In the second fiscal quarter ending on August 3, Academy Sports + Outdoors Inc. reported a 2.2% decline in net sales, totaling $1.55 billion. This downward trend in sales reflects a 6.9% drop in comparable sales, which worsened from the previous quarter’s 5.7% decline. CEO Steve Lawrence pointed to several factors influencing this downturn, including economic challenges, distribution center backlogs tied to a new warehouse management system, and severely adverse weather conditions impacting its key markets.

Despite the overall sales slump, Academy Sports + Outdoors managed to record a 30 basis point increase in e-commerce, with online sales now accounting for 9.7% of total revenue. This achievement underscores a growing trend within the retail sector where digital channels increasingly bolster business growth, even when physical store sales wane. As evident in their earnings call, Academy Sports anticipates reaching approximately $734.26 million in e-commerce sales for 2024, according to projections by Digital Commerce 360.

The company’s challenges come at a time when its core customer base, primarily active families earning between $50,000 and $150,000, has tightened its spending habits due to inflation and rising credit card debt. Chief Financial Officer Carl Ford noted that although inflation is showing signs of easing, consumers remain cautious in their purchasing decisions. This is especially pertinent as recent data suggest high household debt levels, which has led to increased utilization of credit cards and buy now, pay later (BNPL) services.

The impact of seasonal shopping patterns also contributed to the company’s performance. While recent high-profile shopping events such as Memorial Day and Father’s Day drove strong sales, back-to-school purchases in July were slower than expected, with many consumers pushing purchases into August. Moreover, severe weather events, such as tornadoes and Hurricane Beryl, disrupted business operations in essential markets.

However, there are silver linings amidst these challenges. Academy Sports retained much of its business gained over the past five years, with Q2 sales reflecting a remarkable 25% increase compared to pre-pandemic levels. The company is actively working to expand its footprint, having opened new stores and planning additional openings in the upcoming fiscal year. In Q2 alone, Academy Sports opened one new location and aims for 15 to 17 new store launches by the end of fiscal 2024.

Furthermore, the retailer’s recent partnership with DoorDash for same-day delivery services has shown promising early results. This initiative has attracted younger, urban customers—especially in areas lacking physical stores—by offering delivery times under an hour. Importantly, with the integration of this delivery service planned for Phase 2, orders from DoorDash are set to contribute directly to Academy Sports’ e-commerce revenue, enhancing its overall online presence.

In terms of customer loyalty, the launch of the “myAcademy” rewards program is proving beneficial. This program provides members with incentives such as a 10% welcome discount and free shipping on orders over $25, significantly improving user experience compared to non-members. Daily signups for the program have tripled, putting Academy Sports on track to exceed 10 million members by the end of 2024.

Looking toward the future, the company has revised its sales outlook for fiscal 2024 to between $5.9 billion and $6.1 billion, indicating a projected decrease of between 4.3% and 1.4% from the previous year. As Ford pointed out, the outcome will rely heavily on trends observed in August, as well as the efficacy of new store openings, enhanced marketing strategies, promotions, and the success of growing their loyalty program.

In summary, although Academy Sports + Outdoors faces a challenging retail landscape characterized by economic headwinds and fluctuating consumer behaviors, its e-commerce segment continues to thrive. By leveraging strategic partnerships, enhancing customer loyalty initiatives, and expanding their physical presence, the company is positioning itself to navigate the complexities of today’s retail environment effectively.