Good morning, and welcome to the Academy Sports and Outdoors First Quarter Fiscal 2025 Results Conference Call. This call is being recorded. [Operator Instructions] I'll now turn the call over to Dan Aldridge, Vice President of Investor Relations for Academy Sports and Outdoors. Please go ahead.

Good morning, everyone, and thank you for joining the Academy Sports and Outdoors First Quarter 2025 Financial Results Call. Participating on today's call are Steve Lawrence, Chief Executive Officer; and Carl Ford, Chief Financial Officer. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our most recent 10-K and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors.academy.com. This morning, we will review our financial results for the first quarter of fiscal 2025, provide an update on our strategic initiatives and to discuss our outlook for the year and share our updated guidance for the full year fiscal 2025. After we conclude the prepared remarks, there will be time for questions at the end. With that, I'll turn the call over to our CEO, Steve Lawrence.

Thanks, Dan, and good morning to everyone on the call. I'd like to start by covering the subject that is top of mind for most analysts and investors, and that would be how Academy is navigating through the additional tariffs that have been levied since our last earnings call. We, like most people in our business, have been dealing with a fluid situation that has created a lot of complexity in how we forecast and manage our business on a day-to-day basis. We're fortunate that we have a strong team that has navigated through other periods of rapid change such as the pandemic in 2020, the cotton crisis from 2010 and 2011 and the subprime mortgage crisis in 2008 and 2009. The team has drawn on these past experiences to help strategize how to effectively navigate through the current situation. Our first step was for the teams to calculate the impact on the business for the 10% reciprocal tariffs on most countries, coupled with the additional tariffs on goods coming out of China, which are currently set at 30% along with the steel and aluminum tariffs. Once this work was completed, we moved to our second step, which was to work with our factories and suppliers to look for tariff offsets by reducing costs on product. Using this approach, we worked with each supplier in a partnership fashion to help share some of the burden of the incremental tariffs. From there, we moved to step three, which was to work on strategies to help minimize the impact that these additional costs will have on our customers and our internal P&L. The team has taken the following key actions on this front. First, we paused shipments out of China during the period that the tariff rate was set at 145%. Once…

Thanks, Steve. Net sales for the first quarter were $1.35 billion with a comp decline of 3.7%. As Steve mentioned, we saw sequential comp improvement throughout the quarter culminating in a positive comp in April, and our eCommerce channel posted a positive 10% comp for the quarter. Breaking down the comp transactions were down 5.2% and ticket was up 1.5%. Looking at performance by category. Footwear and apparel continue to perform well and we saw strength in kids apparel, women's athletic apparel and men's athletic footwear. Athletic footwear posted a positive 4.5% comp led by brands like Nike and Brooks. To be clear, Jordan Brand products were only in stores for the last 2 weeks of the quarter, but it beat our internal plan in April and in May. Additionally, over 25% of Jordan Brand sales have come from our eCommerce channel, which you will recall, only has a 10% penetration for the total business. Within our sports and recreation category, outdoor cooking and baseball posted positive comps as spring started to materialize across the country, especially in our footprint. While we saw encouraging results in baseball, total team sports underperformed primarily coming from softness in basketball and a slower start to the quarter in golf. In outdoors, fishing and firearms performed well, while ammunition, paddle and power marine remain challenged. We continue to deemphasize the marine categories in lieu of more productive additions like Jordan Brand. In ammunition, we continue to see industry pressure on AUR, so we're implementing some new tactics like bulk promos to try and offset this impact. Absent these three categories, outdoor is performing very well and in fact would have posted a positive comp. Gross margin came in at 34%, 60 basis points higher than last year driven by 40 basis points of merch…

Thank you. With that, the company will now open the call up for your questions. [Operator Instructions] At the end of the Q&A session, CEO, Steve Lawrence, will make closing comments. Our first question comes from the line of Jonathan Matuszewski with Jefferies.

The first one was on the higher income consumer. Nice to hear about the ongoing traffic flows from that cohort. I think you started to observe that dynamic maybe 2 quarters ago. So curious if you could comment on the retention of those higher income consumers that you initially maybe welcomed 6-plus months ago. And anything you're seeing from a repeat shopping behavior perspective with that cohort? That's my first question.

