Academy Sports Outdoors Inc

Previous wording

This Quarterly Report on Form 10-Q (this "Quarterly Report") includes "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are subject to the "safe harbor" created by those sections. Forward-looking statements include all statements that are not historical facts, including statements reflecting our current views with respect to, among other things, our operations and financial performance. These forward-looking statements are included throughout this Quarterly Report, including this "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and in the section entitled "Risk Factors," and relate to matters such as macroeconomic conditions, our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek," "foreseeable," the negative version of these words or similar terms and phrases to identify forward-looking statements in this Quarterly Report.

Current wording

This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. Forward-looking statements include all statements that are not historical facts, including statements reflecting our current views with respect to, among other things, our operations and financial performance. These forward-looking statements are included throughout this Quarterly Report, including in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and in the section entitled “Risk Factors,” and relate to matters such as macroeconomic conditions, our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words or similar terms and phrases to identify forward-looking statements in this Quarterly Report.

Previous wording

The forward-looking statements contained in this Quarterly Report are based on management’s current expectations and are not guarantees of future performance. The forward-looking statements are subject to various risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include but are not limited to those described under "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (the "Annual Report"), as filed with the Securities and Exchange Commission (the "SEC") on March 21, 2024, as such risk factors have been updated from time to time in our periodic filings with the SEC, and are accessible on the SEC's website at www.sec.gov.

Current wording

The forward-looking statements contained in this Quarterly Report are based on management’s current expectations and are not guarantees of future performance. The forward-looking statements are subject to various risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors that could affect overall consumer spending or our industry, including the possible effect of ongoing macroeconomic challenges, inflation and higher interest rates, trade policy changes or additional tariffs or changes in tariffs, geopolitical tensions, or changes to the financial health of our customers, many of which are beyond our control. We believe that these factors include but are not limited to those described under the “Risk Factors” section in the Company's Annual Report, as such risk factors may be updated from time to time in our periodic filings with the SEC which are accessible on the SEC's website at www.sec.gov.

Previous wording

• risks associated with our reliance on internationally manufactured merchandise, including in China, which exposes us to various international risks, including potential tariffs, that could have a material adverse effect on our business and results of operations;

Current wording

•risks associated with our reliance on internationally manufactured merchandise, including in China, which exposes us to various international risks, including additional tariffs and our ability to successfully reduce our direct cost exposure to China;

Previous wording

• any failure to attract, train and retain quality team members in sufficient numbers, increases in wage and labor costs, and changes in laws and other labor issues;

Current wording

•our ability to attract, train and retain quality team members in sufficient numbers, increases in wage and labor costs, and changes in laws and other labor issues;

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes included elsewhere in this Quarterly Report for the thirteen and thirty-nine weeks ended November 2, 2024 and our audited financial statements for the fiscal year ended February 3, 2024 and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes included elsewhere in this Quarterly Report for the thirteen weeks ended May 3, 2025 and our audited financial statements for the fiscal year ended February 1, 2025 and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report.

Previous wording

All references to "Academy," "Academy Sports + Outdoors," "ASO, Inc.," "we," "us," "our" or the "Company" in this Quarterly Report refer to Academy Sports and Outdoors, Inc., a Delaware corporation and the current parent holding company of our operations, and its consolidated subsidiaries. We conduct our operations through our subsidiaries, including our indirect subsidiary, Academy, Ltd., an operating company which is doing business as "Academy Sports + Outdoors." All of the Company's sales and business operations occur at Academy, Ltd., and Academy, Ltd., is also the borrower and/or issuer of the Company's long-term debt and lessee of facilities.

Current wording

All references to “Academy,” “Academy Sports + Outdoors,” “ASO, Inc.,” “we,” “us,” “our” or the “Company” in this Quarterly Report refer to Academy Sports and Outdoors, Inc., a Delaware corporation and the current parent holding company of our operations, and its consolidated subsidiaries. We conduct our operations primarily through our indirect subsidiary, Academy, Ltd., a Texas limited partnership doing business as “Academy Sports + Outdoors”, or Academy, Ltd. All of the Company's sales and business operations occur at Academy, Ltd., and Academy, Ltd., is also the borrower and/or issuer of the Company's long-term debt and lessee of facilities.

