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Item 1. Business

2022-03-29 compared with 2021-04-07 · 210 added, 340 removed, 156 unchanged (78% of the section changed)

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Academy Sports + Outdoors is one of the leading full-line sporting goods and outdoor recreation retailers in the United States.

We estimate that we served 30 million unique customers and completed approximately 80 million transactions in 2020 across our seamless omnichannel platform and highly productive stores, resulting in net sales of $5.7 billion and making us the largest value-oriented sporting goods and outdoor recreation retailer in the country.

We have continually increased our market share by expanding our leadership in fast-growing merchandise categories and offering a broad, value-oriented assortment with deep and localized customer connections.

We believe the following key attributes differentiate us from our competitors:

Originally founded in 1938 as a family business in Texas, we now operate 259 stores across 16 contiguous 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, apparel, sports & recreation and footwear (representing 32%, 27%, 22% and 19% of our 2021 net sales, respectively) through both leading national brands and a portfolio of 20 owned brands, which go well beyond traditional sporting goods and apparel offerings.

We believe the following attributes differentiate us from our competitors:

• Value-based assortment that enables our customers to participate and have fun, no matter their budget.

• Broad assortment that extends beyond sporting goods and apparel to outdoor recreation.

• Emerging, rapidly growing and profitable omnichannel strategy that leverages our strong buy-online-pickup-in-store program ("BOPIS") and shipping fulfillment capabilities.

• Broad assortment that extends beyond sporting goods and apparel to outdoor recreation and is localized for individual stores.

• Emerging, growing and profitable omnichannel strategy that leverages our buy-online-pickup-in-store program ("BOPIS") and shipping fulfillment capabilities.

• Strong customer loyalty, with opportunities to increase penetration in existing markets.

• Regional focus in the southern United States with a strong and growing presence in six of the top 10 fastest-growing Metropolitan Statistical Areas (or "MSAs").

• Regional focus in the southern United States with a growing presence in some of the fastest-growing Metropolitan Statistical Areas (or "MSAs").

• Core customers comprising active families that we support with one-stop shop convenience.

• Significant whitespace opportunity for both in-fill and adjacent geographies and new markets.

• Strong financial profile with accelerating performance and attractive cash flow generation.

Originally founded in 1938 as a family business in Texas, we have grown to 259 stores across 16 contiguous 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, apparel, sports & recreation and footwear (representing 35%, 25%, 22% and 18% of our 2020 net sales, respectively) through both leading national brands and a portfolio of 19 owned brands, which go well beyond traditional sporting goods and apparel offerings.

Our retail locations range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, and have no mall exposure.

Our box size and layout create a spacious in-store experience for the current shopping environment and easily accessible front of store checkout that drives efficiency for our BOPIS and curbside pickup customers.

Our stores are supported by over 22,000 knowledgeable team members offering a high-touch service element.

Our stores have remained open during the COVID-19 pandemic as a result of our essential product offering and enhanced safety measures, resulting in continued market share gains and greater visibility in newer markets to the Academy brand and increased community connections.

We operate three distribution centers that service our stores and our growing e-commerce platform, which reaches 47 states today.

We have significant new store whitespace and our disciplined approach to store openings has allowed most stores to achieve profitability within the first twelve months of opening a store.

We are continually assessing the number of locations available that could accommodate our preferred size of stores in markets we would consider and we expect to open eight to 10 new stores per year, starting in 2022, which is similar to our growth rates from 2018 to 2019.

We are active members of the communities in which we operate.

We have a strong and growing presence in four of the top five, and six of the top 10, fastest-growing MSAs, in the United States, including Dallas, Houston, Atlanta, Austin, Charlotte and San Antonio.

Our long-time customers have grown up with the Academy brand over time and pass their passion for us on to the next generation, enabling us to benefit from strong customer loyalty and shopping frequency in our embedded regional markets.

Our broad assortment appeals to all ages, incomes and aspirations, including beginning and advanced athletes, families enjoying outdoor recreation and enthusiasts pursuing their passion for sports and the outdoors.

We enable our customers to enjoy a variety of sports and outdoors activities, whether they are trying out a new sport, tailgating for a sporting event or hosting a family barbecue.

We enhance our customers’ shopping experience through our knowledgeable and passionate team members and value-added store services, making us a preferred, one-stop shopping destination.

We carefully tailor our products and services to meet local needs and offer our customers memorable experiences that help us maintain lasting emotional connections with our loyal customer base and the communities we serve.

We sell a range of sporting and outdoor recreation products.

Our strong merchandise assortment is anchored by our broad offering of year-round items, such as fitness equipment and apparel, work and casual wear, folding chairs, wagons and tents, training and running shoes and coolers.

We also carry a deep selection of seasonal items, such as sports equipment and apparel, seasonal wear and accessories, hunting and fishing equipment and apparel, patio furniture, trampolines, play sets, bicycles and severe weather supplies.

We provide locally relevant offerings, such as crawfish boilers in Louisiana, licensed apparel for area sports fans, baits and lures for area fishing spots and beach towels in coastal markets.

Our value-based assortment also includes exclusive products from our portfolio of 19 owned brands.

Nearly 20% of our 2020 sales were from our owned brands, such as Magellan Outdoors and BCG, which offer a distinct offering to our customers and approximately 56% of our customers purchased an owned brand item from us in 2020.

Our merchandising creates a balanced sales mix throughout the year with no single season accounting for more than 28% of our annual sales.

Our stores deliver industry-leading unit sales and profitability, including 2020 net sales per store of $22.0 million, average total sales per square foot of $311, and average EBITDA per store of $2.3 million.

Our customers love the Academy store shopping experience because they are able to easily find, learn about, feel, try on and walk out with their favorite items.

Our one-stop, convenient store layout, together with our highly trained team members offering value-added customer services, drive strong and consistent store foot traffic and transaction volume, with our average customers visiting our stores two to four times per year and our best customers visiting our stores nine times per year.

The majority of our stores are located in high-traffic shopping centers, while none of the stores are located in, or anchored to, malls.

Our emerging, profitable e-commerce platform that leverages our strong BOPIS and shipping fulfillment capabilities has achieved year-over-year sales growth of 138% and 8% during 2020 and 2019, respectively.

Our e-commerce sales represented 10% and 5% of our merchandise sales in 2020 and 2019, respectively.

We are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities.

Our BOPIS program, launched in 2019, allows customers to place an order on our website and pick up their product at a desired location, either in-store or curbside.

Our website also serves as a platform for marketing and product education, enhancing our customer experience and driving traffic to our stores.

For example, our website includes an “Expert Advice” page, which provides articles, tips, advice and links to video demonstrations on how to best select, use and get the most out of our products.

Our website is introducing new customers to the Academy brand, with approximately 39% of our e-commerce sales during 2020 coming from new households.

We serve our communities by supporting events, programs and organizations that help make a positive impact, including the sponsorship of over 1,500 local sports teams.

We promote and encourage safety and responsibility, so that everyone can feel confident and comfortable doing what they love, by offering products and information that enable our customers to be smart, responsible and safe.

We have a long history of providing essential products for crisis preparedness and have helped our communities, customers and team members through various natural disasters and crises.

For example, during Hurricane Harvey, we provided first responders with boats, paddles, ponchos, sleeping bags, air beds, backpacks and fresh clothes, as well as a safe, dry place to camp on our corporate campus.

During the ongoing COVID-19 pandemic, we have donated emergency ponchos and footwear for health care workers to use as personal protective equipment.

By providing our communities with the right gear and knowledge, promoting safety and responsibility and being there in times of need, we help to solidify our role as a trusted partner where we operate and to better enable our customers to improve their quality of life.

We finished the fiscal year ended January 30, 2021 with approximately $5.7 billion in sales, $308.8 million of net income and $607.0 million in Adjusted EBITDA.

Although comparable sales were negative for fiscal years 2017, 2018 and 2019, we have seen six consecutive quarters of positive comparable sales and Adjusted EBITDA growth as of the 2020 fourth quarter.

We earned net income of $308.8 million, $120.0 million and $21.4 million and Pro Forma Adjusted Net Income of $311.7 million, $75.9 million and $41.3 million in 2020, 2019 and 2018, respectively.

