Academy Sports & Outdoors - Q4 2026
March 17, 2026
Transcript
Operator (participant)
Good morning, and welcome to the Academy Sports + Outdoors fourth quarter fiscal 2025 results conference call. The call is being recorded, and all participants are on a listen-only mode. Following the prepared remarks, there will be a brief question-and-answer session. Questions will be limited to analysts and investors. Please limit yourself to one question and one follow-up. To ask your question during the call, please press star one on your telephone keypad. If you require operator assistance at any time during the call, please press star zero on your telephone keypad. I would now like to turn the call over to Dan Aldridge, Vice President, Investor Relations for Academy Sports + Outdoors.
Dan Aldridge (VP of Investor Relations)
Good morning, everyone, and thank you for joining the Academy Sports + Outdoors fourth quarter and fiscal year 2025 financial results call. Participating on today's call are Steve Lawrence, Chief Executive Officer, and Carl Ford IV, Chief Financial Officer. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our most recent 10-K and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors.academy.com.
This morning, we will review our financial results for the fourth quarter of fiscal 2025 and the full year, provide an update on strategic initiatives, discuss outlook for the year, and share guidance for the full year fiscal 2026. After we conclude prepared remarks, there will be time for questions. With that, I'll turn the call over to CEO Steve Lawrence.
Steve Lawrence (CEO and Dirctor)
Thanks, Dan, and good morning to everyone on the line today. On our call this morning, we plan to cover our fourth quarter and full year results for 2025, along with providing initial guidance for 2026. I will remind you that we also have an analyst day planned for April seventh in New York City, which will also be webcast, where we'll go into more detail on our long range plan and how the investments we've been making in 2025 and 2026 play into our multi-year strategy. I'll start with the fourth quarter, which played out largely as we'd forecasted, with sales coming in at $1.7 billion, which was a 2.5% increase versus last year and translated into a -1.6% comp decrease. These results were within our implied guidance range for the quarter.
As we shared on our last call, sales were strong over the Thanksgiving and Cyber Week time periods. Similar to prior years, we saw customer spending patterns soften in the second and third week of December and then surge during the week leading into Christmas, which continued into the last week of the month. January was softer than we anticipated, primarily driven by the large winter storms in the last 10 days of the month, which caused roughly half of our stores to be partially or fully shut down for 2-3 days. We saw the business rebound once our stores reopened. As we discussed on prior calls, the big unknown for us this holiday was how the customer was going to react to the inflationary pressures on pricing for goods that were imported from overseas.
Our forecast was for average unit retail to be up low double digits for the quarter. We delivered against that by raising our average unit retail up 10% through a combination of promotional optimization, growing sales in the better best end of our assortment, and some strategic AUR increases. All of these efforts helped improve our gross margin by 140 basis points versus last year. Pulling back to the full year, I'm proud of how our team executed in a choppy environment. We navigated through all of the challenges in 2025 while still growing top line sales to $6.05 billion, up 2%, which resulted in solid market share gains across our footprint. We also put in place many foundational building blocks, which should help drive sales in 2026 and beyond, some of which include.
First, I'm proud of how the team rallied mid-year to mitigate and offset the impact of the incremental tariffs that were levied in late Q1 and Q2 of last year. Team had to react mid-year after most of the merchandise was already purchased and managed to offset the increased expense through a combination of sourcing country diversification, inventory pull forward at lower costs, and pricing and promotional optimization work. The result of these efforts yielded an annual AUR increase of 6%, which translated into a gross margin rate of 34.8% or plus 90 basis points versus the prior year. As we embarked on this journey to raise AURs, we've also remained committed to not losing our reputation for having outstanding value by constantly monitoring pricing across the marketplace.
What we found through the ongoing customer research work we do is that we've managed to improve average unit retail across the full year while also improving our value perception with customers relative to key competitors. I can assure you that this was no easy feat. Another key accomplishment was the 13.6% growth we drove in our dot-com business. We put a lot of new players in place late in 2024, and they jumped in and quickly worked to improve core search site experience fundamentals. They also showed tremendous agility throughout the year as we incorporated emerging AI capabilities into our site for data enrichment on our items to help improve relevance in search, leveraging image generation capabilities on our private brand apparel, and finally, by introducing agentic AI onto our site for the first time, the launch of Scout prior to Christmas.
While we're still in the early innings on these efforts, we're excited about the initial results we're seeing on this front. Store expansion remains our number one growth opportunity. During the year, we successfully opened up 24 new stores, which in aggregate are tracking to exceed their year one performance. At the same time, stores that opened up in 2022 through 2024, which are now in the comp base, show mid-single-digit comp increases. We expect this tailwind to grow in 2026 as the 2025 vintage of new stores rolls into the comps as we progress throughout the year. Fourth, the team was laser-focused on improving in-stocks through a combination of assortment rationalization efforts, coupled with the rollout of RFID scanners to all of our stores in Q2.
During the year, we shifted to weekly counts and inventory updates on brands that are RFID labeled, which in aggregate represent roughly 25% of our annual volume. The end result was improvement in store in-stocks across the company by 500 basis points, which had a major impact on overall customer satisfaction along with improving conversion. We also believe that the merchants did a great job of leaning into emerging trends and brands, which helped reinforce our position as a key destination during gift-giving time periods such as Father's Day and Christmas, along with stock-up time periods such as back to school.
Adding in-demand brands such as Jordan and Converse to our assortment, coupled with expanding other hot trending items such as Birkenstock, Fila, Baseball Lifestyle 101, Turtlebox speakers, and Ray-Ban Meta helped us drive traffic into our stores during the key moments on our customers' calendars. This is another initiative that we'll continue to push on in 2026. Next, our My Academy Rewards loyalty program has continued to grow since we kicked it off in mid-2024. We now have over 13 million customers enrolled in this program. This is another initiative that we're still in the early innings on, and we have some exciting plans to accelerate growth on this front in 2026 that I'll share in a couple of minutes.
