Academy Sports’ Poised To Capture Trade-Down Consumers
Academy Sports + Outdoors has big advantages heading into the rest of 2025 as the retailer continues to gain ground as a value-oriented U.S. sporting goods retailer.
That’s the conclusion from Jefferies analyst Jonathan Matuszewski, who describes Academy as a destination retailer. And while the current retail backdrop against rising tariffs suggests consumer uncertainty and cost headwinds over the near term, the analyst reiterated his “Buy” rating on shares of the stock as he is upbeat about the retailer over the medium-term.
According to Matuszewski, he sees tailwinds from higher-income consumers trading down and the biggest merchandise refresh in company’s history.
He said the retailer saw an uptick in business from $100,000-plus households in the third quarter, and noted that the “magnitude was amplified” in the fourth quarter.
Watch on FN
Academy’s primary competitors include Dick’s Sporting Goods, Walmart, Kohl’s, Target and Macy’s. Also considered competitors are the Hibbett and Big 5 banners, as well as Bass Pro/Cabela’s and Sportsman’s Warehouse.
“Academy sees a growing customer file from $100K+ households increasingly trading down to make budgets stretch farther,” Matuszewski said. “Academy’s perception among consumers meaningfully improves with the debut of highly-requested brands like Converse, Jordan, and others.”
That’s in comparison to 2022 when the retailer’s average customer earned $79,000 annually, with nearly 30 percent earning less than $50,000.
Looking ahead, the analyst also noted that “high-growth athletic footwear and apparel vendors increasingly view Academy as a value-added retail distribution partner with a unique customer demographic,” adding that both average ticket and average order value are rising as enhanced merchandising moves “Better” and “Best” price points stock-keeping units toward 50 percent of the assortment mix over time. He also expects that both recently acquired trade-down customers will “remain loyal for years to come” and that the active customer file continues to grow as householder budgets remain stretched.
Academy also stands to benefit from its company-owned brands, where private label can provide a value-branded strategy through every day low prices. The analyst said Academy’s portfolio of 19 owned brands generate “more revenue than its entire footwear category, with several generating more than $100 million annually.” These brands have solidified the retailer as a destination option, and they have filled voids left by national brands, which in turn support’s Academy’s merchandise margin expansion.
And with Academy’s launch of its loyalty program in summer 2024, it now can incentivize customer retention via trip frequency and high spend per visit. The enrollment of more than 11 million loyalty members in just a few months suggests customers find value in benefits that include 10 percent off their next purchase, free shipping on orders over $25, early access to new product drops, personalized deals, and $10 off during their birthday month, the analyst noted.
Another plus is the updated merchandise mix, such as the launch of Converse across Academy’s 280-plus store network, the anticipated Jordan debut in 145 stores and online, and the ongoing expansion of core Nike stock-keeping units. The expanded Nike product line will be in men’s, women’s and kids across footwear, apparel and accessories.
When the company posted fourth quarter and full-year results last month, Academy’s chief merchandising officer Matt McCabe said the retailer is also working to increase its share of the hot running market, with Brooks, Asics and New Balance all key vendors.
“We see this lifting annual spend from existing customers and sparking wholesale distribution interest from vendors of sought-after brands,” Matuszewski said. “With Jordan poised to become a Top 20 brand based on distribution in just 50 percent of the fleet and for only 75 percent of the calendar year, we believe it can crack the Top 10 in 2026 with broader door roll-out and a full 12 months of distribution.”
Tariffs could potentially present a hiccup to sales and margins. The analyst noted that Academy’s current direct import exposure to China is 9 percent, and “trending toward 8 percent as the retailer continues to diversity its sourcing base.” With product-related costs representing the vast majority of the total cost of goods sold, Academy does have exposure to tariffs. Based on some factors such as sourcing exposure by country, the percentage of wholesale cost increases absorbed by vendors and shifts in consumer demand after price-hikes, Matuszewski said the “hit to EBIT” (earnings before interest and taxes) could be in the 15 percent range.
Currently, twenty-three percent of sales are from owned brands, and the 77 percent balance represent sales from national brands. Sales of the national brands such as Nike and Under Armour also represent less control over pricing for the sporting goods retailer.
For the year ended Feb. 1, net income fell 19.4 percent to $418.4 million, or $5.73 a diluted share, from net income of $519.2 million, or $6.70, in 2023. Net sales were down 3.7 percent to $5.93 billion from $6.16 billion.
For the year ending Jan. 31, 2026, Academy guided net income in the range of $375 million to $410 million, on a net sales range estimated at between $6.09 billion to $6.27 billion. The company said it expects the back half to be stronger than the first half, with internal initiatives starting to positively impact results beginning in the second quarter.
This week, UBS analyst Michael Lasser said the U.S. retail sector could shed 40,000 doors by 2029, with 12,500 apparel, accessories and footwear locations shuttering over the next five years. Dick’s Sporting Goods and Academy were two he cited as retailers that are “well positioned” to continue to grow their market share.
