S-1/A

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

S-1/A 1 d934024ds1a.htm S-1/A S-1/A

As filed with the Securities and Exchange Commission on September 28, 2020

Registration No. 333-248683

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Academy Sports and Outdoors, Inc.

(Exact name of registrant as specified in its charter)

Delaware

5940

85-1800912

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

1800 North Mason Road

Katy, Texas 77449

(281) 646-5200

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Rene G. Casares, Esq.

Senior Vice President and General Counsel

1800 North Mason Road

Katy, Texas 77449

(281) 646-5200

(Name, address, including zip code, and telephone number, including area code, of registrant’s agent for service)

With copies to:

Joseph H. Kaufman, Esq.

Sunny Cheong, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

(212) 455-2000

Marc D. Jaffe, Esq.

Ian D. Schuman, Esq.

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

(212) 906-1200

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Amount to be Registered⁽¹⁾	Proposed Maximum Offering Price Per Share⁽²⁾	Proposed Maximum Aggregate Offering Price⁽¹⁾⁽²⁾	Amount of Registration Fee⁽³⁾
Common Stock, $0.01 par value per share	17,968,750	$17.00	$305,468,750	$39,650

(1)	Includes 2,343,750 shares of common stock that the underwriters have the option to purchase. See “Underwriting (Conflicts of Interest).”

(2)	Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) promulgated under the Securities Act of 1933, as amended.

(3)	The Registrant previously paid $39,650 in connection with a prior filing of this Registration Statement.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

This Registration Statement on Form S-1, or the Registration Statement, is being filed by Academy Sports and Outdoors, Inc., a newly formed Delaware corporation, or the Registrant, in connection with a proposed registered public offering of shares of its common stock. Prior to the consummation of this offering, we intend to undertake a series of reorganization transactions, which we refer to as the Reorganization Transactions, that will result in, among other things, New Academy Holding Company, LLC, the current holding company for the business described in this prospectus that is part of the Registration Statement, being contributed to the Registrant by its unitholders and becoming a wholly owned subsidiary of the Registrant. Following the Reorganization Transactions, the Registrant will be the holding company of the business described in this prospectus.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer and sale is not permitted.

Subject to completion, dated September 28, 2020

Preliminary Prospectus

15,625,000 Shares

LOGO

Academy Sports and Outdoors, Inc.

Common Stock

This is the initial public offering of common stock of Academy Sports and Outdoors, Inc. We are offering 15,625,000 shares of our common stock.

Prior to this offering, there has been no public market for our common stock. We expect that the initial public offering price of our common stock will be between $15.00 and $17.00 per share. We have applied to list our common stock on Nasdaq Global Select Market, or Nasdaq, under the symbol “ASO.”

After the completion of this offering, investment entities owned by investment funds and other entities affiliated with Kohlberg Kravis Roberts & Co. L.P. will beneficially own approximately 70% of the voting power of our common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. See “Management—Controlled Company Exemption.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 23 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission, or the SEC, nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Price to Public

Underwriting
Discounts and
Commissions⁽¹⁾

Proceeds to
Academy
Sports and
Outdoors, Inc.

Per Share

Total

(1)	See “Underwriting (Conflicts of Interest)” for additional information regarding underwriting compensation.

We have granted the underwriters a 30-day option from the date of this prospectus to purchase up to 2,343,750 additional shares of our common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments, if any.

The underwriters expect to deliver the shares on or about , 2020.

Joint Book-Running Managers


Credit Suisse		J.P. Morgan		KKR		BofA Securities

Bookrunners


Evercore ISI		Guggenheim Securities		UBS Investment Bank		Wells Fargo Securities

Co-Managers


Stephens Inc.		Capital One Securities		Loop Capital Markets		CastleOak Securities, L.P.



Blaylock Van, LLC	Cabrera Capital Markets, LLC	Ramirez & Co., Inc.	R. Seelaus & Co., LLC

The date of this prospectus is , 2020.

LOGO

TABLE OF CONTENTS


	Page
Industry and Market Data		ii
Trademarks, Tradenames, Service Marks and Copyrights		ii
Basis of Presentation		iii
Non-GAAP Financial Measures		iv
Letter From Our Chairman, President and Chief Executive Officer		vi
Summary		1
Risk Factors		23
Forward-Looking Statements		56
Use of Proceeds		58
Dividend Policy		59
Capitalization		60
Dilution		62
Selected Historical Consolidated Financial Data		64
Management’s Discussion and Analysis of Financial Condition and Results of Operations		67
Business		95
Management		114
Executive Compensation		121
Certain Relationships and Related Party Transactions		193
Principal Stockholders		197
Description of Capital Stock		199
Description of Certain Indebtedness		207
Shares Eligible for Future Sale		209
Material U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders		211
Underwriting (Conflicts of Interest)		214
Legal Matters		221
Experts		221
Where You Can Find More Information		221
Index to Financial Statements		F-1

Through and including the 25th day after the date of this prospectus, all dealers that effect transactions in these shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligations to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. Neither we nor the underwriters have authorized anyone to provide you with different information. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus, or any free writing prospectus, as the case may be, or any sale of shares of our common stock.

For investors outside the United States: we are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.

INDUSTRY AND MARKET DATA

Within this prospectus, we reference information and statistics regarding the sporting goods and outdoor recreation retail industries. We have obtained this information and statistics from various independent third-party sources, including independent industry publications, reports by market research firms and other independent sources. Some data and other information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of internal company research, surveys and independent sources. Data regarding the industries in which we compete and our market position and market share within these industries are inherently imprecise and are subject to significant business, economic and competitive uncertainties beyond our control, but we believe they generally indicate size, position and market share within these industries. While we believe such information is reliable, we have not independently verified any third-party information. While we believe our internal company research, surveys and estimates are reliable, such research, surveys and estimates have not been verified by any independent source. In addition, assumptions and estimates of our and our industries’ future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Forward-Looking Statements.” As a result, you should be aware that market, ranking, and other similar industry data included in this prospectus, and estimates and beliefs based on that data may not be reliable. Neither we nor the underwriters can guarantee the accuracy or completeness of any such information contained in this prospectus.

