Academy Sports Revenue Rises 3.3% in Q2

Key Points

• Revenue rose 3.3% in the second quarter. Comparable sales turned positive at 0.2% in Q2 FY2025 after several negative quarters.

• eCommerce sales surged 17.7% in Q2 FY2025, while gross margin (GAAP) held steady at 36.0% despite tariff pressures.

• Adjusted earnings per share fell 4.4% in the second quarter, and GAAP operating income dropped as expenses increased to support growth initiatives.

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Academy Sports And Outdoors (NASDAQ:ASO), a leading sporting goods and outdoor recreation retailer, reported its results for the quarter ended August 2, 2025, on September 2, 2025. The main highlight: GAAP revenue grew 3.3% to $1,599.8 million in Q2 FY2025, driven by stronger eCommerce and new store sales. Comparable sales, a key retail metric reflecting sales from stores open at least a year, turned positive at 0.2%, marking a turnaround from several quarters of declines. However, adjusted diluted earnings per share (non-GAAP) fell 4.4% to $1.94, missing last year’s levels as increased investments drove up expenses. Management narrowed full-year sales guidance for FY2025, slightly raising the low end, but kept full-year GAAP and non-GAAP (adjusted) earnings expectations below last year’s performance. Overall, the quarter showed recovery in top-line growth, but profitability remained pressured by ongoing investments and cost challenges.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About Academy Sports And Outdoors: Business and Recent Focus

Academy Sports And Outdoors is known for its wide selection of sporting goods, outdoor gear, and lifestyle products at value-driven prices. Its stores and website serve active families and individual customers across 21 states, offering both national brands and private label products in categories like athletics, camping, fishing, and footwear.

Lately, the company has focused on several priorities to drive growth and resilience. These include expanding its omnichannel capabilities -- blending in-store and online shopping, modernizing its merchandise selection, launching new stores in growing regions, and deepening customer loyalty with targeted programs. Success hinges on effective inventory management, pricing strategies, tech investments, and the ongoing balance between national brand partnerships and private label performance.

Quarter Highlights: Sales Recovery, Expense Pressure, and Strategic Moves

The quarter delivered a turnaround in sales trends. Total revenue (GAAP) rose 3.3%, a notable shift from the previous quarter’s decline, and comparable sales turned positive at 0.2% after several quarters of negatives. Management pointed to stronger business momentum, highlighting that new stores performed especially well, posting mid-single-digit comparable sales growth. eCommerce stood out as a key growth engine, with online sales jumping 17.7%, far outpacing store traffic and reflecting efforts to strengthen digital channels. Initiatives like buy-online-pickup-in-store (BOPIS), expanded online assortment, and upgraded tech for inventory management all contributed to these gains.

Profitability, however, faced headwinds. Despite flat gross margin at 36.0% (GAAP), expenses climbed due to heavy investment in new stores, increased payroll, technology upgrades, and support for new brand launches like Jordan footwear. This drove selling, general, and administrative expenses to 25.3% of revenue, up from 23.8% in Q2 FY2024. As a result, adjusted net income (non-GAAP) dropped 11.6%, and adjusted earnings per share (non-GAAP) fell. Operating income margin decreased from 12.3% to 10.8%, emphasizing that cost growth is outrunning top-line improvements. Net income declined 12.1% in the second quarter.

Product assortment and merchandising remained a priority. Academy continued to feature national brands such as Nike and rolled out the Jordan Brand across stores, aiming to attract both longtime customers and new high-income shoppers. Technology enhancements like RFID-enabled tracking improved inventory accuracy, contributing to store execution and customer service. Approximately 75 % of products now sell at everyday prices, limiting promotional markdowns and aiming for price discipline even as tariffs and cost pressures persist.

Inventory levels rose 16.2% year over year -- in part due to stocking up ahead of anticipated tariffs and preparing for ongoing store openings. Management characterized most of this inventory as “evergreen,” meaning it includes products without a clear expiration or need for deep discounting, such as home gym weights and bicycles. Nonetheless, the rise in inventory relative to revenue growth will be watched closely in coming months, as further sales improvements will be necessary to avoid risk of future markdowns. Inventory per store was up 4.5% in units and 8.2% in dollars.

Geographic expansion advanced with three new stores opened during the quarter, bringing the store count to 306. The company plans 20 to 25 new store openings over FY2025. This expansion is integral to Academy’s long-term growth ambitions and overall market reach. Firearms and ammunition sales made up approximately 6% of total net sales in FY2024.

The customer loyalty program, myAcademy, was launched in July 2024. While management views it as a long-term driver of repeat customer visits and higher spending, no new membership numbers were disclosed in this quarter’s release. The company did note that higher-income customers continue to make up a growing percentage of shoppers, while visits from lower-income shoppers are weakening. Share repurchases dropped sharply year over year, Dividends paid rose 8.1% for the twenty-six weeks ended August 2, 2025.

Looking Ahead: Guidance and What to Watch

For the rest of FY2025, management modestly raised its outlook for sales, narrowing the low end of projected net sales guidance to $6,000 million. Net sales guidance now stands between $6.0 billion and $6.265 billion, with comparable store sales expected between a decline of 3.0% and growth of 1.0%. Adjusted diluted earnings per share (non-GAAP) are projected between $5.60 and $6.30, a range below last year’s earnings, Capital expenditures are guided at $180–$220 million, reflecting ongoing investment in store openings and technology. Guidance for adjusted free cash flow is $250–$320 million (non-GAAP).

Investors should monitor inventory levels in relation to sales pace, as the continued build-up could pressure margins if demand does not continue to recover. Watching how ecommerce momentum develops, especially as new omnichannel tools roll out, will be important. Margin performance and expense management remain key factors to track as Academy Sports And Outdoors invests in growth but faces ongoing tariff and consumer demand risks. The company declared a quarterly dividend of $0.13 per share, payable in October 2025.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Motley Fool Markets Team is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. The Motley Fool takes ultimate responsibility for the content of these articles. Motley Fool Markets Team cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Academy Sports And Outdoors. The Motley Fool has a disclosure policy.