Previous wording

We operate on a retail fiscal calendar pursuant to which our fiscal year consists of 52 or 53 weeks, ending on the Saturday closest to January 31 (which such Saturday may occur on a date following January 31) each year. References to any year, quarter, or month mean our fiscal year, fiscal quarter, and fiscal month, respectively, unless the context requires otherwise. References to the "current quarter," "2024 third quarter," or similar reference refers to the thirteen week period ended November 2, 2024, and any reference to the "prior year quarter," "2023 third quarter" or similar reference refers to the thirteen week period ended October 28, 2023. Unless otherwise specified, all comparisons regarding the current period of 2024 are made to the corresponding period of 2023.

Current wording

We operate on a retail fiscal calendar pursuant to which our fiscal year consists of 52 or 53 weeks, ending on the Saturday closest to January 31 (which such Saturday may occur on a date following January 31) each year. References to any year, quarter, or month mean our fiscal year, fiscal quarter, and fiscal month, respectively, unless the context requires otherwise. References to the “current quarter,” “2025 first quarter,” or similar reference refers to the thirteen week period ended May 3, 2025, and any reference to the “prior year quarter,” “2024 first quarter” or similar reference refers to the thirteen week period ended May 4, 2024. Unless otherwise specified, all comparisons regarding the current period of 2025 are made to the corresponding period of 2024.

Previous wording

We are a leading full-line sporting goods and outdoor recreation retailer in the United States. Our mission is to provide “Fun for All”, and we fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers. Our product assortment focuses on key categories of outdoor, sports and recreation, apparel, and footwear (representing 32%, 21%, 26%, and 21% of our 2024 third quarter net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.

Current wording

We are a leading full-line sporting goods and outdoor recreation retailer in the United States. Our mission is to provide “Fun for All”, and we fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers. Our product assortment focuses on key categories of outdoor, sports and recreation, apparel, and footwear (representing 28%, 26%, 24%, and 22% of our 2025 first quarter net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.

Previous wording

As of November 2, 2024, we operated 293 stores that range in size from approximately 40,000 to 137,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 19 contiguous states located primarily in the southern United States. Our stores are supported by approximately 23,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app. Additionally, we are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities, such as our mobile app, optimizing the website experience and upgrading our fulfillment capabilities.

Current wording

As of May 3, 2025, we operated 303 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 21 contiguous states located primarily in the southern United States. Our stores are supported by approximately 22,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app. Additionally, we are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities, such as our mobile app, optimizing the website experience and upgrading our fulfillment capabilities.

Previous wording

How We Assess the Performance of Our Business and Recent Trends

Current wording

How We Assess the Performance of Our Business

Previous wording

Comparable Sales. We define comparable sales as the percentage of period-over-period net sales increase or decrease, in the aggregate, for stores open after thirteen full fiscal months, as well as for all e-commerce sales. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data in this Quarterly Report regarding our comparable sales may not be comparable to similar data made available by other retailers. Stores which have been significantly remodeled or relocated are removed from this calculation until the new store has been in operation for substantially all of the periods being compared. Stores which have been closed for an extended period of time due to circumstances beyond our control are also removed from the calculation. Any sales made through our website or mobile app are allocated to e-commerce sales for the purpose of measuring comparable sales, regardless of how those sales are fulfilled, whether shipped to home or picked up in-store or curbside through our buy-online-pickup-in-store program ("BOPIS"). For example, all BOPIS transactions, which are originated by our website, are allocated to e-commerce sales for the purpose of comparable sales, despite the fact thatour customers pick-up these purchases from a specific store.

Current wording

Comparable Sales. We define comparable sales as the percentage of period-over-period net sales increase or decrease, in the aggregate, for stores open after thirteen full fiscal months, as well as for all e-commerce sales. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data in this Quarterly Report regarding our comparable sales may not be comparable to similar data made available by other retailers. Stores which have been significantly remodeled or relocated are removed from this calculation until the new store has been in operation for substantially all of the periods being compared. Stores which have been closed for an extended period of time due to circumstances beyond our control are also removed from the calculation. Any sales made through our website or mobile app are allocated to e-commerce sales for the purpose of measuring comparable sales, regardless of how those sales are fulfilled, whether shipped to home or picked up in-store or curbside through our buy-online-pickup-in-store program (“BOPIS”). For example, all BOPIS transactions, which are originated by our website, are allocated to e-commerce sales for the purpose of comparable sales, despite the fact that our customers pick-up these purchases from a specific store.

