Finvest
ASO Specialty Retail · Consumer discretionary · Value retail · Omnichannel · Thesis updated July 2, 2026

Better sales, weaker foot traffic

01 Running thesis

A cleaner rebound, with a traffic warning

Academy has now shown real signs of a rebound. In Q1 2026, net sales rose 6.7% to $1.44 billion, and comparable sales rose 2.9%. That matters because comparable sales compare stores and channels that were open in both periods, so they show whether the core business is improving.

The bull case is that Academy is selling better products to a broader customer base. Outdoors grew 11.7% in Q1 2026, e-commerce grew 17.4%, and higher-income households became the largest and fastest-growing customer group in 2025 after traffic from households earning over $100,000 rose 10%. That supports management's plan to reduce reliance on lower-income shoppers.

The bear case is about the quality of growth. The average ticket rose 4.5%, but comparable transactions fell 1.5%. Fewer trips can be an early sign that the core customer is stretched, even if the customers who do visit spend more.

Margins are also a live issue. Gross margin fell 80 basis points to 33.2% in Q1 2026, mainly because tariffs hurt margin by 110 basis points. Academy is executing better, but the stock still needs proof that traffic and margins can improve at the same time.

Jun 2026▲Q1 2026 confirmed better sales momentum, with net sales up 6.7% and comparable sales up 2.9%. The update was not clean, since transactions fell 1.5% and tariffs pushed gross margin down.
Jun 2026▲Management reported stronger e-commerce and Outdoors growth, and raised full-year 2026 guidance. Tariffs were still a clear drag on margin.
Mar 2026▲The fiscal 2025 update showed Academy moving toward higher-income customers, with traffic from households earning over $100,000 up 10%. The company also pointed to new stores and a revamped loyalty program as 2026 drivers.
Dec 2025▲Q3 2025 improved the margin story, as gross margin expanded 170 basis points to 35.7% and e-commerce grew 22.2%. Comparable sales were still down 0.9%, so traffic remained the weak spot.
Sep 2025→Q2 2025 showed the first comparable sales increase in over a year at 0.2%, but transactions still fell 1.4%. An EPS miss and a more promotional market kept the view cautious.
02 Business model

Value retail with a richer shopper target

Academy makes money by buying sporting goods, outdoor gear, apparel, and footwear, then selling them through stores and its website. The model depends on good product selection, sharp prices, enough inventory, and store traffic.

The company has long been a value retailer. Now it is adding more better and best brands to attract shoppers with higher incomes. This is meant to reduce pressure from weaker lower-income spending, which remains a risk when food, housing, and other costs stay high.

Growth comes from three places: new stores, e-commerce, and loyalty. Management opened 24 new stores during 2025, said stores opened from 2022 through 2024 drove mid-single-digit comp increases, and is relaunching its credit card and loyalty setup as My Academy Rewards.

The model can break if customers visit less, if promotions rise, if tariffs cut merchandise margin, or if distribution center changes cause empty shelves. A prior warehouse management rollout in the Georgia distribution center caused out-of-stock problems and cost an estimated $32 million in sales in Q2 2025.

03 Product portfolio

Gear, clothes, shoes, and private brands

Growth engine

Outdoors

Outdoors was 31% of fiscal 2025 net sales and grew 11.7% in Q1 2026. This is the clearest current growth engine, helped by categories like fishing and shooting sports.

Steady

Apparel

Apparel was 27% of fiscal 2025 net sales and grew 4.7% in Q1 2026. It helps Academy sell both everyday value items and higher-tier brands.

Steady

Sports & Recreation

Sports & Recreation was 22% of fiscal 2025 net sales and grew 6.2% in Q1 2026. This line ties Academy to team sports, fitness, and family recreation spending.

Cash cow

Footwear

Footwear was 20% of fiscal 2025 net sales and grew 2.8% in Q1 2026. It includes key national brands and can drive repeat store visits when demand is healthy.

Option

Private brands

Private brands such as Magellan Outdoors and BCG made up about 22% of fiscal 2025 merchandise sales. They can support margin if shoppers accept them as good value.

Option

Firearms

Firearms were about 6% of fiscal 2025 net sales. The category can bring traffic and market share gains, but it also carries higher regulatory and political risk.

04 Business segments

Fiscal 2025 sales mix

Outdoors31%growing fast
Apparel27%modest
Sports & Recreation22%modest
Footwear20%flat

The segment mix uses fiscal 2025 net sales by merchandise division. Outdoors is the largest division at 31%, so weather, outdoor demand, and firearm rules can matter more than they would for a general apparel chain.

05 Risk factors

What could still break the rebound

Fewer shopping trips

High impact · Medium odds

Q1 2026 comparable sales rose 2.9%, but comparable transactions fell 1.5%. That means growth came from bigger baskets, not more visits. If lower-income shoppers pull back further, the company may need more discounts to move goods.

We watchComparable transactions in Q2 2026 and management comments on lower-income customer traffic.

Tariff pressure on margin

High impact · High odds

Tariffs hurt Q1 2026 gross margin by 110 basis points. Gross margin still fell 80 basis points to 33.2% even with help from shrink and freight. If tariffs stay high, Academy may have to raise prices, accept lower profit, or push suppliers harder.

We watchGross margin rate, tariff basis-point impact, and pricing comments in the next earnings report.

Distribution center execution

Medium impact · Medium odds

Retailers lose sales when popular items are not on shelves. Academy already had a costly example when a new warehouse management system in the Georgia distribution center caused out-of-stock issues and an estimated $32 million sales hit in Q2 2025. Future system changes could repeat that problem.

We watchOut-of-stock commentary, distribution center conversion updates, and inventory availability.

More promotions from competitors

Medium impact · Medium odds

Academy sells in categories where customers can compare prices. Management has already pointed to a more competitive promotional backdrop in prior periods. If rivals discount more, Academy may protect sales at the cost of margin.

We watchMerchandise margin, markdown levels, and management comments on the promotional environment.

Firearms regulation and scrutiny

Medium impact · Medium odds

Firearms were about 6% of fiscal 2025 net sales. The category is governed by many federal, state, and local rules. Mistakes or tighter enforcement could hurt sales, create costs, or harm the brand.

We watchNew firearm rules, enforcement actions, license issues, and company comments on shooting sports sales.
06 Quick answers

In one breath

What does Academy Sports and Outdoors sell?

Academy sells outdoor gear, sports and recreation products, apparel, and footwear. Its key national brands include Nike, Under Armour, adidas, Columbia, and YETI, and it also sells private brands like Magellan Outdoors and BCG.

Why did ASO's latest quarter look better?

Q1 2026 net sales rose 6.7%, comparable sales rose 2.9%, and e-commerce grew 17.4%. Outdoors was the strongest division, with sales up 11.7%.

What is the biggest concern for ASO right now?

The main concern is that fewer customers are transacting, even though shoppers who do buy are spending more. Tariffs are another key concern because they already cut into gross margin in Q1 2026.

How important is e-commerce for Academy?

E-commerce is still a minority of the business, but it is growing quickly. It reached 11.0% of merchandise sales in Q1 2026 after growing 17.4% year over year.