Academy Sports has thrived during the pandemic — thanks to its ability to keep stores open and increased demand for outdoor and recreational product as consumers stayed close to home.
As vaccines become more widespread and a new normal takes hold, experts are predicting more spending on experiences like dining and travel over discretionary goods. But Academy is optimistic about the road ahead — and EVP and chief merchandising officer Steve Lawrence said the chain has its sights set on brick-and-mortar expansion and the acceleration of e-commerce, while doubling down on its omnichannel business. (Former Foot Locker chief Ken Hicks has been CEO of Academy since 2018.)
In an interview with FN, the executive opened up about the retailer’s stronger-than-anticipated fourth quarter — its sixth straight three-month period of recording both earnings and revenue gains — as well as its business strategy in its first year as a public company. (Academy’s stock, which debuted at a price point of $13, has grown to $29 as of Friday afternoon.)
Here, FN sits down for a virtual chat with the sporting goods chief merchant.
Can you speak about the trajectory of Academy’s business through the pandemic cycle?
“The pandemic has certainly provided a tailwind for us, but we were moving in the right direction before that. A lot of the work has been blocking and tackling, getting better assortments in the store and being more thoughtful in terms of how we merchandise. It’s an editing exercise. Before the pandemic, the footwear and apparel business was definitely leading the way for us, but obviously during the pandemic, the hard goods side of the business — comprised of outdoor and recreation — took on greater importance. Then things started to open back up, and we saw the footwear and apparel business come back. In Q4, both comped low double digits. We’re pretty excited about that.”
How has your footwear strategy changed over the past year?
“Our footwear business has been strong outside of the dip we saw last year around this time. In the back half of the year, footwear ran double-digit increases for two consecutive quarters. If you break it down by category, people working from home are wearing comfort — sneakers instead of dress shoes — and that trend has certainly helped our business. What we’re seeing is strength in running and sneakers. Probably the only business that’s struggled a bit over the past year has been team sports — shoes for soccer, baseball [and] football. When the pandemic hit, all sports leagues were canceled; they didn’t play games in the spring or summer. The good news is that now the leagues are starting to play, and that business should be a tailwind for us for the remainder of this year.”
What improvements has Academy made to its omnichannel business?
“We launched BOPIS back in 2019, and during the pandemic, much like other retailers, we had to figure out how to do curbside really quick. It’s now one of our key drivers. Our .com business was around 5% penetration in 2019, and it doubled to 10% in 2020 — a big chunk of that is driven by curbside. [Consumers] use it for footwear and apparel, but where we see curbside utilized the most is in big, bulky categories. We carry a lot of merchandise that’s very expensive to ship — treadmills, deer feeders, ping-pong tables.”
How has your private brands portfolio expanded?
“Our private brands make up about 20% of our business. At our core, we’re a house of brands. We’ve got Nike, Adidas, Under Armour, Columbia, The North Face — that’s what the consumer wants, and believe in those [brands]. We do have private brands to augment our assortment or supplement it where we aren’t getting an offering from national brands. We have BCG, but when we started looking at our assortment, we saw that there was a gap between that price point and the national brands we carried. We started developing a ‘bridge brand,’ which is ultimately what became Freely. We look at it as something you wear to do yoga and Pilates that also doubles as streetwear. We focused on a fusion of comfort and performance. It started off really strong, and as a result, we’re going to expand into plus sizes in the fall.
We also looked at our outdoor space. We have our opening price-point brand called Magellan, which is our biggest private brand and one of our most well known, but we saw a similar gap with The North Face and Columbia, so we created Magellan Pro, with more technical fabrics. It’s not just a fishing shirt; it’s a sportswear shirt. For footwear, obviously, if you step in water, it drains and dries quickly. We’ve got it in camping. It fills the other side of the equation [in comparison with Freely], and is more heavily for the men’s business.”
Have you seen a boost from stimulus checks and state-by-state reopenings?
“Our stores never closed. We had some that were operating under not-normal conditions, but for the most part, most of our stores were open all the way through [the pandemic] … We were candid about when we saw stimulus appear back in April last year; we saw a lift from that. We also saw [a boost] in January when the checks came out and even those coming around more recently. It certainly doesn’t hurt.”
As the economy opens back up, does Academy see any potential headwinds ahead?
“If you think about it, more people will spend on eating out, at live events and things like that. It’s top of mind for us because, obviously, the shutdowns have certainly fueled more retail spending in our space. But on the flip side, what we’re seeing is a lot of the trends that happened last year during the pandemic are continuing. People who spent X amount to buy a treadmill last year aren’t quickly going to go back to pay $50 a month at the gym. They’re going to build up their home gyms and invest in free weights.
It was also around this time last year when the shutdowns happened when we saw explosive sales in certain categories. Workout equipment sold out, fishing and other categories really spiked in Q1 and early Q2 — but we’re getting in better inventory shape, and we think we’re going to be in the best inventory shape by the end of Q1.”
Any other plans for 2021 that you can share with us?
“A lot of other retailers have a much higher penetration for e-commerce than us, so we have that ahead of us. [What’s more,] we’re only in 16 states, so there’s certainly geographic expansion opportunities as we fill out the footprint to become a national retailer. We’re pretty penetrated in Texas, Oklahoma and Louisiana, but there’s a lot of white space for us in the newer markets, like the Carolinas or Florida, to expand as well. As we come out of this, there’s a ton of opportunity for long-term growth as well. I think sometimes people lose sight of that. We had a lot of momentum before, and we’ve got a lot of opportunity going forward.”