Finally, all these efforts combined to help us drive new customers into our stores, which was evidenced by the 10% growth we saw in consumers whose household income is over $100,000 a year. The increased traffic from this cohort is in effect helping us diversify and somewhat de-risk our customer base, with these higher income consumers now representing our largest and fastest-growing customer cohort. To be clear, we remain focused and committed to maintaining our position as the value provider in the sports and outdoor space. That being said, we believe layering on new trending brands and items targeted at the better, best end of the assortment is a good way for us to both expand our share of wallet with existing customers while also attracting new customers to shop with us. Shifting gears to 2026.
You saw in our press release earlier this morning that we're providing sales guidance for 2026 of +2% to +5% total growth, which translates into a -1% to +2% comp sales. The low end of our guidance contemplates a continued muted backdrop for discretionary consumer spending. Our belief is that most of the macroeconomic pressures the consumer faced in the back half of 2025 will carry into the first half of 2026. In particular, inflationary pressures on goods sourced outside of the U.S. should continue through the first half of the year. Assuming no additional dramatic changes in trade policy, we believe that as we lap the increased tariff costs in the back half of the year, prices should settle in at their new levels. That being said, there are also several tailwinds that should help us overcome some of these macroeconomic pressures.
The first three I'll mention are external events that we should benefit from. First, we're still early in the tax return cycle, but we believe consumers should see higher income tax refunds this year. In the past, we've seen categories such as firearms, gun safes, and work boots benefit from earlier and/or higher refunds during the tax season. It's hard to discern how much of an impact we're currently seeing from refunds, but I'll share with you through the first seven weeks of the quarter, we're running a positive comp, and we believe some portion of these results could be attributed to higher tax refunds. Second, as most of you are aware, the World Cup is coming to the U.S. this summer, and approximately 30 matches will be played in venues across our footprint.
We believe this should translate into increased tourism and foot traffic in the second quarter, which should provide a sales lift for our licensed team and tailgating businesses. Longer term, we've seen events such as this drive increased participation in youth soccer, which should help drive sales in our sporting goods business in the back half of the year and into 2027. Finally, 2026 is the 250th anniversary of the United States. We traditionally see strong selling over the summer in patriotic merchandise, and we believe this year will be even stronger when you couple the surge in national pride around our 250th birthday with all of the excitement for Team USA this summer. At the same time, we have multiple self-help initiatives we've put in place, which should also enable us to drive comp growth.
We expect the momentum we started to build in our dot-com results in 2025 will continue to propel the business forward. We're accelerating Academy's digital transformation by building a modern omni-channel business that will deepen engagement with our customers through data-driven personalization. Key enhancements for 2026 include moving to an AI-based semantic search platform on our site in late Q2 to improve relevancy and conversion. We're also working with leading AI platforms such as OpenAI and Google to enable our catalog of products and offers to surface inside their ecosystems, which will greatly simplify the browsing experience for customers who are using AI as a search engine for shopping. We also continue to grow our online assortment through additional drop ship partnerships.
When you combine this push to expand our endless aisles with the new handheld devices we rolled out to stores in conjunction with RFID last year, you can see we're empowering our store team members to take care of their customers' needs in real time by dramatically expanding the assortment available to them well beyond what is physically available in that individual store. Lastly, we continue to expand our reach beyond our own channels through third-party storefronts on platforms where our customers frequent. Chad Fox, our Chief Customer Officer, presented our Analyst Day on April 7th to give you a deeper dive into many of the topics I just covered, along with some of the other initiatives that we have in the works for later in the year and beyond. Another big landmark for us in 2026 will be the relaunch of the Academy credit card.
We launched this program seven years ago, and for many years this served as our only customer loyalty vehicle. In 2024, we introduced My Academy Rewards as a way to extend loyalty offers to customers who either didn't want and/or qualify for our private label credit card. These programs have worked in parallel to each other but were not connected. With this relaunch in Q2, we have streamlined the sign-up process and are also creating a unified customer loyalty program with expanded ways to provide increased value to our customers. The new program will have three tiers. My Academy Rewards, which is currently comprised of 13 million members, is the base tier and does not require an Academy credit card to access.
Key benefits customers get for joining My Academy include a sign-up first discount of $15 off their next purchase, birthday reward, free shipping on dot-com orders over $25, and a $25 reward after spending $500 inside of Academy within the first 90 days. The second tier is a private label credit card, which can only be used at Academy. Value proposition for this tier include all the benefits of joining My Academy with some additional perks. The sign-up first discount accelerates from $15 off to $30 off. Customers get free shipping on all dot-com orders with no minimum. Similar to today, customers receive 5% off all purchases made in our stores and dot-com site on this card. The third tier is a new My Academy Rewards MasterCard, which can be used as a normal credit card across all purchases.
Benefits for this tier include all the ones I listed for the private label credit card, along with a couple of additional incentives. First, they get a higher spending limit than customers traditionally get on our private label credit card. In addition to the 5% off for spending with us, these customers also get 2% back on all purchases made outside of Academy in rewards they can redeem to shop back at Academy. Finally, they get an initial $50 reward to shop after they spend their first $500 outside of Academy on their card. The beauty of this new card is a unique and best-in-class value proposition that helps solve an unmet customer need. Most retailers' cards only give rewards for spending within a brand's four walls or on their website.
Our My Academy Rewards MasterCard will allow all these game families that we serve to leverage all of their spend on weekly necessities such as groceries and gas, taking the rewards they earn from this spend and redeeming them at Academy to buy all the gear they need to fuel their families, activities and passions. We will fully relaunch the program and convert existing cardholders over to the new card in Q2 in advance of Father's Day. All reissued cards will have a reactivation reward included with their new credit card, which should help drive a good tailwind heading into the key summer selling time period. Similar to last year, we'll continue to add and expand our offering of better and best brands that resonate with our core consumers.
