Academy Sports & Outdoors Inc.
03/17/2026 | Press release | Distributed by Public on 03/17/2026 14:03
Annual Report for Fiscal Year Ending January 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations for the year ended January 31, 2026 ("2025") and the year ended February 1, 2025 ("2024") should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report for the fiscal year ended January 31, 2026 (this "Annual Report"). Year-to-year comparisons between 2024 and 2023 have been omitted from this Annual Report, but may be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended February 1, 2025.
This discussion contains forward-looking statements that involve risks and uncertainties. See the section of this Annual Report entitled "Cautionary Statement Regarding Forward-Looking Statements." When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that characterize our business. Known material factors that could affect our financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this discussion or otherwise made by our management, are described in the "Part I. Item 1A. Risk Factors" section of this Annual Report.
Any reference in this Annual Report to "year" or any year in particular refers to our fiscal year, which represents the fifty-two or fifty-three week period ending on the Saturday closest to January 31. Unless otherwise specified, all comparisons or changes regarding 2025 are made to 2024.
All references in this discussion and analysis to "2025", "2024" and "2023" or like terms relate to our fiscal years as follows:
| Fiscal Year | Ended | Weeks | ||||||||||||
| 2025 | January 31, 2026 | 52 | ||||||||||||
| 2024 | February 1, 2025 | 52 | ||||||||||||
| 2023 | February 3, 2024 | 53 | ||||||||||||
Overview
We are a leading full-line sporting goods and outdoor recreation retailer in the United States. Our mission is to provide "Fun for All" and we fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers. Our product assortment focuses on key categories of outdoors, sports & recreation, apparel, and footwear (representing 31%, 22%, 27% and 20% of our 2025 net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.
Our business is subject to seasonal fluctuations. A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father's Day and Independence Day, during the second quarter. Our net sales and profits are also impacted by the July/August back-to-school selling season during the second and third quarters, the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.
As of January 31, 2026, we operated 322 stores that range in size from approximately 40,000 to 130,000 grosssquare feet, with an average size of approximately 70,000 gross square feet, throughout 21 contiguous states located primarily in the southern United States. Our stores are supported by approximately 23,000team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app. Additionally, we are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities such as our mobile app, optimizing the website experience and upgrading our fulfillment capabilities.
The following table summarizes store activity for the periods indicated:
| Fiscal Year Ended | ||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | ||||||||||||||||||
| Beginning stores | 298 | 282 | 268 | |||||||||||||||||
| Q1 new stores | 5 | 2 | 1 | |||||||||||||||||
| Q2 new stores | 3 | 1 | 1 | |||||||||||||||||
| Q3 new stores | 11 | 8 | 5 | |||||||||||||||||
| Q4 new stores | 5 | 5 | 7 | |||||||||||||||||
| Closed | - | - | - | |||||||||||||||||
| Ending stores | 322 | 298 | 282 | |||||||||||||||||
| Relocated stores | - | - | - | |||||||||||||||||
Tariffs and Other Macroeconomic Trends
We continue to monitor global macroeconomic trends and uncertainties such as inflation, existing and potential tariffs, and other shifting trade policies, which have impacted consumer spending and could adversely affect our ability to grow sales and merchandise margin. The impact of the evolving macroeconomic environment on our financial results is uncertain. We have worked diligently to mitigate the impact of tariffs on our business. We are closely monitoring the evolving environment with respect to tariffs and other trade policy developments and will continue to adjust plans as needed, including, but not limited to, inventory purchase quantities and timing, strategic pricing and promotional adjustments to maintain value for our customers, diversifying sourcing to shift country of origin, and vendor negotiations.
How We Assess the Performance of Our Business
Our management considers a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate projections. These metrics include operational measures and non-GAAP metrics supplemental to our GAAP results.
Comparable Sales. We define comparable sales as the percentage of period-over-period net sales increase or decrease, in the aggregate, for stores open after thirteen full fiscal months, as well as for all e-commerce sales. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data in this Annual Report regarding our comparable sales may not be comparable to similar data made available by other retailers. Stores which have been significantly remodeled or relocated are removed from this calculation until the new store has been in operation for substantially all of the periods being compared. Stores which have been closed for an extended period of time due to circumstances beyond our control are also removed from the calculation. Any sales made through our website or mobile app are allocated to e-commerce sales for the purpose of measuring comparable sales, regardless of how those sales are fulfilled, whether shipped to home or picked up in-store or curbside through our buy-online-pickup-in-store program ("BOPIS"). For example, all BOPIS transactions, which are originated by our website, are allocated to e-commerce sales for the purpose of comparable sales, despite the fact that our customers pick up these purchases from a specific store.
Increases or decreases in e-commerce between periods being compared directly impact the comparable sales results. Various other factors affect comparable sales, including consumer preferences; buying trends and overall economic trends; our ability to identify and respond effectively to customer preferences and local and regional trends; our ability to provide an assortment of high quality/value oriented product offerings that generate new and repeat visits to our stores and our website; the customer experience and unique services we provide in our stores; our ability to execute our omnichannel strategy, including the growth of our e-commerce business; changes in product mix and pricing, including promotional activities; the number of items purchased per visit and average order value; unseasonal or extreme weather; a shift in the timing of a holiday between comparable periods; and the number of stores that have been in operation for more than thirteen months.
