Academy Sports and Outdoors, Inc.

Good morning and welcome to the Academy Sports and Outdoors second quarter 2026 earnings conference call. This 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. We ask that you please limit yourself to one question and one follow-up. To ask your question during the call, please press star 1 from your telephone keypad. If you require operator assistance during the call, please press star zero. I would now like to turn the conference over to Dan Aldridge, Vice President, Investor Relations for Academy Sports and Outdoors. Thank you. You may begin.

Good morning, and thank you for joining the Academy Sports and Outdoors second quarter fiscal 2026 financial results call. Participating on today's call are Steve Lawrence, Chief Executive Officer, and Carl Ford, 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 today's earnings release and in our most recent form 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 on our website at investors.academy.com. This morning, we will review our financial results for the second quarter of fiscal 2026, provide an update on our strategic initiatives, and discuss our outlook for the year. After we conclude prepared remarks, there will be time for questions. With that, I'll turn the call over to Steve.

Good morning and welcome to our second quarter earnings call. As you read in our press release earlier today, we saw continued top-line momentum in the business, with sales for the quarter coming in at $1.6 million, which was up 3% in total and translated into a slightly negative comp at down 0.4%. Our dot-com business continued to grow double digits at up 12.8%, which improved penetration in this channel by 110 basis points versus last year. During our Q1 call, we mentioned a slowdown at the end of the quarter as we transitioned to Q2, which we attributed to overall inflationary pressures on the consumer, which were no longer being offset by increased tax refunds. This trend persisted into the early part of second quarter, with May and June running up 2% in total and down 1% on a comp basis. You see this most pronounced in traffic trends from the lower-income households making less than $50K annually, which were down high single digits during the quarter. This was a larger decrease than we saw in Q1, which was down low single digits. Conversely, we continue to see strong traffic trends in the higher income cohort, with traffic from households greater than 100K annually tracking up high single digits during Q2, which was an acceleration to what we saw in the first quarter. We're pleased to end Q2 on a high note, with July being our best month of the quarter, plus 3% in total, which translated into a modest positive comp. We believe July sales in back-to-school categories would have been even stronger. We had four states in our footprint. Oklahoma, Missouri, Virginia, and South Carolina shipped their tax-free weekends from the last week of July into the first week of August. While this disadvantaged the tail end of Q2, it did help us get off to a good start in Q3 with sales through Labor Day running up low with single-digit comps. As we've seen in the past, when the customer is under pressure, they shop episodically and aggregate their purchases around the key events on the calendar as a way to expand their spending power. This held true this past quarter with events such as Memorial Day, Father's Day, Fourth of July, and Back to School performing well. These also happen to be the time periods where the promotions traditionally are at their sharpest. Similar to Q1, we continue to see stronger performance on the hardwood side of the business. Sports and Recreation was our best business at up 6% with continued strength in sporting goods. Within sporting goods, we're definitely seeing a World Cup effect with soccer gear sales running up double digits for the quarter. We expect this trend will continue throughout the remainder of the year and into next. We're also seeing strength in fitness with treadmills up high single digits during the quarter as customers continue to prioritize health and wellness. Another very note is our front-end department, which is somewhat of a catch-all for us. This business continues to benefit from significant investments in trend right categories such as trading cards and outdoor speakers driven by Turtle Box. Outdoor was our second best performing division at up 4% driven by shooting sports, coolers, and camping. While not as strong as hard goods, we did have some bright spots on the soft goods side of the business. While apparel sales were flat, we did see strong performance from categories such as World Cup jerseys and tees, outdoor, and work in western apparel. Some of the World Cup good news was offset by decline in NBA championship gear as we anniversary the Oklahoma City Thunder winning the title last year. As we look to comp the World Cup next year, we believe the Women's World Cup merchandise, coupled with a strengthening assortment and improved localization in our fan shop assortment, should allow us to offset the gains from this year. Footwear was our softest category for the quarter with sales down 1%, but even running this decline, we did pick up market share during the quarter. Well, Footwear is our smallest division at roughly 20% of our total sales. It is an important business for us. We service a diverse portfolio of customer needs, including cleats and athletic shoes you can wear on the field or court, casual shoes and sneakers, work boots and shoes, along with a meaningful business and seasonal style, such as sandals and flip-flops in spring and boots in fall. The team is focused on moving back to top-line growth in this division by aggressively shifting funding from underperforming styles towards the items and brands that are currently driving the business, such as performance running styles from brands