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Good morning, and welcome to the Academy Sports and Outdoors, Inc. Fourth Quarter Fiscal 2025 Results Conference Call. The call is being recorded, and all participants are in a listen-only mode. Following the prepared remarks, there will be a brief question-and-answer session. Questions will be limited to analysts and investors, with one follow-up. Please press 0 on your telephone keypad. I would now like to turn the call over to Dan Aldridge, Vice President, Investor Relations for Academy Sports and Outdoors, Inc.

Good morning, everyone, and thank you for joining the Academy Sports and Outdoors, Inc. Fourth Quarter and Fiscal Year 2025 Financial Results Call. Participating on today's call are Steve Lawrence, Chief Executive Officer, and Carl Ford, Chief Financial Officer. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our most recent 10-Ks and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors.academy.com. This morning, we will review our financial results for the fourth quarter of 2025 and the full year, provide an update on strategic initiatives, discuss outlook for the year, and share guidance for the full year fiscal 2026. After we conclude prepared remarks, there will be time for questions. With that, I will turn the call over to CEO, Steve Lawrence.

Thanks, Dan, and good morning to everyone on the line today. On our call this morning, we plan to cover our fourth quarter and full year results for 2025, along with providing initial guidance for 2026. I will remind you that we also have an Analyst Day planned for April 7 in New York City that will also be webcast. We will go into more detail on our long-range plan and how the investments we have been making in 2025 and 2026 play into our multiyear strategy. I will start with the fourth quarter, which played out largely as we forecast, with sales coming in at $1,700,000,000, which is a 2.5% increase versus last year and translated into a negative 1.6% comp decrease. These results were within our implied guidance range for the quarter. As we shared on our last call, sales were strong over the Thanksgiving and Cyber Week time periods. Similar to prior years, we saw customer spending patterns soften in December and then surge during the week leading into Christmas, which continued into the last week of the month. January was softer than we anticipated, primarily driven by the large winter storms in the last ten days of the month, which caused roughly half of our stores to be partially or fully shut down for two to three days. We saw the business rebound once our stores reopened. As we discussed on prior calls, the big unknown for us this holiday was how the customer was going to react to the inflationary pressures on pricing for goods that were imported from overseas. Our forecast was for average unit retails to be up low double digits for the quarter. We delivered against that by raising our average unit retails up 10% through a combination of promotional optimization, growing sales in the better/best end of our assortment, and some strategic AUR increases. All these efforts helped improve our gross margin by 140 basis points versus last year. Pulling back to the full year, I am proud of how our team executed in a choppy environment. We navigated through all the challenges in 2025 while still growing top line sales to $6,050,000,000, or up 2%, which resulted in solid market share gains across our footprint. We also put in place many foundational building blocks which should help drive sales in 2026 and beyond, some of which include, first, I am proud of how the team rallied midyear to mitigate the impact of the incremental tariffs that were levied in late Q1 and Q2 of last year. The team had to react midyear after most of the merchandise was already purchased and managed to offset the increased expense through a combination of sourcing country diversification, inventory pull-forward at lower costs, and pricing and promotional optimization work. The result of these efforts yielded an annual AUR increase of 6% which translated into a gross margin rate of 34.8%, or plus 90 basis points versus the prior year. As we embarked on this journey to raise AURs, we also committed to not losing our reputation for having outstanding value by constantly monitoring pricing across the marketplace. What we found through the ongoing customer research work we do is that we have managed to improve average unit retails across the full year while also improving our value perception with customers relative to key competitors. I can assure you that this was no easy feat. Another key accomplishment was the 13.6% growth we drove in our .com business. We put a lot of new players in place late in 2024, and they jumped in and quickly worked to improve core search and site experience fundamentals. They also showed tremendous agility throughout the year as we incorporated emerging AI capabilities into our site for data enrichment on our items to help improve relevance in search, leveraging image generation capabilities on our private brand apparel, and finally, introducing agentic AI onto our site for the first time, the launch of Scout, prior to Christmas. While we are still in the early innings on these efforts, we are excited about the initial results we are seeing on this front. Third, new store expansion remains our number one growth opportunity. During the year, we successfully opened up 24 new stores, which in aggregate are tracking to exceed their year one performance. At the same time, stores that opened in 2022 through 2024, which are now in the comp base, drove mid-single-digit comp increases. We expect this tailwind to grow in 2026 as the 2025 vintage of new stores rolls into the comps as we progress throughout the year. Fourth, the team was laser focused on improving in-stocks through a combination of assortment rationalization efforts coupled with the rollout of RFID scanners to all of our stores in Q2. During the year, we shifted to weekly counts and inventory updates on brands that are RFID-enabled, which in aggregate represent roughly 25% of our annual volume. The end result was improvement in store in-stocks across the company by 500 basis points, which had a major impact on overall customer satisfaction along with improving conversion. We also believe that the merchants did a great job of leaning into emerging trends and brands, which helped reinforce our position as a key destination during gift-giving time periods such as Father’s Day and Christmas, along with stock-up time periods such as back to school. Adding in-demand brands such as Jordan and Converse to our assortment, coupled with expanding other hot-trending items such as Birkenstocks, Perliville 101, Turtlebox speakers, and the Ray-Ban Metas, helped us drive traffic into our stores during the key moments on our customers' calendars. This is another initiative that we will continue to push on in 2026. Next, our My Academy Rewards loyalty program has continued to grow since we kicked it off in mid-2024. We now have over 13,000,000 customers enrolled in this program. This is another initiative that we are still in the early innings on. We have some exciting plans to accelerate growth on this front in 2026 that we will share in a couple of minutes. Finally, all these efforts combined to help us drive new customers in our stores, which was evidenced by the 10% growth we saw in consumers whose household income is over $100,000 a year. The increased traffic from this cohort is, in effect, helping us diversify and somewhat de-risk our customer base, with these higher-income consumers now representing our largest and fastest-growing customer cohort. To be clear, we remain focused and committed to maintaining our position as the value provider in the sports and outdoor space. That being said, we believe layering on new trending brands and items targeted at the better/best end of the assortment is a good way for us to both expand our share of wallet with existing customers, while also attracting new customers to shop with us. Shifting gears to 2026, as you saw in our press release earlier this morning, we are providing sales guidance for 2026 of plus 2% to plus 5% total growth, which translates into a negative 1% to plus 2% comp sales. The low end of our guidance contemplates a continued muted backdrop for discretionary consumer spending. Our belief is that most of the macroeconomic pressures the consumer faced in the back half of 2025 will carry into 2026. In particular, inflationary pressures on goods sourced outside of the U.S. should continue through the first half of the year. Assuming no additional dramatic changes in trade policy, we believe that as we lap the increased tariff costs in the back half of the year, prices should settle in at their new levels. That being said, there are also several tailwinds that should help us overcome some of these macroeconomic pressures. The first three I will mention are external events that we should benefit from. First, we are still early in the tax return season, but we believe consumers should see higher income tax refunds this year. In the past, we have seen categories such as firearms, gun safes, and work boots benefit from earlier and/or higher refunds