Yes. Jonathan, thanks for the question. It's Carl. Yes, we started to see a customer demographic shift beginning in the third quarter of 2024 and we were really focused on quintiles 4 and 5, so customers above $100,000. It accelerated into Q4 and it accelerated even more into Q1. From a retention -- it's a mix of new customers as well as customers that just make more money that are shopping more frequently with us. And from a retention standpoint, they're sticking with us. They're shopping across the store. They're not just there for national brands. They're experiencing our private brand value as well.

That's helpful. And then nice to hear about the positive comp in April. I think you mentioned the Jordan outperformance versus internal expectations continued into May. Curious if that implies the first couple of weeks of 2Q is also showing that positive comp.

Yes. So Jordan continues to perform very well relative to our expectations. We're very excited about it. In terms of May, I would tell you we've seen a pretty choppy shopping environment during the first half of this year. We talked a lot about that in our Q1 results. May right now ran down low single digits. It's trending better than first quarter did, but it is down slightly. That being said, we're still very optimistic about Q1 -- or I'm sorry, Q2 being a very strong quarter for us. Customers [indiscernible] to come out and shop during the big moments on the calendar. We've got some of those big moments still ahead of us this week. It's Father's Day week, it's the biggest week of the year for us prior to Black Friday. So a lot riding on this weekend. And then obviously, we've got back-to-school kicking off at the tail end of July. So still very optimistic about the quarter, although the customers being very choppy in terms of their shopping patterns right now.

Our next question comes from the line of Simeon Gutman with Morgan Stanley.

This is Pedro Gil on for Simeon. Maybe just a follow-up on that last question. That's my first question. If you could double-click on May and maybe talk a little bit about the health of the consumer. If you could sort of parse out the cadence of the quarter, the impact of weather, the Easter shift and then what the development is in May as far as the category mix and...

Yes. So in terms of the quarter, I'll talk about the first quarter, and I think we covered this in the prepared remarks, the early part of the quarter was down in February. We think that was a lot of storm impact, cold weather moving across the geography. March improved, was still negative. But April inflected the positive, as we said on the call. I think the things that drove April to positive were the Jordan launch, the Nike expansion and somewhat the Easter shift out of March into April. I think as we got into the early part of Q2, with the month of May, you have Mother's Day. We're not a big Mother's Day store. Business started off a little soft. I think there are still some cooler temperatures we're dealing with in there, although I wouldn't describe too much to weather. I think it's just choppiness from a consumer perspective. I think the consumer is under pressure right now. I think that they are being very careful when and how they shop and spend their money. I think they're waiting to see kind of how this whole tariff situation, trade war situation plays out. And I think they're gravitating towards value, which is why we're excited to start seeing some trade down from those higher income consumers. That's something we've been waiting to see for a long time and we really started seeing happen last year and saw it accelerate into this quarter, Q1 and into Q2. And our expectation is that, that will continue as we move forward. As we go throughout the remainder of Q2, we've got -- obviously, this is the first quarter we're going to be fully leveraging the benefit of Jordan and the Nike expansion, the rollout that we had on the new technology we talked about, whether it's the handheld devices for our store associates or RFID. Those were not really fully rolled out until, honestly, last week. So they're now in all stores, and we really should start seeing some benefit from that in all stores. Moving forward, we're excited about the momentum we have in our dot-com business. We're excited about the momentum we're seeing in our new stores. So there's a lot of positive kind of green shoots beneath the surface. That's being counteracted a little bit by choppy consumer shopping patterns, but we believe we've got a lot of opportunities still ahead of us in the quarter.

Got it. That's helpful. And my follow-up is on your gross margin guidance, which you kept -- gross margin rate guidance kept unchanged. I'm a little surprised in the low-end scenario for guidance where you're factoring in the full 145% tariff on China and the full reciprocal tariff as was initially announced on April 2 on all the other countries. Yet you're keeping the gross margin rate assumption unchanged to 34% relative to what you gave on March 20. Could you elaborate a little bit your thinking there and what are the puts and takes?