For example, while we launched the Jordan brand in 145 doors last spring, some categories such as boys apparel, socks and slides and backpacks have already expanded out to all doors. We'll expand our Jordan brand shop concept this spring out to an additional 55 stores, which will take this integrated presentation to more than 200 doors overall. At the same time, we also will continue to expand our offering from Nike of higher-level fashion in both footwear and apparel into all stores and online. Another key trend we're rapidly growing is our offering in work and western wear. We're capitalizing on this growing lifestyle movement by expanding our breadth of assortment from key brands such as Carhartt, Wrangler and Ariat, while also expanding our vendor matrix to test emerging brands such as Huey and Brunt.
On the fitness front, one of the hottest trends out there is HYROX. For those not familiar with HYROX, it is a multi-disciplined workout where people train for and participate in over 80 races across the globe. We are their exclusive brick-and-mortar partner in the U.S., and we'll bring their branded training equipment to over 70 Academy doors this spring so people can train at home for the races. The last big merchandise initiative I will cover today is our continued push into the baseball lifestyle culture. We continue to expand our assortment of the hottest bats and gloves and have supplemented that with an assortment of apparel and lifestyle accessories from hot new brands such as Baseball Lifestyle 101, Dirty Mids, and Bruce Bolt.
This area was one of our best-selling categories over holiday, and we expect that the momentum will carry through into spring and summer selling seasons. We plan to share more on our other exciting brand launches at our Analyst Day in April. The last self-help initiative I will cover is leaning into and expanding on some of the strategic investments we've made over the past couple of years. As I mentioned earlier, rolling out our RFID scanners last year was a game changer for us as it helped us improve in-stocks and drive higher conversion rates. This spring, we're expanding tagging to include our private branded apparel and footwear products. This will allow us to facilitate weekly counts and update inventory on roughly one-third of our sales base by the end of spring.
We also remain committed to our new store expansion plans, and as we shared in our Q3 call, our plan is to open up 20-25 new stores in 2026. The majority of these stores will be infill within our legacy and existing markets and should be strong performers for us right out of the gates. At the same time, as we move through the year, the 2025 vintage new stores will start to pull in our comp base, and by the end of the year, we'll have over 50 stores that opened up between 2022 and 2025 impacting our comparable sales growth. We'll give you a deeper dive into how we've refined our real estate strategy during our Analyst Day on April 7th. To summarize, we are proud of all that the team accomplished in 2025.
While we expect the macroeconomic backdrop to be challenging for the lower- and middle-income consumer, we believe that there are a combination of external factors, coupled with our internal initiatives, should allow us to grow top-line sales 2%-5%, while also driving margin expansion and earnings per share growth in 2026. I will now turn it over to Carl to give you a deeper dive into the Q4 and full-year financials for 2025, along with our initial guidance for annual 2026. Carl.
Carl Ford IV (EVP and CFO)
Thank you, Steve. Fourth quarter net sales were $1.7 billion, up 2.5%, and comparable sales were down 1.6%. Breaking down the comp, transactions were down 6.4%, while ticket was up 5.1%. In the fourth quarter, Academy generated net income of $133.7 million and diluted earnings per share of $1.98. Fourth quarter adjusted net income was $132.9 million or $1.97 in adjusted diluted earnings per share. Gross margin of 33.6% in the fourth quarter was up 140 basis points versus last year and exceeded our implied guidance.
The majority of the expansion was driven by efficiency gains in our supply chain and the lapping of costs incurred for port disruption from the prior year. Merch margin, inclusive of tariffs, was flat as we managed prices while managing alignment with our value pricing strategy. SG&A expenses came in at 23.7% of sales for the fourth quarter, an increase of approximately $21 million or 70 basis points. The increase was driven by growth initiatives totaling approximately 135 basis points, comprised of 115 basis points of new store growth as we've opened 24 new stores in the last twelve months and 20 basis points of technology investments to fuel our omni-channel growth. The acceleration in new store growth from 2022 to 2025 has had an outsized impact on SG&A expense growth.
As we move through 2026, the number of new stores at 20-25 will be similar to FY 2025. Looking at the balance sheet, we ended the quarter with $330 million in cash, which was a 14% increase from the prior year. Our inventory balance was $1.5 billion, an increase of 15% compared to last year. On a per store basis, inventory dollars were up 6.3%, while inventory units were flat. For the full year, we generated $435 million in cash from operations, of which we reinvested $172 million back into the business to drive our growth initiatives.
These actions led to approximately $263 million of adjusted free cash flow, of which we returned $234 million to investors through $35 million in dividends and $199 million in share repurchases at an average price of $50.62. In terms of capital allocation, our strategy remains focused on generating cash flow to reinvest into our growth initiatives for the business and to return the majority of our free cash flow back to investors through dividends and stock repurchases. During the fourth quarter, we paid $8.6 million in dividends and repurchased approximately $100 million of our shares at an average share price of $54.03.
We are pleased to announce the board recently approved a 15% increase in our dividend, resulting in $0.15 per share payable on April 10th, 2026 to stockholders of record as of March 20th, 2025. Our guidance for 2026 is as follows. Net sales are expected to range from $6.18 billion to $6.36 billion, an increase of 2%-5% with comparable sales of -1% to +2% with a midpoint of +0.5%. I'd like to share the assumptions that influence our 2026 guidance. As we head into 2026, we expect the consumer to continue to face a challenging economic backdrop, but we are confident that our internal initiatives alone support the midpoint of our guidance.
The low end of our sales guidance contemplates a continued muted backdrop in discretionary consumer spending, and the high end represents an improvement in consumer health, aided by the macro events already mentioned. We also expect traffic to improve as our internal initiatives continue to resonate and prices stabilize throughout the year. Our gross margin rate is expected to range from 34.5%-35.0%. GAAP net income is between $380 million and $415 million. Adjusted net income, which excludes stock-based compensation of approximately $37 million, is forecasted to range from $410 million-$445 million. Our gross margin gains for the full year of 2025 were primarily driven from merch margin expansion as we expanded Nike and launched the Jordan brand.