during the tax season. It is hard to discern how much of an impact we are currently seeing from refunds, but I will share with you that through the first seven weeks of the quarter we are running a positive comp. We believe some portion of these results could be attributed to higher tax refunds. Second, as most of you are aware, the World Cup is coming to the U.S. this summer, and approximately 30 matches will be played in venues across our footprint. We believe this should translate into increased tourism and foot traffic in the second quarter, which should provide a sales lift for our licensed team and tailgating businesses. Longer term, we have seen events such as this drive increased participation in youth soccer, which should help drive sales in our sporting goods business in the back half of the year and into 2027. Finally, 2026 is the 250th anniversary of the United States. We traditionally see strong selling over the summer in patriotic merchandise, and we believe this year will be even stronger when you couple the surge in national pride around our 250th birthday with all of the excitement for Team USA this summer. At the same time, we have multiple self-help initiatives we put in place, which should also enable us to drive comp growth. We expect the momentum we started to build in our .com results in 2025 will continue to propel the business forward. We are accelerating Academy’s digital transformation by building a modern omnichannel business that will deepen engagement with our customers through data-driven personalization. Key enhancements for 2026 include moving to an AI-based semantic search platform on our site in late Q2 to improve relevancy and conversion. We are also working with leading AI platforms such as OpenAI and Google to enable our catalog of products and offers to surface inside their ecosystems, which will greatly simplify the browsing experience for customers who are using AI as a search engine for shopping. We also continue to grow our online assortment through additional drop-ship partnerships. When you combine this push to expand our endless aisles with the new handheld devices we rolled out to stores, in conjunction with RFID last year, you can see we are empowering our store team members to take care of their customers’ needs in real time by dramatically expanding the assortment available to them well beyond what is physically available in that individual store. Lastly, we continue to expand our reach beyond our own channels through third-party storefronts on platforms where our customers frequent. Chad Fox, our Chief Customer Officer, will present at our Analyst Day on April 7 to give you a deeper dive into many of the topics I just covered, along with some of the other initiatives that we have in the works for later in the year and beyond. Another big landmark for us in 2026 will be the relaunch of the Academy credit card. We launched this program seven years ago, and for many years this served as our only loyalty vehicle. In 2024, we introduced My Academy Rewards as a way to extend loyalty offers to customers who either did not want and/or did not qualify for a private label credit card. These programs have worked in parallel to each other but were not connected. With this relaunch in Q2, we have streamlined the sign-up process and are also creating a unified customer loyalty program with expanded ways to provide increased value to our customers. The new program will have three tiers. My Academy Rewards, which is currently comprised of 13,000,000 members, is the base tier and does not require an Academy credit card to access. Key benefits customers get for joining My Academy include a sign-on first discount of $15 off their next purchase, a birthday reward, free shipping on .com orders over $25, and a $25 reward after spending $500 inside of Academy within the first 90 days. The second tier is a private label credit card that can only be used at Academy. The value proposition for this tier includes all the benefits of joining My Academy with some additional perks. The sign-up first discount accelerates from $15 off to $30 off. Customers get free shipping on all .com orders with no minimum, and similar to today, customers receive 5% off all purchases made in our stores and .com site on this card. The third tier is a new My Academy Rewards Mastercard which can be used as a normal credit card across all purchases. Benefits for this tier include all the ones I listed for the private label credit card along with a couple of additional incentives. First, they get a higher spending limit than customers traditionally get on a private label credit card. In addition to the 5% off for spending with us, these customers also get 2% back on all purchases made outside of Academy and rewards they can redeem to shop back at Academy. Finally, they get an initial $50 reward to shop after they spend their first $500 outside of Academy on their card. The beauty of this new card is a unique and best-in-class value that helps solve an unmet customer need. Most retailers’ cards only give rewards for spending within the brand’s four walls or on their website. Our My Academy Rewards Mastercard will allow all the game families that we serve to leverage all their spend on weekly necessities such as groceries and gas, taking the rewards from this spend and redeeming them at Academy to buy all the gear they need to fuel their families’ activities and passions. We will fully relaunch the program and convert existing cardholders over to the new card in Q2 in advance of Father’s Day. All reissued cards will have a reactivation reward included with their new credit card, which should help drive a good tailwind heading into the key store selling time period. Similar to last year, we will continue to add and expand our offering of better and best brands that resonate with our core consumers. For example, while we launched the Jordan brand in 145 doors last spring, some categories such as boys’ apparel, socks and slides, and backpacks have already expanded out to all doors. We will expand our Jordan Brand Shop concept this spring out to an additional 55 stores, which will take this integrated presentation to more than 200 doors overall. At the same time, we also will continue to expand our offering from Nike of higher-level fashion in both footwear and apparel into all stores and online. Another key trend we are rapidly growing is our offering of work and western wear. We are capitalizing on this growing lifestyle movement by expanding our breadth of assortment with key brands such as Carhartt, Wrangler, and Ariat, while also expanding our vendor matrix to test emerging brands such as Hooey and Brunt. On the fitness front, one of the hottest trends out there is 80 races across the globe. We are their exclusive brick-and-mortar partner in the U.S. and will bring their branded training equipment to over 70 Academy doors this spring so people can train at home for the races. The last big merchandise initiative I will cover today is our continued push into the baseball lifestyle culture. We continue to expand our assortment of the hottest hats and gloves and have supplemented that with an assortment of apparel and lifestyle accessories from hot new brands such as Baseball Lifestyle 101, Dirty Mid’s, and Bruce Bolt. This area was one of our best-selling categories for the holiday, and we expect that the momentum will carry through in the spring and summer selling seasons. We plan to share more on our other exciting brand launches at our Analyst Day in April. The last self-help initiative I will cover is leaning into and expanding on some of the strategic investments we made over the past couple of years. As I mentioned earlier, rolling out RFID scanners last year was a game changer for us as it helped us improve in-stocks and drive higher conversion rates. This spring, we are expanding tagging to include our private branded apparel and footwear products. This will allow us to facilitate weekly counts and update inventory on roughly one-third of our sales base by the end of spring. We also remain committed to our new store expansion plan, and as we shared in our Q3 call, our plan is to open up 20 to 25 new stores in 2026. The majority of these stores will be infill within our legacy and existing markets and should be strong performers for us right out of the gate. At the same time, as we move through the year, the 2025-vintage new stores will start to flow into our comp base. By the end of the year, we will have over 50 stores that opened between 2022 and 2025 impacting our comparable sales growth. We will give you a deeper dive into how we have refined our real estate strategy during our Analyst Day on April 7. To summarize, we are proud of all that the team accomplished in 2025. We expect the macroeconomic backdrop to be challenging for the lower- and middle-income consumer, but believe that there are a combination of external factors that, when coupled with our internal initiatives, should allow us to grow top line sales 2% to 5% while also driving margin expansion and earnings per share growth in 2026. I will now turn it over to Carl to give you a deeper dive into Q4 and full year financials for 2025, along with our initial guidance schedule for 2026. Carl?