Transactions and average ticket.We define transactions as the number of customer transactions for stores and e-commerce during a given period on a comparable sales basis. Transactions are influenced by customer traffic, the amount of customers that visited our stores or website, and sales conversion, the percent of those customers that made a purchase. We define average ticket as total sales divided by the number of transactions during a given period, which tells us the average amount the customer is spending on a purchase.
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings Per Share and Adjusted Free Cash Flow. Management uses Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings Per Share and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. Management also uses Adjusted EBIT as a performance target to establish and award discretionary annual incentive compensation. See "Non-GAAP Measures" below.
Components of Our Results of Operations. Our profitability is primarily influenced by fluctuations in net sales, gross margin and our ability to leverage selling, general and administrative expenses.
Net Sales. Net sales are derived from in-store and e-commerce merchandise sales, net of sales tax and an allowance for merchandise returns.
Net sales fluctuations can be driven by new store openings, comparable sales increases or decreases including e-commerce sales, our ability to adjust inventory based on sales fluctuations, our management of vendor relations and meeting customer demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and changes in product mix and pricing, including promotional activities.
We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business. A shortage of popular merchandise could reduce our net sales. Conversely, we also must seek to avoid accumulating excess inventory to avoid markdowns and clearance, which negatively impact sales and gross margin. We deploy several tools to improve inventory handling and vendor management, including third-party programs to analyze our inventory stock, execute a disciplined markdown strategy and improve our inventory management throughout the year at every location. We have coupled these tools with the data we collect from our myAcademy Rewards program, our customer database and targeted customer surveys, so that we can better estimate future inventory requirements. It is imperative that we continue to find innovative ways to strengthen our inventory management if we are to remain competitive and expand our margins on a go-forward basis.
Our broad assortment gives us an advantage over mass general merchants who typically do not carry the full assortment of leading national brands sold at Academy. We have also continued to add private label brands to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer. A shift in our sales mix in which we sell more units of our private label brand products and fewer units of the national brand products would generally have a positive impact on our gross margin rate but an adverse impact on our total net sales. Furthermore, our softgoods merchandise divisions, which consist of apparel and footwear, have higher margins than our hardgoods merchandise divisions, which consist of outdoors and sports and recreation. A shift in sales mix toward softgoods would generally have a positive impact on gross margin and a shift in sales mix towards hardgoods would generally have a negative impact on gross margin rate.
The expansion and enhancement of our omnichannel capabilities have contributed to increased sales in recent years. We continue to invest in initiatives designed to drive traffic to our stores and e-commerce platforms, including our website and mobile application, improve conversion, and support our long-term objective of continuing to increase our e-commerce penetration of sales. These initiatives include investments in our customer data ecosystem (data lake and Customer Data Platform), enabling customer-level attributes and models that power personalization and deepen engagement.
We are implementing enhancements to the online shopping experience, including a redesigned homepage, expanded BOPIS functionality, enhanced shipping notifications, and ongoing improvements in product discovery and site experience. Our e-commerce platform supports store operations by driving customer demand, providing real-time product discovery and inventory visibility, and enabling store-fulfilled transactions such as BOPIS, ship-to-store, and ship-from-store. During 2025, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS, and in-store retail sales. We expect to continue investing in the expansion and enhancement of our omnichannel capabilities, including our mobile application, website experience optimization, fulfillment improvements, and emerging digital commerce capabilities such as artificial intelligence-enabled shopping experiences and social and marketplace commerce integrations. These initiatives are intended to support long-term growth and improve customer experience, and will require ongoing investment.
We expect that new stores will be a key driver of growth in our net sales and gross margin in the future as we execute our new store opening growth plans. Our growth strategy encompasses both deepening our presence in legacy and existing markets as well as entering new markets, leveraging enhanced brand awareness and operational efficiencies. Our new store model favors off-mall locations within power centers or stand-alone buildings. We utilize comprehensive demographic and trade data to guide our real estate site selection. During the fiscal year 2025, we opened 24 new stores. We plan to open 20 to 25 stores in fiscal year 2026 and we are continuously evaluating available locations that meet our size requirements and market criteria. Our strategic real estate approach, including the 63 stores opened since fiscal year 2021, has positioned us effectively for continued expansion.
Gross Margin. Gross margin is our net sales less cost of goods sold. Cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution. These costs consist primarily of tariffs, payroll and benefits, distribution center occupancy costs, depreciation and freight, and are generally variable in nature relative to our inventory receipts and sales volume.
Our gross margin depends on a number of factors, such as net sales increases or decreases, our promotional activities, product mix including private label brand merchandise sales, and our ability to control cost of goods sold, such as inventory and logistics cost management. Our gross margin is also impacted by variables including tariffs, commodity costs, freight costs, shrinkage (discussed below), inventory processing costs, and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.
We refer to loss or theft of inventory as "shrinkage" or "shrink." A prolonged period of significant increased shrink could have a material negative impact on our gross margin and results of operations.
Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses include store and corporate administrative payroll and payroll benefits, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature. SG&A expenses as a percentage of sales increased from 24.8% in 2024 to 26.3% in 2025. The majority of the increase in SG&A from the prior year was driven by investments in our growth initiatives, including costs related to new stores (such as additional property and facility fees, employee compensation costs and advertising costs). We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets. Management of SG&A expenses depends on our ability to balance operating costs, such as store and corporate headcount, information technology infrastructure and marketing and advertising expenses, while efficiently and effectively servicing our customers. Selling, general, and administrative expenses on the Consolidated Statements of Income includes gains of approximately $15.4 million in 2025 and $7.1 million in 2024 related to multiple sale-leaseback transactions which qualified for sale accounting under ASC 606 (see Note 11).
