Academy raises EPS outlook as new stores lift sales and tariff refunds bolster margins

Academy Sports and Outdoors increased sales even as transactions across its comparable business declined, while earnings per share grew faster than total profit. New stores, tariff refunds and share repurchases helped the sporting-goods retailer lift second-quarter results and raise its annual EPS outlook, even as comparable sales slipped and its full-year sales and net-income forecasts stayed unchanged.

Academy reported net sales of $1.65 billion for the 13 weeks ended August 1, 2026, up 3.0% from $1.6 billion a year earlier. GAAP diluted earnings rose to $2.17 per share from $1.85. Adjusted diluted EPS, a company non-GAAP measure, increased to $2.31 from $1.94.

Chief Executive Officer Steve Lawrence said consumer spending remained pressured, particularly among lower-income households. Academy was responding by reinvesting tariff-related benefits in value, expanding brands and categories, and accelerating initiatives across stores, digital shopping and loyalty, he said. The quarter’s disclosures show both the cost of that response and the importance of expansion to sales growth.

New stores offset fewer comparable transactions

Comparable sales fell 0.4%, against a 0.2% increase a year earlier. The quarterly filing gives the underlying split: comparable transactions declined 5.3%, while average ticket increased 4.9%. Customers spent more per purchase, but that did not fully compensate for fewer purchases. Transactions measure completed purchases, so the decline does not by itself establish how much customer traffic changed.

Academy’s comparable-sales calculation includes stores after 13 full fiscal months, all e-commerce sales and credit-card revenue. Online orders collected in stores count as e-commerce. The measure therefore captures more than activity at established physical locations.

The 21 stores opened since the end of the prior-year second quarter generated $61.5 million of quarterly sales, including e-commerce. That exceeded the company’s total year-over-year sales increase of $47.4 million, underscoring how much the larger footprint contributed to growth.

There is also a longer operating record for assessing that expansion. Of the 68 stores opened since Academy relaunched its new-store program in 2022, 47 had been open for at least twelve months. Those locations averaged approximately $13 million in sales per store, including e-commerce, over the last twelve months. Academy said opening season and regional brand awareness partly affect first-year performance; that average is not a promise for each future opening.

Sports and recreation sales rose 6.3%, and outdoor sales increased 4.4%. Footwear declined 1.0%, while apparel was relatively unchanged. For the first 26 weeks, total sales increased 4.7% to $3.09 billion and comparable sales rose 1.1%, leaving the second quarter weaker than the first-half aggregate on both measures.

Digital sales grew, although the disclosures differ on the rate. The earnings release reported 12.8% eCommerce growth, while the Form 10-Q reported 14.1% growth in e-commerce net sales. Neither explains the difference. The filing showed e-commerce reaching 12.1% of merchandise sales, compared with 10.9% a year earlier.

Tariff refunds funded investment and lifted earnings

Gross margin rose to 40.4% of sales from 36.0%. Academy attributed 510 basis points of benefit to one-time tariff refunds and 20 basis points to lower inventory shrink, partly offset by 90 basis points of weaker merchandise margin. That merchandise-margin decline included 70 basis points of reinvestment in strategic pricing. A basis point is one-hundredth of a percentage point.

The earnings presentation supplies the dollar bridge. Academy received $83.7 million in tariff refunds, excluding interest, and invested $10.9 million in strategic pricing, leaving a $72.8 million gross-margin benefit from tariffs. Those pricing investments reduced the amount of refund benefit retained in merchandise profitability.

A much larger offset appeared below operating income. Academy had sold a portion of its potential tariff-refund rights in 2025. After receiving the refunds, it paid $72.2 million to the buyer and recognized $10.5 million of proceeds collected in the prior year that had previously been carried as a liability. The refunds reduced cost of goods sold; the buyer payment and recognition of earlier proceeds ran through other expense and income.

After those items, the presentation showed an $11.1 million net tariff benefit. Academy then invested $5.8 million in customer experience, recorded in selling, general and administrative expenses, leaving $5.3 million of net tariff impact recognized in the quarter before tax. The company put the tax-effected diluted EPS benefit at $0.06, including reinvestments.