While we don't anticipate the same level of expansion, we do see growth as we expand the Jordan brand shop concept into 55 more doors and expand soft line brands like BURLEBO. This, of course, will be partially offset by the impact of continued tariffs, especially in the first half of the year. In addition, we expect shrink to be a tailwind as we continue to roll out RFID to more national brands and private label apparel and footwear. We expect GAAP diluted earnings per share of $5.65-$6.15 and adjusted diluted earnings per share of $6.10-$6.60. The earnings per share estimates are based on an expected share count of 67 million diluted weighted average shares outstanding for the full year. These amounts do not include potential future repurchase activity.
Our current authorization had $437 million remaining at the end of fiscal 2025. We are also confident in the strength of our cash flows and expect to generate between $250 million and $300 million of adjusted free cash flow after investing $200 million-$240 million back into the business in the form of capital expenditures, primarily for our strategic growth initiatives. Looking at the anticipated shape of the year, our Q1 performance through the first seven weeks is off to a positive comp sales start, and we expect it to be our strongest quarter as we lap a -3.7% comp from 2025.
On the surface, the second quarter could appear the most challenging as we lap a positive comp, the launch of Jordan Brand, and the subsequent Nike assortment expansion. However, we're optimistic as we expect to see tailwinds from the launch of the new My Academy Rewards MasterCard, as well as the continued rollout of the Jordan brand shop concept into 55 doors this spring. Additionally, we expect to see a tailwind from the World Cup, increased tax refunds, and America's 250th anniversary. We expect the positive momentum in the first half to carry over into the second half of the year, but we're mindful that tariffs and any prolonged impact to gas prices could have a negative impact on the U.S. consumer.
It's also important to remember that the 20-25 new store openings in 2026 will be more back half weighted when compared to fiscal 2025 due to the initial pausing of signing new leases for 2026 when tariffs caused uncertainty in construction prices. We will provide updates to our guidance each quarter as conditions warrant. To conclude, we're optimistic as we head into the new fiscal year and believe we have made the right investments and strategic decisions. I look forward to speaking with you again during our Analyst Day on April 7th about our long-range plan. Operator, please open the line for questions.
Operator (participant)
Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. My first question comes from Christopher Horvers with JPMorgan. Your line is now live.
Christopher Horvers (Senior Analyst)
Thanks. Good morning, guys. My first question is on sales. You mentioned a large number of store closures at the end of January. Can you quantify how much of a headwind that was to your overall performance in the fourth quarter? As we try to, you know, parse out what the right underlying trend in the business is, any specificity on how you're running quarter to date? You did have weather headwinds that you lapped last year in February, and then March wasn't that much better. You've had the war recently, which I think historically when these events happen, it does drive some sort of run on the ammo business as well. How do you think about, like, the puts and takes of what the right underlying trend is?
Have you seen any of that impact from what's going on in and around?
Carl Ford IV (EVP and CFO)
Yeah, sure. I'll start. You know, Chris, we saw trends coming through Christmas pretty strong the last week leading up to Christmas and even the week after Christmas. January is actually running positive for us. We had roughly half of our stores
Closed for about three days. It was over a weekend this year versus last year, where we had some weather. It was during the week. If you took those three days out where we had roughly half of our stores running or shut down, we're running a positive comp in the mid-single digit range. We estimate that it's probably worth about 100 basis points in comp of a headwind for us within Q4. We were pleased to see though that once the stores reopened, as we said, the business resumed. February was strong. You know, we were happy with the positive comps. We had positive comps across every division. That's continued into early March. So it feels pretty broad-based.
I would tell you that, ammo, you know, the category you just mentioned, got better during the quarter in Q4. We talked, I think, in the previous call about how we're up against a run-up prior to the election in Q3, and we saw that business start to stabilize in Q4. Started off running down in high single digits. By the end of the quarter, it was running down low single digits. It's running positive comp. Was running positive comp in February before the war kicked off a couple weeks ago, and then since then, it's obviously accelerated a little bit. But it's also been a solid business for us. It probably aided a little bit by the current events.
Christopher Horvers (Senior Analyst)
Understood. My follow-up question, Carl, is on the SG&A side. You mentioned that, you know, you're gonna annualize. You'll have two back-to-back years of similar kind of unit growth. You know, as you look at what's happened, you know, ex the, you know, lapping, you'll lap Jordan, the Jordan rollout and some of the costs that you put in on the advertising and the updates there. But you've been running 6%-7%, it looks like. We were thinking that was the right trend here in 2026, but the guidance seems to imply about 2%-3% SG&A growth this year. Is there anything, like how much of that is the, you know, annualization of a similar number of store opens? Is there some investments that are being dialed back or anything unique to get down to that math?
I know you mentioned the cadence of the year and how the stores are gonna be weighted, so any additional detail on that would be helpful as well. Thanks so much.
Carl Ford IV (EVP and CFO)
Yeah, the main driver of our SG&A growth has been the store increases. As we moved from 16 in 2024 to 24 in FY 2025, that had an outsized impact. We're guiding 20-25. We think that's the right number for us next year. We feel good about all of the openings. Simply not having the growth in the number of units, it'll be about an 8% unit growth for us, provides a good level of leverage. As it relates to next year's guidance at the midpoint, what's implied is modest leverage from an SG&A standpoint. I will remind you that in Q1 of 2025, we had $7.5 million in the Jordan launch cost that was associated with primarily the 145 shop doors.
That's gonna be less this year, and it'll be in Q2, not Q1. Overall, like look, we're looking for ways to leverage in the business, and so doing things smarter and more efficiently. We found some automation opportunities that's helpful, and we're gonna have modest leverage next year at the midpoint.
Christopher Horvers (Senior Analyst)
Thanks very much. Have a great spring.