like Nike, Adidas, Brooks & New Balance, as well as trending lifestyle brands such as Birkenstock and Ariat. Clearly, we've seen a shift in the consumer spending patterns as we progress through the first half of the year, with demand decelerating from Q1 into Q2. Our expectation is that the trends we saw take shape in Q2 will persist throughout the remainder of the year. Based on this assumption, we're reacting accordingly. We know that being able to present our customers with compelling value during the key events on their calendar is critical to driving sales in the back half of the year. Some actions are taken on this front. First, we're reinvesting the majority of the proceeds from the tariff refunds we receive back into approved pricing for our customers. We've done a thorough review and have adjusted pricing across many of our private brand products to offer customers pre-tariff level prices which has already stimulated demand, driven traffic, and delivered value to our customers. A couple examples of this are, in Q2, we promoted our outdoor gourmet three-burner gas and charcoal grills for key events at $99.99. We've taken our largest private brand key item, Magellan Outdoors Laguna Madre shirt, back to $19.99 versus $24.99 previously. And finally, within our BCG apparel brand, we're promoting key programs such as our Coach's Polo at $9.99. Second, We continue to make sure that for the key events on the customer's calendar, we have market-leading deals and value on both national and private brands. We'll continue to rationalize promotions during the lulls in the calendar in order to help fund these more aggressive promotions in the peaks. Third, we'll also continue to utilize clearance as a way to drive traffic in off-peak months by providing deep value on end-of-life products as we close out each season. This strategy has proved to be particularly valuable with the under 50K a year household who frequently shop out of season as a way to outfit their family in advance of the next year's needs. Fourth, we're leaning into our newly reinvented and relaunched multi-tier MyAcademy loyalty program by providing more targeted discounts and offers to our loyalists during key moments on the calendar. We're still in the early innings on this program, but are already seeing increased engagement from this initiative, and I'll share more on this front a little bit later in the call. Finally, we're doubling down on our commitment to delivering newness and innovation across all of our categories as a way to drive traffic with existing and new customers. This has been a key ingredient in our success over the past couple of years, and we're accelerating our pace on this front. A couple examples of this are, we're excited to announce the launch of HOKA in 15 stores and online for this fall. will also receive distorted allocations and improved in-store merchandising for all key performance-running programs across brands such as Nike, Brooks, Adidas, New Balance, and Asics. The team has also done a great job of identifying and incubating new brands in smaller door accounts and then rapidly expanding them into additional doors and categories once we get a good read on them. The case study for this has been Burley Bow, which continues to grow high-level digits for us over the past several years. We grew the brand from 25 doors to all doors within two years, and Burley Bow is now one of our top 10 apparel brands. The team used the same model to test Chicken Legs, a Trend Right conversational print running short brand, in 25 doors this past spring. The results were well above our expectations, and we quickly scaled this brand out to roughly 200 doors from back to school. We're also leveraging the continued growth in work in Westernware by expanding one of our key brands area through shop installations and 200 doors, which is double the amount of doors we announced in Key 1. This category has been experiencing strong growth over the past couple years. With the partnership we're building on this front, we expect this growth to continue for the remainder of this year and into next. Newness is not just limited to the soft goods business. A great example is how we're scaling new brands and categories in shooting sports we've been rolling out to pressers this year. We now have this new category in roughly 85 doors at the end of Q2 with the goal of pushing out to 135 doors by the end of the year versus our original plan of roughly 100 stores. Ultimately, we expect to see this going to almost all doors in 2027. As a reminder, this business is 100% incremental for us. In addition, we're rolling out private label hunting rifles under the Redfield brand in the back half of the year. The introduction of Redfield into the firearms category will allow us to fill a void in the marketplace with shotguns and scoped hunting rifles that can retail for $100 less than comparable national brand firearms. We believe the refinements we're making to our go-forward strategy will continue to drive both traffic and sales increases by delivering compelling value coupled with a steady diet of new and innovative brands and items. This gives us the confidence to reaffirm our sales guidance for the full year of plus 3% to plus 5% which would translate into a flat plus 2% comp for fiscal 2026. Shifting gears, I'd like to share more on the continued progress we're making against our long-range plan strategies. I'll start with our single largest growth initiative, new stores. We remain on track to open up 22 to 24 stores this year, and during Q2, we opened up three new stores with locations in Altoona, Pennsylvania, and Morristown in North Knoxville, Tennessee. We plan to open 11 additional stores in Q3, The remaining stores for this year are scheduled to open up in November, giving customers a great option to shop for holiday gifts. At this point, we have 46 stores that will