Thank you, Steve. Fourth quarter net sales were $1,700,000,000, up 2.5%, and comparable sales were down 1.6%. Breaking down the comp, transactions were down 6.4% while ticket was up 5.1%. In the fourth quarter, Academy Sports and Outdoors, Inc. generated net income of $133,700,000 and diluted earnings per share of $1.98. Fourth quarter adjusted net income was $132,900,000, or $1.97 in adjusted diluted earnings per share. Gross margin of 33.6% in the fourth quarter was up 140 basis points versus last year and exceeded our implied guidance. The majority of the expansion was driven by efficiency gains in our supply chain and the lapping of costs incurred for port disruption from the prior year. Merch margin, inclusive of tariffs, was flat as we managed prices while maintaining alignment with our value pricing strategy. SG&A expenses came in at 23.7% of sales for the fourth quarter, an increase of approximately $21,000,000, or 70 basis points. The increase was driven by growth initiatives totaling approximately 135 basis points, comprised of 115 basis points of new store growth, as we have opened 24 new stores in the last twelve months, and 20 basis points of technology investments to fuel our omnichannel growth. The acceleration in new store growth from 2022 to 2025 has had an outsized impact on SG&A expense growth, but as we move through 2026, the number of new stores at 20 to 25 will be similar to FY25. Looking at the balance sheet, we ended the quarter with $330,000,000 in cash, which was a 14% increase from the prior year. Our inventory balance was $1,500,000,000, an increase of 15% compared to last year. On a per-store basis, inventory dollars were up 6.3% while inventory units were flat. For the full year, we generated $435,000,000 in cash from operations, of which we reinvested $172,000,000 back into the business to drive our growth initiatives. These actions led to approximately $263,000,000 of adjusted free cash flow, of which we returned $234,000,000 to investors through $35,000,000 in dividends and $199,000,000 in share repurchases at an average price of $50.62. In terms of capital allocation, our strategy remains focused on generating cash flow to reinvest into our growth initiatives for the business and to return the majority of our free cash flow back to investors through dividends and stock repurchases. During the fourth quarter, we paid $8,600,000 in dividends and repurchased approximately $100,000,000 of our shares at an average share price of $54.03. We are pleased to announce the Board recently approved a 15% increase in our dividend, resulting in $0.15 per share payable on April 10, 2026 to stockholders of record as of March 20, 2025. Our guidance for 2026 is as follows. Net sales are expected to range from $6,180,000,000 to $6,360,000,000, an increase of 2% to 5%, with comparable sales of negative 1% to positive 2%, with a midpoint of positive 0.5%. I would like to share the assumptions that influence our 2026 guidance. As we head into 2026, we expect the consumer to continue to face a challenging economic backdrop, but we are confident that our internal initiatives alone support the midpoint of our guidance. The low end of our sales guidance contemplates a continued muted backdrop in discretionary consumer spending, and the high end represents an improvement in consumer health, aided by the macro events already mentioned. We also expect traffic to improve as our internal initiatives continue to resonate and prices stabilize throughout the year. Our gross margin rate is expected to range from 34.5% to 35.0%. GAAP net income is between $380,000,000 and $415,000,000. Adjusted net income, which excludes stock-based compensation of approximately $37,000,000, is forecasted to range from $410,000,000 to $445,000,000. Our gross margin gains for the full year of 2025 were primarily driven from merch margin expansion, as we expanded Nike and launched the Jordan brand, and while we do not anticipate the same level of expansion, we do see growth as we expand the Jordan Brand Shop concept into 55 more doors and expand softline brands like Birnabow. This, of course, will be partially offset by the impact of continued tariffs, especially in the first half of the year. In addition, we expect shrink to be a tailwind as we continue to roll out RFID to more brands and private label apparel and footwear. We expect GAAP diluted earnings per share of $5.65 to $6.15 and adjusted diluted earnings per share of $6.10 to $6.60. The earnings per share estimates are based on an expected share count of 67,000,000 diluted weighted average shares outstanding for the full year. These amounts do not include potential future repurchase activity. Our current authorization had $437,000,000 remaining at the end of fiscal 2025. We are also confident in the strength of our cash flows and expect to generate between $250,000,000 and $300,000,000 of adjusted free cash flow after investing $200,000,000 to $240,000,000 back into the business in the form of capital expenditures, primarily for our strategic growth initiatives. Looking at the anticipated shape of the year, our Q1 performance through the first seven weeks is off to a positive comp sales start, and we expect it to be our strongest quarter as we lap a negative 3.7% comp from 2025. On the surface, the second quarter could appear the most challenging as we lap a positive comp, the launch of the Jordan brand, and the subsequent Nike assortment expansion. However, we are optimistic as we expect to see tailwinds from the launch of the new My Academy Rewards Mastercard, as well as the continued rollout of the Jordan Brand Shop concept into 55 doors this spring. Additionally, we expect to see a tailwind from the World Cup, increased tax refunds, and America’s 250th anniversary. We expect the positive momentum in the first half to carry over into the second half of the year, but we are mindful that tariffs and any prolonged impact to gas prices could have a negative impact on the U.S. consumer. It is also important to remember that the 20 to 25 new store openings in 2026 will be more back half-weighted when compared to fiscal 2025 due to the initial pausing of signing new leases for 2026 when tariffs caused uncertainty in construction prices. We will provide updates to our guidance each quarter as conditions warrant. To conclude, we are optimistic as we head into the new fiscal year and believe we have made the right investments and strategic decisions. I look forward to speaking with you again during our Analyst Day on April 7 about our long-range plan. Operator, please open the line for questions.