Pre-opening expenses represent non-capital expenditures associated with the opening of new stores and distribution centers prior to sales generation or start of operations, which consist primarily of occupancy costs, marketing, payroll and recruiting costs, and are expensed as incurred. As we execute our new store opening growth plans, we expect our pre-opening expenses to increase and result in a negative impact to SG&A as a percentage of sales. The following table summarizes our pre-opening expense activity for the periods presented:
| Fiscal Year Ended | ||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | ||||||||||||||||||
| Number of new stores opened | 24 | 16 | 14 | |||||||||||||||||
| Pre-opening expenses (in millions) | $ | 14.6 | $ | 13.9 | $ | 8.3 | ||||||||||||||
Interest Expense. Interest expense includes regular interest payable related to our Term Loan, Notes and ABL Facility (see Note 4) and the amortization of our deferred loan costs and original issuance discounts associated with the acquisition of the debt.
Income Tax Expense. ASO, Inc. is treated as a U.S. corporation for U.S. federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes. Recent fluctuations in income tax expense have been primarily a result of changes in income before income taxes.
Results of Operations
A discussion regarding Results of Operations and Analysis of Financial Condition for the fiscal year ended February 1, 2025, as compared to the fiscal year ended February 3, 2024, is included in "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" to our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.
2025 (52 weeks) Compared to 2024 (52 weeks)
The following table sets forth amounts and information derived from our Consolidated Statements of Income for the periods indicated as follows (dollar amounts in thousands):
| Fiscal Year Ended | Change | ||||||||||||||||||||||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 6,053,414 | 100.0 | % | $ | 5,933,450 | 100.0 | % | $ | 119,964 | 2.0 | % | |||||||||||||||||||||||||||||
| Cost of goods sold | 3,947,801 | 65.2 | % | 3,921,990 | 66.1 | % | 25,811 | 0.7 | % | ||||||||||||||||||||||||||||||||
| Gross margin | 2,105,613 | 34.8 | % | 2,011,460 | 33.9 | % | 94,153 | 4.7 | % | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 1,593,429 | 26.3 | % | 1,472,821 | 24.8 | % | 120,608 | 8.2 | % | ||||||||||||||||||||||||||||||||
| Operating income | 512,184 | 8.5 | % | 538,639 | 9.1 | % | (26,455) | (4.9) | % | ||||||||||||||||||||||||||||||||
| Interest expense, net | 36,214 | 0.6 | % | 36,873 | 0.6 | % | (659) | (1.8) | % | ||||||||||||||||||||||||||||||||
| Write-off of deferred loan costs | - | 0.0 | % | 449 | 0.0 | % | (449) | (100.0) | % | ||||||||||||||||||||||||||||||||
| Other income, net | 10,087 | 0.2 | % | 36,908 | 0.6 | % | (26,821) | (72.7) | % | ||||||||||||||||||||||||||||||||
| Income before income taxes | 486,057 | 8.0 | % | 538,225 | 9.1 | % | (52,168) | (9.7) | % | ||||||||||||||||||||||||||||||||
| Income tax expense | 109,289 | 1.8 | % | 119,778 | 2.0 | % | (10,489) | (8.8) | % | ||||||||||||||||||||||||||||||||
| Net income | $ | 376,768 | 6.2 | % | $ | 418,447 | 7.1 | % | $ | (41,679) | (10.0) | % | |||||||||||||||||||||||||||||
|
* Percentages in table may not sum properly due to rounding.
|
|||||||||||||||||||||||||||||||||||||||||
Net Sales.Net sales increased $120.0 million, or 2.0%, in fiscal year 2025 compared to fiscal year 2024, which was driven by increased sales of 3.6% in the sports and recreation merchandise division, 2.4% in the apparel merchandise division, 1.2% in the footwear merchandise division and 1.2% in the outdoor division.
We opened 24 new stores since the end of the 2024 fiscal year, 5 of which opened throughout the 2025 fourth quarter. During the 2025 fiscal year, these 24 stores generated $142.8 million of net sales, including e-commerce. Since re-launching our new store program in 2022, we have opened 63 new stores, 39 of which have been open for at least twelve months. Over the last twelve months, those 39 stores have averaged approximately $13 million in net sales per store, including e-commerce. We believe that performance of new stores in year one is partially affected by the season in which the new store opens and the brand awareness in the region the new store opens.
Comparable sales decreased 1.5% driven by lower comparable sales across all merchandise divisions, except the sports and recreation merchandise division, as a result of a 4.2% decrease in comparable transactions, partially offset by an increase in average ticket of 2.9%.
E-commerce net sales represented 11.7% of merchandise sales for fiscal year 2025 compared to 10.5% for fiscal year 2024. E-commerce net sales increased 13.6% for fiscal year 2025 compared to fiscal year 2024.
Gross Margin. Gross margin increased $94.2 million, or 4.7%, to $2,105.6 million for fiscal year 2025 from $2,011.5 million for fiscal year 2024. As a percentage of net sales, gross margin increased 90 basis points from 33.9% in 2024 to 34.8% in 2025. The increase of 90 basis points in gross margin was primarily attributable to favorability in merchandise margin due to promotions and managing prices in response to increased tariff costs, while maintaining alignment with our value pricing strategy.
