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• consumer confidence in the economy;
−Removed: • financial market volatility;
• wages, jobs and unemployment trends;
−Removed: • public health events (including the COVID-19 pandemic) and their effect on our customers, team members, vendors/suppliers and other stakeholders;
+Added: • public health events (such as the COVID-19 pandemic) and their effect on our customers, team members, vendors/suppliers and other stakeholders;
• the housing market, including real estate prices and mortgage rates;
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Increasing volatility in financial markets may cause some of the aforementioned conditions to change with even greater degree of frequency and magnitude.
−Removed: In addition, COVID-19 has had, and may continue to have, far-reaching adverse impacts on aspects of our operations, directly and indirectly, including our team members, consumer behavior, inventory, distribution and logistics, our suppliers and the market overall.
Our comparable sales, net sales per square foot, customer traffic or average value per transaction may be adversely affected if, for example, our customers reduce their purchases with us due to continued high inflation, job losses, foreclosures, bankruptcies, higher consumer debt and interest rates, higher taxes, reduced access to credit, falling home prices and lower consumer confidence.
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Consumer spending on sporting goods, sports and casual apparel and footwear, and outdoor recreation products could decrease or be displaced by spending on other activities due to a number of factors, including:
−Removed: • shifts in behavior away from team sports and outdoor activities in favor of media (including social media) and electronics-driven leisure activities;
+Added: • shifts in behavior away from team sports and outdoor activities in favor of travel, media (including social media) and electronics-driven leisure activities;
• state, local and federal government budget cuts on facilities and activities, such as school athletic budgets, parks, ball fields, recreational sports leagues, hunting and fishing services, etc.;
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• consumer activism relating to controversial products we may carry, services we may perform, or our corporate philosophy, including those relating to firearms and ammunition, which could cause them to take their retail business elsewhere;
−Removed: • escalating costs of sporting and outdoor activities due to adverse changes in economic conditions, including rising fuel prices, rising participation fees and rising sporting license fees;
−Removed: • severe weather and natural or man-made disasters (e.g., an oil spill closing large areas of hunting or fishing), including heat waves, freezes, hurricanes, tornadoes, large storms and floods, and the effects of such events on the ability of large urban areas to continue spending on sporting goods and outdoor recreation products.
+Added: • escalating costs of sporting and outdoor activities due to adverse changes in economic conditions, including inflation, rising fuel prices, rising participation fees and rising sporting license fees;
+Added: • severe weather and natural or man-made disasters (e.g., an oil spill closing large areas of hunting or fishing), including heat waves, freezes, hurricanes, tornadoes, large storms and floods, and the effects of such events on consumer demand for certain seasonal goods and the ability of large urban areas to continue spending on sporting goods and outdoor recreation products.
Total consumer spending may not continue to increase at historical rates due to slowed production growth and shifts in population demographics, and it may not increase in certain product categories given changes in consumer interests and participation rates.
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The success of sporting teams is highly uncertain and difficult to predict.
−Removed: In addition, macro factors, such as severe weather, may significantly affect whether or not certain sports leagues are able to host their games in their usual seasons, and if they are, whether or not spectators can attend.
+Added: In addition, factors beyond our control, such as severe weather, local safety concerns, player-lockouts or strikes, may significantly affect whether or not certain sports leagues are able to host their games in their usual seasons, and if they are, whether or not spectators can or are able to attend.
Our licensed apparel is significantly more popular when spectators are able to attend the games of the sports teams featured on such apparel.
If we are not successful in managing our inventory balances, our results of operations may be negatively affected.
−Removed: The COVID-19 pandemic has, and may continue to, impact our business and financial results.
−Removed: The COVID-19 pandemic, including measures taken in response have negatively impacted the global and U.S.
−Removed: economies, disrupted consumer spending and global supply chains, and created significant volatility and disruption of labor and financial markets, and may continue to do so.
−Removed: The initial phase of the COVID-19 pandemic saw the imposition by various governmental authorities, and by us, of significant restrictions on the operations of our facilities intended to protect the health and safety of our team members, customers and communities, including temporary full or partial closures and the imposition of new permanent or temporary safety measures.
−Removed: These restrictions, along with other impacts of the COVID-19 pandemic on our team members and customers, adversely impacted our business and results, and any future imposition of restrictions or resurgence of the pandemic could cause further adverse impacts.
−Removed: Our information technology systems and cyber-security could also be adversely affected by a significant increase in remote working by our corporate team members and a significant increase in online orders.
−Removed: As a result of the COVID-19 pandemic, we may also see further disruptions or delays in shipments and negative impacts to pricing of certain components of our products.
−Removed: The COVID-19 pandemic has impacted, and may continue to impact, the suppliers of products we sell, particularly as a result of mandatory shutdowns in locations where our products are manufactured and in some cases due to extreme demand for certain popular or necessary goods or raw materials.
−Removed: A significant amount of our merchandise is produced in China, and the ongoing COVID-19 pandemic in China has led to, and may continue to lead to, significant governmental measures being implemented in China to control the spread of the virus, including, among others, restrictions on manufacturing and the movement of team members in many regions of the country.
−Removed: These measures in China have resulted in, and may result in further, disruptions to our supply chain, including the temporary closure of third-party manufacturer facilities, interruptions in labor and/or product supply, or restrictions on the export or shipment of our products.
−Removed: As a result, our third-party manufacturers may not have the materials, capacity, or capability to manufacture our products according to our schedule and specifications.
−Removed: If our third-party manufacturers’ operations are again curtailed, we may need to seek alternate manufacturing sources, which may be more expensive.
−Removed: Alternate sources may not be available or may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations.
−Removed: The duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time.
−Removed: Should such production and distribution closures continue or be re-imposed, the impact on our supply chain in China and globally could have a material adverse effect on our results of operations and cash flows.
−Removed: Moreover, during the pandemic we have observed an increase in the popularity of isolated recreation, outdoor and leisure activity products, which has benefited our business and financial results.
−Removed: However, we are unable to predict how long this increased popularity will last or how significant it will be.
−Removed: To the extent the popularity of isolated recreation, outdoor and leisure activity products declines, our sales could be adversely impacted.
−Removed: The extent to which the COVID-19 pandemic continues to impact our results, financial position and liquidity will depend on future developments and the related impact on consumer confidence and spending, labor supply or product supply, all of which are highly uncertain.
Intense competition in the sporting goods and outdoor recreation retail industries could limit our growth and reduce our profitability.
−Removed: The market for sporting and outdoor recreation goods is highly fragmented and intensely competitive.
+Added: The market for sporting and outdoor recreation goods is highly fragmented, intensely competitive, and continually evolving.
Our current and prospective competitors include many large companies, some of which have substantially greater market presence, name recognition and financial, marketing and other resources than us.
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• mass general merchants;
+Added: • department stores;
• large format sporting goods stores;
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• catalogue and internet retailers;
+Added: • suppliers that sell directly to customers.
Pressure from our competitors could require us to reduce our prices or increase our spending for advertising and promotion.
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Increased competition in markets in which we have stores or the adoption by competitors of innovative store formats, aggressive pricing, promotion or delivery strategies and retail sale methods, such as the Internet, could cause us to lose market share and could have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: In addition, as the popularity and use of Internet sites and free merchandise shipping continue to increase, our business faces increased competition from various domestic and international sources, including our suppliers.
+Added: In addition, as the popularity and use of Internet sites, free merchandise shipping, and suppliers selling directly to consumers continue to increase, our business faces increased competition from various domestic and international sources, including our suppliers.
Additionally, the ability of consumers to compare prices on a real-time basis through the use of smartphones and digital technology puts additional pressure on us to maintain competitive prices vis-à-vis our competitors.