Thank you. At this time, we will be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from Christopher Horvers with JPMorgan. Your line is now live.

Thanks. Good morning, guys. So my first question is on sales. You mentioned a large number of store closures in January. Can you quantify how much of a headwind that was to your overall performance in the fourth quarter? And then as we try to parse out what the right underlying trend in the business is, where are you any specificity on where you are running quarter to date? You did have weather headwinds that you lapped last year in February, and then March was not that much better. And then you have had the war recently, which I think historically when these events happen, it does drive some sort of run on the ammo business. So how do you think about the puts and takes of what the right underlying trend is? And have you seen any of that impact from what is going on around?

Yes, sure. I will start. So, Chris, we saw trends coming through Christmas pretty strong in the last week leading up to Christmas and even the week after Christmas. January was actually running positive for us. We had roughly half of our stores closed for about three days. It was over a weekend this year versus last year where we had some weather; it was during the week. If you took those three days out where we had roughly half of our stores shut down, we were running a positive comp in the mid-single-digit range. We estimate that was probably worth about 100 basis points in comp of a headwind for us within Q4. We were pleased to see, though, that once the stores reopened, as we said, the business resumed. February was strong. We were happy with the positive comps. We had positive comps across every division. That has continued into early March, so it feels pretty broad-based. I would tell you that ammo, the category you just mentioned, got better during the quarter in Q4. We talked on the previous call about how we were up against the run-up part of the election in Q3, and we saw that business start to stabilize in Q4. It started off running down high single digits; by the end of the quarter it was running down low single digits. It was running positive comp in February before the war kicked off a couple of weeks ago, and then since then, it has obviously accelerated a little bit. But it has also been a solid business for us. It probably was aided a little bit by current events.