Selling, General and Administrative Expenses.SG&A expenses increased $120.6 million, or 8.2%, to $1,593.4 million in 2025 from $1,472.8 million in 2024, primarily as a result of our increased strategic investments of $109.0 million, including $84.8 million in new stores and $13.1 million in technology.
Write-off of Deferred Loan Costs. Write-off of deferred loan costs decreased by $0.4 million for fiscal year 2025 when compared with fiscal year 2024, in connection with the amendment in the 2024 first quarter that led to the write-off of deferred loan costs on the ABL Facility.
Interest Expense.Interest expense decreased $0.7 million, or 1.8%, to $36.2 million in 2025 from $36.9 million in 2024, primarily driven by lower interest rates and a lower outstanding balance on our Term Loan.
Other Income, net. Other income, net, decreased $26.8 million in 2025 when compared to 2024, primarily driven by the settlement of a legal matter with a non-trade vendor that resulted in a net gain of approximately $15.0 million in 2024 (see Note 2) as well as lower interest rates in the current year.
Income Tax Expense. Income tax expense decreased $10.5 million to $109.3 million in 2025 as compared to $119.8 million in 2024, resulting primarily from a decrease in pre-tax income.ASO, Inc.'s effective tax rate for 2025 was 22.5%compared to22.3% in 2024. Theincreasein effective tax rate was primarily driven bythe decrease in pre-tax income in the current year.
Non-GAAP Measures
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow, as shown below, have been presented in this Annual Report as supplemental measures of financial performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We define Adjusted EBITDA as net income (loss) before interest expense, net income tax expense and depreciation, amortization and impairment and other adjustments included in the table below. We define Adjusted EBIT as Adjusted EBITDA less depreciation and amortization. We describe these adjustments reconciling net income (loss) to Adjusted EBITDA and to Adjusted EBIT in the applicable table below. We define Adjusted Net Income as net income (loss), plus other adjustments included in the table below, less the tax effect of these adjustments. We define basic Adjusted Earnings per Share as Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and diluted Adjusted Earnings per Share as Adjusted Net Income divided by thediluted weighted average common shares outstanding during the period. We describe these adjustments by reconciling net income (loss) to Adjusted Net Income and Adjusted Earnings per Share in the applicable table below. We describe Adjusted Free Cash Flow as net cash provided by (used in) operating activities less net cash used in investing activities. We describe this adjustment by reconciling net cash provided by operating activities to Adjusted Free Cash Flow in the applicable table below.
We believe Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management believes Adjusted Free Cash Flow is a useful measure of liquidity and an additional basis for assessing our ability to generate cash. Management uses Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. Management has also historically used Adjusted EBIT as a performance target to establish and award discretionary annual incentive compensation.
Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance ornet cash provided by operating activities as a measure of liquidity, or any other performance measures derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management's discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share should not be construed to imply that our future results will be unaffected by unusual or non-recurring items. In evaluating Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow should not be construed to imply that our future results will be unaffected by any such adjustments.
Our Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
•Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share do not reflect costs or cash outlays for capital expenditures or contractual commitments;
•Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share do not reflect changes in, or cash requirements for, our working capital needs;
•Adjusted EBITDA and Adjusted EBIT do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, and Adjusted Free Cash Flow does not reflect the cash requirements necessary to service principal payments on our debt;
•Adjusted EBITDA and Adjusted EBIT do not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;
•Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income and Adjusted Earnings per Share do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted Free Cash Flow do not reflect cash requirements for such replacements; and
•other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness. Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow supplementally.
Adjusted EBITDA and Adjusted EBIT
The following table provides reconciliations of net income to Adjusted EBITDA and to Adjusted EBIT for the periods presented (amounts in thousands):
| Fiscal Year Ended | |||||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||||||||
| Net income (a) | $ | 376,768 | $ | 418,447 | $ | 519,190 | |||||||||||||||||
| Interest expense, net | 36,214 | 36,873 | 46,051 | ||||||||||||||||||||
| Income tax expense | 109,289 | 119,778 | 143,966 | ||||||||||||||||||||
| Depreciation and amortization | 122,866 | 118,070 | 110,936 | ||||||||||||||||||||
| Equity compensation (b) | 21,176 | 26,629 | 24,377 | ||||||||||||||||||||
| Loss on early retirement of debt | - | - | 1,525 | ||||||||||||||||||||
| Write-off of deferred loan costs | - | 449 | - | ||||||||||||||||||||
| Adjusted EBITDA | $ | 666,313 | $ | 720,246 | $ | 846,045 | |||||||||||||||||
| Less: Depreciation and amortization | (122,866) | (118,070) | (110,936) | ||||||||||||||||||||
| Adjusted EBIT | $ | 543,447 | $ | 602,176 | $ | 735,109 | |||||||||||||||||
| (a) | Net income for the year ended February 1, 2025, includes a $15.0 million gain pertaining to a litigation settlement which occurred in the fourth quarter of 2024. Net income for the year ended February 3, 2024, includes a $15.9 million net gain relative to a credit card litigation settlement which occurred in the fourth quarter of 2023. | ||||||||||||||||||||||
