had a background with Sysco Corporation. How long ago was that now?

Speaker #9: He seems like about two years ago. I think he's doing Yeoman's work. I think he's balancing capacity, if you look at our store count growing by 8% last year, it'll probably be in that 7% this year.

Steve Lawrence: About two years.

Carl Ford: About two years ago. I think he's doing yeoman's work. I think he's balancing capacity. If you look at our store count growing by 8% last year, it'll probably be in at 7% this year. He's got to make a lot of room in the distribution center. He's got to factor in the type of units that we're flowing. We're continuing to see unit per hour productivity and cost per unit productivity as it relates to distribution center operations. I don't expect that to change. I think as it relates to transportation, net transportation was a 10 basis point tailwind improvement year over year from Q1 of this year versus Q1 of last year. That reflects freight and sort of inbound supply chain, if you will, as well as e-commerce shipping.

Speaker #9: He's got to make a lot of room in the distribution center, and he's got to factor in the type of units that we're flowing.

Speaker #9: We're continuing to see unit-per-hour productivity and cost-per-unit productivity. As it relates to distribution center operations, I don't expect that to impact transportation. Net transportation was a 10 basis point tailwind, an improvement year over year from Q1 of this year versus Q1 of last year.

Speaker #9: That reflects freights and sort of inbound supply chain, if you will, as well as e-commerce shipping. And so I think that fuel will be a bigger headwind as it relates to Q2 and perhaps Q3 and beyond.

Carl Ford: I think that fuel will be a bigger headwind as it relates to Q2 and perhaps Q3 and beyond. I think the team's doing great work, and they're increasing their productivity year-over-year, and that's what we expect, and that's what we're seeing.

Speaker #9: But I think the team's doing great work. And they're increasing their productivity year over year. And that's what we expect. And that's what we're receiving.

Speaker #7: Okay. That's helpful. Thank you. Good luck.

Pedro Gil: Okay. That's helpful. Thank you. Good luck.

Speaker #1: Our next question comes from John Heimbach with Guggenheim Partners. Your line is now live.

Operator 2: Our next question comes from John Heinbockel with Guggenheim Partners. Your line is now live.

Operator: Our next question comes from John Heinbockel with Guggenheim Partners. Your line is now live.

Speaker #10: Hey, Steve. I wanted to start with, given what's going on with gas prices and just macro in general, do you think that amplifies the peaks and valleys around holidays?

John Heinbockel: Hey, Steve. Wanted to start with, given what's going on with gas prices and just macro in general, do you think that amplifies the peaks and valleys around holidays and maybe deeper valleys? If you think that's true, have you made tactical adjustments when you think about how you want to spend promotional dollars and communicate with the customer the rest of the year?

Speaker #10: And maybe a deeper valleys? And is that, if you think that's true, is that sort of have you made tactical adjustments when you think about how you want to spend promotional dollars and communicate with the customer the rest of the year?

Speaker #4: Yeah, I think your instincts are spot on. I mean, we definitely have seen that play out a little bit. As we progress through Q2—and I expect that's going to happen—customers are looking for value, right?

Steve Lawrence: Yeah, I think your instincts are spot on. We definitely have seen that play out a little bit as we progress through Q2, and I expect that's going to happen. Customers are looking for value, right? I think they're looking for ways to offset higher gas prices, and I think we've seen this happen a little bit in Q1, and we've seen it continue into Q2, where they're amplifying purchases during the promotional windows that we have on the calendar. They're pulling back a little bit in the lulls, and we have definitely adjusted our forecasts and our plans moving forward to account for that.

Speaker #4: And I think they're looking for ways to offset higher gas prices. And I think we've seen them in this happen a little bit in Q1.

Speaker #4: And we've seen it continue in Q2 where they're amplifying purchases during the promotional windows that we have on the calendar. They're pulling back a little bit in the lows.

Speaker #4: And we have definitely adjusted our forecasts and our plans moving forward to account for that.