TRADEMARKS, TRADENAMES, SERVICE MARKS AND COPYRIGHTS

We own and license a number of registered and common law trademarks and pending applications for trademark registrations in the United States, primarily through our subsidiaries, including, for example: Academy Sports + Outdoors^®, Magellan Outdoors^®, BCG^®, O’rageous^® and Outdoor Gourmet^®. Unless otherwise indicated, all trademarks appearing in this prospectus are proprietary to us, our affiliates and/or licensors. This prospectus also contains trademarks, tradenames, service marks and copyrights of other companies, which are the property of their respective owners. Solely for convenience, certain trademarks, tradenames, service marks and copyrights referred to in this prospectus may appear without the ^©, ^® and ^™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, tradenames, service marks and copyrights. We do not intend our use or display of other parties’ trademarks, tradenames, service marks or copyrights to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

BASIS OF PRESENTATION

Certain Definitions

The following terms are used in this prospectus unless otherwise noted or indicated by the context:

•

“ABL Facility” means our senior secured asset-based revolving credit facility, as described under “Description of Certain Indebtedness;”

•

“Academy,” “Academy Sports + Outdoors,” the “Company,” “we,” “us” and “our” refer to, (1) prior to the consummation of this offering, New Academy Holding Company, LLC, a Delaware limited liability company and the current holding company for our operations, and its consolidated subsidiaries; and (2) following the consummation of this offering, Academy Sports and Outdoors, Inc. and its consolidated subsidiaries;

•

“Adviser” has the meaning set forth under “Certain Relationships and Related Party Transactions—Monitoring Agreement;”

•

“Allstar Managers” means Allstar Managers, LLC, an entity owned by certain current and former executives and directors of the Company;

•

“Average order value” means in-store and e-commerce merchandise sales divided by the number of sales transactions, which indicates the average amount of a sales receipt;

•

“BOPIS” means our buy-online-pickup-in-store program;

•

“Comparable sales” means the percentage of period-over-period net sales increase or decrease, in the aggregate, for stores open after thirteen full fiscal months as well as for all e-commerce sales. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Assess the Performance of Our Business—Comparable Sales.” There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data in this prospectus regarding our comparable sales may not be comparable to similar data made available by other retailers;

•

“footprint” means, in the aggregate, the geographic locations where our stores are located. As of the date of this prospectus, our stores are located in the following states: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee and Texas;

•

“full-line sporting goods and outdoor recreation retailers” means: retailers who offer all three of the following categories, across all price points and brands (i) sporting goods (e.g., team and individual sports, footwear/apparel, fitness), (ii) outdoor goods (e.g., hunting gear, fishing rods, outdoor cooking, camping), and (iii) recreation goods (e.g., pools, backyard living, bikes). Among the current full-line sporting goods and outdoor recreation retailers in the United States, management has determined that the Company is one of the leading full-line sporting goods and outdoor recreation retailers because its annual revenue in each of the years from 2014 to 2019 is the second highest;

•

“Gochman Investors” means, collectively, certain investors who are family descendants of our founder, Max Gochman;

•

“KKR” means, collectively, investment funds and other entities affiliated with Kohlberg Kravis Roberts & Co. L.P.;

•

“KKR Stockholders” means, collectively, investment entities owned by KKR;

•

“largest value-oriented sporting goods and outdoor recreation retailer in the country” refers to management’s determination of the Company’s comparative position based upon (i) the Company’s competitive pricing index, which illustrates the Company’s prices are lower on average compared to those full-line sporting goods and recreational retailers with higher annual revenue, and (ii) the Company’s 2019 and 2020 customer surveys, which indicate that customers perceive the Company as being more value-oriented than all of the other full-line sporting goods and recreation retailers;

iii

•

“mature stores” means stores that have been in operation for longer than four years;

•

“number of sales transactions” means total quantity of sales transactions generated, whether in-store or online;

•

“owned brands” means our private label brands, which include both our own brands, as well as brands we license under exclusive license contracts;

•

“Reorganization Transactions” means the series of reorganization transactions that will take place prior to the consummation of this offering and will result in, among other things, New Academy Holding Company, LLC, the current holding company for the business described in this prospectus, being contributed to Academy Sports and Outdoors, Inc. by its unitholders and becoming a wholly owned subsidiary of Academy Sports and Outdoors, Inc.; and

•

“Term Loan Facility” means our senior secured term loan facility, as described under “Description of Certain Indebtedness.”

Presentation of Financial Information

New Academy Holding Company, LLC conducts (and after the consummation of this offering, Academy Sports and Outdoors, Inc. will conduct) its operations through its subsidiaries, including its indirect subsidiary, Academy, Ltd., an operating company which is doing business as “Academy Sports + Outdoors.”

We operate on a retail fiscal calendar pursuant to which our fiscal year consists of 52 or 53 weeks, ending on the Saturday closest to January 31 (which such Saturday may occur on a date following January 31) each year. References to any “year,” “quarter,” “half” or “month” mean “fiscal year,” “fiscal quarter,” “fiscal half year” and “fiscal month,” respectively, unless the context requires otherwise. References to “2015,” “2016,” “2017,” “2018” and “2019” relate to our fiscal years ended January 30, 2016, January 28, 2017, February 3, 2018, February 2, 2019 and February 1, 2020, respectively, unless the context requires otherwise. References to “2020” relate to our fiscal year ending January 30, 2021, unless the context requires otherwise.

Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

NON-GAAP FINANCIAL MEASURES

This prospectus contains “non-GAAP financial measures,” which are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States, or GAAP. Specifically, we make use of the non-GAAP financial measures “Adjusted EBITDA,” “Adjusted Net Income (Loss),” “Pro Forma Adjusted Net Income (Loss)” and “Adjusted Free Cash Flow.”

measure of liquidity and an additional basis for assessing our ability to generate cash. Management uses Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish and award discretionary annual incentive compensation, to report our compliance with certain covenants in our debt agreements, and to compare our performance against that of other peer companies using similar measures.

Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or net cash provided by operating activities as a measure of liquidity, or any other performance measures derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of, our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. For a discussion of the use of these measures and a reconciliation of the most directly comparable GAAP measures, see “Summary—Summary Historical Consolidated Financial and Other Data.”