Understood. And then my follow-up question, Carl, is on the SG&A side. You mentioned that you are going to annualize; you will have two back-to-back years of similar unit growth. As you look at what has happened, you know, ex the lapping, you will lap Jordan, the Jordan rollout, and some of the costs that you put in on the advertising and the updates there. But you have been running 6%, 7%. It looks like we were thinking that was the right trend here in 2026, but the guidance seems to imply about 2% to 3% SG&A growth this year. Is there anything, like how much of that is the annualization of a similar number of store opens? Is there some investments that are being dialed back, or anything unique to get down to that math? I know you mentioned the cadence of the year and how the stores are going to be weighted. So any additional detail on that would be helpful as well. Thanks so much.

Yes. So the main driver of our SG&A growth has been the store increases, and so as we move from 16 in 2024 to 24 in FY25, that had an outsized impact. We are guiding 20 to 25. We think that is the right number for us next year. We feel good about all of the openings. Simply not having the growth in the number of units—it will be about 8% unit growth for us—provides a good level of leverage. As it relates to next year’s guidance, at the midpoint, what is implied is modest leverage from an SG&A standpoint. I will remind you that in 2025, we had $7,500,000 in the Jordan launch cost that was associated with primarily the 145 shop doors. That is going to be less this year, and it will be in Q2, not Q1. And then overall, we are looking for ways to leverage in the business, doing things smarter and more efficiently. We found some automation opportunities—that is helpful—and we are going to have modest leverage next year at the midpoint.

Thanks very much. Have a great spring.

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

Good morning, guys. So if you look at 2025 in the rearview mirror, discretionary spend was fairly light across the board for most end markets, but you were lapping easier compares and you did add a few initiatives, which are working, still seem promising. So looking at the following year—and I appreciate the range, and it is early, and there is a lot of geopolitical things brewing—but, big picture, the return to positive comps, why do you think it is taking as long as it is given initiatives and the drivers and the confidence of landing maybe in the higher end of that range for this year?

Yes. I think when we talked about guidance, Simeon, we were looking at the puts and the takes. I would say from a headwind perspective, I think that the consumer was under pressure, as you noted, last year. I think that persisted throughout most of the year, and I think that was probably the one thing that stopped us from getting all the way across the line to get a positive comp. I will note that we actually grew the top line last year, which is the first time since 2021 that we have grown the top line, so that is a good starting point, but we know delivering consecutive positive comps is the key moving forward. That is why we really talked about some of the growth initiatives we have, both self-help as well as some external. You look at our .com business; that has been surging and was up almost 14% last year. I think we have a really good foundational base there. We are going to continue to lean into that. I think some of the moves the team is making and leaning into AI are really going to help out there. The new stores continue to get stronger. We mentioned that our new stores that opened from '22 to '24 ran a mid-single-digit positive comp, and we had roughly 25, 26 that we were feeling that last year. That number doubles this year as more stores fill in the comp base. That becomes an increasing tailwind. I cannot underestimate the impact of this loyalty credit card relaunch and integration. That is a big, big deal for us. It was two separate programs based off when we launched them. I think integrating it is really going to allow us to start delivering value to the consumer. Then you think about other things. We have got some outsized growth in some categories we are carrying, like work and westernwear—those are trending lifestyle initiatives out there that we are really doubling down on this year. We will continue to lean into newness with all the things we have mentioned on the call. Then you have the external tailwinds like the tax refunds, World Cup, and then obviously the 250th anniversary of the United States. So we feel like we have got a really good point of view around what we think the headwinds are. We think we have got a lot of self-help as well as external tailwinds that allow us to get back to positive comps. We think this is the year that happens.

Thanks. And a follow-up, the store economic model—if you step back, how is the profitability ramp of the newer stores? And then given the lighter comp backdrop, how do you think of the year-two, year-three stores, or the economic model with the returns producing the way you thought?

Yes, thanks for asking. Our stores in year one are a little bit better than what we anticipated. And with mid-single-digit comps for those that are in the comp set—and that is after the fourteenth month that they enter the comp set—they are performing well. So we are pretty pleased with it. We have seen some opportunities to infill in legacy and existing markets. Those typically perform a little bit better than those in our newer markets where we are establishing brand awareness. From an economic model standpoint, from a CapEx standpoint, it is $2.5 to $3.5 million of net CapEx, and then we invest some incremental inventory there too. We expect a 20% ROIC. From a multiyear standpoint, from a growth trajectory, what we are seeing is that they continue to grow. In the legacy markets, it is pretty steady growth, and then in the new markets, when you look at those that are in the comp set, they are growing well into years two and three as well. Again, we like what we are seeing. We have learned a ton over time since we started launching in 2022. We feel really good about the 2026 cohort.

Thanks. Good luck. See you in a couple weeks.

Thanks.