open up between 2022 and 2025 that are currently in the comp base, and these stores continue to perform well in Q2, topping in the mid-single digits. As we progress through the back half of the year, we'll continue to see fall 2025 stores start to move into the base, and by the end of the year, we'll have 63 stores from prior vintages help fuel our comp sales. Our second major sales initiative is driving outsized growth in our dot-com business. We're running up 14% in our dot-com channel through the first half of the year, and during Q2, we continue to make solid progress on this front. We rolled out storefronts on both the Instacart and Uber Eats same-day delivery platforms to complement our existing partnership with DoorDash. Our research shows there is minimal overlap between users on these platforms, so we view this as an incremental business. We also completed our migration on our site map from traditional keyword search to AI-based semantic search. Moving forward, this will continue to improve our overall site experience as more and more users adopt conversational prompts over keywords as their everyday choice for how they search across the web with AI. At the tail end of Q2, we launched our Academy Retail Media Network, or ARM for short, and have already onboarded several vendor partners who believe we can provide them with expanded and unduplicated reach in the marketing, to the always-game families who serve across our footprint. While we don't expect this to be a huge source of revenue or profitability during the back half of this year, we believe our retail media network should be a solid contributor starting next year. We also plan to launch our first foray into social commerce during Q3 with a TikTok shop featuring our Freely brand. As you already know, this is a rapidly growing channel for commerce, and we see this as a key way to attract younger consumers to our brand. The third leg of our long-term growth algorithm is to strengthen our existing base business. One of the key focuses on this front has been the integration of our MyAcademy Rewards program with our credit card program. During the quarter, we completed this relaunch and are seeing a very strong reaction from customers right out of the gate. A couple of data points I'd share to support this. Credit card applications were up 15% during the quarter, with approval rates up over 900 basis points for the same time period. Spend on Academy credit cards is also up roughly 20% during the quarter. This tells us that our new value proposition is resonating with existing customers while also helping us attract a larger number of affluent customers who also tend to have higher credit ratings. We've also seen the spend outside of Academy on the co-branded card exceed our expectations. This tells us customers are starting to move their MyAcademy Rewards MasterCard to their top of wallet choice. As a reminder, customers earn 2% back on outside spend that generates rewards that are redeemable at Academy. So we put, as more and more customers adopt MyAcademy Rewards MasterCard for their everyday purchases, this behavior will translate into additional traffic and sales for Academy down the road. The end result is we believe we should hit 16 million members for MyAcademy program by the end of the year, and are currently sitting at over 15 million members in the program, which was our original goal for the end of this year. This initiative is also in the early innings, and there's ample opportunity for us to scale this program, both in terms of new customer acquisition and driving expanded usage with existing members. As a reminder, members that have a private-level credit card spend two and a half times the average customer. We expect those with co-branded cards to spend three and a half times the average customer. We expect the impact of this integration and relaunch of our loyalty and credit card program will provide us a powerful new tool to drive sales and profitability moving forward. Another key initiative under this strategy is to build a deeper connection with families and communities we serve. To help with this, we're working across a couple of fronts. First, working with two of our key vendor partners, Nike and the Jordan brand, to launch the H-Town Classic Basketball Tournament next month. This is a three-on-three tournament for youths aged 11 to 18 to help celebrate basketball culture in our hometown. The tournament will be played in the parking lot of one of our local stores where we expect to see over 150 teams compete and we're really excited to see this idea to come to life this fall. Second, we signed a sponsorship agreement with High Rocks to complement our brick and mortar exclusivity with this rapidly growing fitness trend. With this partnership, we will tie activations to races and key markets in our footprint, such as Atlanta, Dallas, Nashville and Tampa, including the title sponsorship of the race in Houston next spring. As you can tell, we're making solid progress against our long-range plan initiatives, but we still have a lot more opportunity ahead of us each has these growth initiatives strengthened in scale. At this point, we're halfway through the year, and our sales year-to-date are plus 4.7% to last year of $3.1 billion, which translates into a plus 1.1% on a comp basis. These results put us squarely in the middle of our annual comp sales guidance range of flat to plus 2%. Our expectation is that the consumer backdrop will remain challenged during the back half of the year. At the same time, and our long-term strategies. And when you couple that with the adjustments we've been making in our assortment and pricing, we believe we can successfully navigate through the remainder of fiscal 2026 and deliver against our annual guidance. Now, I'd like to turn it over to Carl to give you a deeper dive into the financials for the quarter. Carl?