We may require significant capital in the future to sustain or grow our business, including our store and e-commerce activities, due to increased competition, and there is no assurance that cash flow from operations will be sufficient to meet those needs or that additional sources of capital will be available on acceptable terms or at all.
−Removed: Any failure to protect the integrity, confidentiality, and availability of our digital environment (including our technology infrastructure and networks, third party services, and hosted and on-premises software) and data that we hold relating to us and our customers, team members, and partners (including vendors) could result in lost sales, fines, penalties, assessments, investigations, inquiries, and/or lawsuits, a loss of confidence in us, and harm to our reputation, business, results of operations, and financial condition.
−Removed: The security of our digital environment (including our technology infrastructure and networks, third party services, and hosted and on-premises software) and data (including from our partners) is critical to our business as a retailer, and we devote significant resources to protecting our digital environment and data.
+Added: Any failure to protect the integrity, confidentiality, and availability of our information systems (including our technology infrastructure and networks, third party services, and hosted and on-premises software) and data that we hold relating to us and our customers, team members, and partners (including vendors) could result in lost sales, fines, penalties, assessments, investigations, inquiries, and/or lawsuits, a loss of confidence in us, and harm to our reputation, business, results of operations, and financial condition.
+Added: The security of our information systems (including our technology infrastructure and networks, third party services, and hosted and on-premises software) and data (including from our customers, team members and partners) is critical to our business as a retailer, and we devote significant resources to protecting our information systems and data.
In order to operate our business and to provide products and services to our customers, we collect, source, store, maintain, and process data that can be used to identify a person (i.e., personal data or personally identifiable information), including customers, partners, and team members, along with our intellectual property and proprietary business information.
We share data with third parties for further processing consistent with applicable terms and conditions.
−Removed: Our retail stores and online operations depend on the secure transmission and processing of confidential information and the continued operation of systems necessary to perform store operations and to process transactions.
−Removed: Our customers provide payment card and gift card information, alternative payment information, and other personal information to purchase products or services, enroll in promotional programs, apply for credit, create accounts and make purchases on our website, or otherwise communicate and interact with us.
+Added: Our retail stores and online operations depend on the secure transmission and processing of confidential information and the continued operation of information systems necessary to perform store operations and to process transactions.
+Added: Our customers provide payment card and gift card information, alternative payment information, and other personal information to purchase products or services, enroll in promotional programs, apply for credit, create accounts and make purchases on our website or mobile applications, or otherwise communicate and interact with us.
Job applicants provide personal information in connection with their employment application and our team members provide personal information in connection with their continued employment.
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We and our partners rely on commercially available information security technology and industry standard operational practices for collecting, storing, maintaining, transmitting, protecting, and processing data.
−Removed: Despite our security measures, we may not be able to anticipate, prevent, and stop future attacks to our digital environment and data and those of our partners.
−Removed: Threat actors may defeat our security measures and may obtain access to data (including personal data or personally identifiable information) that we hold relating to us and our customers, team members, and vendors, or may cause operational harm.
−Removed: For example, ransomware events could cause key systems to be unavailable for use, or credential stuffing attacks of customer accounts on academy.com could cause customer privacy breaches and authorized charges to payment or gift cards, or phishing/smishing attacks, in which attackers masquerade as a trustworthy entity in an electronic communication (including email or text message), could gain control of a user's device and/or credentials.
+Added: Despite our security measures, we may not be able to anticipate, prevent, and stop future cybersecurity incidents, including attacks to our information systems and data and those of our partners.
+Added: Threat actors may have the ability to defeat our security measures and may obtain access to data (including personal data or personally identifiable information) that we hold relating to us and our customers, team members, and vendors, or may cause operational harm.
+Added: For example, ransomware events could cause key systems to be unavailable for use, or credential stuffing attacks of customer accounts on our website could cause customer privacy breaches and authorized charges to payment or gift cards, or phishing/smishing attacks, in which attackers masquerade as a trustworthy entity in an electronic communication (including email or text message), could gain control of a user's device and/or credentials.
The techniques used by threat actors to attack or access systems and data evolve and may not be recognized until or after being launched against a target.
−Removed: We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks.
−Removed: While we have no knowledge of any material data security breaches to date, actual or suspected attacks, increased risks, and newly discovered vulnerabilities have resulted, and in the future could result, in us expending significant resources related to our information systems, data stores, technology infrastructure and team member training.
−Removed: A future data security breach could also (1) attract substantial media attention, (2) damage our relationships with our customers, team members, and partners, (3) cause a loss of confidence in us or cause us to violate applicable privacy laws and obligations, (4) expose us to costly government enforcement actions or private litigation and financial liability (possibly beyond our insurance coverage), (5) increase the costs we incur to protect against or remediate security breaches and vulnerabilities, (6) result in additional costs and operational activities to comply with consumer protection and data privacy laws and obligations, and/or (7) disrupt our operations and distract our management and other key personnel from performing their primary operational duties, any of which could adversely affect our reputation, business, results of operations, and financial condition.
+Added: We may not have the resources or technical sophistication to anticipate, prevent or stop new or evolving cybersecurity incidents, including attacks to our information systems and data and those of our partners.
+Added: We may also be vulnerable to breaches due to human error or other disruptions, including data privacy breaches by employees, insiders or others with authorized access, or other cybersecurity incidents.
+Added: As new and improved technologies and methodologies become available to threat actors (for example, artificial intelligence), increased risks and currently unknown vulnerabilities could result in significant future expenditures related to our information systems, technology infrastructure and operations.
+Added: A future cybersecurity incident could also (1) result in unauthorized access, disclosure, loss, or misuse of our intellectual property, proprietary information, or team member, customer or supplier data, (2) attract substantial media attention, (3) damage our relationships with our customers, team members, and partners, (4) cause a loss of confidence in us or cause us to violate applicable privacy laws and obligations, (5) expose us to costly government enforcement actions or private litigation and financial liability (possibly beyond our insurance coverage), (6) increase the costs we incur to protect against or remediate cybersecurity incidents and vulnerabilities, (7) result in additional costs and operational activities to comply with consumer protection and data privacy laws and obligations, and/or (8) disrupt our operations and distract our management and other key personnel from performing their primary operational duties, any of which could adversely affect our reputation, competitiveness, business, results of operations, and financial condition.
+Added: Any of the foregoing can be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident.
We maintain cyber liability insurance in an amount and coverage we deem appropriate, taking into account the specific coverages and coverage requirements in the marketplace.
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If an insurance carrier seeks to deny coverage of a particular loss, we may incur costs to dispute the denial of coverage, which could result in paying costs that otherwise would be recovered from insurance and delays in or ultimate denial of coverage.
−Removed: The data privacy and cyber security regulatory environment is constantly changing, with new and increasingly rigorous or complex requirements.
−Removed: Consumer data privacy and cyber security laws and related regulations have been enacted and additional laws and regulations are under consideration by various state and federal legislatures and regulatory authorities.
−Removed: Maintaining compliance with those requirements may require significant effort, cost, and new or improved technical capabilities, may require changes to our business practices, and may limit our ability to obtain or use data to provide a personalized customer experience or to engage in certain marketing practices.
−Removed: In addition, failure to comply with applicable requirements could subject us to fines, sanctions, governmental investigations, lawsuits, reputational damage, and other risks and costs that may be difficult to anticipate but could become material depending on the specific facts.
+Added: The data privacy and cybersecurity regulatory environment is constantly changing, with new and increasingly rigorous or complex requirements.
+Added: Consumer data privacy and cybersecurity laws and related regulations have been enacted and additional laws and regulations are under consideration by various state and federal legislatures and regulatory authorities.