Our next question comes from John Heinbockel with Guggenheim Securities. Your line is now live.

Hey, guys. I wanted to start with this year, the waterfall effect of new stores. Looks like that could be, I do not know, 60 or 70 basis points or something like that at a mid-single digit. Is that fair? Does that sort of suggest mature stores you think will be flattish? And then the impact of loyalty and Mastercard launch, could that be as impactful as the waterfall? How would you sort of compare the two?

I think you are in the right range, John. I think that we saw mid-single-digit growth last year in the 2022 through 2024 vintage stores, and you multiply that times the percentage they contribute, it is probably about a 30 basis point tailwind last year that will probably come close to doubling this year. I think you can assume a very similar sort of lift for the loyalty relaunch. And I will remind you, that is for about a half a year because we are really kicking the full relaunch off heading into Father’s Day. So we will also get the benefit of that as we lap the first half of next year as well. So we are really excited about both those initiatives.

And then maybe as a follow-up, I know there has been a lot of opportunity with regard to supply chain, which I guess has been pushed out a little bit. What is the current update on all of the initiatives? Some of it is technology. Some of it is throughput. Where are we on that? Where are we tracking?

Yes. From a supply chain standpoint, I will get to the future-facing in a second, but we did see the majority of our gross margin gains in the fourth quarter through the supply chain. Some was from lapping—I do not even know if people remember this, but in Q3 and Q4, there were proposed East Coast port strikes. We took some mitigating activities. We were up against those. The efficiencies that we saw in 2025 were more than just the lapping, and I think Rob Howell, our Chief Supply Chain Officer, is doing a great job as it relates to driving efficiencies out of transportation as well as DC efficiency. Moving forward, I would like to couch the majority of the ongoing benefit because we are going to contextualize that in the Analyst Day on April 7, but we have rolled out one of our distribution centers on the Manhattan Active warehouse management program. We are looking to slate the Katy distribution center and the Cookeville distribution center later. It will not be in 2026. We have got some pretty good efficiencies that are going on there right now based off the unitary management there, and that is implied within the guidance. As it relates to beyond that, I still feel really good about the supply chain efficiencies that we spoke about previously, but I would like to give you more color—if you do not mind, I would like to wait until April 7 to speak to beyond 2026.

Sure. Thank you.

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

Hi, good morning. Thank you for taking my question. I want to—look, a lot of questions and a lot of focus on just this path towards consistent positive comps at Academy. The way I want to frame the question is, today we are hearing, and over the last few quarters, it seems as though the tools to get there are taking shape. You have the new stores and the new product launches, e-commerce effort, etcetera. But we are still not there yet. The question is, is there something in the business, maybe aside from a more difficult macro backdrop, that is offsetting all those positives that are taking shape, that is becoming a bigger headwind for Academy and its push towards positive comps?

I would say if you go back and look at 2025 in a vacuum, probably one of the bigger headwinds we faced was ammo. That is a big business for us. It does move the needle, and there were a lot of events that drove that business in 2024 that were not there in 2025. But outside of that, I would say there is nothing I would point to outside of just getting these initiatives and strategies really mature and starting to contribute fully. I think that is the thing that is going to allow us to break through and post a positive comp, and that is why we are excited about all the different initiatives we put together. We are seeing really good green shoots beneath the surface on all the initiatives we talked about, and we think this is the year where all those things culminate and pull together and get us across the line. So we are seeing momentum in the business coming out of Christmas into the first part of this year. We want to be very muted about what we see from a consumer backdrop out there, but we are encouraged by what we are seeing, and we think that the culmination of all those initiatives is what it is going to take to get us there.

I agree with everything Steve said. The primary headwind is the economic health—the financial health—of the American consumer. That is what is moving against e-com being up 13.6%, new stores mid-single-digit comps, Nike and Jordan taken together—because we did not have Jordan the previous year—up high single digits. That headwind, except for the category of ammo that Steve spoke to, is the financial health of the American consumer. And that is embedded within our guidance. We feel great about the initiatives moving forward. But I am seeing credit card delinquencies at double what they were in 2024. I feel job growth in America is not going to be strong in 2026. I think that gas staying high—we are just really conscious of a headwind associated with financial health.

That is very helpful. And, Carl, I guess my follow-up will be—just to—you made the comment just a second ago about gas prices. So obviously a very big focus right now for the market. A lot of questions of how high and the duration. But given the nature of your business and your consumer and given where your stores are generally located, historically have you seen higher or elevated oil or gas prices more of a friend or foe for your consumers?

Yes. I will jump in here, Brian. I would tell you that, obviously, gas prices being high is not good for discretionary spending in America. That is not a good thing for us or for any of our competitors because it just takes more share of wallet from the consumer. On the flip side, to the point I think you are alluding to, we have a big base of stores in Texas, and higher oil prices lead to higher rig count. Higher rig count leads to higher employment in the oil patch, and that sometimes can be a tailwind for us. We are not going to prognosticate on how long this is going to take or how long this is going to play out. But there are definitely puts and takes with what is going on in the world today. We got a question earlier about the impact on some of our categories. Ammo tends to be one of those categories that reacts positively when we have events like this happen. So we are watching it closely. We are not trying to prognosticate about what is going to happen in the war, but we think we have a really good balanced approach based off of the backdrop that Carl mentioned, as well as the self-help initiatives that we have internally to help us overcome those headwinds.

