Academy Sports + Outdoors is on a roll.
The outdoor retailer ended Q2 with a net income of $190.5 million, the highest quarterly earnings in the company’s history. Academy also achieved record second quarter sales of $1.8 billion.
With these results, Academy has now posted eight consecutive quarters of positive comparable sales and operating profit growth since Q3 of 2019. Footwear and apparel were the strongest sectors, with footwear comps up 15% year over year and 27% compared to 2019 and apparel up 19% year over year and 37% compared to 2019.
In discussing the results in apparel and footwear, executives called out Academy’s relationships with key national brands such as Nike, Adidas, Under Armour, Columbia and the North Face, which have been top sellers in stores. According to Academy’s chief merchandising officer and EVP Steve Lawrence, Nike, Adidas, and Under Armour outperformed the company average this quarter as three of the company’s core brands.
In general, Academy has benefited from a general retail industry trend of brands nixing partnerships with different wholesalers to focus on key accounts and direct-to-consumer channels. In the last year, Nike has terminated wholesale accounts with Zappos, Dillard’s, DSW, Urban Outfitters, Shoe Show and more retailers as it forges ahead with a plan to lean into its direct-to-consumer capabilities. Adidas, Under Armour and Crocs have made similar moves. In most of these cases, soaring demand for product has allowed shoemakers to be more selective about where they present themselves to consumers.
While this shift has left many retailers without these key brands in stores, it has also rewarded those — such as Academy — that have proven themselves to be lucrative wholesale channels.
“Having fewer points of distribution for a brand that a customer loves definitely is going to help in driving traffic in our stores when people are looking for that brand and they can’t find it,” Lawrence told FN in an interview. “Our relationship with those brands that are controlling the partnerships is only getting stronger.”
He added that when these brands tighten their channels of distribution, it also allows for more price control with less discounting. In the last few years, Academy has focused on nurturing the presentation and assortment of these core brands while cutting off smaller and less lucrative brands and categories. This attention is one example of how Academy has become a differentiating wholesaler in the eyes of brand partners like Nike and Adidas.
“It’s representing the brand in the best possible way and helping showcase that brand, whether it’s a physical store or on our digital store,” Lawrence said. “We’ve really been partnering with them to invest in more mannequins, better fixturing, more digital content on the site, more digital content in our marketing that really helps bring their brand story to life in our stores.”
In addition to national brands, Academy’s private brands have also continued to perform. In 2021, Academy rolled out the Magellan Outdoors Pro and Freely brands, which have both outpaced initial predictions.
Lawrence said Academy wants to fill white space and demand gaps with its private brands, which make up about 20% of the company’s inventory. For example, Academy launched Freely, its private-label activewear collection for women, to establish a stake in the growing athleisure market. This move was meant to fill a gap in Academy’s inventory rather than go head-to-head with existing offerings from other brands in its stores.
“That complements our assortment and fills in a gap,” Lawrence said. “We don’t feel like it directly competes with national brands.”