Absolutely. Yes. So last year, we were at 33.9% gross margin rate. Guidance for this year is 34% and below 34.5%. Q1 was up 60 basis points. The bulk of it was merch margin. We did "shrink" but there are some other things around the edges. I think the risk for tariffs, I'm going to start really broadly, is on how much money consumers have to spend. So there's been so much pressure -- there's so much discussion about the pressure being put on gross margin rates. The pressure the American consumer is going to feel is on how much money they have to spend on things. So we've pulled forward inventory. I feel really proud of the work that the teams did in the thinking that in July and August, we don't know what these expirations are going to do, what happens on the back of those expirations. We've shifted out of China. We talked a little bit about our path that we started many years ago on that. It's obviously accelerating with what's going on this year. And we feel confident in our gross margin guidance given the tactics that the merchants are really employing primarily related to inventory positioning.

Okay. Got it. Wouldn't we be seeing perhaps a lower gross margin rate if we went to buying at 145% and all the other countries have higher tariff rate?

Yes. Yes. I mean, if China goes back to 145%, a lot of things in America are going to change. And so we pulled forward inventory and we've shifted out of it, and that's our focus area. We're pulling inventory out of China. And we feel good about the inventory that we're carrying at those pre-tariff pricing.

But to be clear, the gross margin guidance that we gave anticipates -- we gave you more of a sales-based scenario based off a different tariff exposure. So at the high end, it assumes world goes to 10%. Base case that we're operating the business off of assumes kind of steady state from where we're at today. The low end of the guidance scenario anticipates the pauses that were put on reciprocal tariffs and things go back to kind of what they originally planned at for both China and the rest of the world. That being said, in all those scenarios, we built in different offsets in terms of pricing and inventory management to deal with the gross margin impact. But I think what Carl is trying to highlight is that we see the impact probably more on the sales side and how the customer would react to more of an inflationary environment if those tariffs go back into place because I have to believe candidly that if those reciprocal tariffs go back into place at 145%, prices are going up virtually and everything. And our goal would be to maintain our value positioning in the space and make sure we've got the best value on products. But we would expect that there would be some price increases there that would offset margin erosion.

Our next question comes from the line of Christopher Horvers with JPMorgan.

This is Jolie Wasserman on for Chris. Our first question is about the April benefit from Easter when you're looking at March and April together. And just how are you looking at the business given the March to May with the Easter trend combined with your weather commentary? And on top of that, was there any lift from Nike built into that in terms of how you're thinking about it?

Yes. So if you look at March and April combined, I think it was down like low, low single digits. But in aggregate, we think that what we really saw benefit April was the combination of Easter shift. But I would also lean more into the Nike, Jordan launch. That was a big boost for us. Traditionally, after we get out of the holiday, we kind of had a lull. And we really didn't hit that lull this year because we had the Nike expansion and Jordan was positioned right after Easter, and I think that kind of helped us avoid that lull. So we would attribute a lot of the comp positive in April to that launch. As we move in, I kind of highlighted this earlier, we only really got the benefit of that for about 2 weeks in April. And if you go back to March, one of the things that also probably impacted us a little bit in March was our floors are pretty disruptive. We were resetting the Nike shops, clearing out room for Jordan. We did this on a rolling basis across almost 150 stores on a week-by-week basis, but the stores were pretty kind of disrupted during this time period. And so I think that probably had a little bit more impact on March than we initially anticipated, but we're pleased with the rebound that we saw coming on of that in April.

Got it. That makes sense. And just moving to the promotion side. I think you touched on it a little bit earlier. We noticed that Q-to- date promotions did tick up a bit year-over-year. We saw an additional $20 off $100 coupons that also got extended, some additional e-gift card promotions, et cetera. Also, we saw several promotions like a 25% off Under Armour. So is it fair to say like net-net that quarter-to-date promotions are higher year-over-year? And how much of that is for clearing out for the newness with Nike and Jordan? And how much of that is just related to an overall weaker Academy consumer since a lot of these incremental promotions are entire basket? And just a quick aside on promotions. We also saw the infamous Stanley water bottle was about 40% off. So when exactly did that begin? And speaking to the broader impact of hydration promotions would be great.