Speaker #10: All right. And secondly, I think you want to add when you look at the membership, and I think you said you want to add 2 million members and I think get to 15 by year-end.

John Heinbockel: All right. Secondly, when you look at the membership, I think you said you want to add 2 million members and I think get to 15 by year end. When we think about how that breaks down between rewards members, proprietary credit card, MasterCard, relative sizes of that, and do you think will most of the growth come from the new MasterCard offering?

Speaker #10: When we think about how that breaks down between rewards members, proprietary credit card, and MasterCard, what are the relative sizes of those? And do you think most of the growth will come from the new MasterCard offering?

Speaker #4: Yeah, we haven't broken it down between credit, loyalty, etc., like that. What I will tell you is that we're seeing a meaningful acceleration in the take rate on the new credit card.

Steve Lawrence: Yeah, we haven't broken it down between credit, loyalty, et cetera like that. What I will tell you is that we're seeing a meaningful acceleration in take rate on the new credit card. We rolled that out in advance of issuing new plastic. New customers apply for the credit card pretty much since the middle of March, I would say, have been eligible for either the private label credit card or the co-branded MasterCard. We've seen applications up double digits pretty much since we've done that. We expect that to continue, and we think it's a great value proposition, and it's a great way for customers to stretch their spending power. I think the 15 million we set as a goal by the end of the year, I'm fairly confident we're going to beat that number this year.

Speaker #4: We rolled that out in advance of issuing new plastic. So new customers have applied for the credit card pretty much since the middle of March, I would say.

Speaker #4: Been eligible for either the private level credit card or the co-branded MasterCard. We've seen applications up double digits pretty much since we've done that.

Speaker #4: We expect that to continue. And we think it's a great value proposition. And it's a great way for customers to stretch their spending power.

Speaker #4: And so, I think the 15 million we set as a goal by the end of the year—I'm fairly confident we're going to beat that number this year.

Speaker #10: Thank you.

John Heinbockel: Thank you.

Speaker #1: Our next question comes from Anna Glaston with B. Riley Securities. Your line is now live.

Operator 2: Our next question comes from Anna Glaessgen with B. Riley Securities. Your line is now live.

Operator: Our next question comes from Anna Glaessgen with B. Riley Securities. Your line is now live.

Speaker #11: Hi. Good morning. Thanks for taking my questions. I'd like to follow up on the JordanMcKee performance. Nice to see that you're expanding into more stores.

Anna Glaessgen: Hi. Good morning. Thanks for taking my questions. I'd like to follow up on the Jordan Nike performance. Nice to see that you're expanding into more stores. Could you comment on if there's any structural reason that it wouldn't be able to be expanded through the whole fleet? A follow-up on, I think you said you expected mid-single digit growth through the year following the Q1 performance. Was that on a comp store sales basis? Given the expansion, just want to understand better the terms, assuming though. Thanks.

Speaker #11: I guess, could you comment on if there's any structural reason that it wouldn't be able to be expanded throughout the whole fleet? And then a follow-up: I think you said you expected mid-single-digit growth through the year.

Speaker #11: Following the one Q performance, was that on a comp store sales basis? Because given the expansion, I just want to understand better the trends, assume better.

Speaker #11: Thanks.

Speaker #4: So I'll start with, we do have elements of Jordan in all stores right now. We've expanded out things like slides, backpacks, and sports equipment to all stores.

Steve Lawrence: I'll start with, we do have elements of Jordan in all stores right now. We've expanded out things like slides and backpacks and sports equipment out to all stores. The shop concept is going out to an additional 55 stores, taking us to 200, which is about two-thirds of the store base, which is obviously a meaningful chunk of our volume. I think you'll see us continue to expand that methodically over time. I don't see any reason why ultimately we won't have all elements of Jordan in all stores at some point, but it's just more of a methodical rollout. The growth we're seeing in terms of mid-single digit comp with Jordan and Nike combined, we do expect that to continue forward. I believe that's a comp number that I'm citing.