Previous wording

Increases or decreases in e-commerce between periods being compared directly impact the comparable sales results. Various factors affect comparable sales, including the relative condition of the U.S. economy, consumer preferences, buying trends and overall economic trends; our ability to identify and respond effectively to customer preferences and local and regional trends; our ability to provide an assortment of high quality/value oriented product offerings that generate new and repeat visits to our stores and our website; the customer experience and unique services we provide in our stores; our ability to execute our omnichannel strategy, including the growth of our e-commerce business; changes in product mix and pricing, including promotional activities; the number of items purchased per visit and average order value; a shift in the timing of a holiday between comparable periods; and the number of stores that have been in operation for more than 13 months. Additionally, the U.S. macroeconomic environment in which we operate remains challenging as the result of numerous factors, including continued high inflation, higher consumer debt and interest rates, reduced access to credit, employment and income uncertainty, and lower consumer sentiment, which are impacting consumer discretionary spending behavior and the promotional landscape in which we operate. The Company's 2024 fiscal year is a 52-week year, whereas the 2023 fiscal year was a 53-week year, which created a one week shift.

Current wording

Increases or decreases in e-commerce between periods being compared directly impact the comparable sales results. Various factors affect comparable sales, including consumer preferences, buying trends and overall economic trends; our ability to identify and respond effectively to customer preferences and local and regional trends; our ability to provide an assortment of high quality/value oriented product offerings that generate new and repeat visits to our stores and our website; the customer experience and unique services we provide in our stores; our ability to execute our omnichannel strategy, including the growth of our e-commerce business; changes in product mix and pricing, including promotional activities; the number of items purchased per visit and average order value; a shift in the timing of a holiday between comparable periods; and the number of stores that have been in operation for more than thirteen months.

Previous wording

The comparable sales metric for the 2024 third quarter compares thethirteen and thirty-nine weeks ended November 2, 2024 versus thethirteen and thirty-nine weeks ended November 4, 2023. The prior year rate of decline in comparable store sales slowed in year-to-date 2024 compared to the two prior year periods, with a decrease of 5.9% in 2024 compared to 7.6% and 6.9% in 2023 and 2022, respectively. See the discussion on Net Sales below for factors contributing to these changes.

Current wording

The comparable sales metric for the 2025 first quarter compares the thirteen weeks ended May 3, 2025 versus the thirteen weeks ended May 4, 2024. The prior year rate of decline in comparable store sales slowed in the 2025 first quarter with a 2025 first quarter comparable sales decrease of 3.7% compared to 5.7% in the 2024 first quarter. See the discussion on Net Sales below for factors contributing to these changes.

Previous wording

Transactions and average ticket. We define transactions as the number of customer transactions for stores and e-commerce during a given period on a comparable sales basis. Transactions are influenced by customer traffic, the amount of customers that visited our stores or website, and sales conversion, the percent of those customers that made a purchase. We define average ticket as total comparable sales divided by the number of transactions during a given period, which tells us the average amount the customer is spending on a purchase.

Current wording

Transactions and average ticket. We define transactions as the number of customer transactions for stores and e-commerce during a given period on a comparable sales basis. Transactions are influenced by customer traffic, the amount of customers that visited our stores or website, and sales conversion, the percent of those customers that made a purchase. We define average ticket as total sales divided by the number of transactions during a given period, which tells us the average amount the customer is spending on a purchase.

Previous wording

Our broad assortment gives us an advantage over mass general merchants who typically do not carry the leading national brands sold at Academy. We have also continued to add private label brand products to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer. A shift in our sales mix in which we sell more units of our private label brand products and fewer units of the national brand products would generally have a positive impact on our gross margin but an adverse impact on our total net sales. Furthermore, our softgoods merchandise divisions, which consist of apparel and footwear, have higher margins than our hardgoods merchandise divisions, which consist of outdoors and sports and recreation. A shift in sales mix toward softgoods would generally have a positive impact on gross margin and a shift in sales mix towards hardgoods would generally have a negative impact on gross margin.