Yes, sure. There's a lot wrapped in that question. I'll do my best to answer it. I would characterize promotions candidly quarter-to-date is fairly consistent with last year. I mean, we're an everyday value-based retailer. And we've cited multiple times, that means about 75% of what we sell is at our everyday price. We do have promotions. Those promotions generally happen around the big holiday events on the calendar. So that for us is Memorial Day, that for us is Father's Day, Fourth of July and back-to-school. So you will see promotional activity during those time periods. And when we looked at it, I would tell you it's fairly consistent with last year. In regards to some of the global offers I think you're citing, those may be more driven either through our app or through our site. We're certainly focused very hard on getting people to join our loyalty program. The reason we're focused on that is because we know that we can get somebody into our ecosystem, and we can start target marketing to them and getting them to shop with us more frequently. A more loyal customer shops with us 2 to 3 times more a year. They shop and buy a bigger basket. They tend to be more profitable customers for us and spend almost 4 to 5x what a normal customer does. So one of the things you're seeing us test into a little bit is trying to offer some good promotions to get people to kind of embed themselves into our ecosystem. And that, when you look at it, we're looking at the price of that onetime discount relative to the lifetime value of the customer more than pays for itself. So I wouldn't read too much into that. In regards to Stanley, Stanley has been on a run for obviously a couple of years now, and I think they have been in a place -- very verified place where they haven't had to take any markdowns and discontinued colors. I think they're starting to have to deal with some colors that are moving out of the assortment moving forward. And so they had a map break on some discontinued colors that we along with, I think, everybody who carried those colors participated in. That's been going on for about a week now. And I think this is just part of a normal course of the evolution of the business that as the business gets bigger and matures, they have to deal with the obsolete colors. And I think that's what you're seeing there.

Our next question comes from the line of Paul Lejuez with Citigroup.

This is Kelly on for Paul. Just want to follow up on the tariff commentary. It sounds like the pull forward of tariffs is accounted for quite a bit of the mitigation this year. So how do we think about the impact of tariffs as we look to F '26? And then I have a follow-up.

I'd love to answer that question. I mean this thing changes so rapidly. I feel like we've done a really good job of getting this year mitigated and having a good handle on it. What's going to happen between now and the end of the year I think is anybody's guess. We're not going to speculate on that. I think the strategies that we're focused on in terms of diversifying our sourcing base, reducing our exposure to China, and candidly, making sure that we don't have too much in any one basket, I think, is -- in any one country's basket, I think, is going to be important moving forward because you never know what the next country that's going to be kind of focused on. So I think gone are the days where you can just say, "hey, we're going to get out of China and not worry about it." Vietnam had a pretty high reciprocal tariff put on them as well as other countries. And so I think having a more diversified sourcing base is what our focus is there. As we move forward though into next year, we really believe that leaning into who we are, our value proposition in this space and making sure the value leader, leaning into our growth initiatives in terms of new store growth, leaning into our dot-com opportunities we have, I think all those things make us optimistic about the back half of this year and next year. But I can't tell you what the tariff situation is going to be next year at this time.

Okay. Got it. And then just want to follow up on the gross margin guidance. So is the current guidance, I guess, is that assuming all merchandise margin improvement driven? And then, I guess, within that pricing assumptions, what sort of ticket increases are you embedding in that guide?

I think we'll probably tag team on this one. I'll take the first part of that. So our guidance on top line as well as all the way down the P&L kind of models in three different scenarios. The midpoint you can think of as the tariffs that are in place right now; on the high end, it's basically every country at 10%; and then on the low end, it's everything that was paused reverts back in July and August upon those expiration dates. And so as we pulled forward inventory, we feel good about carrying that inventory at pre-tariff pricing. We have no regrets associated with that inventory position. It's going to serve us well throughout.

Yes, I'd say -- so embedded in this, I mean, I don't think it's all going to translate into price increases. So first, we talked about partnering with our factories. So they're bearing some of the brunt of this. And where we have a national brand partner, in a lot of cases, they're bearing some of the brunt of this, right? We're looking at how we're pricing and approaching this from a pricing offset perspective. We've got a pretty sophisticated pricing optimization engine called Revionics. And there's multiple ways to get at AUR increases to offset this. First, through promotional optimization. We're looking at how long we ran promotions last year versus this year and maybe looking at shorter windows. We're looking at the depth of promotions during those windows. Another way to get at it is through markdown optimization. We take goods and mark them down at the end of their life cycle, leveraging that as a way to maybe gain some AURs. And really so overall pricing increases, ticket increases, is kind of the last resort. And if and when we have to do that, our goal is a couple of things. First, we know that there are some key price points on our private brands, national brands that really drive traffic, protect those to make sure that the customers aren't seeing price increases there. So if we have to take price increases, it would be on ancillary categories that are less obvious to the consumer. I think one of the examples we use in the last call was if a bike is kind of the razor, the razor blade might be the bike seat, the bike pump or the bike lock, can we take some pricing up on some of the ancillary categories around it so it was obvious for the customer, and they still can find a great price on that key item they're coming in for. And you can take that same example and spread it across grills and fitness equipment and all those other big type of things as well. So I think it's a combination of ways that we're getting at mitigating this and how we're getting at price increases with kind of the last resort being physically raising prices.