| (b) | Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures. | ||||||||||||||||||||||
Adjusted Net Income and Adjusted Earnings per Share
The following table provides a reconciliation of net income to Adjusted Net Income and Adjusted Earnings per Share for the periods presented (amounts in thousands, except per share data):
| Fiscal Year Ended | |||||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||||||||
| Net income (a) | $ | 376,768 | $ | 418,447 | $ | 519,190 | |||||||||||||||||
| Equity compensation (b) | 21,176 | 26,629 | 24,377 | ||||||||||||||||||||
| Loss on early retirement of debt | - | - | 1,525 | ||||||||||||||||||||
| Write-off of deferred loan costs | - | 449 | - | ||||||||||||||||||||
| Tax effects of these adjustments (c) | (4,761) | (6,038) | (5,621) | ||||||||||||||||||||
| Adjusted Net Income | $ | 393,183 | $ | 439,487 | $ | 539,471 | |||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | 5.66 | $ | 5.87 | $ | 6.89 | |||||||||||||||||
| Diluted | $ | 5.54 | $ | 5.73 | $ | 6.70 | |||||||||||||||||
| Adjusted Earnings per Share: | |||||||||||||||||||||||
| Basic | $ | 5.90 | $ | 6.16 | $ | 7.16 | |||||||||||||||||
| Diluted | $ | 5.78 | $ | 6.02 | $ | 6.96 | |||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 66,612 | 71,343 | 75,389 | ||||||||||||||||||||
| Diluted | 68,034 | 73,048 | 77,469 | ||||||||||||||||||||
| (a) | Net income for the year ended February 1, 2025, includes a $15.0 million gain pertaining to a litigation settlement which occurred in the fourth quarter of 2024. Net income for the year ended February 3, 2024, includes a $15.9 million net gain relative to a credit card litigation settlement which occurred in the fourth quarter of 2023. | ||||||||||||||||||||||
| (b) | Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures. | ||||||||||||||||||||||
| (c) | Represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at our historical tax rate. | ||||||||||||||||||||||
Adjusted Free Cash Flow
The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flowfor the periods presented (amounts in thousands):
| Fiscal Year Ended | |||||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||||||||
|
Net cash provided by operating activities
|
$ | 434,798 | $ | 528,082 | $ | 535,779 | |||||||||||||||||
|
Net cash used in investing activities
|
(172,037) | (186,120) | (206,139) | ||||||||||||||||||||
| Adjusted Free Cash Flow | $ | 262,761 | $ | 341,962 | $ | 329,640 | |||||||||||||||||
Liquidity and Capital Resources
Sources and Uses of Liquidity
Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense. We also use cash to pay dividends and to repurchase our common stock. We may fund our liquidity requirements through cash and cash equivalents, cash generated from operating activities, and borrowings under our ABL Facility (as defined below). On January 31, 2026, our cash and cash equivalents totaled $330.3 million. We believe our existing cash and cash equivalents, cash flows from operations, as well as availability under the ABL Facility, will be sufficient to fund our cash requirements for the foreseeable future.
Long-Term Debt
As of January 31, 2026, the Company's long-term debt consists of:
•Notes - 6.00% fixed rate senior secured notes with $400 million in principal outstanding and full principal maturing November 15, 2027;
•Term Loan - 7.72% variable rate term-loan with $85.8 million in principal outstanding maturing November 6, 2027 and requiring quarterly principal payments of $750 thousand through September 30, 2027; and
•ABL Facility - $1.0 billion commitment on a variable rate secured asset-based revolving credit facility with no principal outstanding maturing March 8, 2029.
See Note 4 to the accompanying financial statements for further disclosure regarding our debt agreements. The following table summarizes our current debt obligations by fiscal year (amounts in thousands):
| 2026 | 2027 | 2028 | 2029 | 2030 | Total | |||||||||||||||
|
Term Loan and related interest(1)
|
$ | 9,159 | $ | 87,725 | $ | - | $ | - | $ | - | $ | 96,884 | ||||||||
|
Notes and related interest(2)
|
24,000 | 424,000 | - | - | - | 448,000 | ||||||||||||||
|
ABL Facility and related interest (3)
|
2,500 | 2,500 | 2,500 | 268 | - | 7,768 | ||||||||||||||
(1) Interest payments do not include amortization of discount and debt issuance costs and are approximated based on projected interest rates and assume no unscheduled principal payments.
(2) Interest payments do not include amortization of debt issuance costs and assumes Notes are paid in full at maturity date.
(3) Assumes a minimum revolving credit commitment of $1.0 billion and no balances drawn on our ABL Facility.
Liquidity information related to the ABL Facility is as follows for the periods shown (amounts in thousands):
| Fiscal Year Ended | |||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||
| Average funds drawn | $ | - | $ | 32 | $ | - | |||||||||||
| Number of days with outstanding balance | - | 3 | - | ||||||||||||||
| Maximum daily amount outstanding | $ | - | $ | 3,900 | $ | - | |||||||||||
| Minimum available borrowing capacity | $ | 953,921 | $ | 955,495 | $ | 881,445 | |||||||||||
Liquidity information related to the ABL Facility (amounts in thousands) as of:
| January 31, 2026 | February 1, 2025 | ||||||||||
| Outstanding borrowings | $ | - | $ | - | |||||||
| Outstanding letters of credit | $ | 7,630 | $ | 9,258 | |||||||
| Available borrowing capacity | $ | 992,370 | $ | 955,495 | |||||||
Leases
We predominantly lease store locations, distribution centers, office space and certain equipment under operating leases expiring between fiscal years 2026 and 2045. Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at January 31, 2026. In the fiscal year ended January 31, 2026, we opened 24 new locations. The following table summarizes our operating lease obligations by fiscal year:
| 2026 | 2027 | 2028 | 2029 | 2030 | After 2030 | Total | |||||||||||||||||
|
Operating lease payments (1) (2)
|
$ | 266,461 | $ | 265,364 | $ | 248,658 | $ | 232,185 | $ | 213,700 | $ | 1,141,396 | $ | 2,367,764 | |||||||||
(1) Minimum lease payments have not been reduced by sublease rentals of $1.4 million due in the future under non-cancelable subleases.