Operator (participant)
Our next question comes from Simeon Gutman with Morgan Stanley. Your line is now live.
Simeon Gutman (Research Analyst of Retailing Broadlines & Hardlines and Food Retailers)
Good morning, guys. If you look at 2025 in the rearview mirror, discretionary spend was fairly light across the board for most end markets. You know, you were lapping easier compares, and you did add a few initiatives which are working, still seem promising. You know, looking at the following year, and I appreciate the range, and it's early, and there's a lot of geopolitical things brewing. You know, big picture, the return to positive comps, why do you think it's taking as long as it is, given the initiatives and the drivers and the confidence of landing maybe in the higher end of that range for this year? Thank you.
Steve Lawrence (CEO and Dirctor)
Yeah. I think when we talked about guidance, Simeon, we were looking at, you know, the puts and the takes. I'd say from a headwind perspective, I think that the consumer was under pressure, as you noted last year. I think that persisted throughout most of the year, and I think that was probably the one thing that stopped us from getting all the way across the line to get to a positive comp. I will note that we actually grew the top line last year, which is the first time since 2021 that we've grown the top line. That's a good starting point. We know delivering consecutive positive comps is the key moving forward. That's why we really talked about some of the growth initiatives we have, both self-help as well as some external.
You know, you look at our dot-com business, that's been surging. It was up almost 14% last year. We think we've got a really good foundational base there. We're gonna continue to lean into that. I think some of the moves the team's making and leaning into AI are really gonna help out there. The new stores continue to get stronger, right? We mentioned that our new stores had opened up from 22 to 24, ran a mid-single-digit positive comp, and we had roughly 25, 26 that were fueling that last year. That number doubles this year as more stores fill in the comp base. That becomes an increasing tailwind. Can't underestimate the impact of this loyalty credit card relaunch and integration. That's a big, big deal for us.
It was run as kind of two separate programs based off when we launched them. I think integrating it is really gonna allow us to start delivering value to the consumer. Then you think about other things. We've got some outsized growth in some categories we're carrying, like work and western wear. Those are trending lifestyle initiatives out there that we're really doubling down on this year. Continuing to lean in newness with all the things we've mentioned on the call. Then you've got the external tailwinds like the tax refunds, World Cup, and then obviously the 250th anniversary of the United States. We feel like we've got a really good point of view around what we think the headwinds are.
We think we've got a lot of self-help as well as external tailwinds that allow us to get back to positive comps. We think this is the year that happens.
Simeon Gutman (Research Analyst of Retailing Broadlines & Hardlines and Food Retailers)
Thanks. A follow-up. The store economic model. If you step back, how is the profitability ramp of the newer stores? Then, you know, given the lighter comp backdrop, how do you think of the year two, year three stores? Are the economic models or the returns producing the way you thought?
Carl Ford IV (EVP and CFO)
Yeah. Thanks for asking. Our stores in year one are performing a little bit better than what we anticipated. With mid-single digit comps for those that are in the comp set, and that's after the 14th month that they enter the comp set, they're performing well. We're pretty pleased with it. We've seen some opportunities to infill in legacy and existing markets. Those typically perform a little bit better than those in our newer markets where we're establishing brand awareness. From an economic model standpoint, from a CapEx standpoint, it's $2.5 million-$3.5 million of net CapEx. Then we invest in incremental inventory there too. We expect a 20% ROIC.
From a multi-year standpoint, from a growth trajectory, what we're seeing is that they continue to grow. In the legacy markets, it's pretty steady growth. In the new markets, when you look at those that are in the comp set, they're growing well into years two and three as well. Again, we like what we're seeing. We've learned a ton over time since we started launching in 2022, and we feel really good about the 2026 cohort.
Simeon Gutman (Research Analyst of Retailing Broadlines & Hardlines and Food Retailers)
Thanks. Good luck. See you in a couple weeks.
Carl Ford IV (EVP and CFO)
Thanks. Have a good one.
Steve Lawrence (CEO and Dirctor)
Thank you.
Operator (participant)
Our next question comes from John Heinbockel with Guggenheim Securities. Your line is now live.
John Heinbockel (Research Analyst of Food Retailers and Consumables Retail/Distrbution)
Hey, guys. Wanted to start with this year, the waterfall effect of new stores. Looks like that could be, I don't know, 60 or 70 basis points or something like that at a mid-single digit. Is that fair? You know, does that sort of suggest, you know, mature stores you think will be flattish? The impact of loyalty and the Mastercard launch, could that be as impactful as the waterfall? How would you sort of compare the two?
Steve Lawrence (CEO and Dirctor)
I think you're in the right range, John. I think that you know we saw mid-single digit growth last year in the 22 through 24 vintage of stores. You know you multiply that times the percentage they contribute you know it's probably about a 30 basis point tailwind last year that'll probably come close to doubling this year.
John Heinbockel (Research Analyst of Food Retailers and Consumables Retail/Distrbution)
Yep.
Steve Lawrence (CEO and Dirctor)
I think you can assume a very similar sort of lift for the loyalty relaunch. Mind you, that's only for about a half a year because we're really kind of kicking the full relaunch off heading into Father's Day. We'll also get the benefit of that as we lap the first half of next year as well. We're really excited about both those initiatives.
John Heinbockel (Research Analyst of Food Retailers and Consumables Retail/Distrbution)
Maybe as a follow-up, I know there's been a lot of opportunity with regard to supply chain, you know, which is, I guess, has been pushed out a little bit. What's the current update on, you know, I guess all of the initiatives? Some of it, right, is technology, some of it is throughput, but, you know, where are we on that? Where are we tracking?
Carl Ford IV (EVP and CFO)
Yeah. From a supply chain standpoint, I'll get to the future facing in a second, but we did see the majority of our gross margin gains in the fourth quarter through the supply chain. Some was from lapping. I don't even know if people remember this, but in Q3 and Q4, there was proposed East Coast port strikes, and we took some mitigating activities. We were up against those. The efficiencies that we saw in Q4 of 2025 was more than just the lapping. I think Rob Howell, our Chief Supply Chain Officer, is doing a great job as it relates to driving efficiencies out of transportation as well as DC efficiency.