Speaker #4: The shop concept is going out to an additional 55 stores taking us to 200, which is about two-thirds of the store base. Which is obviously a meaningful chunk of our volume.

Speaker #4: I think you'll see us continue to expand that methodically over time. And I don't see any reason why ultimately we won't have all elements of Jordan in all stores at some point.

Speaker #4: But it's just more of a methodical rollout. The growth we're seeing in terms of mid-single-digit comp with Jordan and Nike combined—we do expect that to continue forward.

Speaker #4: I believe that's a comp number that I'm citing. So, I don't see any reason why we're going to see that slow in the back half if that's the trend we saw in the first half of the year, based on how we plan the business.

Steve Lawrence: I don't see any reason why we're going to see that slow in the H2, if that's the trend we saw in the H1 of the year based off how we plan the business.

Speaker #10: Anna, I do want to take the opportunity to— you'll recall in Q1 of last year, we expanded Nike and then rolled that shop concept out to 135 doors.

Carl Ford: Anna, I do want to take the opportunity to, you'll recall in Q1 of last year, we expanded Nike and then rolled that shop concept out to 135 doors in Q1 of last year. It's 55 doors, but the timing obviously is not Q1, it's Q2. There's some costs associated with that. We saw enough benefits in the shop concept versus just having the Jordan elements dispersed amongst the store that we wanted to roll out those additional 55 doors this year. There's some costs that'll hit in Q2 there.

Speaker #10: In Q1 of last year, it's 55 doors but the timing obviously is not Q1. It's Q2. So there's some costs associated with that. But we saw enough benefit in the shop concept versus just having the Jordan elements in dispersed amongst the store.

Speaker #10: That we wanted to roll out those additional 55 doors this year. There's some costs that'll hit in Q2 there.

Speaker #11: Great. Thanks. That's super helpful. And then wanted to follow up on the introduction of suppressors. I guess, why historically have you not had the category?

Anna Glaessgen: Great. Thanks. That's super helpful. Wanted to follow up on the introduction of suppressors. I guess why historically have you not had the category, and what signals were you seeing that gave the confidence to expand as a lot of competitors are exiting or diminishing the category? Thanks.

Speaker #11: And what signals were you seeing that gave you the confidence to expand as a lot of competitors are exiting or diminishing the category? Thanks.

Speaker #4: So I would tell you that suppressors has been a change in law. And it's a little easier to procure than it used to be.

Steve Lawrence: I would say that suppressors has been a change in law, and it's a little easier to procure than it used to be. It's still a pretty arduous process, but the industry has seen an expansion in suppressors since the laws have changed really at the start of the new year. We've got it in roughly I think 30, 35 stores right now. We're going to roll it out to over 100 stores throughout the remainder of this year. As we said on the call, it's really for hearing protection for the person who enjoys shooting sports, going to the range, et cetera. It's a little quieter and a little safer for them to use. We see a high attachment rate. It's not just the suppressor, it's all the cleaning equipment and other things that you need to purchase when you buy a suppressor.

Speaker #4: It's still a pretty arduous process, but the industry has seen an expansion in suppressors since the laws have changed, really at the start of the new year.

Speaker #4: We've got it in roughly, I think, 30 to 35 stores right now. We're going to roll it out to over 100 stores throughout the remainder of this year.

Speaker #4: As we said on the call, it's really for hearing protection for the person who enjoys shooting sports, going to the range, etc. It's a little quieter and a little safer for them to use.

Speaker #4: We see a high attachment rate. It's not just the suppressor. It's all the cleaning equipment and other things that you need to purchase when you buy suppressor.

Speaker #4: It also has tailwinds into ammo because it requires a different type of ammo. That you shoot. So we think that this is a good non-comp thing for us that we're going to see expansion and fueling the shooting sports category for us throughout the remainder of this year and the next.

Steve Lawrence: It also has tailwinds into ammo because it requires a different type of ammo that you shoot. We think that this is a good non-comp thing for us that we're going to see expansion and fueling the shooting sports category for us throughout the remainder of this year and the next as we expand it into doors. We're excited about it. I think it's a growing part of the shooting sports category, and we're participating in it.