(2) These balances include stores where we have an executed contract but have not taken possession of the location as of January 31, 2026.
Share Repurchases
On December 4, 2024, the Company's Board of Directors approved a new share repurchase program under which the Company is authorized to purchase up to$700 million of its outstanding shares during the three-year period ending December 4, 2027 (the "2024 Share Repurchase Program"), and which replaces the previously approved share repurchase program. Under the 2024 Share Repurchase Program,repurchases can be made using a variety of methods, which may include open market purchases, block trades, accelerated share repurchase programs, privately negotiated transactions and/or Rule 10b5-1 or other non-discretionary trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the 2024 Share Repurchase Program will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. The 2024 Share Repurchase Program does not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time. As of January 31, 2026, the Company had $436.6 million remaining for share repurchases under the 2024 Share Repurchase Program. See Note 2 to the consolidated financial statements.
The following table summarizes our share repurchases for the fiscal year ended January 31, 2026 (dollar amounts in thousands, except per share amounts):
| Total Number of Shares Purchased |
Average Price Paid per Share(1)
|
Total Amount Repurchased (1)
|
||||||||||||||||||
| First Quarter (February 2, 2025 to May 3, 2025) | 2,080,772 | $ | 47.59 | $ | 99,031 | |||||||||||||||
| Second Quarter (May 4, 2025 to August 2, 2025) | - | - | - | |||||||||||||||||
| Third Quarter (August 3, 2025 to November 1, 2025) | - | - | - | |||||||||||||||||
|
Fourth Quarter (November 2, 2025 to January 31, 2026) (2)
|
1,849,900 | 54.03 | 99,947 | |||||||||||||||||
| Total Share Repurchase Activity | 3,930,672 | $ | 50.62 | $ | 198,978 | |||||||||||||||
(1) Excludes the impact of excise taxes.
(2) See Part II, Item 5 - Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for further detail on the 2025 fourth quarter share repurchases.
Dividends
The following table summarizes our quarterly dividend payments for the fiscal year ended January 31, 2026 (amounts in thousands, except per share amounts):
| Dividends Paid per Share | Total Dividends Paid | Stockholder Date of Record | ||||||||||||||||||
| First Quarter (February 2, 2025 to May 3, 2025) | $ | 0.13 | $ | 8,716 | March 25, 2025 | |||||||||||||||
| Second Quarter (May 4, 2025 to August 2, 2025) | $ | 0.13 | 8,649 | June 19, 2025 | ||||||||||||||||
| Third Quarter (August 3, 2025 to November 1, 2025) | $ | 0.13 | 8,663 | September 11, 2025 | ||||||||||||||||
| Fourth Quarter (November 2, 2025 to January 31, 2026) | $ | 0.13 | 8,629 | December 18, 2025 | ||||||||||||||||
| Total Dividends Paid | $ | 34,657 | ||||||||||||||||||
On March 5, 2026, the Company announced that the Board of Directors declared a quarterly cash dividend with respect to the quarter ended January 31, 2026 of $0.15 per share of common stock, payable on April 10, 2026, to stockholders of record as of the close of business on March 20, 2026.
Capital Expenditures
The following table summarizes our capital expenditures for the periods shown (amounts in thousands):
| Fiscal Year Ended | ||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | ||||||||||||||||||
| New stores | $ | 119,902 | $ | 107,703 | $ | 100,419 | ||||||||||||||
| Corporate, e-commerce, and information technology programs | 41,291 | 70,474 | 81,992 | |||||||||||||||||
| Existing stores, distribution centers and other | 51,475 | 21,412 | 25,359 | |||||||||||||||||
| Total capital expenditures | $ | 212,668 | $ | 199,589 | $ | 207,770 | ||||||||||||||
We expect capital expenditures for fiscal year 2026 to be between $200 million and $240 million. The following table summarizes our forecasted allocation of capital expenditures for fiscal year 2026:
| 2026 | ||||||||
| New stores | 60 | % | ||||||
| Corporate, e-commerce, and information technology programs | 20 | % | ||||||
| Existing stores, distribution centers and other | 20 | % | ||||||
We review forecasted capital expenditures throughout the year and will adjust our capital expenditures based on business conditions at that time.
Cash Flows
Our Consolidated Statements of Cash Flows are summarized as follows (in thousands):
| Fiscal Year Ended | |||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||
| Net cash provided by operating activities | $ | 434,798 | $ | 528,082 | $ | 535,779 | |||||||||||
| Net cash used in investing activities | (172,037) | (186,120) | (206,139) | ||||||||||||||
| Net cash used in financing activities | (221,370) | (400,953) | (318,865) | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 41,391 | $ | (58,991) | $ | 10,775 | |||||||||||
Operating Activities.Cash flows from operating activities are seasonal in our business. Typically, cash flows from operations are used to build inventory in advance of peak selling seasons, with the fourth quarter pre-holiday inventory increase being the most significant.
