Academy Sports + Outdoor: Engagement Data Indicates a Differentiated Approach

Key Academy Sports+ Outdoor Metrics

Amid fears of a broader pullback in discretionary spending, there were still some signs of encouragement from Academy Sports + Outdoors, which reported first-quarter results this week. As the company had previously discussed, it was lapping a +39% comparable-store sales gain in the year ago period, so the 1Q22 comparable store sales decline of -7.5% shouldn’t be surprising. Management also adjusted its outlook for full-year comparable store sales downward to a range of -6.0% to -3.0% compared to previous expectations for a decline of -4.0% to -1.0% “to reflect current macroeconomic challenges,” which is something we’ve started to see from other retailers catering to a lower-income consumer. Despite expectations that comparable-store sales will continue to decline for the remainder of the year, Placer data still indicates some positive trends from a customer behavior standpoint, which helps to reinforce the company’s longer-term unit growth goals.

• Lower-income consumer base impacting visitation trends, but also source of differentiation. Academy’s/Y visitation trends have lagged the broader sporting goods industry (below)by a few percentage points during 2022, but we believe this is likely the result of catering to a lower-income consumer than any operational or supply chain missteps. As shown below, the median household income for the consolidated trade area for Academy’s stores is $54K, well below the median for other recreational and sporting goods retailers. Catering to value-priced consumers can work against a retailer during periods of economic volatility but being one of the few players in the categories that services this audience can also be seen as a longer-term source of differentiation.

• Revenue per visit trends suggest heightened engagement. Visits may be down year-over, but Placer data suggests that revenue per visit trends at up Y/Y. Clearly, inflation has played a role here, but we also believe these trends validate what management has said about “existing customers shopping more categories” than in the past.

• Unit growth restart. In April, Academy opened its 11th store in the Atlanta market store in Conyers. This location was built with Academy’s new store format (that includes added visuals featuring brand and key item call outs, key category shops, enhanced category sightlines, more efficient checkout and more localized inventory). The company now has 260 stores across 16 states and plans 80 to 100 stores over the next five years (including 8 this year). According to management, unit growth falls into three distinct areas: (1) filling out existing markets to build scale like in Atlanta; (2) expanding into adjacent markets, like planned expansion into Lexington, Kentucky later this year; and (3) opening new markets, including new stores in Virginia and West Virginia later this year.