Academy Sports and Outdoors Q4 2024: Unpacking Gross Margin, Tariff Strategies, and Shifting Consumer Trends

These are the key contradictions discussed in Academy Sports and Outdoors' latest 2024Q4 earnings call, specifically including: Gross Margin Expectations, Tariff Impact on Sourcing, Impact of Weather and Consumer Uncertainty, and Consumer Behavior Changes:



Financial Performance and Sales Trends:
- Academy Sports and Outdoors reported net sales of $1.68 billion for Q4 2024, representing a 6.6% decline, but flat on a 13-week basis compared to the previous year.
- The company's Outdoor category saw total net sales growth of plus 2%, driven by increases in Hunting, Fishing, and Camping, while the Sports and Recreation category improved, finishing down 1%.

Store and New Initiatives:
- Academy opened 16 new stores in 2024, expanding its presence to 19 states, with new stores in the second half of the year significantly outperforming expectations.
- The launch of new initiatives, such as the introduction of the Jordan Brand into 145 stores, is expected to be a key growth driver in 2025.

Margin and Cost Management:
- Gross margin rate for Q4 was 32.2%, down 110 basis points from the previous year, influenced by increased penetration of hardline business and markdown actions.
- SG&A expenses increased by 110 basis points, driven by strategic investments in growth initiatives and store openings, but were offset by base expense control.

Customer Behavior and Market Share:
- Academy gained 40 basis points of store traffic share among households earning more than $100,000 in December, with a continued increase in January.
- This is attributed to an uptick in traffic and sales from higher-income households, seeking value amidst a challenging macroeconomic environment.