See “Part II — Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Measures” for definitions of Adjusted EBITDA, Pro Forma Adjusted Net Income and Adjusted Free Cash Flow and reconciliations of Adjusted EBITDA and Pro Forma Adjusted Net Income to net income and Adjusted Free Cash Flow to net cash provided by operating activities.

Our Performance Improvement Initiatives

We have made significant progress on several key performance improvement initiatives that drove positive comparable sales and Adjusted EBITDA growth in the last six consecutive quarters ended January 30, 2021, and created a foundation for our future growth.

These key initiatives include:

• Strengthened leadership team – Our leadership team comprises nine highly experienced and proven individuals, seven of whom joined Academy since 2017, led by our Chief Executive Officer and including our Chief Financial Officer, Chief Merchandising Officer, EVP of Retail Operations, SVP of Logistics and Supply Chain, SVP of Omnichannel, and Chief Information Officer.

Our leadership team also recently demonstrated its ability to adapt, operate and gain market share and new customers during the most challenging of retail environments, including its ability to safely operate our stores and distribution centers, source and deliver our merchandise, and manage our liquidity and expenses in all elements of our business during the COVID-19 pandemic.

• Build omnichannel – After investing approximately $50 million in our omnichannel capabilities from 2017 through 2019, we launched several new omnichannel initiatives in 2019, including our BOPIS program, ship-to-store program and new website design, content and functionality.

While still early in our omnichannel strategy, we have built a profitable omnichannel business that is poised for continued growth and improvement of capabilities.

• Localized merchandising – Since 2018, we improved the localization of our assortment across selected inventory offerings.

For example, a crawfish boiler sells well in Louisiana, but not in North Carolina, and our fishing assortment sells better in stores with closer proximity to fishing venues.

This initiative resulted in an improved customer shopping experience and increased sales.

• Category focus – In 2019 and continuing into 2020, we improved and focused our assortments in priority product categories, such as team sports, fishing and outdoors, while exiting certain other product categories, such as luggage, electronics and toys, that were less profitable or unprofitable, slower moving, and not core to our sporting goods and outdoor offering.

• Enhance store optimization – We leverage technology to enable our store team members to better manage, prioritize and reduce tasks to give them more time to engage in customer service, thereby increasing our productivity and sales conversion.

• Digital marketing program – During the last two years, we shifted our primary marketing focus from print to digital marketing.

Our improved website also supports our stores with digital marketing and our BOPIS program.

Each of these initiatives has given us a closer connection with our customers.

• Implement loyalty program – We launched the Academy Credit Card program in May 2019, which constituted approximately 4.5% of 2020 net sales.

Academy Credit Card represents a significant opportunity to build customer loyalty, as our Academy Credit Card customers both spend more per trip and visit our stores more often.

• Programmatic inventory management – We implemented a new disciplined price markdown strategy that has improved our margins and inventory management, as well as a new merchandise planning and allocation system that enables us to target inventory by store market to allow us to localize our offerings and sizes.

This along with automated inventory ordering drove a significant amount of our margin expansion and improved inventory turns from 2.84x in 2019 to 3.89x in 2020.

• Develop small box format – We opened our first small format store (approximately 40,000 square feet) in Dallas, Texas in 2019.

We believe this new smaller format store allows us to open new stores in urban and less dense areas.

During 2020, this smaller format store experienced approximately 28% higher sales per square foot and 37% higher inventory turns than the average of all Academy stores, the latter of which had $311 sales per square foot and 3.89x inventory turns.

We evaluate performance inclusive of store sales, as well as BOPIS sales and other fulfilled sales from the location.

More recently, as a result of the COVID-19 pandemic, consumers are spending more time at and around home engaging in recreation and leisure activities that include our key categories.

The outdoor recreation industry, in particular, has tailwinds arising out of the COVID-19 pandemic, as indicated by a survey from Civic Science, stating 49% of Americans expect to be doing more outdoor recreational activities in the future in order to facilitate social distancing.

We expect that this will continue throughout the duration of the pandemic and will result in a long-term increase to our customer base.

The industry has seen unprecedented increases in participation across several categories which we consider to be our “power categories.” This includes outdoor (comprised of camping, hiking and kayaking), fitness, running and team sports, which saw participation increases of 9%, 4%, 3% and 2%, respectively, from 2015 to 2019.

According to Allied Market Research, sales growth from 2019 through 2027 in categories we participate, such as outdoor, team sports, apparel and footwear, is expected to grow approximately 6% per annum.

We have invested in and built our operating platforms over the last several years and, coupled with our product offering and accessible stores, have laid the foundation for our future growth and success in this environment.

It is difficult to ascertain with precision what portion of our increased comparable sales during 2020 is attributable to the increase in e-commerce sales due to the COVID-19 pandemic as compared to the impact of the business improvements described above.

We compete in a $70 billion fragmented market of retailers that sell sporting goods, outdoor recreation products, fan shop, apparel, footwear and other nontraditional sporting goods and general merchandise, such as casual and work apparel, barbecue and cooking equipment, patio furniture, outdoor games, severe weather supplies and pet care.

• Significant whitespace opportunity for new stores for both in-fill and adjacent geographies and new markets.

We believe we sit in a sweet-spot of consumer demand, offering a broad, value-based assortment of sporting goods and outdoor recreation products, so our customers can participate and have fun, no matter their budget.

Sporting goods shoppers consistently rate us as the top retailer for offering sporting and outdoor recreation products for a wide range of customers and being a one-stop shop.

We carefully curate our products to provide the right assortment that appeal to beginners, experts, families and casual participants.

Our access to national brand and owned brand merchandise creates a comprehensive portfolio of value-based and diversified products, spanning various price-points, that differentiates our assortment from our peers.

Our category, brand and price-point mix is unique to Academy and difficult to replicate at other retailers.

Approximately 80% of our 2021 merchandise sales was comprised of national brand products, with the remainder coming from exclusive products in our portfolio of 20 owned brands.

We have minimal product overlap with direct-to-consumer brands and competitors.

No single brand we carry accounted for more than 11% of our 2021 sales.

We endeavor to offer products for customers of all ages, incomes and aspirations across sporting and outdoor recreation activities, seasons and experience levels.

As such, we have a balanced, year-round business and a large customer base.

Our average customer visits our stores anywhere from two to three times per year.

Strategic Priorities

We made tremendous progress against our 2021 key business priorities.

For omnichannel, we implemented improved search capabilities, increased check-out speed, added more payment options and launched a new mobile app.

To enhance our customer shopping experience, we focused on better service, better looking stores, and better products.

We continued to enhance our merchandise planning and allocation capabilities to increase our inventory efficiency and optimize our markdown strategy to increase sales and expand gross margin.

In addition, we have taken measures to protect and strengthen our supply chain.

In 2022, we are continuing our efforts to be the best sports and outdoors retailer in the country.

We expect to do this by executing on these key priorities:

• Creating a consistent and meaningful omnichannel business that delivers a true omnichannel experience for the customer;

• Providing a great customer experience across all of our points of contact that drives loyalty and long-term growth;

• Growing our store base to strengthen existing markets and enter new ones successfully;

• And we expect to foster our continued growth by:

◦ Strengthening the efficiency and effectiveness of our supply chain;

◦ Developing and retaining an industry leading retail team;

◦ Maintaining and scaling our IT capabilities.

The retail business is highly competitive based on many variables including price, product assortment, customer service, omnichannel experience and store locations.

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Our primary competitors are large format sporting goods stores and mass general merchants that offer sporting goods, outdoor recreation products and other lifestyle and recreational merchandise.

While our average store size of approximately 70,000 square feet positions us as a large format store, our extensive and diverse assortment and everyday value proposition differentiate us from our competitors and enable us to take market share from each of these categories.

For instance, our broad selection gives us a competitive advantage over value-based mass general merchants, which typically only carry a narrow selection of lower-end sporting goods and lack our access to national brands, and small traditional sporting goods stores, which do not carry our broad assortment or category depth.

Additionally, our broader assortment and value-based pricing give us an advantage over the specialty retailers, which typically offer their more limited assortment at premium prices.

The overall U.S.

sporting goods and outdoors recreation industry is constantly evolving and demand for certain sports and outdoors recreation goods may increase or decrease depending upon the economics, demographics or popularity of each activity.