Very helpful. I appreciate all the color. Thank you.

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

Good morning. Thank you so much for taking my question. I wanted to mention some of the puts and takes on your sales outlook for this year. Carl, in your remarks, you talked about a 200 to 300 basis point swing from the low end to the high end of the guide based on macro factors, and yet you are also pointing to some good guys from the macro, whether it is tax refunds, the World Cup, or the 250th anniversary celebration. So are you factoring in around 200 to 300 basis points of a contribution from those factors? Because a year from now, when we are having this conversation, we are going to have to dimension how much of your performance in 2026 is based on what Academy is doing versus how much was based on macro, and it will be very helpful to understand what you assumed within your outlook. Thank you.

Yes. So we started with what our plan is, and it is not a range. It is what we think we are going to deliver. Our self-help initiatives—the things that we are talking to you about: new stores, e-commerce (aided by all the things that Steve said), the loyalty program—these things that we are launching and, in some cases, building upon, get us to the midpoint of that 2% to 5% guidance range. At the low end, we anticipate that macroeconomic factors stay the same and that the tailwinds associated with those three big events you just mentioned—World Cup, 250th, and elevated tax refunds—are completely negated by macro headwinds. At the top end, the 5%, those macro events, those three things, outweigh the headwind associated with financial pressure on the consumer and give us a little bit of a net tailwind, if you will. So our self-help initiatives get us to the midpoint. The three things that are macro drivers are either going to be overwhelmed by financial pressure of the consumer or will give us some benefit, and that was really what differentiated the 2% to 5% low-high guidance. I will tag on this question, Michael, thanks. The other thing I would say is that when you think about the value of the external tailwinds versus the self-help, the self-help are much greater than the external. We think the World Cup is probably worth about 30 basis points for the year. That being said, we think that just the loyalty credit card alone is equal to that this year with having a half year next year. So that should mute or overcome whatever we would be up against from a World Cup perspective. Tax refunds will be repeated; I do not think those are going to be lower next year. And so then you come back to the 250th anniversary of the United States. Helpful—it certainly can drive a surge in patriotism and help us with red, white, and blue. But it is not as big as the impact of the new store comp waterfall, the impact of .com in our business. So I would say that the majority of what gives us confidence this year about being able to bend the curve and get back to a positive comp is the self-help initiatives that are going to drive it.

Got you. Very, very helpful. My follow-up question is the changing nature of the Academy model pivoting to maybe a slightly higher income and a slightly higher vendor base that might have a higher expectation for how you showcase their product. So as a result, is that driving an increase in your operating expenses? Because if we look at your results in the fourth quarter, your gross profit dollars actually exceeded the consensus forecast, but operating income was a bit short, and it really all came down to SG&A. And the question is, are you seeing less visibility in your SG&A dollars as you pivot to maybe a higher operating cost model as a result of these changes?

Yes. I do not think there is an elevated operating cost model. Again, there are some launch costs, which I walked through for Jordan associated with rolling out the shops, and then we do have a Jordan enthusiast that staffs on key time periods for that. But I really would not point to elevated operating costs as the issue. I think, in looking at the consensus for the fourth quarter on an SG&A rate standpoint, we do still pay people when we close our stores. So if that was a 100 basis point headwind to the fourth quarter comp, we still incur some of those costs without having the sales that they provide. But the majority—almost twice as much—of the deleverage, 135 basis points in the fourth quarter, was because of our growth initiatives that we are pretty committed to. Those will normalize as it relates to the number of stores year-over-year in 2026, which is why we are guiding to modest leverage in SG&A in 2026.

The thing I would add on to Carl’s points—I agree with everything he said—is that at our core, we are a value retailer. We are not getting away from that. I want to make sure we do not leave any doubt in anybody’s mind that we are losing focus on that. I think we are in an environment where the lower-end consumer under $50k is really under pressure, is opting out or trading down. We still actively market to them and want them to shop with us. I think we see them come back during times of deep value, like when we run clearance events or when we are in a key time period; we see them come back and shop with us. We see this layering on of better/best brands as the way to somewhat diversify and de-risk our assortment a little bit. From twofold: number one, it helps customers who maybe could not find those brands in our stores previously stay with us and shop when they had to leave. And on the other side of it, I think it is helping us bring in a new customer. So we are still a value-based retailer. We think these new brands help us diversify and de-risk our customer and bring in a slightly more elevated customer, but we do not want you to think in any way, shape, or form that we are losing focus on the value-based customer as well.

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

Hi, thanks for taking our question. We are just curious if we could get a little bit more detail about how each business segment performed during the quarter? And then just as a second unrelated follow-up question, when you are thinking about the loyalty program or this new iteration of the loyalty program, what is being incorporated into the margin implications of that in 2026?

