ASO Q3 Deep Dive: Omnichannel Growth, Higher-Income Mix, and Strategic Store Expansion

Sporting goods retailer Academy Sports & Outdoor (NASDAQ:ASO) fell short of the markets revenue expectations in Q3 CY2025 as sales rose 3% year on year to $1.38 billion. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $6.11 billion at the midpoint. Its non-GAAP profit of $1.14 per share was 7.5% above analysts’ consensus estimates.

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StockStory’s Take

Academy Sports' third quarter saw a positive market reaction despite revenue coming in slightly below Wall Street’s expectations. Management attributed the quarter’s performance to strong growth from new store openings, gains in higher-income customer segments, and accelerated e-commerce momentum. CEO Steve Lawrence highlighted that “consumers are shopping episodically and seeking out values,” with positive responses during key back-to-school and holiday periods. The company also pointed to improved product assortment—especially with national brands like Nike and Jordan—and technology investments in inventory management as supporting margin expansion. Management noted that average unit retail prices rose mid to high single digits, offsetting cost pressures from tariffs.

Looking forward, management expects Academy Sports’ full-year performance to be shaped by ongoing investments in omnichannel initiatives, expanded product offerings, and continued focus on attracting higher-income customers. CFO Carl Ford emphasized that maintaining the right pricing architecture amid elevated tariffs and managing SG&A through disciplined growth initiatives will be crucial. The company plans to accelerate new store openings, primarily in legacy and high-growth markets, and aims to further grow its loyalty program and digital sales. Lawrence stated, “We expect the momentum in our new stores and digital channels to continue into next year, supported by expanded brand partnerships and an enhanced customer experience.”

Key Insights from Management’s Remarks

Management credited the quarter’s results to new store productivity, e-commerce acceleration, and targeted merchandising focused on higher-income customers, while margin improvement was aided by pricing actions and inventory initiatives.

• E-commerce acceleration: The online channel grew 22% year-over-year, with management citing improvements in website functionality and assortment, plus a symbiotic relationship between new store openings and heightened digital engagement.
• New store momentum: Twenty-six recently opened stores now in the comp base delivered high single-digit comparable growth, and new locations in legacy geographies outperformed plans, reflecting strong brand affinity and favorable local demographics.
• Higher-income customer gains: Customers in households earning over $100,000 annually now make up 40% of sales, up from roughly a third last year. This shift reduced exposure to economically pressured lower-income groups and was driven by brand assortment upgrades.
• Brand partnerships drive appeal: Expanded access to Nike and Jordan brands helped attract new, higher-spending customers, with combined sales from these brands growing high single digits. Management also introduced emerging brands and products aimed at health, wellness, and youth sports.
• Margin enhancement strategies: Gross margin improved 170 basis points, with higher average unit retail prices and inventory management offsetting tariff-related cost pressures. Efforts included more disciplined promotion timing, clearance management, and technology investments such as RFID.

Drivers of Future Performance

Management expects continued growth to be driven by omnichannel investments, new store expansion in core markets, and ongoing pricing discipline to navigate consumer and cost pressures.

• Store rollout strategy: The company plans to open 20-25 new stores next year, with 80% in existing or legacy markets where brand awareness is high and commercial real estate is attractive. Management views these markets as offering faster payback and lower marketing costs, supporting profitable growth.
• Digital and loyalty initiatives: Continued investment in technology and the digital ecosystem is expected to drive higher online penetration, with an eventual goal of 15% of total sales. The loyalty program, expected to reach 13 million members by year-end, is being further integrated with credit offerings to boost repeat business.
• Pricing and tariff management: Elevated average unit retail prices are set to hold through early next year as the company laps accelerated tariffs. Management acknowledges the risk of consumer pushback and is carefully monitoring elasticity by category, using targeted promotions and private label strategies to maintain value perception and margin resilience.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the pace and productivity of new store openings in both legacy and new markets, (2) the trajectory of e-commerce penetration and loyalty program engagement, and (3) the company’s ability to manage gross margin through pricing and inventory discipline amid ongoing tariff and consumer pressures. Progress in expanding premium product partnerships and further technology investments will also be key signposts.

Academy Sports currently trades at $52.48, up from $48.85 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

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