We monitor local demographics and buying trends and tailor our merchandise assortment to the preferences of the local community.

As interests change, our broad selection allows us to adapt to shifts and expand or contract our product mix to meet the changing customer demand.

Over the last two years, there have been a number of market trends and tailwinds in our favor.

We believe we are well positioned to capture the demand from the rising popularity of fast growing trends, including athleisure wear, insulated coolers and cups and outdoor recreation, such as fishing.

Additionally, we benefit from recent shifting of customer spend towards in-home health and wellness and dedicating more time to memory-making experiences.

More recently, as a result of the COVID-19 pandemic, consumers are spending more time at and around home engaging in isolated recreation and leisure activities that we support and, we expect that this will continue throughout the duration of the pandemic and will result in a long-term increase in our customer base.

The rising popularity in loyalty to premium brands, and importance of experience for customers also serve as constructive tailwinds to our business.

We believe we are well positioned to capture an increasing portion of the wallets of important growing demographics, such as female and Hispanic customers.

Female customers constitute a large and growing portion of our business (48% of our customers in 2020), with our targeted and diverse merchandise that consciously supports women’s active interests.

In addition, mothers who shop with us are not only buying for themselves, but for their family as well.

We believe our footprint and localized offerings also position us well to serve the significant growth of the Hispanic population (16% of our customers in 2020, up from 15% in 2019 and 14% in 2018), the nation’s fastest-growing demographic.

Currently, we have stores in four of the top eight fastest growing Hispanic MSAs in the United States, including Houston, Dallas, Orlando, and San Antonio.

We have proven to be adaptive through periods of significant industry transformation.

As consolidations and e-commerce disruption have threatened and, in some cases, played a role in shutting down some of our peers, we have taken advantage of these changes by taking market share.

Our value-based operating strategy and expansive assortment beyond traditional sporting goods, such as our outdoor gear and work wear categories, have been keys to our success, because they provide a one-stop shop for our customers who are searching for assortment, value and convenience.

Our Competitive Strengths

We attribute our success to the following competitive strengths:

Regional leader in growing industry

We are the second largest full-line sporting goods and outdoor recreation retailer in the United States, with 2020 net sales of $5.7 billion.

We believe our stores are well positioned geographically, with a strong and growing presence in six of the top 10 fastest-growing MSAs, including Dallas, Houston, Atlanta, Austin, Charlotte and San Antonio.

As of January 30, 2021, 29% of our stores are in four of the top five fastest-growing MSAs.

This deep penetration of our established markets results in high customer awareness of, and loyalty to, the Academy name and frequent visits to our conveniently located stores.

The size of the sporting goods and outdoor recreation industry was estimated at $70 billion in the United States in 2018, and it is growing.

Broad assortment and compelling value proposition across the spectrum

Sporting goods shoppers consistently rate us as the top retailer for offering sporting and outdoor recreation products for a wide range of customers and being a one-stop shop.

We carefully curate our products to provide the right assortment that appeal to beginners, experts, families and casual participants.

In May 2020, over one-third of our customers tried a new sport or activity and came to Academy for the products they needed to get started in their new pursuit.

We are the largest value-oriented sporting goods and outdoor recreation retailer in the United States.

Our sporting goods customers ranked value as the most important driver in deciding where to shop and Academy was rated as the top retailer for value among sporting goods retailers.

We maintain our leading value-oriented position by offering customers extensive choices of “good, better and best” merchandise at a range of competitive prices, coupled with convenient omnichannel solutions, a one-stop shopping experience and helpful customer services, such as free assembly of certain products, product demonstrations, hunting and fishing license certifications, fishing line spooling and bulk product carrying out, among others.

We offer a price-beat guarantee where, if our customers find a lower price on an identical, in-stock merchandise advertised in print by any local retailer or select online retailers, we will beat that price by 5%.

Our effective merchandise mix and compelling value proposition allow us to cater to both the price-conscious shopper, such as the active parent of a household with several children participating in various sports, and the discriminating shopper, such as the hunting and fishing expert.

We are for all.

Diversified mix of industry-leading national brands and owned brands

Our category, brand and price-point mix is unique to Academy and difficult to replicate at other retailers.

Approximately 80% of our 2020 merchandise sales was comprised of national brand products, with the remainder coming from exclusive products in our portfolio of 19 owned brands.

We have minimal product overlap with direct-to-consumer brands and competitors.

No single brand we carry accounted for more than 10% of our 2020 sales.

We have premium access to hundreds of well-recognized national brands, such as Nike, Carhartt, adidas, Under Armour, Columbia Sportswear, North Face and Winchester, which are critical to our market penetration.

These brands rely on us to broaden their consumer reach, which fosters a mutually beneficial relationship when it comes to pricing and assortment.

We play a critical role in delivering customer volume for these brands, especially as mall-based retailers face further headwinds and our industry consolidates.

Our national brand assortment spans across each brand’s price spectrum beyond those of our competitors and we expand below the national brand price spectrum by complementing the assortment with our owned brands.

As such, we receive favorable product exclusivity from leading suppliers.

Our owned brand portfolio consists of 19 brands, including Magellan Outdoors, BCG, Academy Sports + Outdoors and Outdoor Gourmet.

Our owned brand strategy focuses on in-filling categories and price points that our national brand products may not satisfy.

Our owned brand offerings support and complement our overall merchandising strategy due to limited price-point overlap with national brands.

Our two largest owned brands, Magellan Outdoors and BCG, are among our fastest growing brands, growing year-over-year at 9.1% and 4.0% in 2020, respectively.

Additionally, our owned brands generate strong brand equity and drive significant customer loyalty, as several of our exclusive products, such as the Academy-logo folding chair and folding wagon, are top-selling items.

Approximately 56% of our customers purchased an owned brand item from us in 2020.

Whether it is seeing a row of Academy-branded chairs at a softball game, or individuals wearing Magellan Outdoors shirts around town, our owned brands are worn and used throughout our footprint.

Differentiated in-store experience

Our differentiated in-store experience, convenient locations and our helpful team members ensure that our customers can rely on us on any given day or situation in our region to deliver the right product at a competitive price.

We provide a localized in-store experience that allows us to deepen our customer relationships.

We tailor our product assortment by store, season and market to enhance year-round profitability.

For example, our customers expect us to carry the right baits and lures customized for the local fishing spots, such as heavier selections of saltwater lures in our coastal locations.

Stores with different climates and seasonal patterns each receive an assortment that better matches the local conditions.

Stores located near a university carry a large selection of that school’s licensed apparel giving them a look and feel of the local bookstore, which appeals to the nearby loyal fans and customers.

We consider crawfish cookers to be an absolute necessity for our customers in Louisiana, and beach towels are a stronger seller in coastal markets than they are in inland markets.

Our customers often shop our stores for same-day-need purchases, such as before a big game with unexpected weather changes, or to purchase an add-on product that was forgotten on a day trip.

We have developed considerable expertise in identifying, stocking and selling a relevant assortment to meet the local needs and demands.

We provide an engaging customer shopping experience that drives customer traffic.

Our visual merchandising strategy creates an entertaining and interactive in-store shopping experience for a broad range of shoppers.

Our stores generally have consistent store layouts providing our customers with familiarity across our entire store base.

Our in-store experience is further enhanced by the value-added customer service delivered by our highly trained and passionate staff.

Value-added services we provide include free assembly of certain products, such as bicycles, grills and bows, fitness equipment demonstrations, issuances and renewals of hunting and fishing licenses, fishing line spooling and carrying bulk items to the car, among others.

We sell many products, such as baseball bats and gloves, football helmets, fishing rods and reels, fitness equipment and bicycles, that require a “touch and feel” experience, as well as bulky items that would otherwise be difficult or costly to ship.

We employ team members who we fondly refer to as our Enthusiasts–passionate local experts who are specially recruited and trained for category-specific positions.

Our Enthusiasts use the products they sell and have the first-hand knowledge of the communities they serve, allowing them to advise and equip customers with products that suit the customers’ specific needs and the nuances of the local environment.

We believe our stores often serve as gathering spots, as our customers come back to engage with our Enthusiasts to share experiences and obtain further advice and assistance.