Moving forward, I think I'd like to couch the majority of the ongoing benefit because we're gonna contextualize that in the Analyst Day on April 7th. We have rolled out one of our distribution centers on the Manhattan Active warehouse management program. We are looking to slate the Katy distribution center and the Cookeville distribution center later. It will not be in 2026. We've got some pretty good efficiencies that are going on there right now based off the inventory management there, and that is implied within the guidance. As it relates to, you know, beyond that, I still feel really good about the supply chain efficiencies that we spoke about previously. I'd like to give you more color, if you don't mind.
I'd like to wait until April seventh to speak to beyond 2026.
John Heinbockel (Research Analyst of Food Retailers and Consumables Retail/Distrbution)
Sure. Thank you.
Carl Ford IV (EVP and CFO)
Thanks.
Steve Lawrence (CEO and Dirctor)
Thank you.
Operator (participant)
Our next question comes from Brian Nagel with Oppenheimer. Your line is now live.
Brian Nagel (Managing Director and Senior Analyst of Consumer Growth & eCommerce)
Hi. Good morning. Thank you for taking my question.
Steve Lawrence (CEO and Dirctor)
Good.
Brian Nagel (Managing Director and Senior Analyst of Consumer Growth & eCommerce)
I wanna. You know, look, a lot of questions and a lot of focus on, you know, just this path towards consistent positive comps, you know, at Academy. The way I want to frame the question is, you know, today we're hearing, and, you know, in the last few quarters, I mean, it seems as though the tools, if you will, to get there are, you know, taking shape. You got the new stores and the new product launches, the e-commerce effort, et cetera. But we're still, you know, kinda, you know, not there yet.
The question is, why is there something in the business, maybe aside from a more difficult macro backdrop, but is there something in the business that, you know, is kind of offsetting all those positives that are taking shape, that is becoming a bigger headwind for Academy and its, you know, push towards positive comps?
Steve Lawrence (CEO and Dirctor)
I would say if you go back and look at 2025 in a vacuum, probably one of the bigger headwinds we faced was ammo. You know, that's a big business for us. It does move the needle. And there were a lot of events that kinda drove that business in 2024 that weren't there in 2025. But outside of that, I would say there's nothing I would point to outside of just getting these initiatives and strategies really mature and starting to contribute fully. I think that's the thing that's gonna allow us to break through and post positive comps. That's why we're excited about all the different initiatives we put together.
You know, we're seeing really good green shoots beneath the surface on all the initiatives we've talked about, and we think this is the year where all those things kinda culminate and pull together and get us across the line. You know, we're seeing momentum of the business coming out of Christmas into the first part of this year. We wanna be very muted about what we see from a consumer backdrop out there. You know, we're encouraged by what we're seeing, and we think that the culmination of all those initiatives is what it's gonna take to get us there.
Carl Ford IV (EVP and CFO)
I agree with everything Steve said. The primary headwind is the economic health, the financial health of the American consumer. You know, that is what is moving against e-com being up 13.6%, new stores mid-single digit comps. You know, Nike and Jordan taken together because we didn't have a Jordan the previous year, up high single digits. You know, that headwind, except for the category of ammo that Steve spoke to, is the financial health of the American consumer, and that's embedded within our guidance. You know, we feel great about the initiatives moving forward. Look, I'm seeing credit card delinquencies at, you know, double what they were at the end of 2024.
I feel job growth in America is not going to be strong in 2026. I think that gas staying high, we're just really conscious of a headwind associated with financial health.
Brian Nagel (Managing Director and Senior Analyst of Consumer Growth & eCommerce)
No, that's very helpful. Carl, I guess my follow-up will be, you know, you made the comment just a second ago about gas prices. Obviously a very big focus right now for the market. I mean, a lot of questions of, you know, how high and the duration. You know, given the nature of your business as a consumer and, you know, given where your stores are generally located historically, have you seen higher or elevated oil or gas prices more of a friend or foe for your consumers?
Steve Lawrence (CEO and Dirctor)
Yeah, I'll jump in here, Brian. I would tell you that obviously gas prices being high is not good for discretionary spending in America, right? I mean, that's not a good thing for us or for any of our competitors, 'cause it just takes more share of wallet from the consumer. On the flip side, to the point I think you're alluding to, I mean, we have a big base of stores in Texas, and higher oil prices lead to higher rig count. Higher rig count leads to higher employment in the oil patch, and that sometimes can be a tailwind for us. We're not gonna prognosticate along how long this is gonna take or how long this is gonna play out. There are definitely puts and takes with what's going on in the world today.
I mean, we, you know, we got a question earlier about, you know, the impact on some of our categories, and ammo tends to be one of those categories that reacts positively when we have events like this happen. We're watching it closely. We're not trying to, you know, prognosticate about what's gonna happen in the war. We think we've got a really good balanced approach based off of the backdrop that Carl mentioned, as well as the self-help initiatives that we have internally to help us overcome those headwinds.
Brian Nagel (Managing Director and Senior Analyst of Consumer Growth & eCommerce)
Yeah, very helpful. I appreciate the color. Thank you.
Steve Lawrence (CEO and Dirctor)
Thanks.
Operator (participant)
Our next question comes from Michael Lasser with UBS. Your line is now live.
Michael Lasser (Equity Research Analyst of Hardlines, Broadlines & Food Retail)
Good morning. Thank you so much for taking my question. I wanted to mention some of the puts and takes on your sales outlook for this year. Carl, in your remarks, you talked about a 200-300 basis points swing from the low end to the high end of the guide based on macro factors. Yet you're also pointing to some good signs from the macro, whether it's tax refunds, the World Cup, or the 250th anniversary celebration. Are you factoring in around 200-300 basis points of a contribution from those factors?