Current wording

Our broad assortment gives us an advantage over mass general merchants who typically do not carry the leading national brands sold at Academy. We have also continued to add private label brand products to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer. Furthermore, our softgoods merchandise divisions, which consist of apparel and footwear, have higher margins than our hardgoods merchandise divisions, which consist of outdoors and sports and recreation. A shift in sales mix toward softgoods would generally have a positive impact on gross margin and a shift in sales mix towards hardgoods would generally have a negative impact on gross margin.

Previous wording

The expansion and enhancement of our omnichannel capabilities has resulted in increased sales in recent years. We continue to invest in initiatives that will increase traffic to our stores and e-commerce platform, which includes our website and mobile app, and drive increased sales conversion. These initiatives include investments in our new customer data platform and the development of strategies that focus on customer segmentation with the intention of improving customer identification and increasing customer engagement. Additionally, we recently implemented several innovative website features to enhance the customer online shopping experience, including a redesigned home page, additional BOPIS features, and enhanced shipping notifications. Our improved e-commerce platform supports our stores with digital marketing and our BOPIS and ship-to-store programs. These platforms allow us to connect further with our customers for marketing and product education and assists us in introducing customers to the Academy brand by reaching customers outside of our current store footprint. During the 2024 year-to-date third quarter, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS and in-store retail sales. We expect to continue to invest in expanding and enhancing our omnichannel capabilities, including our mobile app, optimizing the web site experience and upgrading our fulfillment capabilities, which will continue to require further investments by us.

Current wording

The expansion and enhancement of our omnichannel capabilities has resulted in increased sales in recent years. We continue to invest in initiatives that will increase traffic to our stores and e-commerce platform, which includes our website and mobile app, and drive increased sales conversion. These initiatives include investments in our new customer data platform and the development of strategies that focus on customer segmentation with the intention of improving customer identification and increasing customer engagement. Additionally, we continue to implement several innovative website features to enhance the customer online shopping experience, including a redesigned home page, additional BOPIS features, and enhanced shipping notifications. Our improved e-commerce platform supports our stores with digital marketing and our BOPIS and ship-to-store programs. These platforms allow us to connect further with our customers for marketing and product education and assists us in introducing customers to the Academy brand by reaching customers outside of our current store footprint. During the 2025 first quarter, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS and in-store retail sales. We expect to continue to invest in expanding and enhancing our omnichannel capabilities, including our mobile app, optimizing the web site experience and upgrading our fulfillment capabilities, which will continue to require further investments by us.

Previous wording

Gross Margin. Gross margin is our net sales less cost of goods sold. Our cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution, which consist primarily of payroll and benefits, distribution center occupancy costs and freight and are generally variable in nature relative to our sales volume.

Current wording

Gross Margin. Gross margin is our net sales less cost of goods sold. Our cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution, which consist primarily of transportation, payroll and benefits and distribution center occupancy costs and are generally variable in nature relative to our sales volume.

Previous wording

Our gross margin depends on a number of factors, such as net sales increases or decreases, our promotional activities, product mix including private label merchandise sales, and our ability to control cost of goods sold, such as inventory and logistics cost management. Our gross margin is also impacted by variables including duties, commodity costs, freight costs, shrinkage (discussed below), inventory processing costs and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.

Current wording

Our gross margin depends on a number of factors, such as net sales increases or decreases, our promotional activities, product mix including private label merchandise sales, and our ability to control cost of goods sold, such as inventory and logistics cost management. Our gross margin is also impacted by variables including commodity costs, freight costs, shrinkage (discussed below), inventory processing costs and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.

Previous wording

We refer to loss or theft of inventory as "shrinkage" or "shrink". Over recent years, the United States retail industry, including Academy, has experienced a significant increase in inventory shrink, which has resulted in a negative impact to our gross margins. A prolonged period of significant increased shrink could have a material negative impact on our gross margin and results of operations.

Current wording

We refer to loss or theft of inventory as “shrinkage” or “shrink”. A prolonged period of significant increased shrink could have a material negative impact on our gross margin and results of operations.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses include store and corporate administrative payroll and payroll benefits, equity-based compensation, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature. SG&A expenses as a percentage of sales increased from 23.8% in the 2023 year-to-date third quarter to 25.5% in the 2024 year-to-date third quarter, which was primarily attributable to our store growth strategy as well as deleverage from decreased sales, partially offset by favorable reductions in equity compensation. We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets. Management of SG&A expenses depends on our ability to balance a control of operating costs, such as store and corporate headcount, information technology infrastructure and marketing and advertising expenses, while efficiently and effectively servicing our customers.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses include store and corporate administrative payroll and payroll benefits, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature. SG&A expenses as a percentage of sales increased from 25.9% in the 2024 first quarter to 28.8% in the 2025 first quarter, primarily attributable to the addition of new stores. We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets. Management of SG&A expenses depends on our ability to balance a control of operating costs, such as store and corporate headcount, information technology infrastructure and marketing and advertising expenses, while efficiently and effectively servicing our customers.