Large and loyal customer base

We endeavor to offer products for customers of all ages, incomes and aspirations across sporting and outdoor recreation activities, seasons and experience levels.

As such, we have a balanced, year-round business and a large customer base.

In 2020, we estimate we served 30 million unique customers and we completed approximately 80 million transactions, resulting in strong household penetration in our core markets.

Our customers love shopping at Academy.

Our average customer visits our stores anywhere from two to three times per year and our best customers visit our stores nine times per year.

Academy customers are loyal.

Based on our customer surveys, approximately 30% of our customers’ annual sporting goods, outdoor and recreation expenditures are made at Academy, in comparison to approximately 20% for our competitors that are large format sporting goods stores and specialty outdoor retailers and their customers.

During 2020, we estimate we have gained approximately five million new customers.

While we serve all customers, our core customers are young active families who are driven to have a life full of different sports and outdoors recreation activities.

For these customers, fun is forever at their fingertips, and they constantly look for ways to create memories together as a family.

Being a conveniently located, value-oriented, one-stop shop for fun merchandise is why these customers love to shop at Academy.

When these families shop at Academy, they often split up to find the items for their respective activities and meet back together before checking out.

Our core customers are more active shoppers – they shop us more often and are more likely to be omnichannel customers.

Fans and spectators also constitute a large part of our customer base.

Academy-branded folding chairs and wagons are frequently spotted at any local sporting or spectator event.

We are active members in our communities, sponsoring events for the NCAA Southeastern Conference, local events, such as the Bassmaster Classic fishing tournament, and over 1,500 local sports teams.

We also provide an exciting shopping experience for our communities following a major sports title or local team championship, such as a World Series or NCAA football championship, when we extend our local store hours late into the night to celebrate with our customers and meet their immediate need for a championship apparel or gear to display their team pride.

These celebrations strengthen customer loyalty.

Highly experienced and passionate senior management team with a proven track record

Our company is led by a highly-accomplished senior management team with significant public market experience, a proven track record for driving operational efficiency, and a history of using customer data to improve our customer experience and drive our omnichannel strategy.

Our senior management team has an average of over 20 years of retail experience.

Seven out of the nine members of our senior management team, including our Chairman, President and Chief Executive Officer, Ken C.

Hicks, were hired after early 2017 to lead the development and execution of our strategic growth and initiatives in merchandising, e-commerce and omnichannel, stores, information technology and finance.

Together, our senior management has delivered strong results, with six consecutive quarters of positive comparable sales as of the fiscal year ended January 30, 2021, Adjusted EBITDA growth to $607.0 million in 2020, or 88% growth, compared to 2019, and Adjusted Free Cash Flow growth to $978.5 million in 2020 from $196.9 million in 2019.

Strong and adaptive financial performance through economic cycles

We have remained strong and adaptive over the years through a variety of economic cycles, including economic downturns.

Our customers are loyal in any economic environment, and we believe they become even more loyal to our compelling value proposition when the economy is challenged, like during the current recessionary environment resulting from the COVID-19 pandemic.

We find that customers will continue to pursue their wellness, interests and passions, regardless of the economic backdrop.

As a result, we have gained market share during all economic cycles, including during April and May 2020.

We attribute this to customers knowing we offer a broad assortment of the items they want during a down cycle at everyday value.

We have consistently demonstrated steady revenue growth, expanded profit margins and disciplined capital expenditures.

We generated $5.7 billion in net sales, $308.8 million in net income and $607.0 million in Adjusted EBITDA in 2020.

In 2020, we also generated $1,011.6 million of net cash provided by operating activities and $978.5 million in Adjusted Free Cash Flow, while limiting net capital expenditures to $41.3 million.

We have reduced our net leverage ratio to 0.7x as of end of 2020 compared to 4.1x and 5.2x as of the end of 2019 and 2018, respectively.

We have a proven store model that has generated strong Adjusted Free Cash Flow, store-level profitability and return on invested capital.

All but one of our 222 mature stores (stores opened longer than four years) were profitable on a four-wall basis during the fiscal year ended January 30, 2021 and our new stores have average payback periods of four to five years.

Our Growth Strategy

We are focused on the following four growth drivers:

Leverage technology and content to drive our omnichannel strategy

Our e-commerce sales represented 10.4% and 5.1% of our merchandise sales for 2020 and 2019, respectively.

E-commerce sales compared to the same quarter in the prior year increased 406% in the first quarter of 2020, 210% in the second quarter of 2020, 96% in the third quarter of 2020 and 61% in the fourth quarter of 2020.

Our goal is to increase our omnichannel penetration quickly and significantly.

To meet this goal, since 2011, we have invested $230 million in omnichannel and information technology initiatives to improve our customers’ online experience, with an emphasis on our mobile site and product information content.

These investments have resulted in faster load times, more relevant search content, better site design, and a more-streamlined checkout process.

We have also invested in omnichannel initiatives, such as BOPIS, curbside pickup and access to store inventory availability online.

Omnichannel offerings are becoming increasingly important, as our customers want options when they shop.

During 2020, our omnichannel customers spent 50% more than our store-only customers and 316% more than our online only customers.

Since we launched our BOPIS program in 2019, we have seen significant e-commerce penetration that generates higher average order value and incremental in-store purchases.

BOPIS orders accounted for 51% of all e-commerce sales during 2020.

Our omnichannel platform also offers return-to-store capabilities for online orders, curbside fulfillment, the ability to place online orders in our stores if we are out of stock, and the ability to ship orders placed online from our retail locations.

These capabilities help reduce the risk of lost sales and shorten delivery times for online orders while improving inventory productivity.

We launched our ship-to-store capabilities in 2020 third quarter, which will continue to give our customers more options on how to shop Academy.

Our website also serves as the gateway to shopping in our stores.

These customers leverage our website to learn more about the products and brands we sell, read reviews from other customers, compare prices and ensure their local Academy store has the inventory prior to heading to the store.

Our website is also critical to reaching customers outside of our current store footprint.

For fiscal year 2020, we reached approximately 6.3 million unique households in 47 states through ship-to-home orders made through our website.

In 2020, 14% of our online transactions were ordered by customers in markets with no Academy stores.

Our e-commerce platform’s top ten out-of-store-footprint MSAs include adjacent markets, such as Tampa, Miami and Savannah.

As we continue to bolster our omnichannel offerings, we expect to drive traffic to our stores and website and expand our reach beyond our store footprint.

Enhance customer engagement and increase retention

We believe we have a significant opportunity to continue to expand our customer base.

Better understanding our customers’ buying trends allows us to better target and cater to our customers.

Our robust customer database has 40 million unique customers, and we continue to grow this through increased penetration of e-commerce sales and through the success of our Academy Credit Card program.

We utilize data obtained from our customer relationship management, or CRM, tools and targeted customer surveys.

Our CRM tools enable us to create effective customer-targeting strategies.

Our current CRM programs focus on welcoming our first-time customers, thanking our big spenders, reactivating our lapsed customers and cross-selling our category customers (including our hunting, sports equipment and recreation categories).

With 40 million customers in our database, there is ample opportunity to increase our communication directly with our customers via one-on-one marketing.

We are also leveraging the information from our approximately 80 million annual transactions in 2020 to make more informed, localized decisions on promotion, marketing and inventory.

Online transactions are critical to helping us understand and analyze buying patterns.

Data collected through our website allows us to personalize promotions for customers and recommend products based on purchase behavior.

The Academy Credit Card program also provides data to track our customers’ purchases across all channels, giving us the ability to better serve and target those customers.

Launched in May 2019, the Academy Credit Card program constituted approximately 4.5% of our net sales in 2020.

We believe our customers are attracted to the Academy Credit Card because of its bank-funded 5% discount on every Academy purchase and free standard shipping on online orders of $15 or more.

Academy Credit Card holders are responsible for paying all fees associated with having an Academy Credit Card, including any late fees, and we are responsible for paying all costs associated with shipping online orders of $15 or more purchased with an Academy Credit Card.

We believe we possess a significant amount of high quality customer data, which we can leverage to enhance customer engagement and retention and drive purchase conversion.

Enhance operational excellence

We intend to enhance profitability by improving our operational efficiencies.