Yes. So from how the different categories worked out in Q4, we saw strength across a lot of our core businesses. Bikes, fishing, outdoor cooking, apparel, electronics, and athletic footwear were all strong. Some of the softer businesses for us during the quarter were more seasonal in nature. So seasonal footwear—think boots—and outerwear. I already mentioned ammo was a little soft. I would say Drinkware was a little soft, primarily driven by lapping some really big numbers from the year before, and Ride Ons was a little tougher for us this holiday. When we went back and looked at it, we had to kind of cobble together an assortment there based off of the tariff environment, trying to find the right goods out there. What is exciting is as we have crossed over into spring and moved to a positive comp, all the businesses are performing pretty well right now. We are seeing pretty broad-based solid business across all the different businesses. Could you repeat the second part of your question, Kate? I was writing something down, and I missed the second part.

Oh, yes—just any kind of cost implications from the launch.

Yes. So on the loyalty, what we did is we went back—you know, we always have done different, sometimes targeted, discounts through various loyalty programs that we have. We basically pulled those all together and are bundling them in from a rewards perspective. So we do not expect it to really impact the overall gross margins. It is going to be more repurposing of discounts that we were using in the past for other purposes that we are going to repurpose via loyalty and be much more targeted. So rather than kind of broadly giving out coupons on certain events or certain time periods, it is going to be really targeted at loyalty members, which we think is going to really help us accelerate against them.

Thank you.

Jonathan, are you muted?

Oh, good morning. Can you hear me okay?

Yes, now we can.

Oh, great. Carl, you mentioned plans for traffic to improve in 2026 versus 2025. So maybe just at the midpoint of your comp range, what is embedded for traffic versus ticket? And how does that change at the lower end and upper bounds of the range?

We do not really guide based off of traffic, so I do not think I can directly answer your question. But I will say, as it relates to all of the context that we have given around sales growth, all of those are traffic drivers. So new stores, positive comping existing stores, launching and annualizing, gross traffic. E-commerce—we look at a couple of different ways to understand share. We look at Similarweb information associated with session growth, and we see that we are taking share there. We think that some of the agent search—and I do not know if you have looked at our website at Scout, the little assistant that helps you with large language searches—that is going to get better, quicker, faster, stronger. The additional Jordan shops—those are traffic drivers. So we have not overtly guided towards the basket or traffic, but I know that traffic will be improved from what we saw in 2025.

Okay. Thank you. And then just a quick follow-up. Just looking for more color in terms of the traffic decline this quarter. I do not know if you can share any details in terms of by income cohort, and understand how the lower-income quintiles are reacting to the AURs versus the other cohorts? Thanks so much.

Yes. So the traffic trends we saw by cohort mirror what we saw all year that we talked about on previous calls. At the high end, we continue to see a double-digit increase in traffic count—low double-digit increase—from customers in households making over $100,000 a year. At the lower end, we continue to see probably a high single-digit decline in those lower-income consumers, and the middle kind of is holding its own. That is the behavior we have seen all year, and it continued into Q4. Once again, I do not think that the AUR increases and the assortment mix are what is really driving the traffic declines in the lower income. I think they are just under pressure and are opting out or trading down. As I mentioned earlier, we do have some different time periods and strategies and tactics we have to try to engage with them. We were pretty pleased with some of the reaction we saw during February around our clearance event. I think that was a lower-income consumer coming back in and really taking advantage of the values there. And once again, as we run other promotional windows later in the year or clearance events, we are going to get that customer to come back, but they are definitely under pressure.

Understood. Best of luck. Thanks.

Our final question is from Anthony Chukumba with Loop Capital Markets. Your line is now live.

Thank you so much for squeezing me in. I guess I just have one question, two parts. It is on the Jordan brand. Just in terms of how has the brand—you know, it has been, I guess, six or seven months now—how has it performed relative to your initial expectations? And then also, do you think that is going to help with bringing some other high-profile brands that you currently do not have in your merchandise assortment? And, Steve, I think you know which brands I am referring to.

I do, Anthony. Thank you for the question. We are very pleased with the relationship that we have with Nike and the Jordan brand. We do not have a last year for Jordan, so what we can cite is that if you combine Nike and Jordan together, they grew high single digits, which we were very pleased with. And we are going to continue to expand and grow Nike and Jordan. We are getting more access to premium footwear that we are pushing deeper into the chain. You take a performance running shoe like Vomero, and last year we got it at launch. You are going to see that probably go out to roughly 150 doors as we head into back to school. I think how we brought the Jordan brand to life really showed the Nike team, as well as vendors across the spectrum, what we can do when we launch a new brand. And we certainly use that as a proof point as we are talking to new brands. We will share some information around some new brands in the April 7 update, and obviously, if we get to a place where we are ready to announce, we can announce some of the brands you have asked about in the past. Trust me, you will not have to ask us a question. We will probably tell you before you ask us.

Fair enough. I will see you guys in New York.

Okay. Thanks, Anthony.

We have reached the end of the question and answer. I would now like to turn the call back over to Steve Lawrence for closing comments.

Thanks. In closing, we made a lot of progress across numerous fronts in 2025, which allowed us to both grow top line sales for the first time in a couple of years as well as continue to gain market share. We believe that we have the strategies and tactics in place to continue this growth in 2026 and move back to comp store growth as well. As always, I would like to thank our 22,000-plus team members for their hard work and efforts, which are helping make Academy the best sports and outdoor retailer in the country. We look forward to meeting with most of you on April 7 and sharing how we plan to build on the initiatives we outlined today in 2026 and beyond. Thank you all for joining our call today, and have a great rest of your day, and happy Saint Patrick’s Day.