+Added: Maintaining compliance with those requirements may require significant effort, cost, new or improved technical capabilities, and changes to our business practices, and may limit our ability to obtain or use data to provide a personalized customer experience or to engage in certain marketing practices.
+Added: In addition, any alleged or actual failure to comply with applicable requirements could subject us to fines, sanctions, governmental investigations, lawsuits, reputational damage, and other risks and costs that may be difficult to anticipate but could become material.
A significant portion of the merchandise that we sell is manufactured in foreign countries, including China, which exposes us to various international risks that could have a material adverse effect on our business and results of operations.
A significant portion of the merchandise that we sell, including merchandise we purchase from domestic suppliers and much of our private label brand merchandise, is manufactured in countries such as China, Vietnam, El Salvador and Bangladesh.
−Removed: Foreign imports subject us to the risks of changes in import duties, quotas, loss of “most favored nation” status with the United States for a particular foreign country, delays in shipment, shipping port and ocean carrier constraints, supply and demand constraints, labor strikes, work stoppages or other disruptions, freight cost increases and economic uncertainties (including the United States imposing anti-dumping or countervailing duty orders, tariffs, safeguards, remedies or compensation and retaliation due to illegal foreign trade practices).
+Added: Foreign imports subject us to the risks of changes in import duties, quotas, loss of “most favored nation” status with the United States for a particular foreign country, delays in shipment, shipping port and ocean carrier constraints, supply and demand constraints, labor strikes, work stoppages, supply chain disruptions including those caused by extreme weather, natural disasters, public health events (such as pandemics) or other disruptions, freight cost increases and economic uncertainties (including the United States imposing anti-dumping or countervailing duty orders, tariffs, safeguards, remedies or compensation and retaliation due to illegal foreign trade practices).
To the extent that any foreign manufacturers from whom we purchase products directly or indirectly employ labor, environmental, corruption, workplace safety, or other business practices that vary from those commonly accepted in the United States, we could be hurt by any resulting negative publicity or, in some cases, potential claims of liability.
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If the United States were to withdraw from or materially modify any international trade agreements to which it is a party, or if tariffs were raised on the foreign-sourced goods that we sell, or if border taxes were implemented, then the goods we import may become more expensive or may no longer be available at a commercially attractive price or at all, each of which in turn could have a material adverse effect on our business, financial condition and results of operations.
−Removed: A significant amount of our merchandise is produced in China, and increases in the costs of labor and other costs of doing business in China could significantly increase our costs to produce our merchandise and could have a negative impact on our net sales, operating income and net income.
+Added: A significant amount of our merchandise is produced in China.
+Added: The ongoing COVID-19 pandemic in China has led to, and may continue to lead to, significant governmental measures being implemented in China to control the spread of the virus, including, among others, restrictions on manufacturing and the movement of team members in many regions of the country.
+Added: These measures in China have resulted in, and may result in further, disruptions to our supply chain, including the temporary closure of third-party manufacturer facilities, interruptions in labor and/or product supply, or restrictions on the export or shipment of our products.
+Added: As a result, our third-party manufacturers may not have the materials, capacity, or capability to manufacture our products according to our schedule and specifications.
+Added: If our third-party manufacturers' operations are again curtailed, we may need to seek alternate manufacturing sources, which may be more expensive.
+Added: Alternate sources may not be available or may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations.
+Added: The duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time.
+Added: Should such production and distribution closures continue or be re-imposed, the impact on our supply chain in China and globally could have a material adverse effect on our results of operations and cash flows.
+Added: In addition, the increases in the costs of labor and other costs of doing business in China could significantly increase our costs to produce our merchandise and could have a negative impact on our net sales, operating income and net income.
Factors that could negatively affect our business include a potential significant revaluation of the Chinese Yuan, which may result in an increase in the cost of producing products in China, labor shortages and increases in labor costs in China, and difficulties in moving products manufactured in China through the ports on the western coast of North America, whether due to port congestion, labor disputes, product regulations and/or inspections or other factors, and natural disasters or health pandemics impacting China.
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The continuation of this situation could have further adverse effects on our sales and profitability, results of operations and financial condition.
−Removed: As of our report date, no significant modifications have been enacted relative to the escalated tariffs which impact our business.
−Removed: Problems with operating, updating or implementing our information technology systems could disrupt our operations and negatively impact our business operations and materially and adversely affect our financial results.
−Removed: The efficient operation of our business is dependent on the successful integration and operation of our information technology systems.
−Removed: For examples, we rely on our information technology systems to effectively manage our merchandise planning and replenishment, warehousing and distribution, store operations, e-commerce, and customer transactions, optimize our overall inventory levels, process financial information and sales transactions, prevent data breaches and credit card fraud, communications, support services, and comply with legal and regulatory obligations.
−Removed: Our information technology systems, if not functioning properly or if failing to function altogether, could disrupt our ability to track, record, and analyze sales and inventory and could cause disruptions of operations, including, among other things, our ability to order, process and ship inventory, process financial information including credit card transactions, prevent data breaches and credit card fraud, process payrolls or vendor payments or engage in other similar normal business activities.
−Removed: Our information technology systems, including our back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service attacks, security breaches (through cyber-attacks from cyber-attackers or sophisticated organizations), catastrophic events such as fires, floods, tornadoes, earthquakes and hurricanes, and usage errors by our associates.
−Removed: From time to time we have experienced, and we may in the future further experience, interruptions, damages, or failures of our information technology systems, some of which disrupt our business and cause us to expend additional resources to rectify.
−Removed: Although we attempt to mitigate the risk of possible business interruptions by employing customary strategies, any material disruption, malfunction or any other similar problem in or with our information technology systems could negatively impact our business operations and materially and adversely affect our financial results.
−Removed: From time to time, our computer and information technology systems may require repair, upgrade, enhancement, integration and/or replacement for us to maintain successful current operations and achieve future sales and store growth.
−Removed: Updating our existing information technology systems subjects us to numerous risks, including:
+Added: Since the date of our last annual report, no significant modifications have been enacted relative to the escalated tariffs which impact our business.
+Added: Problems with operating, updating or implementing our information systems could disrupt our operations and negatively impact our business operations and materially and adversely affect our financial results.
+Added: The efficient operation of our business is dependent on the successful integration and operation of our information systems, some of which require interoperability to perform the intended function or are dependent on services managed or provided by third-parties.
+Added: For example, we rely on our information systems to manage merchandise planning and replenishment, warehousing and distribution, store operations, customer relationships, e-commerce, and customer transactions, optimize our overall inventory levels, process financial information and sales transactions, pay and receive funds, prevent security breaches and fraud, communicate internally and externally, provide support services, and comply with legal and regulatory obligations.
+Added: Our information systems, if not functioning properly or if failing to function altogether, could disrupt our ability to track, record, and analyze sales and inventory and could cause disruptions of operations, including, among other things, our ability to order, process and ship inventory, process financial information including credit card transactions, prepare financial statements, prevent data breaches and credit card fraud, process payrolls or vendor payments or engage in other similar normal business activities.
+Added: Our information systems, including our back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service attacks, security breaches or other cybersecurity incidents, catastrophic events and severe weather such as fires, floods, tornadoes, earthquakes and hurricanes, and usage or coding errors by our team members or partners.
+Added: From time to time we have experienced, and we may in the future further experience, interruptions, damages, or failures of our information systems, some of which disrupt our business and cause us to expend additional resources to rectify.
+Added: Although we attempt to mitigate the risk of possible business interruptions by employing customary strategies, any material disruption, malfunction or any other similar problem in or with our information systems could negatively impact our business operations and materially and adversely affect our financial results.