We will continue to optimize our merchandise presentation through strategic store remodeling and enhanced visual storytelling, improve our inventory management through disciplined pricing markdowns, and augment the customer experience through more efficient queuing and check out procedures.

Much of our margin expansion from 2019 to 2020 can be attributed to our improvements in inventory management.

We can improve operations across our organization by optimizing our in-store inventory management and implementing automated re-ordering and labor scheduling.

We have deployed several new tools to this end, which will enable us to further improve inventory handling and vendor management.

For example, we have implemented third-party programs to analyze our inventory stock throughout the year at every location.

This implementation, along with other factors, has allowed us to improve our inventory management in stores, increasing the average inventory turns from 2.84x in 2019 to 3.89x in 2020, and has helped us to identify and exit certain product categories, such as luggage and toys.

We believe we can also enhance store operations through technology and personnel investments that will allow our team members to better manage and prioritize tasks, thereby increasing their productivity and sales conversion.

These investments, for example, will reduce administrative tasks to enable more time for engaging in customer service.

Our supply chain initiatives include improving our logistics by leveraging our merchandising planning and assortment capabilities and facilitating product flow through our distribution centers.

We use technology to track inventory daily and keep our distribution centers and stores in sync.

Our data-driven process allows us to improve communication with our suppliers and ensure we are rightfully equipped with the correct inventory in our regional locations and has and will continue to help us to identify and exit certain product categories, such as luggage and toys.

Although we believe these initiatives have helped us, we experienced a gross margin decline in the first quarter 2020 as a result of a shift in consumer preferences due to the COVID-19 pandemic and the related increased popularity in our isolated recreation, outdoor and leisure activity products, which are generally lower margin goods.

As our e-commerce sales continue to shift further towards BOPIS and curbside fulfillment, our overall omnichannel platform becomes more profitable, and we expect this trend to continue as we add more omnichannel solutions, such as ship-to-store, and further develop our omnichannel order execution and fulfillment capabilities.

Capitalize on substantial whitespace and in-fill opportunities

We have significant growth opportunities in both our core markets and outside of our footprint.

We believe our real estate strategy has positioned us well for further expansion, and our track record has demonstrated that we can open and operate stores profitably.

Our disciplined approach to new store openings has allowed most of our stores to achieve profitability within the first twelve months of opening a store.

As of January 30, 2021, we had 222 mature stores, and all but one were profitable on a four-wall basis.

We expect to open eight to 10 new stores per year starting in 2022, which is similar to our growth rates from 2018 to 2019.

In-fill market opportunity

We classify in-fill markets as regions where we already have a well-established presence.

We believe we have an opportunity to expand into surrounding metro areas and more rural locations.

Some examples include Dallas/Fort Worth, Atlanta, Raleigh-Durham, Charlotte, New Orleans and Jacksonville.

We believe our in-fill opportunity currently includes approximately 120 locations that could accommodate our preferred size of stores in markets we would consider.

Adjacent market opportunity

We consider adjacent markets to include markets that are not fully represented.

We believe these regions provide opportunities to expand in metro and rural areas that sit right outside of our current footprint.

We believe our adjacent market opportunity currently includes approximately 90 locations that could accommodate our preferred size of stores in markets we would consider.

Greenfield opportunity

Beyond our in-fill and adjacent markets, we believe we have the opportunity to expand across the nation.

We currently have store locations in 16 states, which leaves us substantial room for growth beyond our core geographies.

We believe our greenfield opportunity currently includes approximately 675 locations that could accommodate our preferred size of stores in markets we would consider.

Significant growth opportunity

The majority of our store expansion is expected to be with our traditional box size of approximately 70,000 gross square feet.

We have also recently tested a smaller store format, which is approximately 40% smaller than our average store, that we believe will be advantageous for in-fill markets and other metropolitan areas.

While we will continue to prioritize investments in our existing operations and omnichannel capabilities, we will continue to judiciously expand.

We have online delivery capabilities in almost every state and will focus on disciplined new store openings.

As we reach into new and existing markets, we expect our omnichannel platform to lead the way in our geographic expansion.

Recent Developments

We have demonstrated our ability to perform during periods of economic hardship, and the COVID-19 pandemic is no exception.

Our diverse and essential offerings permitted our stores to remain open, which allowed us to safely serve both our existing customers and gain new customers during an uncertain time.

With the ongoing pandemic, our customers’ focus on health and wellness and outdoor recreation has amplified.

Our customers are purchasing weights, yoga mats, treadmills and indoor cycles now more than ever to stay at home while maintaining their wellness.

Families are buying backyard and driveway games, trampolines, patio seating and grills to spend more safe, quality time together at home.

Outdoor enthusiasts and first-timers alike are buying fishing, hunting and camping gear to recreate outside at a safe distance.

Our stores range in size from approximately 40,000 to over 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, which, together with our sophisticated social distancing and hygiene measures and curbside fulfillment of online orders, enable our customers to have a safe shopping experience.

We have also benefited from all of our locations not being tethered to malls.

Mall traffic has continuously decreased over time, which has been exacerbated during the COVID-19 pandemic.

Our stores are a single destination for shoppers to feel safe when visiting our stores.

We believe our lack of reliance on malls has bolstered our performance, allows for much easier curbside pickup processes and increases traffic into our stores.

As consumers continue to spend less on travel and entertainment, our broad assortment of health and wellness-centered items at competitive prices position us well to continue taking share in this regard, and we believe our business can continue to benefit from the consistent growth in sports and outdoor goods spending.

Merchandising

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We have long-standing relationships with many of our suppliers and have partnered with them to grow our business over time.

We have no history of material supply chain interruptions.

In 2021, we purchased merchandise from approximately 1,200 vendors.

For 2021, 2020 and 2019 no vendor represented more than 11%, 12%, and 14% of our total purchases, respectively.

We carry a wide variety of national brand products such as Nike, Carhartt, adidas, Columbia Sportswear, North Face, Winchester, Brooks, Rawlings, Remington, Skechers, Under Armour and many more.

We offer a variety of products through our owned brand and exclusive license products such as apparel, footwear, barbecue equipment and outdoor equipment.

Our owned brand products include brands such as Academy Sports + Outdoors, Magellan Outdoors, BCG, O’rageous and Outdoor Gourmet.

As of January 30, 2021, we generally organized our merchandise in four divisions made up of eleven categories as follows:

We have premium access to hundreds of well-recognized national brands, such as Nike, Under Armour, adidas, Winchester, Brooks, Crocs, Wilson, Spaulding, Yeti, the North Face, and Columbia Sportswear, which are critical to our market penetration.

These and some of our other national brands rely on us to broaden their consumer reach, which fosters a mutually beneficial relationship when it comes to pricing and assortment.

We play a critical role in delivering customer volume for these brands, especially as mall-based retailers face further headwinds and our industry consolidates.

As such, we receive favorable product exclusivity from leading suppliers.

Our owned brand portfolio consists of 20 brands, including Magellan Outdoors, BCG, Academy Sports + Outdoors, Outdoor Gourmet and Freely.

Our owned brand strategy focuses on in-filling categories and price points that our national brand products may not satisfy.

Our owned brand offerings support and complement our overall merchandising strategy due to limited price-point overlap with national brands.

Additionally, our owned brands generate strong brand equity and drive significant customer loyalty.

Approximately 57% of our customers purchased an owned brand from us in 2021.

As of January 29, 2022, we generally organized our merchandise in four divisions made up of sixteen categories as follows:

Division Category (1)

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Shooting sports Firearms, ammunition, archery and archery equipment, camouflage apparel, waders, shooting accessories, optics, airguns and hunting equipment

Sports and Recreation Team sports/fitness Baseball, football, basketball, soccer, golf, racket sports, volleyball, fitness equipment, fitness accessories and nutrition

Recreation Patio equipment, outdoor cooking, wheeled goods (bicycles, skateboards and other ride-on toys), trampolines, play sets, watersports, pet equipment, electronics and watches, and front-end (consumables, batteries, etc.)

Sports and Recreation Fitness Fitness equipment, fitness accessories and nutrition supplies

Team sports Team and specialty sports equipment, including baseball, football, basketball, soccer, golf, racket sports, and volleyball

Recreation Patio furniture, outdoor cooking, wheeled goods (bicycles, skateboards and other ride-on toys), trampolines, play sets, watersports and pet equipment

Front end Electronics, watches, and front-end (consumables, batteries, etc.)