We also present adjusted comparable sales, which is a non-GAAP measure, in this prospectus. For a discussion of adjusted comparable sales and a reconciliation to comparable sales, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures—Adjusted comparable sales.”

LETTER FROM OUR CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

Dear Stakeholders and Future Stakeholders:

I am proud to introduce those of you who are not very familiar with, and further inform those of you who know us, to Academy Sports + Outdoors. I am excited to be part of this company and share all the great things we are accomplishing. Academy began over 80 years ago in San Antonio, Texas focusing on its customers with a powerful assortment and great value. It has evolved into a truly remarkable Sports + Outdoors emporium with the same strong focus on customers, assortment, and value.

Having known Academy since I was growing up in Houston, I was excited to join its Board of Managers three years ago. During that time, I learned more about Academy’s opportunities. When the opportunity to become CEO was presented two years ago, I enthusiastically took the position for three major reasons:

An unparalleled opportunity to grow its existing stores within its current footprint, new markets, and through omnichannel penetration;

A chance to improve its operational efficiencies and effectiveness across all elements of the company with an accomplished, experienced leadership team; and

The ability to lead a company that has tremendous brand position and customer loyalty with an emphasis on fun, family and community.

Leading Academy is a dream job that allows me to fill my passion for retail and connecting with customers. I have been fortunate to be part of bringing growth and improved performance to retailers in the role of President, CEO, Chairman, or Director. My current role with our strong leadership team creates a significant opportunity to enhance the culture, operations, and customer connections at Academy. We have a deep bench of excellent executives working with me, which has allowed us to achieve improving comparable sales, profitability and cash flow, thus helping to drive significant long-term shareholder value.

Since I began leading Academy, we have been working on several key initiatives including:

People

We have developed a focused strategy with a clear vision to be the best with a strong positive culture. We have a dedicated staff of over 20,000 team members that are focused on serving our customers and building our company. We have put together an outstanding leadership team from within and outside the company that has transformed the company over the past two years.

Merchandising

We have taken significant actions to improve our merchandise offering, beginning with strengthening our sports and outdoors assortment quality and selection and exiting or reducing categories that were low profit or did not fit, such as toys, electronics and luggage. We developed and improved our pricing and clearance programs to ensure our value and keep our inventory fresh. In stores, we enhanced our merchandise presentation and signage to make the shopping experience more exciting. We also upgraded our planning and allocation systems to improve our in-stocks and inventory turns and allow us to target markets and stores with the right merchandise.

Omnichannel

Academy had been underdeveloped in omnichannel capabilities, but we have been making major improvements to our capabilities that have shown substantial progress and effects over the past year. We have made numerous website improvements, including increased speed, simplified checkout, expanded payment options, content and product information, and search capabilities. We have increased the connection between our website and our stores through our marketing, inventory, and BOPIS.

Operations

We have made substantial enhancements in our stores, including upgrading our service levels by using new technology to hire better team members, scheduling team members to maximize their service level effectiveness, and training team members to improve selling skills and product knowledge. We have improved our supply chain operations by using a new freight system and improved freight handling processes. We have also developed and implemented a work productivity pay program that allows our distribution team members to earn more as they increase their productivity.

As you can see, we have been busy working on these and other high-value programs to improve our long-term performance. Beginning last year, we started to see improvements resulting from these initiatives. In addition, the improvements to our omnichannel capabilities have positioned us well to benefit from changing consumer preferences in response to the COVID-19 pandemic and resulted in substantial increases of our e-commerce sales and, in turn, our comparable sales. We have achieved four consecutive quarters with positive comparable sales, which is an improvement over our negative comparable sales for the past three fiscal years. In addition, second quarter of 2020 was our fourth consecutive quarter of profitability growth and our fifth consecutive quarter of cash flow growth. These results have allowed us to make significant progress on our long-term goals. While we still have a great deal of work and opportunity ahead of us, we are committed to work and focus on achieving our long-range vision and objectives.

Through the years, we have concentrated on serving our customers and communities, in both good and bad times. I am proud of how our company has continued this commitment during the COVID-19 crisis, through our stores that remained open after being designated as an essential retailer and through our website and omnichannel capabilities, all proving valuable to our customers. Our 20,000+ team members have been nothing short of inspiring during this challenging time, which shows not only their dedication, but their ability to adapt and succeed in any environment, be it a hurricane, recession, or pandemic. We will continue to serve our customers by offering a broad, differentiated, value assortment with the service they expect from Academy that satisfies them, regardless of the situation.

Today and going forward, we will maintain focus on our priorities and the execution necessary to achieve excellence. We believe that we have a best-in-class value offering with localized merchandising and marketing, and a new store opening and growth strategy that sets us apart from our competitors. We have proven that we are much more than a sporting goods store, as we are sought out for our extensive assortment and value by our customers, in all seasons and situations. Our customers return to our stores knowing they can count on us, time after time.

We are at the beginning of an incredible journey and still have much to accomplish. I know that we can and will be the best. I look forward to connecting with you and hope that you will join us as a public stakeholder in our mission.

LOGO

Ken C. Hicks

Chairman, President and

Chief Executive Officer

vii

SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read the entire prospectus carefully, including “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties.

Who We Are

Academy Sports + Outdoors is one of the leading full-line sporting goods and outdoor recreation retailers in the United States. We estimate that we served 30 million unique customers and completed approximately 80 million transactions in 2019 across our seamless omnichannel platform and highly productive stores, resulting in net sales of $4.8 billion and making us the largest value-oriented sporting goods and outdoor recreation retailer in the country. We have continually increased our market share by expanding our leadership in fast-growing merchandise categories and offering a broad, value-oriented assortment with deep and localized customer connections.

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

•

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

•

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

•

Emerging, rapidly growing and profitable omnichannel strategy that leverages our strong BOPIS and shipping fulfillment capabilities.

•

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

•

Regional focus in the southern United States with a strong and growing presence in six of the top 10 fastest-growing metropolitan statistical areas, or MSAs.

•

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

•

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

•

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

Originally founded in 1938 as a family business in Texas, we have grown to 259 stores across 16 contiguous states, primarily in the southern United States. Our mission is to provide “Fun for All” and fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers. Our product assortment focuses on key categories of outdoor, apparel, footwear and sports & recreation (representing 32%, 29%, 21% and 18% of our 2019 net sales, respectively) through both leading national brands and a portfolio of 17 owned brands, which go well beyond traditional sporting goods and apparel offerings.