+Added: From time to time, our information systems may require repair, upgrade, enhancement, integration and/or replacement for us to maintain successful current operations and achieve future sales and store growth.
+Added: Updating our existing information systems subjects us to numerous risks, including:
• loss of information;
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• adequacy of training and change management to address critical changes in business processes and job functions;
−Removed: • updated information technology system ultimately does not meet the needs of the business.
−Removed: Any failure to successfully update and maintain our information technology systems, and any missteps, delays, cost overruns, vendor disputes, technical challenges or other similar issues that may arise during the updating of our information technology systems, could have a material impact on our business, financial condition, results of operations, internal controls over financial reporting and ability to manage our business effectively.
−Removed: From time to time, we may undertake initiatives involving numerous information technology systems, including our merchandise management, warehouse management, customer relationship management, point of sale, e-commerce, data security, credit card fraud detection, financial reporting, and labor management systems.
−Removed: While each of these information technology systems initiatives is intended to further improve and enhance our information technology systems, our failure to timely, properly or adequately implement these systems initiatives could result in increased costs or risks, the diversion of our management’s and team members’ attention and resources and could materially adversely affect our results of operations, our internal controls over financial reporting or general computer controls, our ability to manage our business effectively and possible disruption of our business operations or financial reporting.
+Added: • updated information system ultimately does not meet the needs of the business.
+Added: Any failure to successfully update and maintain our information systems, and any missteps, delays, cost overruns, vendor disputes, technical challenges or other similar issues that may arise during the updating of our information systems, could have a material impact on our business, financial condition, results of operations, internal controls over financial reporting and ability to manage our business effectively.
+Added: From time to time, we may undertake initiatives involving numerous information systems to improve and enhance our capabilities, whether for operational, financial or risk reduction purposes.
+Added: Any failure to timely, properly or adequately implement these information systems initiatives could result in increased costs or risks, the diversion of our management’s and team members’ attention and resources and could materially adversely affect our results of operations, our internal controls over financial reporting or general computer controls, our ability to manage our business effectively and possible disruption of our business operations or financial reporting.
We depend on approximately 1,400 suppliers to supply us with the merchandise we purchase for resale and our significant dependence on these suppliers exposes us to risks associated with disruption in supply and losses of merchandise purchasing incentives that could have a material adverse effect on our business and results of operations.
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If there is a disruption in supply from a principal supplier (which can occur for various reasons in or out of the control of these suppliers, including as a result of public health emergencies, such as the COVID-19 pandemic, and measures taken by the Chinese government or other governments in response to such events), we may experience merchandise out-of-stocks, delivery delays or increased delivery costs, or otherwise be unable to obtain the same merchandise from other suppliers in a timely and efficient manner and on acceptable terms, or at all, which could materially affect our results of operations and our customers’ confidence in us.
−Removed: For example, during fiscal 2022 we observed increased competition across the industry for resources throughout the supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
−Removed: These factors negatively impacted transportation costs and required us to pay higher rates to maintain our inventory levels, and we expect such supply chain challenges to continue at least in the near term.
−Removed: Additionally, changes in our relationships with our suppliers (which can occur for various reasons in or out of our control) also have the potential to increase our expenses and adversely affect our results of operations.
+Added: For example, during fiscal 2021, we began to see increased competition across the industry for resources throughout the supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
+Added: As a result, we experienced a period of decreased or delayed supply and high inflation which negatively impacted transportation and inventory costs.
+Added: Over the past year, we have seen improvement to these constraints, resulting in decreased freight costs.
+Added: Fluctuations in the supply chain or changes in our relationships with our suppliers (which can occur for various reasons in or out of our control) have the potential to increase our expenses and adversely affect our results of operations.
The formation and/or strengthening of business partnerships between our suppliers and our competitors could directly alter the available supply of merchandise we desire to sell, which could have a material adverse effect on the level of customers purchasing merchandise from us and, thus, our results of operations.
+Added: Further, vendors increasingly sell their products directly to customers or through broadened or alternative distribution channels, such as department stores, family footwear stores, or e-commerce companies.
Moreover, many of our suppliers provide us with merchandise purchasing incentives, such as return privileges, volume purchasing allowances and cooperative advertising, and a decline or discontinuation of these incentives could severely impact our results of operations.
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Failure to detect, prevent or mitigate issues that might give rise to reputational risk or failure to adequately address negative publicity or perceptions could adversely impact our reputation, business, results of operations, and financial condition.
−Removed: Issues that might pose a reputational risk include failure of our cybersecurity measures to protect against data breaches, product liability and product recalls, our social media activity, failure to comply with applicable laws and regulations or enforce our own policies, our policies related to the sale of firearms, ammunition and accessories, our policies relating to public health, public stances on controversial social or political issues, and any of the other risks enumerated in these risk factors.
+Added: Issues that might pose a reputational risk include failure of our cybersecurity measures to protect against cybersecurity incidents, product liability and product recalls, our social media activity, our handling of issues relating to corporate responsibility matters, including our response to such matters, failure to comply with applicable laws and regulations or enforce our own policies, our policies related to the sale of firearms, ammunition and accessories, our policies relating to public health, public stances on controversial social or political issues, concerns surrounding labor, environmental, workplace safety and other practices that may vary from U.S.
+Added: standards in any of our foreign manufacturers, whether directly or indirectly, and any of the other risks enumerated in these risk factors.
As part of our marketing efforts, we rely on social media platforms and other digital marketing to attract and retain customers.
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In some cases, we outsource certain business services and solutions, and rely on the third-party vendors of these business services and solutions, to support a variety of our business functions, including portions of our information technology and management information systems, data security and credit card fraud detection, supply chain (including product manufacturers, logistics service providers or independent distributors), retail operations, administrative services and other core business functions.
+Added: In some cases, we rely on a single vendor for such services.
While we believe we conduct appropriate due diligence before entering into agreements with these third-parties, if we fail to properly manage these vendors or if they fail to meet, or are prevented from meeting, our performance standards and expectations, then our reputation, sales, and results of operations could be adversely affected.
Any significant interruption in the operations of these service providers, over which we have no control, could also have an adverse effect on our business.
−Removed: In addition, we could face increased costs associated with finding replacement service vendors or hiring new team members to provide these business services and solutions in-house.
+Added: In addition, we could face increased costs or incur substantial time in finding and implementing replacement service vendors or, alternatively, hiring new team members, making additional technology purchases, and changing information systems configurations to provide these business services and solutions in-house.
We may not be able to continue our store growth plans successfully or continue to manage our growth effectively, and our new stores may not generate sales levels necessary to achieve store-level sales or profitability comparable to that of our existing stores, which could materially and adversely affect our business, financial condition and results of operations.
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Our plans to increase our number of retail stores will depend in part on the availability of existing vacant retail stores or developable store sites.
−Removed: The availability of second-generation retail store space, and developable retail sites (i.e., land and redevelopment sites) that meet our criteria is very low.
−Removed: Land prices continue to increase as developers pursue more favorable non-retail options capable of yielding higher returns.
+Added: The availability of second-generation retail store space and developable store sites (i.e., land and redevelopment sites) that meet our criteria is very low.
+Added: In addition, land prices and lease rents have continued to increase due to various macroeconomic factors.
Further, a lack of available financing on terms acceptable to real estate developers or a tightening credit market may adversely affect the retail sites available to us.
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If we fail to locate desirable sites, obtain lease rights to these sites on terms acceptable to us, hire adequate personnel and open and effectively operate these new stores, our financial performance could be adversely affected.
−Removed: We lease our stores under operating leases with initial terms of 15 to 20 years, and we generally cannot cancel these leases at our option.
+Added: We typically lease our stores under operating leases with initial terms of 15 to 20 years, and we generally cannot cancel these leases at our option.