Apparel Outdoor and seasonal apparel Outdoor apparel, seasonal apparel, denim, work apparel, graphic t-shirts and accessories

Youth apparel Boys and girls outdoor and athletic apparel

Athletic apparel Sporting apparel, apparel for fitness and exercise and other accessories

Athletic apparel Sporting apparel and apparel for fitness

Licensed apparel Professional and collegiate team licensed apparel and accessories

Footwear Work, casual and youth footwear Casual shoes and slippers, work and western boots, youth footwear, socks and hunting footwear

Athletic/team sports footwear Running shoes, athletic shoes, sport specific shoes and training shoes

(1) Certain products and categories were reclassified amongst categories and divisions during 2020 as compared to prior years in order to better align with our current merchandising strategy and view of the business.

Footwear Casual and seasonal footwear Casual shoes, slippers, seasonal footwear and socks

Work footwear Work and western boots, shoes and hunting footwear

Youth footwear Boys and girls athletic footwear

Athletic footwear Running shoes, athletic lifestyle and training shoes

Team sports footwear Team and specialty sports footwear and slides

(1) Certain products and categories were reclassified amongst categories and divisions, respectively, during 2021 as compared to prior years in order to better align with our current merchandising strategy and view of the business.

Changes in management's merchandise strategy and viewpoints could result in future reclassifications.

The following table sets forth the approximate amount of sales by merchandise divisions for the periods presented (amounts in thousands):

The following table sets forth the approximate amount of sales (all of which are based in the U.S.) by merchandise divisions for the periods presented (amounts in thousands):

Fiscal Year Ended

January 30, 2021 February 1, 2020 February 2, 2019

Merchandise division sales (1)

January 29, 2022 January 30, 2021 February 1, 2020

Merchandise sales (1)

Outdoors $ 2,174,650 $ 1,968,514 $ 1,455,080

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Net sales $ 6,773,128 $ 5,689,233 $ 4,829,897

(1) Certain products and categories were re-categorized amongst various categories and divisions, respectively, to better align with our current merchandising strategy and view of the business.

(1) Certain products and categories were re-categorized amongst various categories and divisions, respectively, during 2021 as compared to prior years in order to better align with our current merchandising strategy and view of the business.

As a result, we have reclassified sales between divisions for 2020 and 2019 for comparability purposes.

This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed (see Note 2 to the consolidated financial statements).

This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed (see Note 2 to the accompanying consolidated financial statements).

(2) E-commerce sales consist of 9.3%, 10.4% and 5.1% of merchandise sales for 2021, 2020 and 2019, respectively.

(3) Other sales consists primarily of the sales return allowance, gift card breakage income, credit card bounties and royalties, shipping income, net hunting and fishing license income and other items.

Our stores are designed to provide our customers with an easy-in, easy-out shopping experience.

The interior of our stores are built around a central “racetrack” aisle that allows customers to efficiently navigate our selling floor.

Our stores, all of which are based in the U.S., are designed to provide our customers with an easy-in, easy-out shopping experience.

The interior of most of our stores are built around a central “racetrack” aisle that allows customers to efficiently navigate our selling floor.

Additionally, our stores generally have consistent store layouts providing our customers familiarity across our entire store base.

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Our central “racetrack” aisle and adjacent end-cap merchandising space allows us to adjust our inventory presentations throughout our various selling seasons.

Our stores average approximately 70,000 gross square feet, of which approximately 85% is dedicated to selling space.

Our store locations are typically positioned adjacent to major highways or thoroughfares, allowing customers to easily locate our stores.

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Other than stores that we may temporarily own, and for which we are in the process of executing sale-leaseback transactions, we do not own our retail locations.

As of January 30, 2021, the number of stores that we operated by state was as follows:

We are active members of the communities in which we operate.

We have a strong and growing presence in some of the fastest-growing MSAs in the United States, including Austin, Raleigh, Orlando, Houston, San Antonio, Dallas and Charlotte.

As of January 29, 2022, the number of stores that we operated, exclusively in the U.S., by state was as follows:

State Number of Stores

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Mississippi 8

We have significant growth opportunities in both our core markets and outside our footprint.

We believe our real estate strategy has positioned us well for further expansion, and our track record has demonstrated that we can open and operate stores profitably.

We believe there is significant near-term opportunity for expansion with stores in in-fill markets, where we already have an established presence, and in adjacent markets, markets nearby to current locations which are not fully represented.

We expect to open at least eight stores in 2022.

Our marketing strategy is designed to reinforce our broad selection of merchandise and value prices.

We rely on various media to communicate with our customers including printed advertisements, television commercials and digital marketing campaigns, among others.

We rely on various media to communicate with our customers including printed advertisements, television and radio commercials and digital marketing campaigns, among others.

Our print advertisements are primarily comprised of newspaper and direct mail circulars.

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At these events we extend our store hours and offer certain commemorative merchandise.

We are active members in the communities we serve, participating in 36 National Night Out events in 2019 (we sponsored National Night Out in 2020, however, due to COVID-19 precautions, no events were held), sponsoring over 1,500 local sports teams, hosting donation events for first responders and sponsoring events for the NCAA Southeastern Conference.

We periodically enter into sponsorship agreements generally with professional sports teams, associations, events, networks or individual professional players and collegiate athletic programs in exchange for marketing and advertising promotions.

We utilize data obtained from our CRM tools, which enable us to create effective customer-targeting strategies.

We are active members in the communities we serve and sponsor over 3,000 local sports teams and enter into sponsorship agreements with local professional sports teams, associations, events, networks, players and collegiate programs.

We utilize data obtained from our customer relationship management, or CRM, tools, which enable us to create effective customer-targeting strategies.

We also utilize customer demographic data that we capture to know when our customers buy from us and what items they purchase.

With 40 million customers in our database, there is ample opportunity to increase our communication directly with our customers via one-on-one marketing.

With over 40 million customers in our database, there is ample opportunity to increase our communication directly with our customers via one-on-one marketing.

In addition to our CRM tools, our Academy Credit Card program also provides data to track our customers’ purchases across all channels, giving us the ability to better serve and target those customers.

Distribution Centers

We operate three distribution centers in Katy, Texas, Twiggs County, Georgia and Cookeville, Tennessee.

We operate three distribution centers in Katy, Texas;

Twiggs County, Georgia;

and Cookeville, Tennessee.

The distribution centers receive and store products from vendors and use sophisticated sorting and logistical equipment to fill the product needs of the retail store locations they serve, as well as to fulfill e-commerce orders.

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Our net sales and profits are also impacted by the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.

Human Capital

Our Team Members

Our mission is to provide “Fun for All” and a critical component to our success is our people.

As of January 30, 2021, we employed over 22,000 team members.

As of January 29, 2022, we employed approximately 22,000 team members in the U.S.

and 11 team members in Hong Kong.

Of those team members, approximately 50% were full-time and 50% were part-time.

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None of our team members are covered by collective bargaining agreements.

Core Values and Culture.

The Company believes that it has a good working relationship with its team members.

Culture and Core Values.

We strive to provide rewarding careers, benefits, and a workplace culture where team members are empowered to be their authentic self—drawing on their unique perspectives, passions, skills, interests, and experiences in their day-to-day jobs.

Our core values establish a strong foundation for our culture and represent the key expectations we have of our team members.

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Diversity, Inclusion and Belonging.

At Academy, we believe the diversity of our team members, customers, and all others with whom we interact enhance the quality of our work environment and our customers’ shopping experience.

At Academy, we believe the diversity of our team members, customers, and all others with whom we interact enhances the quality of our work environment and our customers’ shopping experience.

Academy encourages team members to work together and to value the strengths each team member brings to the team.

Our strategy begins with attracting, recruiting, developing, and retaining team members with backgrounds that are representative of our diverse communities because it makes our communities stronger.

We require all team members to complete unintentional bias training to help eliminate biases from hiring, promotions, job assignments, evaluations and customer service.

Our strategy begins with attracting, recruiting, developing, and retaining team members with backgrounds that are representative of our diverse communities because it makes our company and communities stronger.