Got it. And if I could just squeeze in one more. Could you just tell us what the April comp was ex the Easter shift?

We don't have that broken out. I can tell you it was mid to low single digits in total.

Mid- to low single digits in the total...

Total comp.

For April, including the Easter shift?

Yes. I mean, Easter was in the month of April this year, correct?

Our next question comes from the line of Robbie Ohmes with Bank of America.

Really just two, one quick one and maybe the other one might be quick as well. Just the softness in basketball and golf that you called out, was that all weather? Or was there anything else there? And then my other question is, I know it's early days, but would love to get initial thoughts on the DICK'S-Foot Locker merger. And if that might create some opportunities for you or how you guys are thinking about that competitively, but I would love to get your thoughts on that.

Yes. The first question, I would say, you're right. It was probably more weather-related than anything. In terms of the DICK's-Foot Locker merger, listen, DICK's is a great company. They're great competitors of ours. We're not going to comment on the rationale for their strategy or what they're doing. We're more focused on what we think our opportunities are. And as we look at this year, we're excited about the trade down we're seeing in higher-end traffic. We're excited about the performance of the new stores. We're excited about the growth we're seeing in our dot-com business. And we really see an opportunity the remainder of this year in executing our strategy. We're a full-line sports and outdoor retailer and are pretty different than a lot of our competition. We focus on not only sporting goods as well as shoes and apparel. We have a big outdoor business that really resonates with our consumer. We also, I think, attract a slightly different customer, younger family that's really getting and starting out their journey through sport. And so we're going to focus on serving our customers and executing our strategy. And I'm sure they're going to focus on theirs and be very successful executing what they're doing.

Our next question comes from the line of Kate McShane with Goldman Sachs.

This is Emily Ghosh on for Kate. We were wondering, is your tariff outlook incorporating any elasticity impact from you raising prices? And then how does your outlook take into account the overall health of the consumer in a higher-priced environment?

Yes, I'm sure Carl and I will tag team this. I would first say that if -- in a world where prices are going up, we use our pricing tool to measure elasticity. So certainly, I think there's some assumption that if AURs go up, there is some erosion in unit demand. And so one of the things Carl talked about in his prepared remarks was getting out in front of and canceling some receipts, some of that to cover the inventory pull forward that we did, but some of it to give us some dry powder so that we can react to what's happening in the marketplace maybe to take advantage of off-price opportunities. I would say, second, though, in terms of how does this impact the consumer and what is the health of the consumer. I think the consumer is a little skittish right now and I think we've seen that in choppy traffic. But as we think about the remainder of this year and you think about a world where inflation is probably realistic to think about, you break it down between discretionary and nondiscretionary spend. From a nondiscretionary spend perspective, you've got food. About 85% of what Americans eat is produced here. And so we think that, that part of nondiscretionary is going to be somewhat insulated from tariffs. I mean, obviously, I saw some articles yesterday about like price of steel impacting canned food. But we think that food prices should feel -- not feel as big a brunt as the rest of kind of merchandise -- general merchandise in American fields. On gas front, you've got the industry very -- I'm sorry, the administration very focused on holding down pricing there. So I think on the nondiscretionary spend, I think the customer is going to be okay. So what that puts you in a place of is on the discretionary side, the customer is going to really hopefully have the same amount of money but want to maximize their spending power. And we think when they do that, they're going to trade in the value. And we think that by remaining true to who we are, being the value provider in our space, we think we're going to benefit from that and have more people trade into Academy. And so that's really how we're thinking about the health of the customer and how this all plays out for the remainder of the year.

Our next question comes from the line of Greg Melich with Evercore ISI.