If a store is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term.
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In addition, as each of our leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could require us to close stores in desirable locations.
−Removed: In addition, our expansion in new and existing markets may present competitive, merchandising, marketing, human resources, distribution and regulatory challenges that differ from our current challenges, including competition among our stores, diminished novelty of our store design and concept, added strain on our distribution centers, maintaining our levels of customer service, training our store team members, additional information to be processed by our management information systems and diversion of our management’s attention from operations, such as the control of inventory levels in our stores.
+Added: In addition, our expansion in new and existing markets may present competitive, merchandising, marketing, human resources, distribution and regulatory challenges that differ from our current challenges, including expanding and improving our operating capabilities, competition among our stores, diminished novelty of our store design and concept, added strain on our distribution centers, maintaining our levels of customer service, training our store team members, additional information to be processed by our management information systems and diversion of our management’s attention from operations, such as the control of inventory levels in our stores.
New stores in new markets, where we are less familiar with the target customer and less well-known by the target customer, may face different or additional risks and increased costs compared to stores operated in existing markets or new stores in existing markets.
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Our continued growth also depends in large part, upon our ability to open new stores in a timely manner and to operate them profitably.
−Removed: In 2020 and 2021, in response to the then-current retail environment, we temporarily stopped new store openings, before resuming in 2022.
+Added: In 2020 and 2021, in response to the then-current retail environment, we temporarily stopped new store openings, before resuming in 2022 and continuing through the date of this Annual Report.
A slower than expected pace of new store openings may negatively impact our net sales growth and operating income.
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We also cannot guarantee that we will be able to obtain and distribute adequate product supplies to our new stores or maintain adequate warehousing and distribution capability to support our new stores at acceptable costs.
+Added: Furthermore, the success of our stores depends on several factors including the sustained success of the shopping center where the store is located, consumer demographics, and consumer shopping habits and patterns.
+Added: Changes in consumer shopping habits and patterns, reduced customer traffic in the shopping centers where our stores are located, financial difficulties of our landlords, or the shopping center operators, anchor tenants or a significant number of other retailers, and shopping center vacancies or closures, could impact the profitability of our stores and increase the likelihood that our landlords or the shopping centers operators fail to fulfill their obligations and conditions under our lease agreements or governing documents.
Thus, our failure to achieve our expansion plans could materially and adversely affect our business, financial condition and results of operations.
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• website operating issues, including website availability, system reliability, website operation, Internet connectivity, website errors, computer viruses, telecommunication failures, electronic break-ins or similar disruptions;
−Removed: • the need to keep pace with rapid technological change and maintain investments necessary for our e-commerce operation;
+Added: • the need to keep pace with rapid technological change and investments from competitors, and maintain investments necessary for our e-commerce operation;
• legal compliance issues related to the online sale of merchandise;
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Our e-commerce activities also carry challenges such as identifying our e-commerce customer, marketing our website, establishing a profitable on-line merchandising mix, managing shipping costs to our customers, setting prices to compete against other on-line retailers, maintaining website content, timely and accurately fulfilling orders, integrating our e-commerce business with our store operations, and growing the operation as part of our overall strategic plan.
+Added: In addition, offering different products through each channel could cause conflicts and cause some of our current or potential e-commerce customers to consider our competitors.
+Added: Offering products through our e-commerce platform could also cause some of our current or potential vendors to consider competing internet or mobile offerings of their products either on their own or through competing distributors.
If we do not successfully manage the risks and navigate the challenges associated with our e-commerce activities, it could have a material adverse effect on our results of operations.
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Our private label brand merchandise exposes us to various risks generally encountered by companies that source, manufacture, market and retail exclusive private label brand merchandise.
−Removed: In addition to national brand merchandise, we offer customers private label brand merchandise that is primarily sold exclusively by Academy.
+Added: In addition to national brand merchandise, we offer customers private label brand merchandise, most of which is sold exclusively by Academy.
The sale of private label brand merchandise subjects us to certain risks, including:
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We depend in large part on the orderly operation of our receiving and distribution process, which depends, in turn, on adherence to shipping schedules, proper functioning of our information technology and inventory control systems and overall effective management of our distribution centers.
−Removed: As a result of damage to, or prolonged interruption of, operations or inventory at any of these facilities, or with respect to third-party transportation providers, due to a work stoppage, labor shortage, operations significantly below historical efficiency levels, supply chain disruption, inclement weather or natural or man-made disasters (including events that may be caused or exacerbated by climate change), system failures, slowdowns or strikes, acts of terror or other unforeseen events in the areas or regions of these facilities could impair our ability to adequately stock our stores, process returns of products to vendors and ship product to our e-commerce customers, thereby adversely affecting our sales and profitability.
+Added: As a result of damage to, or prolonged interruption of, operations or inventory at any of these facilities, or with respect to third-party transportation providers, due to a work stoppage, labor shortage, operations significantly below historical efficiency levels, supply chain disruption, public health events (such as pandemics), severe weather (such as tornadoes) or natural or man-made disasters (including events that may be caused or exacerbated by climate change), system failures or cyber incidents, slowdowns or strikes, acts of terror or other unforeseen events in the areas or regions of these facilities could impair our ability to adequately stock our stores, process returns of products to vendors and ship product to our e-commerce customers, thereby adversely affecting our sales and profitability.
In addition, we could incur significantly higher costs and longer lead times associated with distributing our products to our stores and customers during the time it takes for us to reopen or replace these distribution centers.
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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.
+Added: We must carry a significant amount of inventory, particularly before these selling periods.
If we miscalculate the demand for our products generally or for our product mix during certain holiday or sporting seasons, our net sales could decline resulting in lower margins, higher labor costs as a percentage of sales and excess inventory, which would harm our financial performance.
+Added: If we are not successful in selling our inventory during these periods, we may be forced to rely on markdowns or promotional sales to dispose of the excess inventory or may not be able to sell the inventory at all, which could have a material adverse effect on our business, financial condition and results of operations.
Our quarterly results of operations and comparable sales have historically fluctuated, and may continue to fluctuate, as a result of factors outside our control, including:
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Furthermore, our operating margins may be impacted in periods in which incremental expenses are incurred as a result of upcoming new store openings.
−Removed: The occurrence of severe weather events, catastrophic health events, natural or man-made disasters, social and political conditions or civil unrest could significantly damage or destroy our retail locations, could prohibit consumers from traveling to our retail locations or could prevent us from resupplying or staffing our stores or distribution centers or fulfilling out e-commerce orders, especially during peak shopping seasons.
−Removed: Unforeseen events, including public health emergencies, such as pandemics, natural disasters, such as earthquakes, hurricanes, tornadoes, freezes, snow or ice storms, floods and heavy rains, heatwaves, and man-made disasters, such as an oil spill closing large areas of hunting or fishing, could disrupt our operations or the operations of our suppliers, as well as the behavior of our consumers.
+Added: The occurrence of severe weather events, catastrophic public health events, natural or man-made disasters, social and political conditions or civil unrest could significantly damage or destroy our retail locations, could prohibit consumers from traveling to our retail locations or could prevent us from resupplying or staffing our stores or distribution centers or fulfilling our e-commerce orders, especially during peak shopping seasons.
+Added: Unforeseen events, including public health events, such as pandemics, natural disasters, such as earthquakes, hurricanes, tornadoes, freezes, snow or ice storms, floods and heavy rains, heatwaves, and man-made disasters, such as an oil spill closing large areas of hunting or fishing, could disrupt our operations or the operations of our suppliers, as well as the behavior of our consumers.
For example, frequent or unusually heavy snowfall, ice storms, rainstorms or other extreme weather conditions over a prolonged period could make it difficult for our customers to travel to our stores and thereby reduce our sales and profitability.