We require all team members to complete unintentional bias training to help eliminate biases from recruiting, hiring, promotions, job assignments and opportunities, evaluations, compensation, and customer service.

In 2020, we established our Diversity, Inclusion and Belonging Committee, and they led the organization in the creation of the following formal Diversity, Inclusion and Belonging Statement to further demonstrate our commitment:

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Diversity is inviting all players to join the team.

Inclusion and belonging is when everyone gets to play the game.

Inclusion and belonging are when everyone gets to play the game.

Every player is key, and we are only successful when everyone has an equal opportunity to play and win.

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We are focused on creating a winning team by recruiting and retaining great people, promoting teamwork, and fostering an enjoyable and rewarding work environment.

We also strive to provide all team members with opportunities for personal growth, cross functional training and job opportunities, and career advancement.

We offer a mix of instructor-led, online and blended courses in key areas:

Career Development and Leadership Development.

Our wide variety of courses ranges from job specific (i.e., functional) to compliance, as well as broad based leadership training.

We also strive to provide all team members with opportunities for personal growth, cross functional training, job opportunities and career advancement.

We offer a mix of instructor-led, online, and blended courses in several key areas, including Career Development and Leadership Development.

Our wide variety of courses ranges from job specific (i.e., functional) to broad based leadership training to safety, security, ethics, and compliance training.

We also engage in regular and ongoing feedback, annual performance reviews and annual talent calibration conversations.

Succession planning is conducted on an annual basis to identify suitable internal candidates for key positions within the Company.

Compensation and Benefits.

We offer a competitive compensation and benefits package.

Our benefits package is designed to allow team members the ability to pick and choose which benefits are the best for their and their family’s health and well-being.

Depending on the team member’s employment and work status, they may be eligible for:

medical, dental, and vision insurance;

participation in the Company’s 401(k) Plan with a six percent dollar for dollar match up to the IRS deferral limit;

participation in the Company’s Employee Stock Purchase Plan which provides a 15 percent discount on the lower of the stock price at the beginning or the end of the each offering period;

paid time off and paid vacations;

tuition reimbursement programs;

professional license/certification reimbursement;

medical, family, and bereavement leave;

additional voluntary short/long term, life, legal, pet, and accident insurance;

paid maternity and parental leave;

and a 20 percent team member discount on most all of our merchandise, to name a few.

We also provide, in all our distribution centers and our Katy corporate office, subsidized meals for all team members.

Specific to our Katy corporate office, we engage our team members through the opportunity to participate in intramural sport teams, 5K fun walk/run events, subsidized membership in the company gym and exercise classes (this is also open to our Katy distribution team members);

“food truck Fridays”;

onsite car wash;

and a company holiday party and other team member appreciation events.

In 2021, we paid over nine million dollars in thank you and retention bonuses to our hourly team members to reward them for their effort and support during a unique and challenging year.

Workplace, Health and Safety.

The health and safety of our customers, team members, and communities is our top priority.

Throughout our stores, distribution centers, and corporate headquarters, we employ policies, procedures and training to ensure safe work environments.

Our team member handbook outlines baseline safety expectations, but we also empower our team members with knowledge and skills from various safety training courses during the onboarding process and on an ongoing basis through our learning engagement system with topics such as incident reporting, evacuation, active shooter response, hazardous materials, ergonomics, heat safety, electrical safety, industrial truck and pallet jack safety, confined space entry and parking lot and garage safety.

We strive to ensure that a safe and hygienic working environment is provided and that occupational health and safety practices which prevent accidents and injury are promoted.

Throughout our stores, distribution centers, and corporate headquarters, we employ policies, procedures, and training to promote safe and healthy work environments.

Our team member handbook outlines safety expectations, but we also empower our team members with knowledge and skills from various safety training courses during the onboarding process and on an ongoing basis through our learning engagement system with topics such as incident reporting, behavior-based safety, evacuation, active shooter response, hazardous materials, ergonomics, heat safety, electrical safety, industrial truck and pallet jack safety, confined space entry and parking lot and garage safety.

We continue to focus on developing and driving our safety-first culture through awareness, training, and actions to reduce the frequency and severity of safety incidents.

Our stores have remained open during the COVID-19 pandemic as a result of our essential product offerings and enhanced safety measures.

To provide for the safety of our customers, team members, and communities, we have taken many actions in our stores based on the needs, risks, and regulations present in each community and facility.

Measures we have taken include cleaning stores professionally on a regular basis, equipping stores with hand sanitizer stations and signage illustrating how to socially distance within the store, wearing face coverings, limiting the number of customers admitted at one time, monitoring and sanitizing fitting rooms and sampled clothing, and installing protective shields at cash registers and other countertops.

During 2021, we continued our COVID-19 safety precautions based on Centers for Disease Control guidelines, including requiring all team members in stores, distribution centers, and the corporate office to socially distance;

wear face coverings if they were not fully vaccinated or at-risk except when alone, eating or drinking;

maintain proper hygiene;

stay home if they did not feel well or test positive for COVID-19;

and promptly notify their leader if they received a positive COVID-19 test result or developed symptoms of COVID-19.

We also encouraged all team members to obtain a COVID-19 vaccination and booster and facilitated several free onsite vaccination events to offer team members a convenient way to get vaccinated.

We have taken many additional actions in our stores based on the needs, risks, and regulations present in each community and facility, including cleaning stores professionally on a regular basis, equipping stores with hand sanitizer stations and signage illustrating how to socially distance within the store, limiting the number of customers admitted at one time, monitoring and sanitizing fitting rooms and sampled clothing, installing protective shields at cash registers and other countertops, and providing a cash incentive to our hourly population to get vaccinated.

We have also provided free masks and hand sanitizer and may take team members’ temperatures when they report to work.

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We continue to monitor the rapidly evolving situation and expect to continue to adapt our operations to address federal, state, and local requirements as well as to implement standards or processes that we determine to be in the best interest of our customers, team members, and communities.

Information about our Executive Officers

Below is a list of our executive officers, their respective ages as of January 29, 2022 and a brief account of the business experience of each of them.

Name Age Position

Hicks 69 Chairman, President and Chief Executive Officer

Mullican 46 Executive Vice President and Chief Financial Officer

Lawrence 54 Executive Vice President and Chief Merchandising Officer

Johnson 55 Executive Vice President, Retail Operations

Sherry Harriman 52 Senior Vice President, Logistics and Supply Chain

Jamey Traywick Rutherford 48 Senior Vice President, Omnichannel

Manish Maini 48 Senior Vice President, Chief Information Officer

Ennis 52 Senior Vice President, Chief Human Resources Officer

Casares 46 Senior Vice President, General Counsel and Secretary

Hicks has served as the Chairman and our President and Chief Executive Officer since May 2018.

Hicks has served as a member of the board of managers of New Academy Holding Company, LLC (our predecessor company) since May 2017 and as a member of the board of directors of Academy Sports and Outdoors, Inc.

since June 2020.

Hicks served on the compensation committee of the board of managers of New Academy Holding Company, LLC from May 2017 to May 2018.

Hicks previously served as President and Chief Executive Officer at Foot Locker, Inc.

from August 2009 to February 2010, and also served as Chairman, President and Chief Executive Officer at Foot Locker, Inc.

from February 2010 to November 2014, and as Executive Chairman at Foot Locker, Inc.

from December 2014 to May 2015.

Prior to joining Foot Locker, Inc., Mr.

Hicks held senior positions at J.C.

Penney Company, Inc., Payless ShoeSource, Home Shopping Network, May Department Stores Company, and McKinsey & Company.

Hicks has served on the board of directors of Avery Dennison Corporation since July 2007 and served on the board of directors of Whole Foods Market, Inc.

from May 2017 to August 2017.

Hicks graduated from the United States Military Academy located in West Point, NY, and served in the U.S.

He also earned a Masters of Business Administration with highest distinction from Harvard Business School.

Mullican has served as our Executive Vice President and Chief Financial Officer since January 2018.

He previously served as our Executive Vice President and General Counsel from February 2017 to January 2018.

Prior to joining Academy Sports + Outdoors, Mr.

Mullican served as the Managing Director of Aureus Health Services, a specialty pharmacy owned by Meijer, Inc.