Cash provided by operating activities in 2025 decreased $93.3 million compared to 2024. This decrease is attributable to:
•$41.7 million decrease in net income; and
•$99.9 million net decrease in cash flows provided by operating assets and liabilities; partially offset by
•$48.3 million net increase in non-cash charges, primarily related to increased deferred income taxes as a result of the enactment of the "OBBBA" (see Note 10).
The decrease in cash flows from operating assets and liabilities was primarily attributable to:
•$118.7 million decrease in cash flows from working capital due to the pull-forward of inventory purchases at pre-tariff rates relative to the prior year period; and
•$20.6 million decrease in cash flows from accounts receivable due to timing of payments received; partially offset by
•$37.0 million increase in cash flows from prepaid expenses and other current assets, largely driven by timing of construction reimbursement payments received.
Investing Activities. Cash used in investing activities decreased $14.1 million in 2025 compared to 2024. The decrease in cash used in investing activities is primarily related to:
•$27.2 million in additional proceeds from sale-leaseback transactions in 2025 compared to 2024 (see Note 11); partially offset by
•$13.1 million increase in capital expenditures related to store properties purchased and subsequently sold as part of sale-leaseback transactions (see Note 11).
Financing Activities. Cash used in financing activities decreased $179.6 million in 2025 compared to 2024. The primary drivers of the decrease were:
•$165.9 million decrease in cash outflows for repurchases of common stock in 2025; and
•$10.5 million in proceeds received as of the end of fiscal year 2025 for the sale of a portion of rights to tariff relief litigation claims.
Future Liquidity
We expect our existing cash balances, internally generated cash flows and available borrowings under our ABL Facility to fulfill anticipated obligations such as capital expenditures, dividends, stock repurchases, working capital needs and scheduled debt maturities for the foreseeable future. As of January 31, 2026, we had $992.4 million of available capacity under our ABL Facility and $330.3 million of cash and cash equivalents. As discussed in Note 12, the Company previously sold a portion of its rights to potential tariff relief litigation claims and does not expect to receive refunds associated with the portion of the rights sold. Accordingly, the Company does not expect potential tariff refunds to represent a significant incremental future source of liquidity.
Critical Accounting Policies and Estimates
This discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. See Note 2 to the accompanying financial statements for additional information.
Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. The Company believes the following are its critical accounting estimates:
Merchandise Inventories
Description:Merchandise inventories are stated at the lower of weighted average cost and net realizable value. Merchandise inventories include the direct cost of merchandise (including tariffs), capitalized costs related to procurement, and warehousing and distribution. Merchandise inventories are reflected net of shrinkage, vendor allowances and other valuation reserves.
Judgments and Uncertainties:We record an inventory reserve for the estimated shrinkage between physical inventories on a location by location basis. We perform a full physical inventory count for each store at least once a year, throughout the year, after which our shrinkage accrual rate to sales for each store is updated based on historical results. For vendor allowances based on contractual provisions, we develop accrual rates for receivables as determined by the agreements, which are typically linked to purchase volumes. Other non-contractual vendor allowances received are applied upon receipt. We regularly review inventories and record a valuation adjustment when necessary such as for inventory that has a carrying value in excess of the net realizable value or for slow moving or obsolete inventory.
Impact of Assumptions: For inventory shrinkage, our reserves may be inaccurate if our historical physical inventory shrinkage rates, used in our assumptions, differ significantly from actual rates due to consistent misses to our accrual. However, due to the frequency with which we perform full physical inventory counts, our assumptions are regularly updated, and we regularly analyze the physical inventory results to our accruals and, where necessary, adjust our store accruals to compensate for consistent patterns identified. We have not had a history of significant differences to our reserves for vendor allowances, and the assumptions generally do not have a significant impact on reserves since they are typically short-term and contractual in nature. We book a reserve for inventory permanently marked down below the inventory's historical cost. Additionally, for slow moving or obsolete inventory, we book reserves based on historical margins received for marked down inventory with similarly slow historical sell-through rates. A 20% decrease in assumed margins used in these reserves would not have a material impact to our financial statements. We believe our long history of operations has given us sufficient data to enable us to accurately predict these reserves.
Impairment of long-lived assets
Description:We review the carrying value of long-lived assets, including property and equipment at our stores and right-of-use assets, for indicators of impairment regularly and whenever events and circumstances indicate that the carrying value of an asset may not be recoverable.
Judgments and Uncertainties:We test stores operating over a long enough time span, based on our previous store history for similar locations, to allow for meaningful analysis of future operating results. Recoverability of long-lived assets is measured by a comparison of the carrying amount of the assets to the estimated undiscounted future cash flows expected to be generated by the use of the assets, which is generally projected based on historical results. If such assets are considered to be impaired, the impairment loss recognized is the amount by which the carrying amount of the assets exceeds its estimated fair value, which is calculated using discounted expected future cash flows.