Previous wording

Interest Expense. Interest expense includes regular interest payable related to our Term Loan, Notes and ABL Facility (see Note 4 to our unaudited consolidated financial statements included under Part I, Item 1 of this Quarterly Report) and the amortization of our deferred loan costs and original issuance discounts associated with the acquisition of the debt. During the fourth quarter of 2023, we utilized cash on hand to voluntarily prepay $100 million of outstanding borrowings on our Term Loan. This pay down resulted in decreased interest expense in year-to-date 2024 as compared to the prior year period, and we anticipate it will result in decreased interest expense compared to 2023 throughout the remainder of 2024.

Current wording

Interest Expense. Interest expense includes regular interest payable related to our Term Loan, Notes and ABL Facility (see Note 4 to the accompanying financial statements) and the amortization of our deferred loan costs and original issuance discounts associated with the acquisition of the debt.

Previous wording

Income Tax Expense. ASO, Inc. is treated as a U.S. corporation for U.S. federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes. Recent fluctuations in income tax expense have been primarily a result of changes in income before income taxes.

Current wording

Income Tax Expense. ASO, Inc. is treated as a U.S. corporation for U.S. federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes. Recent fluctuations in income tax expense have been primarily as a result of changes in income before income taxes and changes in equity awards activity.

Previous wording

Net Sales. Net sales decreased $54.4 million, or 3.9%, in the 2024 third quarter from the prior year third quarter. This is primarily a result of decreased comparable sales, which was partially offset by $34.6 million of net sales, including e-commerce, generated by 18 new stores opened since the end of the 2023 third quarter. Since re-launching our new store program in 2022, we have opened 34 new stores, 16 of which have been open for at least twelve months. Over the last twelve months, those 16 stores have averaged approximately $13 million in net sales per store, including e-commerce. Performance of new stores in year one is highly dependent on which season the new store opens and the brand awareness in the region the new store opens.

Current wording

Net Sales. Net sales decreased $12.8 million, or 0.9%, in the 2025 first quarter over the prior year first quarter, which was primarily a result of decreased comparable sales. We opened 19 new stores since the end of the 2024 first quarter, 5 of which opened throughout the 2025 first quarter. During the 2025 first quarter, these 19 stores generated $45.3 million of net sales, including e-commerce. Since re-launching our new store program in 2022, we have opened 44 new stores, 25 of which have been open for at least twelve months. Over the last twelve months, those 25 stores have averaged approximately $13 million in net sales per store, including e-commerce. We believe that performance of new stores in year one is partially affected by the season in which the new store opens and the brand awareness in the region the new store opens.

Previous wording

Comparable sales decreased 5.9% driven by lower comparable sales across all merchandise divisions as a result of a 6.4% decrease in comparable transactions, partially offset by an increase in average ticket of 0.5%. The decrease of 2.5% in net sales was driven by decreased sales of 6.7% in the sports and recreation merchandise division, 4.4% in the apparel division and 2.5% in the footwear division, partially offset by an increase of 3.4% in the outdoors merchandise division. Additionally, we experienced a challenging month in October 2024 with unseasonably warm temperatures across our footprint along with lapping the Rangers World Series run in the prior year, which collectively resulted in a decrease of approximately 1% in both net and comparable sales for theyear-to-date 2024.

Current wording

Comparable sales decreased 3.7% driven by lower sales across all merchandise divisions as a result of a 5.2% decrease in comparable transactions, partially offset by an increase in average ticket of 1.5%. The decrease of 0.9% in net sales was driven by decreased sales of 1.8% in the outdoor merchandise division, 0.6% in the sports and recreation merchandise division and 0.5% in the apparel division, partially offset by an increase of 0.1% in the footwear division.