Our retail locations range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, and have no mall exposure. Our box size and layout create a spacious in-store experience for the current shopping environment and easily accessible front of store checkout that drives efficiency for our BOPIS and curbside pickup customers. Our stores are supported by over 20,000 knowledgeable team members offering a high-touch service element. Our stores have remained open during the COVID-19 pandemic as a result of our essential product offering and enhanced safety measures, resulting in continued market share gains and greater visibility in newer markets to the Academy brand and increased

community connections. We operate three distribution centers that service our stores and our growing e-commerce platform, which reaches 47 states today. We have significant new store whitespace and our disciplined approach to store openings has allowed most stores to achieve profitability within the first twelve months of opening a store.

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

Our broad assortment appeals to all ages, incomes and aspirations, including beginning and advanced athletes, families enjoying outdoor recreation and enthusiasts pursuing their passion for sports and the outdoors. We enable our customers to enjoy a variety of sports and outdoors activities, whether they are trying out a new sport, tailgating for a sporting event or hosting a family barbecue. We enhance our customers’ shopping experience through our knowledgeable and passionate team members and value-added store services, making us a preferred, one-stop shopping destination. We carefully tailor our products and services to meet local needs and offer our customers memorable experiences that help us maintain lasting emotional connections with our loyal customer base and the communities we serve.

We sell a range of sporting and outdoor recreation products. Our strong merchandise assortment is anchored by our broad offering of year-round items, such as fitness equipment and apparel, work and casual wear, folding chairs, wagons and tents, training and running shoes and coolers. We also carry a deep selection of seasonal items, such as sports equipment and apparel,

seasonal wear and accessories, hunting and fishing equipment and apparel, patio furniture, trampolines, play sets, bicycles and severe weather supplies. We provide locally relevant offerings, such as crawfish boilers in Louisiana, licensed apparel for area sports fans, baits and lures for area fishing spots and beach towels in coastal markets. Our value-based assortment also includes exclusive products from our portfolio of 17 owned brands. Nearly 20% of our 2019 sales were from our owned brands, such as Magellan Outdoors and BCG, which offer a distinct offering to our customers and approximately 60% of our customers purchased an owned brand item from us in 2019. Our merchandising creates a balanced sales mix throughout the year with no single season accounting for more than 28% of our annual sales.

Our stores deliver industry-leading unit sales and profitability, including 2019 net sales per store of $18.7 million, average sales per square foot of $264, and average EBITDA per store of $1.3 million. Our customers love the Academy store shopping experience because they are able to easily find, learn about, feel, try on and walk out with their favorite items. Our one-stop, convenient store layout, together with our highly trained team members offering value-added customer services, drive strong and consistent store foot traffic and transaction volume, with our average customers visiting our stores two to four times per year and our best customers visiting our stores nine times per year. The majority of our stores are located in high-traffic shopping centers, while none of the stores are located in, or anchored to, malls.

Our emerging, profitable e-commerce platform that leverages our strong BOPIS and shipping fulfillment capabilities has achieved year-over-year sales growth of 8% and 284% during 2019 and the first half 2020,

respectively. Our e-commerce sales represented 5% and 11% of our merchandise sales in 2019 and the first half 2020, respectively. We are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities. Our BOPIS program, launched in 2019, accounted for approximately 24% and 50% of our e-commerce sales during 2019 and the first half 2020, respectively, and allows customers to place an order on our website and pick up their product at a desired location, either in-store or curbside. Our website also serves as a platform for marketing and product education, enhancing our customer experience and driving traffic to our stores. Our website is introducing new customers to the Academy brand, with approximately 25% of our e-commerce sales during first half 2020 coming from new households.

We serve our communities by supporting events, programs and organizations that help make a positive impact, including the sponsorship of over 1,500 local sports teams. We promote and encourage safety and responsibility, so that everyone can feel confident and comfortable doing what they love, by offering products and information that enable our customers to be smart, responsible and safe. We have a long history of providing essential products for crisis preparedness and have helped our communities, customers and team members through various natural disasters and crises.

We finished the twelve months ended August 1, 2020 with approximately $5.3 billion in sales, $204 million of net income and $449 million in Adjusted EBITDA. Although comparable sales have been negative for the past three fiscal years, we have seen four consecutive quarters of positive comparable sales as of second quarter 2020. In addition, second quarter 2020 reflected our fourth consecutive quarter of Adjusted EBITDA growth and our fifth consecutive quarter of Adjusted Free Cash Flow growth. We earned net income of $21 million, $120 million and $204 million and Pro Forma Adjusted Net Income of $41 million, $76 million and $178 million in 2018, 2019 and the twelve months ended August 1, 2020, respectively, which included $158 million of net income and $135 million of Pro Forma Adjusted Net Income for first half 2020. See “—Summary Historical Consolidated Financial and Other Data” for definitions of Adjusted EBITDA, Pro Forma Adjusted Net Income and Adjusted Free Cash Flow and reconciliations of Adjusted EBITDA and Pro Forma Adjusted Net Income to net income and Adjusted Free Cash Flow to net cash provided by operating activities.


Net Sales ($ in millions)	Adj. EBITDA ($ in millions)	Cum. Adjusted FCF ($ in millions)

Our Performance Improvement Initiatives

We have made significant progress on several key performance improvement initiatives that drove positive comparable sales and Adjusted EBITDA growth in the last four consecutive quarters ended August 1, 2020, and created a foundation for our future growth. These key initiatives include:

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Strengthened leadership team – Our leadership team comprises nine highly experienced and proven individuals, six of whom joined Academy from 2017 to 2018, led by our Chief Executive Officer and including our Chief Financial Officer, Chief Merchandising Officer, EVP of Retail Operations, SVP of Omnichannel, and Chief Information Officer. Our leadership team also recently demonstrated its ability to adapt, operate and gain market share and new customers during the most challenging of retail environments, including its ability to safely operate our stores and distribution centers, source and deliver our merchandise, and manage our liquidity and expenses in all elements of our business during the COVID-19 pandemic.