Speaker #4: As we expanded into outdoors. And we're excited about it. I think it's a growing part of the shooting sports category, and we're participating in it.

Speaker #11: Great. Thanks.

Anna Glaessgen: Great. Thanks.

Speaker #4: Thank you.

Steve Lawrence: Thank you.

Speaker #1: Our next question comes from Brian Nagel with Oppenheimer. Your line is now live.

Operator 2: Our next question comes from Brian Nagel with Oppenheimer. Your line is now live.

Operator: Our next question comes from Brian Nagel with Oppenheimer. Your line is now live.

Speaker #12: Hi, this is Andrew Chassonoff. I'm on for Brian Nagel. Thanks for taking our questions. Just the first one: Q1 comp was driven by both ticket and traffic, which is a sharp reversal from the Q4 transaction decline.

Andrew Chasanoff: Hi, this is Andrew Chasanoff on for Brian Nagel. Thanks for taking our questions. Just the first one. Given your commentary about the 50,000 and under cohort remaining under pressure, I'm just trying to understand how dependent full year comp guidance is on the lower income cohort improving versus just continued outperformance by the higher income cohorts.

Speaker #12: And so just given your commentary about the 50K and under cohort remaining under pressure, we're starting to understand how dependent full-year comp guidance is on the lower income cohort improving versus just continued outperformance by the higher income cohorts.

Speaker #10: Yeah. So going back to Q3 of 2024, we saw quintiles four and five. So households above 100,000 in flex. But it was being offset by less transactions by 50,000 and below.

Carl Ford: Yeah. Going back to Q3 of 2024, we saw quintiles 4 and 5, so households above 100,000 inflect. It was being offset by less transactions by 50,000 and below. That trend continued in 2025, what we saw in Q1 of 2026 is those above 100,000 customers up mid-single digits, the below 50,000 were only down low single digits. I'll say it was less bad. Some of that may have been rebates on tax refunds. We do see that those were offset by higher fuel. What I'm interested to look at is how does that lower income cohort, does it stay at low single digits? Does it go to zero? Does it go back to being a more meaningful pull down? Our highest and fastest growing customer cohort is at above 100,000.

Speaker #10: That trend continued in 2025. But what we saw in Q1 of 2026 is those above 100,000 customers were up mid-single digits, but those below 50,000 were only down low single digits.

Speaker #10: So, I'll say it was less bad. Some of that may have been rebates on taxes—tax refunds, excuse me. But we do see that those were offset by higher fuel.

Speaker #10: What I'm interested to look at is how does that lower income cohort does it stay at low single digits? Does it go to zero?

Speaker #10: Does it go back to being a more meaningful pull-down? Our highest and fastest growing customer cohort is that above 100,000. I think that is going to continue.

Carl Ford: I think that is going to continue, that is what is embedded within the go forward guidance. I think some of the differentiation between the low and the high end of our guidance range is how that lower income cohort. We saw something less bad in Q1 of 2026. TBD on whether that continues into Q2, beyond.

Speaker #10: And that is what is embedded within the go-forward guidance. I think some of the differentiation between the low and the high end is in our guidance range.

Speaker #10: It's how that lower income cohort— we saw something less bad in Q1 of 2026. TBD on whether that continues into Q2, Q3, and beyond.

Andrew Chasanoff: That's really helpful. I appreciate that. If I could just get a follow-up. Just how you're thinking about some of the halo effects around World Cup. I know you've talked a lot about stores where the games are going to be in market, I just wanted to get your thinking on potential traffic uplifts for stores that are in markets where games are not necessarily being played.

Speaker #1: That's really helpful. I appreciate that. If I could just get a follow-up. Just how you're thinking about some of the halo effects around World Cup.

Speaker #1: I know you've talked a lot about stores where the games are going to be in market, but I just wanted to get your thinking on potential traffic uplifts for stores that are in markets where games are not necessarily being played.