Previous wording

E-commerce net sales represented 8.8% of merchandise sales for the 2024 third quarter compared to 9.4% for the prior year third quarter.

Current wording

E-commerce net sales represented 10.0% of merchandise sales for the 2025 first quarter compared to 9.0% for the prior year first quarter.

Previous wording

Gross Margin. Gross margin decreased $25.9 million, or 5.4%, to $456.7 million in the 2024 third quarter from $482.6 million in the 2023 third quarter. As a percentage of net sales, gross margin decreased 50 basis points from 34.5% in the 2023 third quarter to 34.0% in the 2024 third quarter. The decrease of 50 basis points in gross margin was primarily attributable to:

Current wording

Gross Margin. Gross margin increased $3.1 million, or 0.7%, to $458.9 million in the 2025 first quarter from $455.8 million in the 2024 first quarter. As a percentage of net sales, gross margin increased 60 basis points from 33.4% in the 2024 first quarter to 34.0% in the 2025 first quarter. The increase of 60 basis points in gross margin was primarily attributable to 40 basis points of favorability in merchandise margin as a result of managing prices to provide differentiated value and newness to our customers and 10 basis points of favorability as a result of decreased inventory shrink.

Previous wording

Selling, General and Administrative Expenses. SG&A expenses increased $19.3 million, or 5.6%, to $365.2 million in the 2024 third quarter as compared to $345.9 million in the 2023 third quarter, primarily driven by our increased strategic investments of $17.5 million in new stores and technology as well as deleverage from decreased sales.

Current wording

Selling, General and Administrative Expenses. SG&A expenses increased $36.2 million, or 10.2%, to $389.6 million in the 2025 first quarter as compared to $353.4 million in the 2024 first quarter, primarily as a result of our increased strategic investments of $33.4 million in new stores, technology, and the Jordan Brand launch.

Previous wording

Write off of Deferred Loan Costs. Write off of Deferred Loan Costs increased by $0.4 million for the year-to-date 2024 when compared with the year-to-date 2023, in connection with the amendment in the 2024 first quarter that led to the write off of deferred loan costs on the ABL Facility for the year-to-date 2024.

Current wording

Write off of Deferred Loan Costs. Write off of deferred loan costs decreased by $0.4 million in the 2025 first quarter when compared with the 2024 first quarter, in connection with the amendment that led to the write off of deferred loan costs on the ABL Facility in the 2024 first quarter.

Previous wording

Interest Expense. Interest expense decreased $1.8 million, or 16.3%, in the 2024 third quarter when compared with the 2023 third quarter, resulting from a lower outstanding balance on our long-term debt driven by a voluntary prepayment of $100.0 million made on February 1, 2024.

Current wording

Interest Expense. Interest expense decreased $0.4 million, or 4.7%, in the 2025 first quarter when compared with the 2024 first quarter primarily resulting from lower interest rates and a lower outstanding balance on our Term Loan.

Previous wording

Other (Income), net. Other (income), net, increased $2.3 million in the 2024 third quarter when compared with the 2023 third quarter, primarily driven by increased money market investments in the current year.

Current wording

Other (Income), net. Other (income), net, decreased $2.4 million in the 2025 first quarter when compared with the 2024 first quarter, primarily driven by decreased money market investments at lower interest rates in the 2025 first quarter when compared with the 2024 first quarter.

Previous wording

Income Tax Expense. Income tax expense decreased $7.0 million to $23.0 million for the 2024 third quarter as compared to $30.0 million in the 2023 third quarter, resulting primarily from a decrease in pre-tax income. The Company's effective income tax rate was 25.9% for the third quarter of 2024 compared to 23.1% for the third quarter of 2023. The increase in effective tax rate was primarily the result of a reduction in excess tax benefits for share-based compensation in 2024 compared to 2023.

Current wording

Income Tax Expense. Income tax expense decreased $4.2 million to $16.9 million for the 2025 first quarter as compared to $21.2 million in the 2024 first quarter, resulting primarily from a decrease in pre-tax income. ASO, Inc.'s effective tax rate was 26.9% in the first quarter of 2025 compared to 21.7% in the first quarter of 2024. The increase in the effective tax rate compared to the prior year quarter is due to a higher number of employee equity awards vesting and exercised in the 2024 first quarter at a higher share price compared with the 2025 first quarter.