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Build omnichannel – After investing approximately $50 million over the last three years in our omnichannel capabilities, we launched several new omnichannel initiatives in 2019, including our BOPIS program and new website design, content and functionality. While still early in our omnichannel strategy, we have built a profitable omnichannel business that is poised for continued growth and improvement of capabilities.

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Localized merchandising – Since 2018, we improved the localization of our assortment across selected inventory offerings. This initiative resulted in an improved customer shopping experience and increased sales.

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

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

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Digital marketing program – During the last two years, we shifted our primary marketing focus from print to digital marketing. Our improved website also supports our stores with digital marketing and our BOPIS program. Each of these initiatives has given us a closer connection with our customers.

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Implement loyalty program – We launched the Academy Credit Card program in May 2019, which constituted approximately 4% of first half 2020 net sales. Academy Credit Card represents a significant opportunity to build customer loyalty, as our Academy Credit Card customers both spend more per trip and visit our stores more often.

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Programmatic inventory management – We implemented a new disciplined price markdown strategy that has improved our margins and inventory management, as well as a new merchandise planning and allocation system that enables us to target inventory by store market to allow us to localize our offerings and sizes. This along with automated inventory ordering drove a significant amount of our margin expansion and improved inventory turns from 2.68x in 2017 to 3.36x for the twelve months ended August 1, 2020.

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Develop small box format – We opened our first small format store (approximately 40,000 square feet) in Dallas, Texas in 2019. We believe this new smaller format store allows us to open new stores in urban and less dense areas. During first half 2020, this smaller format store experienced approximately 25% higher sales per square foot and 13% higher inventory turns than the average of all Academy stores, the latter of which had $150 sales per square foot and 2.44x inventory turns. We evaluate performance inclusive of store sales, as well as BOPIS sales and other fulfilled sales from the location.

More recently, as a result of the COVID-19 pandemic, consumers are spending more time at and around home engaging in recreation and leisure activities that include our key categories. The outdoor recreation industry, in particular, has tailwinds arising out of the COVID-19 pandemic, as indicated by a survey from Civic Science, stating 43% of Americans expect to be doing more outdoor recreational activities in the future in order to facilitate social distancing. We expect that this will continue throughout the duration of the pandemic and will result in a long-term increase to our customer base. The industry has seen unprecedented increases in participation across several categories which we consider to be our “power categories.” This includes outdoor (comprised of camping, hiking and kayaking), running, fitness and team sports, which saw participation increases of 9%, 3%, 3% and 5%, respectively, from 2014 to 2018. According to Allied Market Research, sales growth from 2019 through 2027 in categories we participate, such as outdoor, team sports, apparel and footwear, is expected to grow approximately 6% per annum. We have invested in and built our operating platforms over the

last several years and, coupled with our product offering and accessible stores, have laid the foundation for our future growth and success in this environment. It is difficult to ascertain with precision what portion of our increased comparable sales during the first half of 2020 is attributable to the increase in e-commerce sales due to the COVID-19 pandemic as compared to the impact of the business improvements described above.

Our Industry

We compete in a $70 billion fragmented market of retailers that sell sporting goods, outdoor recreation products, fan shop, apparel, footwear and other nontraditional sporting goods and general merchandise, such as casual and work apparel, barbecue and cooking equipment, patio furniture, outdoor games, severe weather supplies and pet care. The retail business is highly competitive based on many variables including price, product assortment, customer service, omnichannel experience and store locations.

The retail sporting goods and outdoor recreation retail industry comprises six principal categories of retailers:

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Mass general merchants

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Large format sporting goods stores

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Traditional sporting goods stores

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Specialty outdoor retailers

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Specialty footwear retailers

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Catalogue & Internet retailers

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

The overall U.S. sporting goods and outdoors recreation industry is constantly evolving and demand for certain sports and outdoors recreation goods may increase or decrease depending upon the economics, demographics or popularity of each activity. We monitor local demographics and buying trends and tailor our merchandise assortment to the preferences of the local community. As interests change, our broad selection allows us to adapt to shifts and expand or contract our product mix to meet the changing customer demand. Over the last two years, there have been a number of market trends and tailwinds in our favor. We believe we are well positioned to capture the demand from the rising popularity of fast growing trends, including athleisure wear, insulated coolers and cups and outdoor recreation, such as fishing. Additionally, we benefit from recent shifting of customer spend towards in-home health and wellness and dedicating more time to memory-making experiences. More recently, as a result of the COVID-19 pandemic, consumers are spending more time at and around home engaging in isolated recreation and leisure activities that we support. The rising popularity in loyalty to premium brands, and importance of experience for customers also serve as constructive tailwinds to our business. We believe we are well positioned to capture an increasing portion of the wallets of important growing demographics, such as female and Hispanic customers.

We have proven to be adaptive through periods of significant industry transformation. As consolidations and e-commerce disruption have threatened and, in some cases, played a role in shutting down some of our peers, we have taken advantage of these changes by taking market share. Our value-based operating strategy and expansive assortment beyond traditional sporting goods, such as our outdoor gear and work wear categories, have been keys to our success, because they provide a one-stop shop for our customers who are searching for assortment, value and convenience.

Our Competitive Strengths

We attribute our success to the following competitive strengths:

Regional leader in growing industry

We are the second largest full-line sporting goods and outdoor recreation retailer in the United States, with 2019 net sales of $4.8 billion. We believe our stores are well positioned geographically, with a strong and growing presence in six of the top 10 fastest-growing MSAs, including Dallas, Houston, Atlanta, Austin, Charlotte and San Antonio. As of August 1, 2020, 29% of our stores are in four of the top five fastest-growing MSAs. This deep penetration of our established markets results in high customer awareness of, and loyalty to, the Academy name and frequent visits to our conveniently located stores.

The size of the sporting goods and outdoor recreation industry was estimated at $70 billion in the United States in 2018, and it is growing. According to Allied Market Research, sales growth from 2019 through 2027 in categories we participate, such as outdoor, team sports, apparel and footwear, is expected to grow approximately 6% per annum.