I had a question really on margins in sort of two parts. First, on the gross margin, I just want to make sure I get the cadence right here. With the up 60 in the first quarter and I think the midpoint of your guide being up 25 bps or something, with that inventory that you bought, does that give you 1, 2 or 3 quarters before we'd start to see some of the -- you basically get through that inventory and then we could see some pressure in gross margin offsetting the benefits from mix?

Yes. I think the $85 million that we pulled forward was in very strategic categories. I think we think that, that's going to get us to the other side of July and August expirations. I think at that point, look, we're going to have to see what the administration does associated with it. But we feel good about holding onto the value proposition through all of this. I really want to underscore that is what's driving these upper quintile customers to us.

But just to be clear, the character of this merchandise that we pulled in, we described it as evergreen. It is things that, by definition, don't have a markdown liability generally associated with them. Bikes don't go obsolete. Free weights don't go obsolete. Fitness equipment generally doesn't go obsolete. So it's a pull forward of goods that we would have received in the back half of this year, it's on product that is not seasonal in nature and it's at prices that are pre tariff. So it should allow us to maintain and hold our value proposition as we go into the third and even fourth quarter in some cases for some of these categories. So I don't think you have to worry about this inventory having some sort of a markdown or margin impact down the road. It will not and should not.

Got it. That's very helpful. And then on SG&A, I just want to make sure I got it right. The $7 million on the Jordan launch, is that the portion of the pressure in 1Q that we can just assume that goes away going forward? And that -- but the other things, the new stores and the other investments sort of stick around?

Yes, absolutely. It was $7.5 million, the precise amount that hit Q1. You should not think about that as impacting Q2 and later. If you look at the composition of the $36 million in gross, about $20 million of it was new stores. We've got 19 new stores compared to Q1. We talked about the $7.5 million, which is really just centric to Q1 in launching something that we're very proud of associated with the Jordan and the Nike expansion. And then there was a little bit of technology costs. We quoted supply chain. We quoted omni. But it's also some like customer -- some of the solutions that we're using to help us identify that customer and target them better. I think the first and the third ones of those, you should expect to continue. The guidance that we put out there still contemplates 100 basis points of deleverage for the year. And I think what you guys have seen from us over the last couple of years is we manage inventory well and we manage costs pretty well. But we're proud of the fact that we're investing in these initiatives, these things that we've told you that we were going to stand for. So where you can look for us to continue to invest and where all of that deleverage will come from is the strategies that are embedded within our long-range plan.

Our next question comes from the line of John Heinbockel with Guggenheim Partners.

Steve, why don't I start with I think you've got, right now, I think, 80 or 90, Jordan item SKUs, something like that. Where do you think that ultimately shakes out? You had cleats and maybe some other categories. Is it 2x that, and that's where it stays and then you freshen it up? And then the other part of that was when you think about the comp lift, do you think having Jordan drives traffic that benefits other categories? Or that's hard to tell?

So I'll start with the first part. So we expect the assortment to continue to grow as we go through this year and into next year. I don't have off the top of my head a number that it's going to be 2x or whatever the current size is. You're going to see -- I think we said in the prepared remarks, as we gain in new categories like football cleats, backpacks things like that for back-to-school, you're going to see those expand beyond the 145 doors that the core assortments' in. But obviously, we will continue to grow. I think the footwear assortment has already more than doubled since we launched. And you'll see that continue to grow. You'll see the apparel continue to grow. And I think you'll see it extend into new categories. And we think this is not just a once and done. We expect that to continue into next year. I think the Jordan Brand is going to offer us a growth platform for several years to come candidly as we expand in more categories and into more stores in the next year. I do believe that it helps bring in a different customer for us. I mean, we certainly picked it up because it was the #1 most requested brand on our site that we didn't have access to. So there was some internal searches for it, and that was probably customers who are shopping and certainly had to go other places to find it. But from looking at the traffic data that we're getting through place, we believe it's bringing in an incremental new customer. And we think that's evidenced by that acceleration and kind of trade across what we're seeing at the higher-end consumers. We're seeing more new consumers who didn't shop with us before making north of $100,000 a year finding us and bringing their dollars to spend with us. And we think a chunk of that is because of Jordan.

