- Net Sales Growth: Q3 2025 net sales reached $1.38B (+3% YoY), with e-commerce up 22% YoY and total e-commerce penetration at 10.4% (targeting 15%).
- Gross Margin Expansion: Gross margin improved to 35.7% (+170 bps YoY), driven by AUR growth (mid-to-high single digits) and operational efficiencies.
- New Store Performance: 11 new stores opened (8% store count growth YoY) contributed a 50 bps comp tailwind, with new store comps at high single digits.
- Customer Demographic Shift: High-income customers now 40% of base (up from 33%), driving U.S. population-growth-focused expansion in Texas and mid-sized markets.
- Strategic Capital Allocation: $54M invested in initiatives, $8.7M in dividends, and $290M in cash reserves, with 2026 store growth guidance at 20–25 openings.
Segment Performance
The company's sales growth was driven by the Sports and Rec, Apparel, Footwear, and Outdoor categories, which grew 6%, 3%, 2%, and 2%, respectively. The e-commerce channel continued to perform well, with sales up 22% year-over-year, and e-commerce penetration growing to 10.4%. The company expects to achieve 15% e-commerce penetration in its long-range plan.
Store Expansion and Customer Trends
Academy Sports and Outdoors opened 11 new stores during the quarter and plans to open 20 to 25 stores in 2026, with a focus on legacy and existing markets. The company is seeing a K-shaped economy, with upper-income customers driving growth, while lower-income customers continue to pull back. The health of the Academy customer is mixed, with upper-income customers growing high single digits, and middle-income customers steady, while lower-income customers decline mid-single digits.
Valuation and Outlook
Using the given valuation metrics, Academy Sports and Outdoors has a P/E Ratio of 9.5, P/B Ratio of 1.67, and P/S Ratio of 0.6. With the company's strong Q3 results and growth prospects, the current valuation appears reasonable. Analysts estimate next year's revenue growth at 2.7%. The company's plans to resume buybacks in Q4 and its commitment to balanced capital allocation are positive signs for investors.
Private Brands and SG&A
The company saw strength in its private brands, such as Magellan and Freely, with customers trading into these brands as they seek value. Academy views its private brands as a key expression of value to customers. On SG&A, the company expects a relatively low figure in Q4 due to efficiency efforts, price changes, and a sale-leaseback of a property in the prior year.