Speaker #4: Yeah. So we have World Cup products in all stores, right? We've moved it to the front of our stores at the entrance in the markets where the games are being played.

Steve Lawrence: Yeah. We have World Cup products in all stores, right? We've moved it to the front of our stores at the entrance in the markets where the games are being played. If you go into any of our stores that are outside those markets, you'll see a meaningful presentation of World Cup jerseys, USA, Mexico, a couple of other teams, depending upon which region those teams are playing in on the licensed team pads. We expect to see growth not just in those stores, broadly across the chain. I think we'd see that persist through the summer months. I also think there's probably a generic red, white, and blue opportunity out there as people cheer for Team USA. That maybe is a little less license driven.

Speaker #4: But if you go into any of our stores that are outside those markets, you'll see a meaningful presentation of World Cup jerseys—USA, Mexico, and a couple of other teams, depending upon which region those teams are playing in.

Speaker #4: On the licensed team pad. So we expect to see growth not just in those stores but broadly across the chain. I think we'd see that persist through the summer months.

Speaker #4: I also think there's probably a generic red, white, and blue opportunity out there as people cheer for Team USA. That maybe is a little less license-driven.

Speaker #4: And then longer term, what we've seen in the past is kind of a halo effect of this. In terms of driving youth participation in the youth soccer well past the event itself.

Steve Lawrence: longer term, what we've seen in the past is kind of a halo effect to this in terms of driving youth participation in youth soccer well past the event itself. We're expecting and believe we'll see more youth soccer participation in the back half of this year and into the spring of 2027.

Speaker #4: So we're expecting and believe we'll see more youth soccer participation in the back half of this year and into the spring of 2027.

Speaker #12: That's really helpful. Best of luck.

Andrew Chasanoff: That's really helpful. Best of luck.

Speaker #4: Thanks.

Steve Lawrence: Thanks.

Speaker #12: Thank you.

Carl Ford: Thank you.

Speaker #1: Our next question comes from Michael Lasser with UBS. Your line is now live.

Operator 2: Our next question comes from Michael Lasser with UBS. Your line is now live.

Operator: Our next question comes from Michael Lasser with UBS. Your line is now live.

Speaker #13: Good morning. Thank you so much for taking my question. I'm curious what you think happened in the first quarter that may not necessarily repeat over the course of the year.

Michael Lasser: Good morning. Thank you so much for taking my question. I'm curious what you think happened in the first quarter that may not necessarily repeat over the course of the year. If we take your 2.9% same store sales increase in Q1, and if we want to get to the midpoint of the guide, it would imply somewhere in the neighborhood of a 50 to 100 basis point comp for Q2, Q3, and Q4. Understanding that the comparison is a little tougher in Q2, but you will have the benefit of the World Cup during this time.

Speaker #13: So if we take your 2.9% same-store sales increase in Q1, and if we want to get to the midpoint of the guide, it would imply somewhere in the neighborhood of a 50 to 100 basis point comp for Q2, Q3, and Q4.

Speaker #13: Understanding that the comparison is a little tougher in Q2. But you will have the benefit of the World Cup during this time. So should we assume that the difference between a nearly three comp in one quarter and call it a 50 to 100 basis point comp for the rest of the year would simply be a function of A, the tax refunds, and B, the macro getting a little bit more difficult?

Michael Lasser: Should we assume that the difference between a nearly three comp in Q1 and call it a 50 to 100 basis point comp for the rest of the year would simply be a function of, A, the tax refunds, and B, the macro getting a little bit more difficult, such that if it doesn't get more difficult, you could do better than what's embedded in your guidance? Thank you.

Speaker #13: Such that if it doesn't get more difficult, you could do better than what's embedded in your guidance? Thank you.

Steve Lawrence: I think there's a lot wrapped up in that question. Simplistically, what we saw happen in the first quarter was increased tax returns blunting the impact of much higher gas prices. I think as we've gotten further away from that, we've seen the business move to more of a flattish comp, up low single digits in total. That's where we kind of feel the natural run rate of the business is sitting today. What gets us from that flattish to that up 1 or up 2 implied in our guidance for the remainder of the year are the impact of the initiatives and how well they're received and how well they impact the consumer. That's really what we're seeing in the business, Michael. We've got a lot of initiatives that we think will play out.