Before being named Managing Director at Aureus, Mr.

Mullican held several leadership roles at Meijer, including Vice President of Business Development, and Vice President and Assistant General Counsel.

Additionally, Mr.

Mullican served as Divisional Counsel and Assistant Secretary at Family Dollar Stores, Inc., and Associate General Counsel and Assistant Secretary at Horizon Lines, Inc.

Mullican holds a Bachelor of Arts in Communication from North Carolina State University and a Juris Doctor degree from the University of Chicago Law School.

Steven (Steve) P.

Lawrence has served as our Executive Vice President and Chief Merchandising Officer since joining the Academy Sports + Outdoors team in February 2019.

Prior to joining Academy Sports + Outdoors, Mr.

Lawrence was President and Chief Executive Officer at francesca’s.

From May 2012 to September 2016, he served as Chief Merchandising Officer at Stage Stores.

Lawrence also spent nearly 12 years working in various merchandising leadership roles at J.C.

Penney after 10 years at Foley’s.

Lawrence also served on the board of directors of francesca’s from October 2016 to January 2019.

Lawrence obtained his Bachelor of Business Administration in Finance from the University of Notre Dame.

Samuel (Sam) J.

Johnson has served as our Executive Vice President, Retail Operations since joining the Academy Sports + Outdoors team in April 2017.

Prior to joining Academy Sports + Outdoors, Mr.

Johnson spent seven years with hhgregg, Inc., where he most recently served as Chief Retail Officer.

While at hhgregg, Inc., he led functions including store operations, customer relations, commercial sales, real estate and visual merchandising.

Prior to hhgregg, Inc., he spent more than 20 years in various leadership roles with Sears Holdings Corporation, including Vice President of Small Stores.

Harriman has served as our Senior Vice President, Logistics and Supply Chain since joining the Academy Sports + Outdoors team in August 2018.

Prior to joining Academy Sports + Outdoors, Mrs.

Harriman spent 29 years at Walmart, Inc., where she served in various logistics and operations roles until she was promoted to Regional Vice President – Logistics in 2007.

In 2010, she was promoted to Divisional Vice President – Supply Chain for Florida and Puerto Rico, where her team delivered innovative Supply Chain solutions that supported omnichannel strategies and disaster relief initiatives.

Harriman holds a Bachelor of Business Administration from the University of Wisconsin-Eau Claire and a Master of Business Administration from John Brown University.

Jamey Traywick Rutherford has served as our Senior Vice President, Omnichannel since joining the Academy Sports + Outdoors team in May 2018.

Prior to joining Academy Sports + Outdoors, Ms.

Traywick Rutherford spent over 17 years at AutoZone where she served in various e-commerce roles until she was promoted to Vice President, e-commerce in 2010.

She transitioned to Vice President, Merchandising in 2017.

She holds a Bachelor of Science in Environmental Science from the University of Denver, and a Master of Science in e-commerce from the University of Memphis.

Manish Maini has served as our Senior Vice President, Chief Information Officer since joining the Academy Sports + Outdoors team in June 2017.

Prior to joining Academy Sports + Outdoors, he served as the Chief Information Officer and Senior Vice President at The Children’s Place U.S.

where he led a 120-member team, and was responsible for the development and implementation of the company-wide IT strategy.

Maini also spent nine years at Ann, Inc., formerly Ann Taylor Stores Inc., where he served in various IT leadership roles, including Vice President of Enterprise Systems.

Maini holds a Bachelor of Engineering, Electronics and Communication from STJ Institute of Technology in Karnatak, India.

William (Bill) S.

Ennis has served as our Senior Vice President, Chief Human Resources Officer since March 2016.

Ennis joined the Academy Sports + Outdoors team as Vice President of Human Resources in April 2008 and served in that role until October 2010 when he was appointed as Senior Vice President, Human Resources.

Prior to joining Academy Sports + Outdoors, Mr.

Ennis spent over 19 years with Stage Stores, May Department Stores and Federated Department Stores in multiple capacities including human resources, stores, buying group, store operations and finance areas.

He currently sits on advisory boards for the Texas A&M Center for Retailing Studies and Texas Retailers Education Foundation, and he is also the governing body chair for the Houston HR Leadership Summit.

Ennis graduated with a Bachelor of Arts in Economics from the University of Texas.

Casares has served as our Senior Vice President, General Counsel and Secretary since March 2018.

He joined the company in July 2013 as Senior Director, Associate General Counsel and served as Vice President, Associate General Counsel and Assistant Secretary from March 2016 to March 2018.

Prior to joining Academy Sports + Outdoors, Mr.

Casares served as an Associate Attorney at the global law firm, Vinson & Elkins LLP, from 2008 to 2013, where he advised major and middle-market companies with mergers and acquisitions, private equity, corporate governance and capital markets.

He also served in a similar capacity as an Associate Attorney at the global law firm, Latham & Watkins LLP, from 2006 to 2008.

Additionally, Mr.

Casares has a background in finance and consulting after serving as an Associate at Growth Capital Partners.

L.P., a Strategy Consultant at KPMG Consulting, Inc., and an Analyst at Merrill Lynch & Co.

Casares holds a Bachelor of Business Administration in Finance from the University of Notre Dame and a Juris Doctor degree from Stanford Law School.

Intellectual Property

Our trademarks, service marks, copyrights, patents, processes, trade secrets, domain names and other intellectual property, including our Academy Sports + Outdoors brand, our owned brands, such as Academy Sports + Outdoors, Magellan Outdoors, BCG, O’rageous and Outdoor Gourmet, and our goodwill, designs, names, slogans, images and trade dress associated with these brands, are valuable assets that are critical to our success.

Our trademarks, service marks, copyrights, patents, processes, trade secrets, domain names and other intellectual property, including our Academy Sports + Outdoors brand, our owned brands, such as Academy Sports + Outdoors, Magellan Outdoors, BCG, O’rageous, Game Winner, Outdoor Gourmet and Freely, and our designs, names, slogans, images and trade dress associated with these brands, are valuable assets that are critical to our success.

We also enter into intellectual property agreements whereby the Company receives the right to use third-party owned trademarks typically in exchange for royalties on sales.

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We operate in a complex regulatory and legal environment that exposes us to regulatory, compliance and litigation risks that could materially affect our operations and financial results.

We are subject to regulation by numerous federal, state and local regulatory agencies and authorities, including the U.S.

Specifically, we are subject to regulation by numerous federal, state and local regulatory agencies and authorities, including the U.S.

Consumer Product Safety Commission, Equal Employment Opportunity Commission, Department of Labor, Occupational Safety and Health Administration, Department of Justice, Department of Treasury, Federal Trade Commission, Customs and Border Protection, Bureau of Alcohol, Tobacco, Firearms and Explosives, SEC, Internal Revenue Service, or IRS, and Environmental Protection Agency and comparable state and local agencies.

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We sell firearms, ammunition, and related accessories.

Firearms represented less than 8% of our net sales in 2020.

Firearms represented approximately 6% of our net sales in 2021.

Numerous federal, state and local laws and regulations govern the procurement, transportation, storage, distribution and sale and marketing of firearms, ammunition, and related accessories, including the regulations governing the performance of federally and state mandated procedures for determining customer firearm purchase eligibility (such as age and residency verification, background checks and proper completion of required paperwork).

In the future, there may be increased federal, state or local regulation affecting the sale of firearms, ammunition, and related accessories, including taxation or restrictions on the type of firearms and ammunition available for retail sale, which could reduce our sales and profitability.

A failure by us to follow these laws or regulations may subject us to claims, lawsuits, fines, penalties, adverse publicity and government action (up to and including the possible revocation of licenses and permits allowing the sale of firearms and ammunition), which could have a material adverse effect on our business and results of operations.

As a result, we devote significant resources to compliance with applicable laws and regulations governing our business and the products we sell.

In the future, there may be increased federal, state or local regulation and enforcement affecting the sale of firearms, ammunition, and related accessories, including taxation or restrictions on the type of firearms and ammunition available for retail sale, which could reduce our sales and profitability.

For additional information, see the risk factors herein in "Item 1A.

Risk Factors" under the sub-caption "Legal and Regulatory Risks".

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business