Broad assortment and compelling value proposition across the spectrum

We believe we sit in a sweet-spot of consumer demand, offering a broad, value-based assortment of sporting goods and outdoor recreation products, so our customers can participate and have fun, no matter their budget. Sporting goods shoppers consistently rate us as the top retailer for offering sporting and outdoor recreation products for a wide range of customers and being a one-stop shop. We carefully curate our products to provide the right assortment that appeal to beginners, experts, families and casual participants. In May 2020, over one-third of our customers tried a new sport or activity and came to Academy for the products they needed to get started in their new pursuit. We are the largest value-oriented sporting goods and outdoor recreation retailer in the United States. Our sporting goods customers ranked value as the most important driver in deciding where to shop and Academy was rated as the top retailer for value among sporting goods retailers. We maintain our leading value-oriented position by offering customers extensive choices of “good, better and best” merchandise at a range of competitive prices, coupled with convenient omnichannel solutions, a one-stop shopping experience and helpful customer services, such as free assembly of certain products, product demonstrations, hunting and fishing license certifications, fishing line spooling and bulk product carrying out, among others. We offer a price-beat guarantee where, if our customers find a lower price on an identical, in-stock merchandise advertised in print by any local retailer or select online retailers, we will beat that price by 5%. Our effective merchandise mix and compelling value proposition allow us to cater to both the price-conscious shopper, such as the active parent of a household with several children participating in various sports, and the discriminating shopper, such as the hunting and fishing expert. We are for all.

Diversified mix of industry-leading national brands and owned brands

Our access to national brand and owned brand merchandise creates a comprehensive portfolio of value-based and diversified products, spanning various price-points, that differentiates our assortment from our peers. Our category, brand and price-point mix is unique to Academy and difficult to replicate at other retailers. Approximately 80% of our 2019 merchandise sales was comprised of national brand products, with the remainder coming from exclusive products in our portfolio of 17 owned brands. We have minimal product overlap with direct-to-consumer brands and competitors. No single brand we carry accounted for more than 12% of our 2019 sales.

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

These brands rely on us to broaden their consumer reach, which fosters a mutually beneficial relationship when it comes to pricing and assortment. We play a critical role in delivering customer volume for these brands, especially as mall-based retailers face further headwinds and our industry consolidates. Our national brand assortment spans across each brand’s price spectrum beyond those of our competitors and we expand below the national brand price spectrum by complementing the assortment with our owned brands. As such, we receive favorable product exclusivity from leading suppliers.

Our owned brand portfolio consists of 17 brands, including Magellan Outdoors, BCG, Academy Sports + Outdoors and Outdoor Gourmet. Our owned brand strategy focuses on in-filling categories and price points that our national brand products may not satisfy. Our owned brand offerings support and complement our overall merchandising strategy due to limited price-point overlap with national brands. Our two largest owned brands, Magellan Outdoors and BCG, are among our fastest growing brands, growing year-over-year at 7.6% and 3.9% in 2019, respectively. Additionally, our owned brands generate strong brand equity and drive significant customer loyalty, as several of our exclusive products, such as the Academy-logo folding chair and folding wagon, are top-selling items. Approximately 60% of our customers purchased an owned brand item from us in 2019. Whether it is seeing a row of Academy-branded chairs at a softball game, or individuals wearing Magellan Outdoors shirts around town, our owned brands are worn and used throughout our footprint.

Differentiated in-store experience

Our differentiated in-store experience, convenient locations and our helpful team members ensure that our customers can rely on us on any given day or situation in our region to deliver the right product at a competitive price. We provide a localized in-store experience that allows us to deepen our customer relationships. We tailor our product assortment by store, season and market to enhance year-round profitability. For example, our customers expect us to carry the right baits and lures customized for the local fishing spots, such as heavier selections of saltwater lures in our coastal locations. Stores with different climates and seasonal patterns each receive an assortment that better matches the local conditions. Stores located near a university carry a large selection of that school’s licensed apparel giving them a look and feel of the local bookstore, which appeals to the nearby loyal fans and customers. We consider crawfish cookers to be an absolute necessity for our customers in Louisiana, and beach towels are a stronger seller in coastal markets than they are in inland markets. Our customers often shop our stores for same-day-need purchases, such as before a big game with unexpected weather changes, or to purchase an add-on product that was forgotten on a day trip. We have developed considerable expertise in identifying, stocking and selling a relevant assortment to meet the local needs and demands.

We provide an engaging customer shopping experience that drives customer traffic. Our visual merchandising strategy creates an entertaining and interactive in-store shopping experience for a broad range of shoppers. Our stores generally have consistent store layouts providing our customers with familiarity across our entire store base. Our in-store experience is further enhanced by the value-added customer service delivered by our highly trained and passionate staff. Value-added services we provide include free assembly of certain products, such as bicycles, grills and bows, fitness equipment demonstrations, issuances and renewals of hunting and fishing licenses, fishing line spooling and carrying bulk items to the car, among others. We sell many products, such as baseball bats and gloves, football helmets, fishing rods and reels, fitness equipment and bicycles, that require a “touch and feel” experience, as well as bulky items that would otherwise be difficult or costly to ship. We employ team members who we fondly refer to as our Enthusiasts –passionate local experts who are specially recruited and trained for category-specific positions. Our Enthusiasts use the products they sell and have the first-hand knowledge of the communities they serve, allowing them to advise and equip customers with products that suit the customers’ specific needs and the nuances of the local environment. We believe our stores often serve as gathering spots, as our customers come back to engage with our Enthusiasts to share experiences and obtain further advice and assistance.

Large and loyal customer base

We endeavor to offer products for customers of all ages, incomes and aspirations across sporting and outdoor recreation activities, seasons and experience levels. As such, we have a balanced, year-round business and a large customer base. In 2019, we estimate we served 30 million unique customers and we completed approximately 80 million transactions, resulting in strong household penetration in our core markets.

Our customers love shopping at Academy. Our average customer visits our stores anywhere from two to four times per year and our best customers visit our stores nine times per year. Academy customers are loyal. Based on our customer surveys, approximately 30% of our customers’ annual sporting goods, outdoor and recreation expenditures are made at Academy, in comparison to approximately 20% for our competitors that are large format sporting goods stores and specialty outdoor retailers and their customers. As of August 1, 2020, we estimate we have gained approximately two million new customers this year.