Speaker #4: I think there's a lot wrapped up in that question. Simplistically, what we saw happen in the first quarter was increased tax returns, blunting the impact of much higher gas prices.

Speaker #4: I think as we've gotten further away from that, we've seen the business move to more of a flattish comp up low single digits in total.

Speaker #4: So that's where we kind of feel the natural run rate of the business is sitting today. What gets us from that flattish to that up one or up two, implied in our guidance for the remainder of the year, are the impact of the initiatives and how well they're received and how well they impact the consumer.

Speaker #4: So that's really what we're seeing in the business, Michael. We've got a lot of initiatives that we think will play out. A lot of them are targeted at activating consumers who are under pressure with the new credit card rollout and the value delivery that we're giving there.

Steve Lawrence: A lot of them are targeted at activating consumers who are under pressure with the new credit card rollout and the value delivery that we're giving there. That's the thing that's going to take us somewhere between the flat to up 2.

Speaker #4: That's the thing that's going to take us somewhere between flat to up two.

Speaker #10: Yeah, and you spoke to it, Michael, but I do want to be specific—last year's Q1 comp of negative 3.7% was the easiest compare.

Carl Ford: Yeah. You spoke to it, Michael, but I do want to be specific. Last year's Q1 comp of -3.7% was the easiest compare. Q2 of last year was +0.2%. Q3 was -0.9%. Q4 was -1.6%. I would encourage you to look at two-year stacks as you think through the modeling aspect of it. I agree with everything that Steve said, but the prior year compares do weigh in on how we guide for the current year.

Speaker #10: Q2 of last year was up 0.2%. Q3 was down 0.9%. Q4 was down 1.6%. So, I would encourage you to look at two-year stacks as you think through the modeling aspect of it.

Speaker #10: I agree with everything that Steve said. But the prior-year comparisons do weigh in on how we guide for the current year.

Speaker #13: Those points are all very helpful. So it sounds like, in addition to the two-year stacks, you are expecting about 200 basis points of same-store sales contribution from your initiatives.

Michael Lasser: Those points are all very helpful. It sounds like in addition to the two-year stacks, you are expecting about 200 basis points of same-store sales contribution from your initiatives. To the extent that you would comp below that over the next few quarters, that would simply be a function of either the compare or the macro getting a little tougher. A, is that fair? Just to clarify on your full year guidance, you took up the low end of the profit outlook, the profit dollar outlook, by about $5 million. What drove that change? Was it simply incorporating the updated expectation around tax tariff rebate into your guidance, or is there something else that you're seeing that drove that change? Thank you so much.

Speaker #13: And to the extent that you would comp below that over the next few quarters, that would simply be a function of either the compare or the macro getting a little tougher.

Speaker #13: So A, is that fair? And just to clarify on your full-year guidance, you took up the low end of the profit outlook, the profit dollar outlook.

Speaker #13: By about $5 million. What drove that change? Was it simply incorporating the updated expectation around tax tariff rebates into your guidance? Or was there some is there something else that you're seeing that drove that change?

Speaker #13: Thank you so much.

Speaker #10: Yeah. So as I would speak to initiatives, they get us to the midpoint of the comp guidance. So a plus 1% comp halfway between 0 and 2 for the full year.

Carl Ford: Yeah. As I would speak to initiatives, they get us to the midpoint of the comp guidance. A +1% comp halfway between zero and two for the full year is all initiatives. We think e-comm is going to be a tailwind. I am very pleasantly pleased associated with the new stores when they get in the comp base. I'm liking that high single-digit comp that is above how we modeled them when we did their pro forma. I think the credit card relaunch, we baked in growth associated with that. Our initiatives alone get us to the midpoint.