Previous wording

Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense. We also use cash to pay dividends and repurchase common stock. We fund these liquidity requirements through cash and cash equivalents, cash generated from operating activities, issuances of debt (such as the Notes) and borrowings under our ABL Facility. On November 2, 2024, our cash and cash equivalents totaled $296.0 million. We believe our cash and cash equivalents, as well as our availability under the ABL Facility, will be sufficient to fund our cash requirements for the next 12 months and the longer term foreseeable future.

Current wording

Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense. We also use cash to pay dividends and to repurchase common stock. We fund these liquidity requirements through cash and cash equivalents, cash generated from operating activities, issuances of debt (such as the Notes) and borrowings under our ABL Facility. On May 3, 2025, our cash and cash equivalents totaled $285.1 million. We believe our cash and cash equivalents, as well as our availability under the ABL Facility, will be sufficient to fund our cash requirements for the next 12 months and the longer term foreseeable future.

Previous wording

As of November 2, 2024, the Company's long-term debt and interest rates consist of (see Note 4 to the accompanying financial statements):

Current wording

As of May 3, 2025, the Company's long-term debt and interest rates consist of:

Previous wording

•Term Loan - 8.88% variable rate term-loan with $89.5 million in principal outstanding maturing November 6, 2027 and quarterly principal payments of $750 thousand; and

Current wording

•Term Loan - 8.18% variable rate term-loan with $88.0 million in principal outstanding maturing November 6, 2027 and requiring quarterly principal payments of $750 thousand through September 30, 2027; and

Previous wording

The following table summarizes our current debt obligations by fiscal year (amounts in thousands):

Current wording

See Note 4 to the accompanying financial statements for further disclosure regarding our debt agreements. The following table summarizes our current debt obligations by fiscal year (amounts in thousands):

Previous wording

We predominantly lease store locations, distribution centers, office space and certain equipment under operating leases expiring between fiscal years 2024 and 2044. Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at November 2, 2024. The following table summarizes our remaining operating lease obligations by fiscal year (amounts in thousands):

Current wording

We predominantly lease store locations, distribution centers, office space and certain equipment under operating leases expiring between fiscal years 2024 and 2044. Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at May 3, 2025. The following table summarizes our remaining operating lease obligations by fiscal year:

Previous wording

On December 4 2024, the Board of Directors of the Company approved a new share repurchase program (the "2024 Share Repurchase Program", which will replace the 2023 Share Repurchase Program) under which the Company is authorized to purchase up to $700 million of its outstanding shares during the three-year period ending December 4, 2027 (see Note 11 to the accompanying financial statements).

Current wording

On November 29, 2023, the Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”) under which the Company was authorized to purchase up to $600 million of its outstanding shares during the three-year period ending November 29, 2026.

Previous wording

On November 29, 2023, the Board of Directors approved a new share repurchase program (the "2023 Share Repurchase Program") under which the Company was authorized to purchase up to $600 million of its outstanding shares during the three-year period ending November 29, 2026. The 2023 Share Repurchase Program did not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time. As of November 2, 2024, the Company had $423.0 million remaining for share repurchases under the 2023 Share Repurchase Program (see Note 2 to the accompanying financial statements).

Current wording

On December 4, 2024, the Company's Board of Directors approved a new share repurchase program under which the Company is authorized to purchase up to 700 millionof its outstanding shares during the three-year period ending December 4, 2027 (the “2024 Share Repurchase Program”), and which replaces the 2023 Share Repurchase Program. Under the 2024 Share Repurchase Program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, accelerated share repurchase programs, privately negotiated transactions and/or Rule 10b5-1 or other non-discretionary trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the 2024 Share Repurchase Program will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. The 2024 Share Repurchase Program does not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time. As of May 3, 2025, the Company had $536.5 million remaining for share repurchases under the Share Repurchase Programs. See Note 2 to the consolidated financial statements.

Previous wording

The following table summarizes our share repurchases for the year-to-date 2024 third quarter (dollar amounts in thousands, except per share amounts):

Current wording

The following table summarizes our share repurchases for the 2025 first quarter (dollar amounts in thousands, except per share amounts):

Previous wording

The following table summarizes our quarterly dividend payments for the year-to-date 2024 (amounts in thousands, except per share amounts):

Current wording

The following table summarizes our quarterly dividend payments for the 2025 first quarter (amounts in thousands, except per share amounts):