And just secondly, how do you think about -- I know seasonally you want to be careful with the receipts. How do you think about chasing in the back half of the year and the ability to do that? Or you just -- the prudent thing is to leave some sales on the table if you have to?

I think we have done a good job. The merchants have done a really good job of keeping our powder dry and maintaining liquidity. So if we see a trend happen and there's inventory available and we think it's at the right price, we will definitely chase it if we think it's going to convert into sales. we're not going to -- I think one of the things that Carl said earlier that I would agree with is I think inventory management is probably one of the strong suits of the Academy over the past 5 or 6 years. And so we're going to be good stewards of the inventory, but we're not going to be so focused on that we ignore opportunities. I mean, I think a great example of that is what we did in Q1. Normally, we would not have inventory up almost 15% in dollars, 6.5% units per store. But we saw an opportunity to leverage our balance sheet to grab some good inventory that didn't have a markdown liability attached to it at pre-tariff prices and we took it. I think you're going to see us continue that kind of mindset as it progress throughout the remainder of the year.

Yes. I haven't gotten any overt questions on inventory, so I kind of want to double-click on that just a little bit. Inventory up 15% on the face of the balance sheet, that's $200 million. If you look at it on a per store standpoint, plus 7.8%, that $85 million pull forward which I'm proud of, like I think the merchants did a great job of identifying domestic products and not paying 10% to 30% more for this in the back half of the year. If you back that out, cost per store is up like 2%. And then I do want to highlight tariffs in an effect on [Audio Gap] that's a year-over-year growth over last year. If you adjust for those two things, I think our inventory is tracking down negative 0.5%, which is pretty -- per store with where we are from an overall sales perspective at down 0.9%. So I'm proud of the team for inventory management, and I think it's going to be an asset, a strength for ours during the balance of this year.

Our next question comes from the line of Michael Lasser with UBS.

So quarter-to-date, the comp, negative. Yet Jordan has outperformed what you would expected it to be. Does this suggest that assortment excluding Jordan has actually gotten a little bit worse such that Jordan may not be as incremental as anticipated? And does this not peg the question of if the second quarter is negative despite the Jordan launch, what will it take for Academy to now produce a positive comp? And then I have a follow-up.

Yes. So no, I don't think it implies some weakness in the overall assortment. Certainly Jordan is a lift for us, but it's only in half the doors at this point. And it's not dramatically moving the needle yet. I think the Nike expansion that we put out there is right now driving a bigger comp increase for us because it's just a bigger vendor for us. I think some of the softness we saw in the first quarter in terms of episodic shopping and the customer kind of contracting back when there's not a reason to spend, I think continues into Q2. And I think that's going to continue all the way throughout the remainder of this year, and we planned that in. I think some of the categories we called out that were soft, particularly ammo, that was soft in the first quarter continued into Q2. I think what moves us to positive comps throughout this year is leaning into the strategies that we've articulated. And I think we're also, as we get in later into this quarter, up against some pretty big slowdown from last year post Father's Day where we were bringing in a new warehouse management system that impact our ability to fulfill a chunk of our stores down in the Atlanta area, a couple with some storms. So I think we're still optimistic about the remainder of the quarter and don't feel like there's some underlying softness there that we haven't accounted for in our forecasts and projections.

Okay. My follow-up question is Academy is now looking at a broader sporting goods retail landscape, where not only is there a potential combination of two of its larger competitors, but also a key vendor that is rapidly growing its wholesale distribution footprint again across the online-only players as well as some entry price point players. Does this not suggest that Academy should proactively lower its margins to drive sales before the market forces it to do so as a result of increased competition over time?

Well, I mean it's -- you're kind of bailing your question there. But I mean, I guess what I would say is the combination of two competitors that already existed in the marketplace I don't think changes the dynamic that much for us. I mean, Michael, I said this earlier. We're more broad-based than just footwear and apparel. We sell certainly footwear and apparel as a chunk of our business, but big outdoor business, hunting, fishing, camping. We do a big recreation business, backyard, grilling, et cetera, that I think puts us in a pretty unique space in the marketplace in terms of the breadth of our assortment. And we're going to continue to lean into those things that we're good at and make us different and set us apart. At the same time, I think we already do offer a really good value relative to, I think, both competitors you mentioned. And we're not going to lose sight of that. We're going to continue to maintain our value and our value positioning in the space to make sure that any kind of pricing increases that creep their way into the marketplace that we're still very focused on maintaining our relative value to competition. So I don't see this changing the dynamic that much for us. We're off mall. A lot of the stores we're talking about are on mall. So we're attacking a different customer. We're in more midsized markets outside of Texas versus large markets. So I think there's plenty of room for both to coexist. And at the heart of your question, if we thought lowering margins would drive more market share and more top line sales, we could hold margin dollars constantly, we'd certainly look at that. We haven't seen anything to indicate that, that would actually play out yet. I think we have got time for one more question.