That bridge explains why the dramatic gross-margin improvement translated into a much smaller earnings benefit. The $0.06 reflects the quarter’s tariff impact after the stated reinvestments; it is not a full-year figure.

Operating income increased 42.9% to $246.4 million, while GAAP net income rose to $137.9 million from $125.4 million. Selling, general and administrative expenses increased 3.8% to $419.5 million, principally reflecting strategic investments, including the larger store base, partly offset by lower base costs.

A lower tax rate also supported net income. The effective rate declined to 22.7% from 23.9% a year earlier, which Academy attributed to purchases of transferable tax credits and the effect of cross-border tax laws.

Adjusted net income was $146.5 million, compared with $131.3 million. Academy’s quarterly adjustment adds back equity compensation and the loss on early retirement of debt, less their tax effects. It does not remove the tariff-refund transactions, so adjusted EPS still includes their effects.

Higher EPS guidance rests on a smaller share base

For fiscal 2026, ending January 30, 2027, Academy now forecasts GAAP diluted EPS of $6.05–$6.45, up from $5.95–$6.35 in its June 9 outlook. Adjusted diluted EPS guidance increased to $6.50–$6.90 from $6.40–$6.80.

Expected GAAP net income remains $390 million–$415 million, and adjusted net income remains $420 million–$445 million. The diluted weighted-average share assumption declined to 64.5 million from 66 million. Dividing earnings among fewer shares supports higher EPS without requiring a higher total-profit forecast. The estimates exclude potential future repurchases and assume an approximately 22.0% tax rate.

That mechanism was already visible in the quarter: diluted weighted-average shares fell to 63.551 million from 67.689 million. First-half repurchases totaled $182.1 million, including $1.6 million in excise-tax fees, compared with $99.9 million a year earlier. Academy had $256.1 million remaining under its repurchase authorization at quarter-end, although the program does not oblige it to buy shares.

Academy retained its sales forecast of $6.23 billion–$6.36 billion, representing 3.0%–5.0% growth, and its comparable-sales forecast of 0%–2.0%. It raised gross-margin guidance to 35.5%–36.0% from 34.5%–35.0%. Chief Financial Officer Carl Ford said the company was positioned to deliver within its fiscal-year outlook while investing in growth and returning capital to shareholders.

Cash generation and the next expansion test

Academy raised adjusted free-cash-flow guidance to $300 million–$350 million from $250 million–$300 million, while retaining planned capital expenditures of $200 million–$240 million. It expects new stores to account for 60% of that capital spending, connecting the investment budget directly to its principal source of sales growth.

The company defines adjusted free cash flow as operating cash flow less cash used in investing activities. For the quarter, operating cash flow of $188.416 million less investing outflow of $72.467 million produced $115.949 million of adjusted free cash flow, versus $21.664 million a year earlier.

The operating figure includes tariff refunds. The $72.224 million remittance of refund claims was classified separately in financing cash flows and therefore was not deducted in that adjusted measure. Readers assessing cash retained from the refund transactions must account for that payment separately. Academy said uncertainty over future reconciling items prevented a reconciliation of its cash-flow guidance to GAAP without unreasonable efforts.

Quarter-end cash was $298.2 million. Academy also refinanced its debt during the quarter: on May 14, it issued $500 million of 5.875% senior secured notes maturing May 15, 2031. The notes’ coupon and maturity define financing costs beyond the current earnings period. Inventory increased 4.4% to $1.66 billion, although inventory per store declined 5.6% in units and 2.3% in dollars. Those lower per-store holdings put the increase in total inventory in the context of a growing chain.

Academy opened three stores in Pennsylvania and Tennessee during the quarter, finishing with 327 locations, and plans eleven openings in the third quarter. Those openings and the next comparable-sales figures will help show whether expansion can sustain growth while transaction counts remain under pressure. Shareholders also have a September 16 record date ahead for the $0.15-per-share dividend declared September 2, with payment scheduled for October 14.