Because a year from now, when we are having this conversation, we're gonna have to dimension how much of your performance in 2026 is based on what Academy's doing versus how much was based on the macro, and it'll be very helpful to understand what you assumed within your outlook? Thank you.
Carl Ford IV (EVP and CFO)
We started with what, you know, our plan is, and it's not a range. It's what we think we're gonna deliver. Our self-help initiatives, the things that we're talking to you about, new stores, e-commerce, you know, aided by all the things that Steve said, the loyalty program. These things that we're launching and in some cases building upon, it gets us to the midpoint of that 2%-5% guidance range. I think that at the low end, we anticipate that macroeconomic factors stay the same, and that the tailwinds associated with those three big events that you just mentioned, World Cup, 250th, and elevated tax refunds, are completely negated by macro headwinds.
At the top end, the 5%, those macro events, those three things outweigh the headwind associated with financial pressure on the consumer and that they give us a little bit of a net tailwind, if you will. Our self-help initiatives, midpoints, the three things that are macro drivers are either gonna be overwhelmed by financial pressure of the consumer or will gain some from. That was really what differentiated the 2%-5% low-high guidance.
Steve Lawrence (CEO and Dirctor)
I'll tag on to this question, Michael.
Carl Ford IV (EVP and CFO)
Okay. Thanks, Steve.
Steve Lawrence (CEO and Dirctor)
The other thing I would say is that when you think about the value of the external tailwinds versus the self-help are much greater than the external. You know, we think the World Cup is probably worth about 30 basis points for the year. That being said, we think that just the loyalty credit card alone is equal to that this year with having a half year next year, so that should mute or overcome whatever we'd be up against from a World Cup perspective. Tax refunds will be repeated. I don't think those are gonna be lower next year. You come back to, you know, 250th anniversary of the United States. That's helpful.
I mean, it certainly can drive a surge in patriotism and help us with red, white, and blue. You know, it's not as big as the impact of the new store comp waterfall, the impact of dotcom on our business. I would say that the majority of what gives us confidence this year about being able to bend the curve and get back to a positive comp is the self-help initiatives are gonna drive it.
Michael Lasser (Equity Research Analyst of Hardlines, Broadlines & Food Retail)
Got you. Very, very helpful. My follow-up question is the changing nature of the Academy model pivoting to maybe a slightly higher income and a slightly higher vendor base that might have a higher expectation for how you showcase their products. As a result, does that drive an increase in your operating expenses? Because if we look at your results in the fourth quarter, your gross profit dollars actually exceeded the consensus forecast, but operating income was a bit short, and it really all came down to SG&A. The question is, are you seeing less visibility in your SG&A dollars as you pivot to maybe a more higher operating cost model as a result of these changes? Thank you very much.
Carl Ford IV (EVP and CFO)
Yeah. I don't think there's an elevated operating cost model. Again, there are some launch costs, which I've walked through for Jordan, associated with rolling out the shops. We do have a Jordan enthusiast that staffs on key time periods for that. I really wouldn't point to elevated operating costs as the issue. I think in looking at the consensus for the fourth quarter from an SG&A rate standpoint, we do still pay people when we close our stores. If that was 100 basis point headwind to the fourth quarter comp, we still did incur some of those costs without having the sales that they provide.
The majority, I mean, almost twice as much of the deleverage, 135 basis points in the fourth quarter was because of our growth initiatives that we're pretty committed to. Those will normalize as it relates to the number of stores year-over-year into 2026, which is why we're guiding to modest leverage in SG&A in 2026.
Steve Lawrence (CEO and Dirctor)
Yeah. The thing I'd add on to Carl's points, I agree with everything he said, is that at our core, listen, we're a value retailer. We're not getting away from that. I wanna make sure that we don't leave any doubt in anybody's mind that we're losing focus on that. I think we're in an environment where the lower-end consumer, under 50K, is really under pressure, is opting out or trading down. We still actively market to them, want them to shop with us, and I think we see them come back during times of deep value, like when we run clearance events or when we're in a promotional time period, we see them come back and shop with us.
We see this layering on of better, best brands as a way to somewhat diversify and de-risk our assortment a little bit from twofold. Number one, it helps customers who maybe couldn't find those brands in our stores previously stay with us and shop when they had to leave. On the other side of it, I think it's helping us bring in a new customer. We're still a value-based retailer. We think these new brands help us diversify and de-risk our customer, bring in slightly more elevated customer. We don't want you to think in any way, shape, or form that we're losing focus on the value-based customer as well.
Michael Lasser (Equity Research Analyst of Hardlines, Broadlines & Food Retail)
Thank you very much. Good luck.
Steve Lawrence (CEO and Dirctor)
Thanks.
Operator (participant)
Our next question comes from Kate McShane with Goldman Sachs. Your line is now live.
Kate McShane (Managing Director)
Hi. Thanks for taking our question. We're just curious if we could get a little bit more detail about how each business segment performed during the quarter. Just as a second unrelated follow-up question, when you are thinking about the loyalty program or this new iteration of the loyalty program, what is being incorporated into the margin implications of that in 2026?
Steve Lawrence (CEO and Dirctor)
Yeah. From how the different categories worked out for Q4, we saw strength across a lot of our core businesses. Bikes, fishing, outdoor cooking, apparel, electronics, and athletic footwear are all strong. Some of the softer businesses for us during the quarter were more seasonal in nature. Seasonal footwear, think boots and outerwear. I already mentioned ammo was a little soft. I would say that camping was a little soft, primarily driven by lapping some really big numbers from the year before in drinkware. Ride-ons was a little tougher for us this holiday. When we went back and looked at it, we had to kinda cobble together an assortment there based off of the tariff environment, trying to find the right goods out there.
What's exciting is as we've crossed over into spring, you know, and moved to positive comp, all the businesses are performing pretty well right now. We're seeing pretty broad-based, solid business across all the different businesses. Could you repeat the second part of your question, Kate? I was writing something down and I missed the second part.