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Socio-political factors, such as foreign wars, civil unrest or other economic or political uncertainties that contribute to consumer unease or harm to our supply chain or store base, may also result in decreased discretionary spending, property damage and/or business interruption losses.
−Removed: For example, we may face losses related to the civil unrest in the United States, such as the that which occurred in late May 2020 in response to reported incidents of police violence.
+Added: For example, we may face losses related to the civil unrest in the United States, such as that which occurred in late May 2020 in response to reported incidents of police violence.
To the extent these events result in the closure of one or more of our distribution centers, a significant number of stores, or our corporate headquarters or impact one or more of our key suppliers, our operations and financial performance could be materially adversely affected through an inability to support our business, resupply or staff our stores, distribution centers or corporate headquarters or fulfill our e-commerce orders, especially during peak shopping seasons, and through lost sales and any precautions that we may take may not be adequate to mitigate the impact of such events.
−Removed: As these events occur in the future, if they should impact areas in which we have our corporate headquarters, a distribution centers or a concentration of retail stores or vendor sources, such events could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our business is significantly dependent on our ability to meet our labor needs.
+Added: If these events impact areas in which we have our corporate headquarters, distribution centers, a concentration of retail stores or vendor sources or foreign and/or U.S.
+Added: ports, such events could have a material adverse effect on our business, financial condition and results of operations.
+Added: Our failure to attract, train and retain quality team members in sufficient numbers, increases in wage and labor costs, and changes in laws and other labor issues could adversely affect our business.
The success of our business depends significantly on our ability to hire and retain quality team members, including store managers, Enthusiasts and other store team members, distribution center team members and corporate directors, managers and other personnel.
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Additionally, our ability to maintain consistency in the quality of customer service in our stores is critical to our success.
−Removed: Many of our store team members are in entry-level or part-time positions that historically have high rates of turnover.
+Added: Many of our store team members are in entry-level or part-time positions that historically have high rates of turnover, which can lead to increased training and retention costs, particularly if employment opportunities increase.
We are also dependent on the team members who staff our distribution centers, many of whom are skilled.
−Removed: We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the work force of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health emergencies, such as the COVID-19 pandemic.
+Added: We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the work force of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health events, such as the COVID-19 pandemic.
We have experienced, and expect to continue to experience, a shortage of labor for certain functions, which has increased our labor costs and negatively impacted our profitability.
−Removed: The extent and duration of the effect of these labor market challenges are subject to numerous factors, including the continuing effect of the COVID-19 pandemic, availability of qualified persons in the markets where we and our contracted service providers operate and unemployment levels within these markets, behavioral changes, prevailing wage rates and other benefits, inflation, adoption of new or revised employment and labor laws and regulations (including increased minimum wage requirements) or government programs, safety levels of our operations, and our reputation within the labor market.
+Added: The extent and duration of the effect of these labor market challenges are subject to numerous factors, including availability of qualified persons in the markets where we and our contracted service providers operate and unemployment levels within these markets, behavioral changes, prevailing wage rates and other benefits, inflation, adoption of new or revised employment and labor laws and regulations (including increased minimum wage requirements) or government programs, safety levels of our operations, and our reputation within the labor market.
Recent or potential future legislative initiatives may seek to increase the federal minimum wage in the United States, as well as the minimum wage in a number of individual states or markets.
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Additionally, the U.S.
−Removed: Department of Labor has indicated that it intends to propose rules that may have salary and wage impact for “exempt” team members, which could result in a substantial increase in store payroll expense.
+Added: Department of Labor has proposed rules that we continue to monitor which may have salary and wage impact for “exempt” team members, which could result in a substantial increase in store payroll expense.
Any increase in the cost of our labor could have an adverse effect on our operating costs, financial condition and results of operations.
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Our senior executive team has substantial experience and expertise in our retail business, and serves an integral role in the growth and support of our various initiatives.
−Removed: If we were to lose the leadership of senior executives or other key team members, our business could be adversely affected.
+Added: If we were to lose the leadership of senior executives or other key team members without appropriate successors in place, our business could be adversely affected.
In addition, if significant unexpected turnover occurs at the team member level, the loss of the services of these individuals, or any resulting negative perceptions of our business, could damage our reputation and our business.
−Removed: Competition for such qualified talent is intense, and we cannot be sure we will be able to find suitable successors promptly, or at all, or to successfully integrate any successors, or that we will be able to attract, retain, and develop a sufficient number of qualified individuals in future periods.
+Added: Competition for such qualified talent is significant, and we cannot be sure we will be able to find suitable successors promptly, or at all, or to successfully integrate any successors, or that we will be able to attract, retain, and develop a sufficient number of qualified individuals in future periods.
Our stores are located primarily in the southern United States which could subject us to regional risks.
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The price of fuel and demand for transportation services has fluctuated significantly over the last few years, and has resulted in increased costs for us and our vendors.
−Removed: Additionally, during fiscal 2022, we observed increased competition across the industry for resources throughout the supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
−Removed: These factors negatively impacted transportation costs, and required us to pay higher rates to maintain our inventory levels, and we expect such supply chain challenges to continue at least in the near term.
+Added: For example, during fiscal 2021, we began to see increased competition across the industry for resources throughout the supply chain, which resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port.
+Added: As a result, we experienced a period of decreased or delayed supply and high inflation which negatively impacted transportation and inventory costs.
+Added: Over the past year, we have seen improvement to these constraints, resulting in decreased freight costs.
In addition, changes in regulations may result in higher fuel costs through taxation, transportation restrictions or other means.
Fluctuations in transportation costs and availability could adversely affect our results of operations.
−Removed: Labor shortages in the transportation industry have and are expected to continue to negatively affect transportation costs and our ability to supply our stores in a timely manner.
+Added: Labor shortages in the transportation industry have historically had and could potentially continue to negatively affect transportation costs and our ability to supply our stores in a timely manner.
In particular, our business is highly dependent on the shipping and trucking industry to deliver products to our distribution centers and our stores.
Our results of operations may be adversely affected if we, or our vendors, are unable to secure adequate transportation resources at competitive prices to fulfill our delivery schedules to our distribution centers or our stores.
−Removed: Difficulties in moving products manufactured overseas and through the ports of North America, whether due to port congestion, government shutdowns, labor disputes, product regulations and/or inspections or other factors, including man-made or natural disasters and public health emergencies, could negatively affect our business.
−Removed: We are subject to payment-related risks.
+Added: Difficulties in moving products manufactured overseas and through the ports of North America, whether due to port congestion, government shutdowns, labor disputes, product regulations and/or inspections or other factors, including man-made or natural disasters and public health events, could negatively affect our business.
+Added: We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business.
For our sales to our customers, we accept a variety of payment methods, including credit cards, debit cards, electronic funds transfers and electronic payment systems.
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If these independent service providers become unwilling or unable to provide these services to us or if the cost of using these providers increases, our business could be harmed.
+Added: The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems.
We are also subject to payment card association operating rules and agreements, including data security rules and agreements, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply.
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If we are unable to continue to develop successful marketing and advertising strategies, especially for online and social media platforms, or if our competitors develop more effective strategies, we could lose customers and sales could decline.
+Added: If we are unable to protect against inventory shrink, our results of operations and financial condition could be adversely affected.
+Added: Our business depends on our ability to effectively manage our inventory.
+Added: We have historically experienced loss of inventory (also called shrink) due to damage, theft (including from organized retail crime), and other causes.
+Added: We continue to experience elevated levels of inventory shrink relative to historical levels, which has adversely affected, and could continue to adversely affect, our results of operations and financial condition.