While we serve all customers, our core customers are young active families who are driven to have a life full of different sports and outdoors recreation activities. For these customers, fun is forever at their fingertips, and they constantly look for ways to create memories together as a family. Being a conveniently located, value-oriented, one-stop shop for fun merchandise is why these customers love to shop at Academy. When these families shop at Academy, they often split up to find the items for their respective activities and meet back together before checking out. Our core customers are more active shoppers – they shop us more often and are more likely to be omnichannel customers.

Fans and spectators also constitute a large part of our customer base. Academy-branded folding chairs and wagons are frequently spotted at any local sporting or spectator event. We are active members in our communities, sponsoring events for the NCAA Southeastern Conference, local events, such as the Bassmaster Classic fishing tournament, and over 1,500 local sports teams. We also provide an exciting shopping experience for our communities following a major sports title or local team championship, such as a World Series or NCAA football championship, when we extend our local store hours late into the night to celebrate with our customers and meet their immediate need for a championship apparel or gear to display their team pride. These celebrations strengthen customer loyalty.

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

Our company is led by a highly-accomplished senior management team with significant public market experience, a proven track record for driving operational efficiency, and a history of using customer data to improve our customer experience and drive our omnichannel strategy. Our senior management team has an average of 24 years of retail experience. Six out of the nine members of our senior management team, including our Chairman, President and Chief Executive Officer, Ken C. Hicks, were hired beginning early 2017 to lead the development and execution of our strategic growth and initiatives in merchandising, e-commerce and omnichannel, stores, information technology and finance. Together, our senior management has delivered strong results, with four consecutive quarters of positive comparable sales as of second quarter 2020, Adjusted EBITDA growth to $323 million in 2019, or 8%, compared to 2018, and Adjusted Free Cash Flow growth of $99 million in 2018 to $197 million in 2019.

Strong and adaptive financial performance through economic cycles

We have remained strong and adaptive over the years through a variety of economic cycles, including economic downturns. Our customers are loyal in any economic environment, and we believe they become even more loyal to our compelling value proposition when the economy is challenged, like during the current recessionary environment resulting from the COVID-19 pandemic. We find that customers will continue to pursue their wellness, interests and passions, regardless of the economic backdrop. As a result, we have gained

market share during all economic cycles, including during April and May 2020. We attribute this to customers knowing we offer a broad assortment of the items they want during a down cycle at everyday value.

We have consistently demonstrated steady revenue growth, expanded profit margins and disciplined capital expenditures. We generated $4.8 billion in net sales, $120 million in net income and $323 million in Adjusted EBITDA in 2019. In 2019, we also generated $264 million of net cash provided by operating activities and $197 million in Adjusted Free Cash Flow, while limiting net capital expenditures to $63 million. We have reduced our net leverage ratio to 1.2x as of end of second quarter 2020 compared to 5.2x as of end of both 2017 and 2018 and 4.1x as of end of 2019.

We have a proven store model that has generated strong Adjusted Free Cash Flow, store-level profitability and return on invested capital. All of our 211 mature stores (stores opened longer than four years) were profitable on a four-wall basis for the twelve months ended August 1, 2020 and our new stores have average payback periods of four to five years.

Our Growth Strategy

We are focused on the following four growth drivers:

Leverage technology and content to drive our omnichannel strategy

Our e-commerce sales represented 5% and 11% of our merchandise sales for 2019 and for the first half 2020, respectively. E-commerce sales increased 406% from the prior quarter in first quarter 2020 and 210% from the prior quarter in second quarter 2020. Our goal is to increase our omnichannel penetration quickly and significantly. To meet this goal, since 2011, we have invested $225 million in omnichannel and information technology initiatives to improve our customers’ online experience, with an emphasis on our mobile site and product information content. These investments have resulted in faster load times, more relevant search content, better site design, and a more-streamlined checkout process. We have also invested in omnichannel initiatives, such as BOPIS, curbside pickup and access to store inventory availability online.

Omnichannel offerings are becoming increasingly important, as our customers want options when they shop. During the first half 2020, our omnichannel customers spent 43% more than our store-only customers and 197% more than our online only customers. Since we launched our BOPIS program in 2019, we have seen significant e-commerce penetration that generates higher average order value and incremental in-store purchases. BOPIS orders accounted for 50% of all e-commerce sales during first half 2020. Our omnichannel platform also offers return-to-store capabilities for online orders, curbside fulfillment, the ability to place online orders in our stores if we are out of stock, and the ability to ship orders placed online from our retail locations. These capabilities help reduce the risk of lost sales and shorten delivery times for online orders while improving inventory productivity. We expect to launch our ship-to-store capabilities in third quarter 2020, which will continue to give our customers more options on how to shop Academy.

Our website also serves as the gateway to shopping in our stores. These customers leverage our website to learn more about the products and brands we sell, read reviews from other customers, compare prices and ensure their local Academy store has the inventory prior to heading to the store. Our website is also critical to reaching customers outside of our current store footprint. For the twelve months ended August 1, 2020, we reached approximately 6.7 million unique households, across 200 cities, in 44 states through ship-to-home orders made through our website. In 2019, 11% of our online transactions were ordered by customers in markets with no Academy stores. Our e-commerce platform’s top ten out-of-store-footprint MSAs include adjacent markets, such as Tampa, Miami and Savannah. As we continue to bolster our omnichannel offerings, we expect to drive traffic to our stores and website and expand our reach beyond our store footprint.

Enhance customer engagement and increase retention

We believe we have a significant opportunity to continue to expand our customer base. Better understanding our customers’ buying trends allows us to better target and cater to our customers. Our robust customer database has 38 million unique customers, and we continue to grow this through increased penetration of e-commerce sales and through the success of our Academy Credit Card program.

We utilize data obtained from our customer relationship management, or CRM, tools and targeted customer surveys. Our CRM tools enable us to create effective customer-targeting strategies. Our current CRM programs focus on welcoming our first-time customers, thanking our big spenders, reactivating our lapsed customers and cross-selling our category customers (including our hunting, sports equipment and recreation categories). With 38 million customers in our database, there is ample opportunity to increase our communication directly with our customers via one-on-one marketing. We are also leveraging the information from our approximately 80 million annual transactions to make more informed, localized decisions on promotion, marketing and inventory.