Kate McShane (Managing Director)
Oh, yes. Just any kind of cost implications, yes, from the launch.
Steve Lawrence (CEO and Dirctor)
Yeah. On the loyalty, what we did is we went back. You know, we always have done different, sometimes targeted discounts, through various loyalty programs that we have. We basically pulled those all together and are bundling them in from a rewards perspective. We don't expect it to really impact the overall gross margins. It's gonna be more a repurposing of discounts that we were using in the past for other purposes, that we're gonna repurpose, via loyalty and be much more targeted. Rather than kind of broadly based giving out coupons on certain events or certain time periods, it's gonna be really targeted at loyalty members, which we think is gonna really help us activate against them.
Kate McShane (Managing Director)
Thank you.
Steve Lawrence (CEO and Dirctor)
Thank you.
Operator (participant)
Jonathan, are you muted?
Speaker 11
Oh, good morning. Can you hear me okay?
Steve Lawrence (CEO and Dirctor)
Yeah.
Operator (participant)
Now we can.
Speaker 11
Oh, great. Carl, you mentioned plans for traffic to improve in 2026 versus 2025. Maybe just at the midpoint of your comp range, what's embedded for traffic versus ticket, and how does that change at the lower and upper bounds of the range? Thanks.
Steve Lawrence (CEO and Dirctor)
We don't really guide based off of traffic, so I don't think I can directly answer your question, but I will say as it relates to all of the context that we've given around sales growth, all of those are traffic drivers. New stores, positive comping, existing stores launching and annualizing, gross traffic, e-commerce. You know, we look at a couple of different ways to understand share. We look at Similarweb information associated with session growth, and we see that we're taking share there. We think that some of the agentic search and I don't know if you guys have looked at our website at Scout, the little assistant that helps you with kinda, like, large language searches. That's gonna get better, quicker, faster, stronger.
The additional Jordan shops, those are traffic drivers. We haven't overtly guided towards the basket or traffic, but I know that traffic will be improved from what we saw in 2025.
Speaker 11
Okay. Thank you. Just a quick follow-up. Just looking for more color in terms of the traffic decline this quarter. I don't know if you can share any details in terms of by income cohort and understand maybe how kind of the lower income quintiles are reacting to the AURs versus the other cohorts. Thanks so much.
Steve Lawrence (CEO and Dirctor)
Yeah. The traffic trends we saw by income cohort kind of mirror what we saw all year that we talked about on previous calls. At the high end, we continue to see a double-digit increase in traffic count, low double-digit increase from customers making over $100,000 a year or households making over $100,000 a year. At the lower end, we continue to see probably a high single-digit decline in those lower income consumers, and the middle kind of just holding its own. That's kind of the behavior we've seen all year, and it continued into Q4. You know, once again, I don't think that the AUR increases and the assortment mix are what's really driving the traffic declines in the lower income consumer.
I think they're just under pressure and are opting out or trading down. You know, as I mentioned earlier, we do have some different time periods and strategies and tactics we have to try to engage with them. We're pretty pleased with, you know, some of the reaction we saw during February around our clearance event. We think that was lower income consumer coming back in and really taking advantage of the values there. Once again, as we run other promotional windows during later in the year or clearance events, we think we're gonna get that customer to come back, but they're definitely under pressure.
Speaker 11
Understood. Best of luck.
Steve Lawrence (CEO and Dirctor)
Thanks.
Operator (participant)
Our final question is from Anthony Chukumba with Loop Capital Markets. Your line is now live.
Anthony Chukumba (Managing Director)
Thank you so much for squeezing me in. I guess I just have one question, two parts. I guess it's on the Jordan brand. Just in terms of how has the brand performed relative to your initial expectations. You know, it's been, I guess, you know, six or seven months now. Do you think that that's gonna help with bringing some other high-profile brands that you currently don't have in your merchandise assortment? Steve, I think you know which brands I'm referring to.
Steve Lawrence (CEO and Dirctor)
I do, Anthony. Thank you for the question. You know, listen, we're very pleased with the relationship that we have with Nike and the Jordan brand. You know, we don't have a last year for Jordan, so what we can cite is that if you combine Nike and Jordan together, they grew high single digits%, which we were very pleased with. You know, we're gonna continue to expand and grow the Nike and Jordan footprint. We're getting more access to more premium footwear that we're pushing deeper into the chain. You take a performance running shoe like Vomero, and last year we got it at launch, and you're gonna see that probably go out to roughly 150 doors as we head into back to school.
I think how we brought the Jordan brand to life really showed the Nike team as well as vendors across the spectrum what we can do when we launch a new brand. We certainly use that as a proof point as we're talking to new brands. We will share some information around some new brands in the April seventh update. Obviously, if we get to a place where we're ready to announce or can announce some of the brands you've asked about in the past, trust me, you will not have to ask us the question. We'll probably tell you before you ask us.
Anthony Chukumba (Managing Director)
Fair enough. I'll see you guys in New York.
Steve Lawrence (CEO and Dirctor)
Okay. Thanks, Anthony.
Operator (participant)
We have reached the end of the question and answer session. I'd now like to turn the call back over to Steve Lawrence for closing comments.
Steve Lawrence (CEO and Dirctor)
Thanks. In closing, we made a lot of progress across numerous fronts in 2025, which allowed us to both grow top-line sales for the first time in a couple of years, as well as continue to gain market share. We believe that we have the strategies and tactics in place to continue this growth in 2026 and move back to comp store growth as well. As always, I'd like to thank our 22,000+ team members for their hard work and efforts, which are helping make Academy the best sports and outdoor retailer in the country. We look forward to meeting with most of you on April 7 and sharing how we plan to build on the initiatives we outlined today in 2026 and beyond. Thank you all for joining our call today, and have a great rest of your day, and Happy St. Patrick's Day.
Operator (participant)
This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.