Sporting goods retailer Academy Sports & Outdoor (NASDAQ: ASO) fell short of the market’s revenue expectations in Q2 CY2025 as sales rose 3.3% year on year to $1.6 billion. On the other hand, the company’s full-year revenue guidance of $6.13 billion at the midpoint came in 0.6% above analysts’ estimates. Its non-GAAP profit of $1.94 per share was 9.1% below analysts’ consensus estimates.

Is now the time to buy ASO? Find out in our full research report (it’s free).

StockStory’s Take

Academy Sports’ second quarter results drew a negative market reaction following a miss on both revenue and non-GAAP earnings relative to Wall Street expectations. Management cited improvement in sales momentum compared to prior quarters, with particular strength in e-commerce and stabilizing same-store sales. CEO Steven Paul Lawrence noted that the company saw “steady improvement with sales running positive the last seven weeks of the quarter,” highlighting growth in footwear, apparel, and the outdoor categories. The company also pointed to successful new store openings and gains in higher-income customer segments as notable contributors in a quarter marked by ongoing inflationary pressures and cautious consumer spending patterns.

Looking ahead, management is cautiously optimistic, raising full-year revenue and non-GAAP earnings guidance. The company is banking on continued digital growth, further expansion of premium brands like Nike and Jordan, and ongoing store openings to drive results. CFO Earl Carlton Ford emphasized that tariff mitigation strategies and targeted marketing will be central to maintaining profitability, while acknowledging that consumer health and macroeconomic factors remain key uncertainties. CEO Lawrence added, “We expect .com will continue to drive growth,” as new product assortments and loyalty initiatives aim to attract repeat customers and offset pressures from cost increases.

Key Insights from Management’s Remarks

Management attributed the quarter’s outcome to growth in e-commerce, successful brand partnerships, and a shifting customer mix, while also highlighting external headwinds such as tariffs and higher shipping costs.

• E-commerce acceleration: Management highlighted an 18% year-over-year increase in online sales, driven by improvements in website navigation, fulfillment speed, and expanded product assortment. This digital channel now accounts for a growing share of total sales and is supported by investments in technology and omnichannel infrastructure.

• Premium brand expansion: The company saw meaningful contributions from the rollout of Nike and Jordan products, with double-digit growth in these brands. CEO Lawrence emphasized that broader access to premium offerings helped boost average transaction value and attract higher-spending customers.

• Customer demographic shifts: Traffic from higher-income households (over $100,000) grew at a double-digit rate, offsetting declines in lower-income segments. The company’s loyalty program surpassed 12 million members, indicating traction in building repeat business among higher-value shoppers.

• Tariff mitigation measures: Academy Sports implemented a multi-pronged approach to offset new tariffs, including renegotiating with suppliers, shifting country of origin when viable, and leveraging pricing optimization tools. Management reported that most tariff-related cost pressures should be absorbed through these actions, although price increases are expected to be more evident in the back half of the year.

• Store network growth: The company opened three new stores during the quarter and is on track for 20 to 25 openings in 2025. New store performance, especially in maturing markets, continues to meet management’s productivity targets, supporting the long-term growth plan.

Drivers of Future Performance

Management expects digital channel momentum, assortment enhancements, and cost controls to shape results in the coming quarters, with macroeconomic uncertainty and tariff impacts as key watchpoints.

• Digital and omnichannel strategy: The company expects further gains from its e-commerce and omnichannel initiatives, including streamlined fulfillment and enhanced website features. CEO Lawrence stated that online conversion and average order value are improving, and management sees continued investment in digital infrastructure as essential to sustaining growth.

• Brand and product assortment: Expansion of premium brands like Nike and Jordan is expected to drive higher average unit retail prices and increase store traffic, especially in the back-to-school and holiday seasons. Management believes that broadening access to these brands and launching new product lines will help differentiate Academy Sports from competitors.

• Cost and margin management: Tariff mitigation remains a strategic focus, with management using a mix of supplier negotiations, inventory strategies, and price optimization to manage gross margin pressures. However, the company acknowledges that rising shipping costs and promotional intensity could continue to weigh on operating margins, especially if consumer demand softens.

Catalysts in Upcoming Quarters

Going forward, our analysts will watch (1) whether digital sales growth maintains momentum as in-store traffic trends normalize, (2) the impact of expanding premium brand assortments on both average transaction values and customer mix, and (3) the effectiveness of tariff mitigation strategies in protecting margins. Execution on store openings and loyalty program engagement will also be important for tracking operational progress.

Academy Sports currently trades at $49.40, down from $53.56 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

Our Favorite Stocks Right Now

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.