Speaker #10: It's all initiatives. We thank Ecom's going to be a tailwind. I am very pleasantly pleased associated with the new stores when they get in the comp base.

Speaker #10: I'm liking that high single-digit comp. That is above how we modeled them. Additionally, when we did their pro forma, I think the credit card relaunch—we baked in growth associated with that.

Speaker #10: So our initiatives alone get us to the midpoint. I think the delineation between what drags us down to the low of a flat comp or the high of a 2%—I think some of that relates to the magnitude of these external events.

Carl Ford: I think the delineation between what drags us down to the low of a flat comp or the high of a 2%, I think some of that relates to the magnitude of these external events, World Cup, 250th, things of that nature, and the health of the overall consumer. Do we see that low? I'm really focused primarily on that below 50,000 customer. Are we at an inflection point there? Is it moderating? Are we at a trough? I think those are the delineations between the high and the low point of the guidance. I do want you to come away thinking that our initiatives alone get us to the midpoint.

Speaker #10: World Cup, 250th, things of that nature, and the health of the overall consumer. Do we see that below? And I'm really focused primarily on that below $50,000 customer.

Speaker #10: Are we at an inflection point there? Is it moderating? Are we at a trough? I think those are the delineations between the high and the low point of the guidance.

Speaker #10: But I do want you to come away thinking that our initiatives alone get us to the midpoint. As it relates to the low end, I think the easiest way to think about why we took the low end of the annual guidance up, and why the low end of the profit is up...

Carl Ford: As it relates to the low end, I think the easiest way to think about why did we take the low end of the annual guidance up and why is the low end of the profit up, it's because Q1 came in towards the high side versus the low side. We're taking that Q1 low side off the table and keeping Q2, Q3, and Q4's ranges exactly how we had them contemplated it when we guided the full year.

Speaker #10: It's because Q1 came in towards the high side versus the low side. So we're taking that Q1 low side off the table and keeping Q2, 3, and 4's ranges exactly how we had them contemplated when we guided the full year.

Speaker #13: Thank you so much. And good luck.

Michael Lasser: Thank you so much, and good luck.

Speaker #10: Thank you.

Carl Ford: Thank you.

Speaker #1: We've reached the end of the question-and-answer session. I'd now like to turn the call back over to Steve Lawrence for closing comments.

Operator 2: We've reached the end of the question and answer session. I'd now like to turn the call back over to Steve Lawrence for closing comments.

Operator: We've reached the end of the question and answer session. I'd now like to turn the call back over to Steve Lawrence for closing comments.

Speaker #4: Thanks. We started to see momentum shift in the business last year, which continued to build into the first quarter and resulted in a positive comp.

Steve Lawrence: Thanks. We started to see momentum shift in the business last year, which continued to build into Q1 and resulted in a positive comp. While inflationary pressures persist, we're confident in our ability to execute through a range of environments. We have a thoughtful, straightforward strategy. Our goal is to continue to build momentum in the business by methodically executing against this strategy while also providing our customers with compelling assortments at a strong value. We know that if we do this, our key stakeholders will be pleased with the results. I'd like to close with a heartfelt thanks to our 22,000 plus Academy team members who delivered a solid start to the year. I'm confident our team will keep the momentum rolling as we head into the remainder of 2026. Thanks for joining our call today, and have a good rest of your day.

Speaker #4: While inflationary pressures persist, we're confident in our ability to execute through a range of environments. We have a thoughtful, straightforward strategy. Our goal is to continue to build momentum in the business by methodically executing against this strategy, while also providing our customers with compelling assortments at a strong value.

Speaker #4: We know that if we do this, our key stakeholders will be pleased with the results. I'd like to close with a heartfelt thanks to our 22,000-plus Academy team members who delivered a solid start to the year.

Speaker #4: I'm confident our team will keep the momentum rolling as we head into the remainder of 2026. Thanks for joining our call today. And have a good rest of your day.

Operator 2: This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.

Operator: This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.

Q1 2026 Academy Sports & Outdoors Inc Earnings Call

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