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Footwear Is a Bright Spot For Academy Sports in Promotional Retail Climate

Footwear was the strongest category for Academy Sports and Outdoors in Q3.

The sporting goods and outdoor retailer, which reported a general sales decline over last year in its most recent quarter, said shoe sales were up 5% in Q3 over last year, driven by the back-to-school season and a broad assortment of national and private brands.

“We saw growth in some of the key brands,” Academy chairman, president and CEO Ken Hicks told FN in an interview. “They were in a much better stock position this year than they were last year.”

While executives noted a generally more conservative consumer due to inflation, Academy did not see any significant trade down within its business to cheaper brands — both national and private brands performed well in Q3. And improved inventory levels allowed for the flow of product from key brands such as Nike, Adidas, Under Armour, Brooks, Crocs, Skechers and more recently, Hey Dude, which rolled out to all stores in July.

Overall, Q3 net sales were $1.49 billion, down 6.2% from last year, due to fewer transactions driven by softness in the hunting and outdoors business. Adjusted net income was $137.9 million and adjusted diluted earnings per share were $1.69, in line with the company’s expectations. Merchandise inventory was up nearly 13% compared to Q3 of last year.

While excess inventories have led to a more promotional environment across retail, Academy is not feeling the pressure to compete with retailers and brands to offer the lowest prices, Hicks said. Academy is one of the few retailers that leading brands like Nike and Adidas have selected to continue to partner with as they reduce their inventory assortment with other retail partners. But even as brands like Nike initiate their own markdowns in their DTC channels, Academy does not see itself as struggling to compete.

“They’re not just trying to dump everything all at once at a very low price,” Hicks explained of other brands’ markdown strategy. “They’re managing through this over a period of time and taking markdowns, but not just trying to move it all at once.”

With consumer spending expected to remain tight into 2023, Academy is also taking a surgical approach when it comes to rolling out its own promotions through the holidays and beyond. Hicks said these promotions will focus on clearing through inventory and driving traffic.

“We’ll have to keep a close eye on our inventories,” Hicks said. “We’ll have to use the promotions that attract and draw consumers to us. And our focus is going to be on how we can pick up share, even during a difficult market.”

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