+Added: To protect against rising inventory shrink, we have taken, and may continue to take, certain operational and strategic actions that could adversely affect our reputation, customer experience, and results of operations.
+Added: In addition, sustained high rates of inventory shrink at certain stores could impact the profitability of those stores and result in the impairment of long-term assets.
We may pursue strategic acquisitions, which could have an adverse impact on our business, as could assimilation of companies following acquisition.
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In June 2021, the DOJ announced a new policy to underscore zero tolerance for willful violations of the law by federally licensed firearms dealers that put public safety at risk.
+Added: Since announcing this policy, ATF (a law enforcement agency in the DOJ) revoked 157 federal firearms licenses in 2023, compared to 88 licenses revoked in 2022 and five in the last six months of 2021.
In the future, there may be increased federal, state or local regulation or 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.
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Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere, including increases in global temperatures, changes in weather patterns and increasingly frequent and/or prolonged extreme weather and climate related events, could present risks to our operations.
+Added: The potential impacts of climate change present a variety of risks.
+Added: The physical effects of climate change, such as extreme weather conditions, drought, and rising sea levels, could adversely affect our results of operations, including by increasing our energy costs, disrupting our supply chain, negatively impacting our workforce, damaging our stores, distribution centers, and inventory, and threatening the habitability of the locations in which we operate.
+Added: We have significant operations in certain states where natural disasters are more prevalent.
+Added: Natural disasters in those states or in other areas where we operate could result in significant physical damage to or closure of one or more of our stores, distribution centers, facilities, or key vendors.
+Added: In addition, weather conditions, natural disasters, and other catastrophic events in areas where we or our vendors operate, or depend upon for continued operations, could adversely affect the availability and cost of certain products within our supply chain, affect consumer purchasing power, and reduce consumer demand.
+Added: Any of these events could adversely affect our results of operations.
For additional information, see also our risk factor related to the impact of severe weather under “Risks Related to Our Business and Industry” above.
−Removed: Climate change could exacerbate challenges relating to the availability and quality of water and raw materials, including those used in the production of the private label and other merchandise that we sell, and may result in changes in regulations or consumer preferences that could have a material adverse effect on our business, results of operations and financial condition.
+Added: Climate change could exacerbate challenges relating to the availability and quality of water and raw materials, including those used in the production of the private label and other merchandise that we sell, may lead to increased energy usage and costs, and may result in changes in regulations or consumer preferences that could have a material adverse effect on our business, results of operations and financial condition.
+Added: Uncharacteristic or significant weather conditions, including the physical impacts of climate change, can affect consumer shopping patterns, particularly in apparel and seasonal items, which could lead to lower sales or greater than expected markdowns and adversely affect our results of operations.
There has been an increased focus by governmental and non-governmental organizations, customers, team members and other stakeholders on products that are sustainably made and other sustainability matters, including responsible sourcing, the use of plastic, conservation, energy and water, the recyclability of packaging and materials transparency, all of which may require us to incur increased costs for additional transparency, due diligence, and reporting.
−Removed: Additionally, recent proposed regulatory changes related to climate change and reporting, could increase the complexity of, and compliance costs associated with, such regulations that could have a material adverse effect on our business, results of operations and financial condition.
+Added: Additionally, recent proposed legislative and regulatory changes related to climate change and reporting at both the federal and state levels could increase the complexity of, and compliance costs associated with, such regulations, which could have a material adverse effect on our business, results of operations and financial condition.
We are, and may in the future, be subject to claims, demands and lawsuits, and our insurance or indemnities may not be sufficient to cover damages related to those claims and lawsuits.
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• tort, personal injury and property damage claims related to our stores, e-commerce, distribution centers or corporate headquarters;
+Added: • unauthorized access to our information systems or facilities that results in a breach of data security or privacy;
• regulatory compliance, including relating to consumer protection, marketing and advertising, product safety, workplace safety, firearms, ammunition and related accessories, knives, import/export customs, taxes, tariffs, duties, and surcharges, data security and privacy, food and other regulated products, accounting, labor and employment, environmental matters, and hazardous materials.
We sell firearms, ammunition, and related accessories.
−Removed: These products are associated with an increased risk of injury and related lawsuits with respect to our compliance with Bureau of Alcohol, Tobacco, Firearms and Explosives and state laws and regulations.
+Added: These products are associated with an increased risk of injury and related lawsuits with respect to our compliance with federal and state laws and regulations covering such products.
Any improper or illegal use by our customers of firearms, ammunition, or related accessories sold by us could have a negative impact on our reputation and business.
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Our sales and operating results could be adversely affected by product safety concerns.
−Removed: If the products that we offer, including from both national brands and our private label brands, do not meet applicable safety standards or our customers’ expectations regarding safety, we could experience decreased sales, increased costs, and/or be exposed to legal and might give rise to reputational risk.
−Removed: All of our vendors must comply with applicable product safety laws, and it is our expectation that our vendors will stand behind their products to ensure that the products we buy comply with all federal, state, and local requirements for sale, including product safety, labeling, and testing requirements.
+Added: If the products that we offer, including from both national brands and our private label brands, do not meet applicable safety standards or our customers’ expectations regarding safety, we could experience decreased sales, increased costs, and/or be exposed to legal and reputational risk.
+Added: All of our vendors must comply with applicable product safety laws, and we rely on our vendors to ensure that the products we buy comply with all federal, state, and local requirements for sale, including product safety, labeling, and testing requirements.
Negative customer perceptions and publicity regarding the safety and sourcing of the products we sell, and events that give rise to actual, potential, or perceived product safety concerns could expose us to government enforcement action and/or private litigation.
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Our failure to protect our intellectual property or avoid the infringement of third-party intellectual property rights could be costly and have a negative impact on our results of operations.
−Removed: We believe that our trademarks, service marks, copyrights, patents, processes, trade secrets, domain names and other intellectual property, including our Academy Sports + Outdoors brand, our private label brands, such as Academy Sports + Outdoors, Magellan Outdoors, BCG, O'rageous, Game Winner, Outdoor Gourmet and Freely, and our goodwill, designs, names, slogans, images and trade dress associated with these brands, are valuable assets, essential to our success and our competitive position due to their name recognition with customers.
+Added: We believe that our trademarks, service marks, copyrights, patents, processes, trade secrets, domain names and other intellectual property, including our Academy Sports + Outdoors brand, our private label brands, such as Academy Sports + Outdoors, Magellan Outdoors, BCG, O'rageous, Game Winner, Outdoor Gourmet, Freely and R.O.W., and our goodwill, designs, names, slogans, images and trade dress associated with these brands, are valuable assets, and are essential to our success and our competitive position due to their name recognition with customers.
The unauthorized use or other misappropriation of our intellectual property could diminish the value of our brands or goodwill and cause a decline in our sales.
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Our level of indebtedness requires that we dedicate a portion of our cash flows to debt service payments and reduces the funds that would otherwise be available for other general corporate purposes and other business opportunities, which could adversely affect our operating performance, growth, profitability and financial condition, which in turn could make it more difficult for us to generate cash flow sufficient to satisfy all of our obligations under our indebtedness.
−Removed: As of January 28, 2023, we had approximately $194.8 million outstanding under the Term Loan and $400.0 million outstanding under the Notes, all of which is secured.
−Removed: As of January 28, 2023, we had no borrowings outstanding under the ABL Facility (as defined in Note 4 of the accompanying financial statements), an available borrowing capacity under the ABL Facility of approximately $947.8 million (which is subject to customary borrowing conditions, including a borrowing base), and outstanding letters of credit of $13.9 million, all of which were issued under the ABL Facility.
+Added: As of February 3, 2024, we had approximately $91.8 million outstanding under the Term Loan and $400.0 million outstanding under the Notes, all of which is secured.
