Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: What are the expected drivers of gross margin expansion in 2025 despite the tariff impact? A: Carl Ford, CFO, explained that the margin expansion is expected from recapturing supply chain headwinds experienced in 2024, particularly around the Georgia distribution facility. Additionally, a higher penetration of soft lines, supported by brands like Jordan and Nike, and improved promotion effectiveness using pricing tools are anticipated to contribute to the margin expansion.
Q: How is the consumer behavior affecting sales, and what is the outlook for the first quarter? A: Steve Lawrence, CEO, noted that while there was a softening in business at the end of January, the trend improved as the weather warmed up. The company expects Q1 to be the most challenging, with Q2 anticipated to be the strongest due to initiatives like the Jordan launch and new store openings. The guidance considers a continued softness in middle to lower-income consumers.
Q: Can you provide more details on the Jordan brand launch and its impact on the relationship with Nike? A: Steve Lawrence, CEO, stated that the Jordan brand will be introduced in 145 stores and online, focusing on sport products. This launch, along with an expanded Nike footprint, signifies a strengthened partnership with Nike. The Jordan brand is expected to be a top 20 brand in 2025 and potentially a top 10 brand in 2026.
Q: How is Academy Sports and Outdoors managing tariff impacts, and what is the exposure to China? A: Steve Lawrence, CEO, mentioned that the company has been diversifying its sourcing base, reducing direct import exposure to China from 10% to under 9%. The company is working with vendors to absorb costs and using pricing optimization to mitigate tariff impacts, ensuring they remain a value leader.
Q: What changes are being observed in the customer demographic, particularly among higher-income cohorts? A: Carl Ford, CFO, noted an acceleration in transactions from households earning over $100,000, seeking value in sports and outdoor products. This trend began in Q3 2024 and continued into Q4, with higher baskets observed among these customers, indicating a shift towards value-conscious shopping.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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