By Teresa Rivas
Sometimes a slam dunk is anything but. Such was the case with my recommendation of Academy Sports & Outdoors at the start of 2025.
Academy is a sporting goods and apparel retailer that had a fantastic run during the pandemic era, when people were focused on health and wellness. It continued to climb in the following years as youth sports resumed, rapidly expanding its store base and adding new brands to its roster.
However, its winning streak couldn't last, and the shares never recaptured their spring 2024 all-time high above $75. They're roughly flat over the past year, while the S&P 500 gained some 17%.
As I mentioned in my year-end mea culpa, it would have been better to leave well enough alone, not revisiting the stock since my July 2021 article, as the shares are still about 40% higher since then.
Academy actually held up better than larger peer Dick's Sporting Goods, which is down more than 6% in the past 12 months. Yet it's overall been a difficult category.
Many people who purchased big-ticket items in 2020 and the years after, like kayaks or treadmills, don't need to replace them yet. Inflation likewise kept a lid on sales even as schools and sports leagues reopened.
The company certainly tried its best. Along with adding new brands to its shelves and new stores to its fleet, it introduced a new customer-data platform to allow for more targeted ads. Academy's private label products offer a good trade-down option for cash-strapped consumers, and it's done this without overloading its balance sheet.
Still, the stock has been stubbornly stuck for a year, and hasn't been able to stay above $60.
If it can break through that level and stay there, that could be a sign that its long slump is nearly over, but there's no indication that now will be the moment it does.
True, the stock is cheap, as it's still hovering around 9 times forward earnings, but that wasn't cheap enough to entice investors last year. And while this fiscal year, which ends in February, should be the last time earnings per share decline on a year-over-year basis, investors will likely want to see consistent earnings growth before jumping back in, given three straight years of EPS contraction.
The World Cup is another potential catalyst, and was the subject of a recent note by Jefferies' Jonathan Matuszewski, one of the few Academy bulls. Yet it remains to be seen whether that will bring a meaningful boost to sales, and how durable that will be. After all, the Paris 2024 Olympics weren't the boon for Nike that many predicted.
Although estimates have been creeping higher in recent months, the average analyst price target just above $60 implies a paltry 5% upside for the stock.
Ultimately there is room for more than one winner in the fragmented sporting goods space, and Academy's geographic expansion, increasing merchandising power, and growing loyalty program mean that at some point, when the broader backdrop is more supportive, it will reap the benefits of recent changes.
Everyone loves an underdog story, but it might not be game time for Academy again yet.
Write to Teresa Rivas at teresa.rivas@barrons.com
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(END) Dow Jones Newswires
January 07, 2026 14:32 ET (19:32 GMT)
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