Academy Sports and Outdoors, Inc. (ASO) had one of those classic good news, bad news earnings reports on Tuesday. The sporting goods retailer beat profit expectations handily, but investors weren't thrilled about the revenue shortfall.
The company posted adjusted earnings of $1.14 per share for the third quarter, comfortably ahead of the $1.06 that analysts had penciled in. But quarterly sales came in at $1.384 billion—a 3% increase year-over-year—which fell short of the $1.403 billion that Wall Street was expecting.
Here's where things get interesting, though. Comparable sales declined just 0.9% in the quarter, which might not sound great until you realize that's a massive improvement from the 4.9% drop a year ago. The company is clearly moving in the right direction.
The real story is in the margins. Gross profit jumped to $493.41 million from $456.71 million last year, and gross margin expanded to 35.7% from 34%. That's the kind of improvement that suggests Academy is doing something right with pricing and cost management.
Academy isn't sitting still on expansion either. The retailer opened eleven new stores during the quarter, bringing its footprint to 317 locations across 24 states. Management is planning an even bigger push in fiscal 2026, targeting 20 to 25 new store openings.
Adjusted EBITDA climbed to $141.49 million from $133.51 million in the prior-year period. The company ended the quarter with $289.487 million in cash and equivalents, down slightly from $295.996 million a year earlier.
CEO Steve Lawrence struck an optimistic tone, noting that the company is pushing forward with growth strategies despite economic headwinds. He highlighted that the holiday season kicked off as expected and delivered a record Black Friday, with early momentum backing up Academy's claim as the value leader in sporting goods retail.