Impact of Assumptions:The assumptions used to project store impairment loss is based on projected future store income and considers variables such as historical and current trends, macroeconomic conditions, store location, and local economy and supply chain factors. Additionally, the long-term store income projections also contain a projection of future store specific costs such as store wages and advertising. Actual long-term income results could vary significantly from our projections due to a variety of reasons such as changes in the local retail environment or macroeconomic factors not used in our assumptions. In addition to variables considered in developing projected long-term store income, assumptions are made to develop the assumed discount rate based on company specific factors. There is significant judgment used in determining these assumptions used in the assessment of store impairment and variability in the assumptions could cause us to reach a materially different conclusion on impairment; however, we do not believe the net book value of any individual store assets are material to the Company's operations. The Company has not recognized any long-lived asset impairment charges during 2025, 2024, or 2023.
Goodwill
Description: Goodwill represents the excess of the purchase price of an acquired business over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is tested for impairment annually or more frequently if events or circumstances indicate that the carrying value of goodwill may not be recoverable. We test for goodwill at the reporting unit level, which is the operating segment level. We operate in one operating segment with one reporting unit.
Judgments and Uncertainties:The annual goodwill impairment test provides for the option of first performing a qualitative assessment to evaluate the existence of events and circumstances that would lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If such a conclusion is reached, we would then be required to perform a quantitative impairment assessment of goodwill. However, if the qualitative assessment leads to a determination that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then no further assessments are required.
Our quantitative assessment for determining the fair value of our reporting unit includes using an estimated discounted cash flow model (income approach) and market value approach. The output of this assessment is an estimated fair value for our reporting unit that is compared to its carrying value to determine whether an impairment charge is necessary. The income approach uses a discounted cash flow analysis of our projected long-term future company income, and the market value approach is based on earnings multiples for a comparable set of public companies as well as guideline transactions. These approaches use key input assumptions such as our projected future operating results, the discount rate, the weighting for each valuation approach and the comparable set of companies and transactions.
Impact of Assumptions:The assumptions used to project long-term company income consider variables such as historical and current trends, macroeconomic conditions, supply chain factors, projections consistent with the Company's operating strategy, such as the future development of e-commerce and our assumptions used on future store openings, and other variables expected to impact future sales. Additionally, the long-term company income projections also contain a projection of future company costs such as wages, freight and transportation, and advertising. Actual long-term company income results could vary significantly from our projections due to a variety of reasons such as changes in the retail environment or macroeconomic factors not used in our assumptions. In addition to variables considered in developing projected long-term company income, assumptions are made to develop the discount rate, which is based on an assumed risk-free rate, and an equity risk premium developed from general historical market data and comparable companies. The earnings multiples and control premiums used in the market approach can vary dependent on which companies and guideline transactions are selected in our comparable set. A history of declining trends in our operating results such as comparable sales, gross margin, net income and cash flow from operations could impact these assumptions and serve as indicators of future impairment. There is significant judgment used in determining these assumptions used in the assessment of goodwill impairment and variability in the assumptions could cause us to reach a different conclusion on impairment. In 2025, we performed a qualitative impairment assessment and determined a quantitative assessment was not necessary. The Company has not recorded any impairment charges related to goodwill during 2025, 2024, or 2023.
Intangible Assets
Description: Intangible assets primarily consists of the trade name "Academy Sports + Outdoors" (the "Trade Name"). The Trade Name is expected to generate cash flows indefinitely and, therefore, is accounted for as an indefinite-lived asset not subject to amortization. The Trade Name is tested for impairment annually or whenever events or circumstances indicate that the carrying amount of the Trade Name may not be recoverable.
Judgments and Uncertainties: The annual Trade Name impairment test provides for the option of first performing a qualitative assessment to evaluate the existence of events and circumstances that would lead to a determination that it is more likely than not that the fair value of an intangible asset is less than its carrying amount. If such a conclusion is reached, we would then be required to perform a quantitative impairment assessment for the Trade Name. However, if the qualitative assessment leads to a determination that it is more likely than not that the fair value of an intangible asset is greater than its carrying amount, then no further assessments are required.
Impairment is calculated as the excess of the Trade Name's carrying value over its fair value. The fair value of the Trade Name is determined using the relief-from-royalty method, a variation of the income approach. This method assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. Once a supportable royalty rate is determined, the rate is then applied to the projected long-term sales over the expected remaining life of the intangible assets to estimate the royalty savings. This approach is dependent on a number of factors, including projections of long-term sales, royalty rates, discount rates and other variables.
Impact of Assumptions:The assumptions used to project long-term company sales consider variables such as historical and current trends, macroeconomic conditions, supply chain factors, projections consistent with the Company's operating strategy, such as the future development of e-commerce and our assumptions used on future store openings, and other variables expected to impact future sales. Actual long-term income results could vary significantly from our projections due to a variety of reasons such as changes in the retail environment or macroeconomic factors not used in our assumptions. In addition to variables considered in developing projected long-term sales, assumptions are made to develop the royalty rates and discount rates. The royalty rates are based on market data where royalty rates are applicable and the discount rates are based on an assumed risk-free rate, and an equity risk premium based on general historical market data and comparable companies. A history of declining trends in our operating results such as comparable sales, gross margin, net income and cash flow from operations could impact these assumptions and serve as indicators of future impairment. There is significant judgment used in determining these assumptions on intangible asset impairment and variability in the assumptions could cause us to reach a different conclusion on impairment. In 2025, we performed a qualitative impairment assessment and determined a quantitative assessment was not necessary. The Company has not recorded any impairment charges related to intangible assets during fiscal 2025, fiscal 2024, or fiscal 2023.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 2 to the accompanying financial statements.
Academy Sports & Outdoors Inc. published this content on March 17, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 17, 2026 at 20:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]