+Added: As of February 3, 2024, we had no borrowings outstanding under the ABL Facility (as defined in Note 4 of the accompanying financial statements), an available borrowing capacity under the ABL Facility of approximately $881.4 million (which is subject to customary borrowing conditions, including a borrowing base), and outstanding letters of credit of $11.6 million, all of which were issued under the ABL Facility.
Our overall level of indebtedness requires that we dedicate a portion of our cash flows to debt service payments.
The Term Loan (as defined in Note 4 of the accompanying financial statements) requires quarterly principal payments through September 30, 2027, and monthly cash interest payments through maturity.
−Removed: The ABL Facility, under which we had no borrowings as of January 28, 2023, matures on November 6, 2025.
+Added: The ABL Facility, under which we had no borrowings as of February 3, 2024, matures on November 6, 2025.
The Notes (as defined in Note 4 of the accompanying financial statements) require semi-annual payments of interest (in arrears) and matures on November 15, 2027.
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These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness, and additionally we have further borrowing capacity under the ABL Facility.
−Removed: As of January 28, 2023, we had no borrowings outstanding under the ABL Facility, and an available borrowing capacity under the ABL Facility of approximately $947.8 million (which is subject to customary borrowing conditions, including a borrowing base).
+Added: As of February 3, 2024, we had no borrowings outstanding under the ABL Facility, and an available borrowing capacity under the ABL Facility of approximately $881.4 million (which is subject to customary borrowing conditions, including a borrowing base).
We may be able to increase the commitments under the ABL Facility by $250.0 million, subject to certain conditions.
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If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, and our net income and operating cash flows, including cash available for servicing our indebtedness, will correspondingly decrease.
−Removed: We use interest rate swap agreements to hedge market risks relating to possible adverse changes in interest rates with the intent of reducing volatility in our cash flows due to fluctuations in interest rates.
+Added: In the past we have used, and in the future we may again use interest rate swap agreements to hedge market risks relating to possible adverse changes in interest rates with the intent of reducing volatility in our cash flows due to fluctuations in interest rates.
However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk, may prove disadvantageous, or may create additional risks.
In addition, our hedging activities are subject to the risks that a counterparty may not perform its obligations under the applicable derivative instrument.
−Removed: LIBOR and other interest rates that are indices deemed to be “benchmarks” are the subject of recent and ongoing national, international and other regulatory guidance and proposals for reform.
+Added: Secured Overnight Financing Rate (“SOFR”) and other interest rates that are indices deemed to be “benchmarks” are the subject of recent and ongoing national, international and other regulatory guidance and proposals for reform.
Some of these reforms are already effective, while others are still to be implemented.
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Each financial institution that is a lender under the ABL Facility is responsible on a several but not joint basis for providing a portion of the loans to be made under the facility.
−Removed: If any participant or group of participants with a significant portion of the commitments under the ABL Facility fails to satisfy its or their respective obligations to extend credit under the facility and we are unable to find a replacement for such participant or participants on a timely basis (if at all), our liquidity may be adversely affected.
+Added: If any participant or group of participants with a significant portion of the commitments under the ABL Facility fails to satisfy its or their respective obligations to extend credit under the facility and we are unable to find a replacement for such participant or participants on a timely basis (or at all), our liquidity may be adversely affected.
In addition, the lenders under the ABL Facility may reduce the borrowing base under the facility in certain circumstances, which could adversely impact our liquidity and results of operations.
Our level of indebtedness may hinder our ability to negotiate favorable terms with our landlords, vendors and suppliers, which could negatively impact our operating performance and, thus, could make it more difficult for us to generate cash flow sufficient to satisfy all of our obligations under our indebtedness.
−Removed: Our new store profitability is partially attributable to our ability to negotiate attractive rental rates with our landlords and to secure sale-leaseback financing at attractive cap rates.
+Added: Our new store profitability is partially attributable to our ability to negotiate attractive rental rates with our landlords and, in the future, to secure sale-leaseback financing at attractive cap rates.
Our level of indebtedness may adversely affect our credit profile or rating, which may adversely affect our ability to negotiate favorable rental rates for our new store locations or expiring existing store leases or secure sale-leaseback financing.
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Our stock price may be highly volatile or may decline regardless of our operating performance, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.
−Removed: The trading price of our common stock may be highly volatile and may be adversely affected due to a number of factors, most of which we cannot control, including those listed elsewhere under this “Risk Factors” section, and the following:
+Added: The trading price of our common stock may be highly volatile and may be adversely affected due to a number of factors, many of which are beyond our control, including without limitation those listed elsewhere under this “Risk Factors” section, and the following:
• results of operations that vary from the expectations of securities analysts and investors;
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• changes in business or regulatory conditions;
−Removed: • future sales of our common stock or other securities;
+Added: • future sales of our common stock or other securities, or the perception that such sales may occur;
• investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives;
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• changes in accounting principles;
−Removed: • other events or factors, including those resulting from informational technology system failures and disruptions, epidemics, pandemics, natural disasters, acts of terrorism, civil unrest, wars (including the invasion of Ukraine by Russia and its regional and global ramifications) or responses to these events.
+Added: • other events or factors, including those resulting from informational technology system failures and disruptions, epidemics, pandemics, natural disasters, acts of terrorism, civil unrest, wars or responses to these events.
Furthermore, the stock market may experience extreme volatility that, in some cases, may be unrelated or disproportionate to the operating performance of particular companies.
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We declared and paid our first quarterly cash dividend for the fourth quarter for fiscal 2021 and have paid a quarterly cash dividend consistently thereafter.
−Removed: Any determination to pay future dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, legal requirements, covenant compliance, restrictions in our existing and any future debt agreements and other factors that our board of directors deems relevant.
+Added: However, we are not required to declare dividends.
+Added: Any determination to pay future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, business strategy, legal requirements, covenant compliance, restrictions in our existing and any future debt agreements and other factors that our Board of Directors deems relevant.
Therefore, there can be no assurance that we will pay any dividends to holders of our common stock or as to the amount of any such dividends.
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Additionally, our operations are conducted through our wholly owned subsidiaries and our ability to generate cash to meet our debt service obligations or to make future dividend payments or conduct share repurchases, if any, is highly dependent on the earnings of, and the receipt of funds from, our subsidiaries via dividends or intercompany loans.
−Removed: In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock.
−Removed: If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.
−Removed: The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business.
−Removed: We do not control these analysts.
−Removed: Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, or if our operating results do not meet their expectations, the price of our stock could decline.
−Removed: If one or more of these analysts ceases coverage of the Company or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.
+Added: In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock or our ability to repurchase our common stock.
Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
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As a result, our stockholders may be limited in their ability to obtain a premium for their shares.
−Removed: Our board of directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.
−Removed: Our amended and restated certificate of incorporation authorizes our board of directors, without the approval of our stockholders, to issue 50 million shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated certificate of incorporation, as shares of preferred stock in series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.
−Removed: The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.
Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders and the federal district courts will be the exclusive forum for Securities Act claims, which could limit our stockholders’ ability to bring a suit in a different judicial forum than they may otherwise choose for disputes with us or our directors, officers, team members or stockholders.
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While the Delaware Supreme Court has upheld the validity of similar provisions under the DGCL, there is uncertainty as to whether a court in another state would enforce such a forum selection provision.
−Removed: Our exclusive forum provision does not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders are not be deemed to have waived our compliance with these laws, rules and regulations.
+Added: Our exclusive forum provision does not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders are not deemed to have waived our compliance with these laws, rules and regulations.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation.
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Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.
−Removed: Unresolved Staff Comments
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.