Our final question this morning comes from the line of Anthony Chukumba with Loop Capital Markets.

So you talked about the strength in higher income cohorts, which is certainly encouraging. How would you characterize the traffic with more of your -- kind of your core customer? Because I'm just thinking that if you had strong growth with the higher income customers and you sort of net out at mid-single digits for traffic decline, I'm just trying to see what that implies for your lower income customers.

Yes. I mean we look at it the same way that what you're asking. So basically, 1/3 of our customers are in quintiles 4 and 5. They're growing. A 1/3 of our customers are in quintiles 1 and 2, so basically households that make less than $50,000. They're shrinking. But the growth in Q 4 and 5 is outpacing the shrinking in quintiles 1 and 2. And then 1/3 makes about $50,000 to $100,000, which is kind of our sweet spot, our core. We saw that quintile 3, what you call the core customer or those that make $50,000 to $ 100,000 inflect positive in April. I think we're going to continue to see quintiles 4 and 5 growing at an outpaced rate to what we're losing at below $50,000. And I think making sure that we have initiatives that are in our base markets that attract those $50,000 to $100,000 customers to us or to shop more frequently is really important I think the stuff that we're doing with customer and customer targeting, we've come a long way there. I think eCommerce lifts all boats. I'm really excited about kind of these technology rollouts that we're doing in stores. We're seeing a lot of lift associated with the [indiscernible] sale kind of associate handheld device and RFID things that we're doing, and then Jordan. I think these are things that kind of are in that $50,000 to $100,000. And I think that's -- if we get three of those quintiles, I think that's a really good outcome.

Got it. That's helpful. And then just one quick follow-up. So you mentioned -- and I just wanted to kind of clarification. We're opening 20 to 25 stores this year. And I'm just trying to think about what's the reasonable expectation for next year, particularly given your commentary on potentially kind of moving back store openings because of potential tariff impact.

Yes. So what we're trying to signal there is we're not giving guidance for next year. But if you go back and look at our original long- range plan, I mean, there was an acceleration from year-to-year. I will tell you this year, I think we scaled that number back. I think we're supposed to be 30 to 35, and we're like 20 to 25. So I think you could imply probably something accelerating based off what we're thinking about this year. But right now, what we've done is just hit pause on signing a lot of new leases until we can get a beat on what the construction costs are going to be. At this point, we would see what we initially would open up in Q1 moving into Q2. So we'll give you more details on that as we get more color on it. But I don't see a change in the overall number for next year. I think it's just maybe shifting a little bit more out of Q1 into Q2. And as you know, we try to move more up in the front part of the year. So we just wanted to signal that, that may be a little more Q2- weighted to make sure than we'd hope for, just based off of trying to make sure we get a good view on what's happening from a costing for those stores.

Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Lawrence for any final comments.

Thanks. As I always do, I want to sincerely thank our 22,000-plus Academy team members who tirelessly work to give our customers an outstanding shopping experience. I also want to thank our analysts, investors and vendors for listening to our call today. Despite the uncertainty we all face, we feel very confident in our strategy and believe that we're well positioned to not only meet the current challenges, but come out of this year better position than ever to serve our customers and deliver long-term growth. I want to leave you by reiterating a few proof points that give us confidence that our strategies are starting to take hold. First, all the work we put in has helped our eCommerce business run a 10% increase during Q1. Second, the 2022 and 2023 vintages of stores continue to comp positive. Third, we're gaining market share in the face of a challenging consumer environment driven by an acceleration in customer traffic and consumers whose households make $100,000 and greater. And fourth, our Jordan Brand launch and Nike expansion plans are just starting to bear fruit and should provide a tailwind in the remainder of the year. Thanks for joining us today, and have a great rest here.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.