Online transactions are critical to helping us understand and analyze buying patterns. Data collected through our website allows us to personalize promotions for customers and recommend products based on purchase behavior. The Academy Credit Card program also provides data to track our customers’ purchases across all channels, giving us the ability to better serve and target those customers. Launched in May 2019, the Academy Credit Card program constituted approximately 4% of first half 2020 net sales. Our customers are attracted to the Academy Credit Card because of its bank-funded 5% discount on every Academy purchase and free standard shipping on online orders of $15 or more. Academy Credit Card holders are responsible for paying all fees associated with having an Academy Credit Card, including any late fees, and we are responsible for paying all costs associated with shipping online orders of $15 or more purchased with an Academy Credit Card.

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

Enhance operational excellence

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

Much of our margin expansion from 2017 to 2019 can be attributed to our improvements in inventory management. We can improve operations across our organization by optimizing our in-store inventory management and implementing automated re-ordering and labor scheduling. We have deployed several new tools to this end, which will enable us to further improve inventory handling and vendor management. For example, we have implemented third party programs to analyze our inventory stock throughout the year at every location. This implementation has allowed us to improve our inventory management in stores, increasing the average inventory turns from 2.68x in 2017 to 3.36x for the twelve months ended August 1, 2020, and has helped us to identify and exit certain product categories, such as luggage and toys.

We believe we can also enhance store operations through technology and personnel investments that will allow our team members to better manage and prioritize tasks, thereby increasing their productivity and sales conversion. These investments, for example, will reduce administrative tasks to enable more time for engaging in customer service.

Our supply chain initiatives include improving our logistics by leveraging our merchandising planning and assortment capabilities and facilitating product flow through our distribution centers. We use technology to track inventory daily and keep our distribution centers and stores in sync. Our data-driven process allows us to

improve communication with our suppliers and ensure we are rightfully equipped with the correct inventory in our regional locations, and has and will continue to help us to identify and exit certain product categories, such as luggage and toys. Although we believe these initiatives have helped us, we experienced a gross margin decline in the first quarter 2020 as a result of a shift in consumer preferences due to the COVID-19 pandemic and the related increased popularity in our isolated recreation, outdoor and leisure activity products, which are generally lower margin goods.

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

Capitalize on substantial whitespace and in-fill opportunities

We have significant growth opportunities in both our core markets and outside of our footprint. We believe our real estate strategy has positioned us well for further expansion, and our track record has demonstrated that we can open and operate stores profitably. Our disciplined approach to new store openings has allowed most of our stores to achieve profitability within the first twelve months of opening a store. As of the end of first half 2020, we had 211 mature stores, and all were profitable on a four-wall basis for the twelve months ended August 1, 2020. We expect to open eight to 10 new stores per year starting in 2022, which is similar to our growth rates from 2018 to 2019.

In-fill market opportunity

We classify in-fill markets as regions where we already have a well-established presence. We believe we have an opportunity to expand into surrounding metro areas and more rural locations. Some examples include Dallas/Fort Worth, Atlanta, Raleigh-Durham, Charlotte, New Orleans and Jacksonville. We believe our in-fill opportunity currently includes approximately 120 locations that could accommodate our preferred size of stores in markets we would consider.

Adjacent market opportunity

We consider adjacent markets to include markets that are not fully represented. We believe these regions provide opportunities to expand in metro and rural areas that sit right outside of our current footprint. We believe our adjacent market opportunity currently includes approximately 90 locations that could accommodate our preferred size of stores in markets we would consider.

Greenfield opportunity

Beyond our in-fill and adjacent markets, we believe we have the opportunity to expand across the nation. We currently have store locations in 16 states, which leaves us substantial room for growth beyond our core geographies. We believe our greenfield opportunity currently includes approximately 675 locations that could accommodate our preferred size of stores in markets we would consider.

Significant growth opportunity

LOGO

The majority of our store expansion is expected to be with our traditional box size of approximately 70,000 gross square feet. We have also recently tested a smaller store format, which is approximately 40% smaller than our average store, that we believe will be advantageous for in-fill markets and other metropolitan areas.

While we will continue to prioritize investments in our existing operations and omnichannel capabilities, we will continue to judiciously expand. We have online delivery capabilities in almost every state and will focus on disciplined new store openings. As we reach into new and existing markets, we expect our omnichannel platform to lead the way in our geographic expansion.

Risks Related to Our Business and this Offering

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described in “Risk Factors” before making a decision to invest in our common stock. If any of these risks actually occurs, our business, results of operations and financial condition may be materially adversely affected. In such case, the trading price of our common stock may decline and you may lose part or all of your investment. Below is a summary of some of the principal risks we face:

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overall decline in the health of the economy and consumer discretionary spending;

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our ability to predict or effectively react to changes in consumer tastes and preferences, to acquire and sell brand name merchandise at competitive prices, and/or to manage our inventory balances;

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intense competition in the sporting goods and outdoor recreation retail industries;

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the impact of COVID-19 on our business and financial results;

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our ability to safeguard sensitive or confidential data relating to us and our customers, team members and vendors;

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risks associated with our reliance on internationally manufactured merchandise;

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our ability to comply with laws and regulations affecting our business, including those relating to the sale, manufacture and import of consumer products;

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claims, demands and lawsuits to which we are, and may in the future, be subject and the risk that our insurance or indemnities coverage may not be sufficient;

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harm to our reputation;

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our ability to operate, update or implement our information technology systems;

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our substantial indebtedness;

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our being a “controlled company” within the meaning of Nasdaq rules and, as a result, qualifying for exemptions from certain corporate governance requirements; and

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KKR Stockholders controlling us and their interests conflicting with ours or yours in the future.

KKR

KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, credit and real assets, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business.

Our Corporate Information

Our principal offices are located at 1800 North Mason Road, Katy, Texas 77449. Our telephone number is (281) 646-5200. We maintain a website at academy.com. The reference to our website is intended to be an inactive textual reference only. The information contained on, or that can be accessed through, our website is not part of this prospectus.

The Offering

Common stock offered by us

15,625,000 shares.

Option to purchase additional shares of common stock

Common stock to be outstanding immediately after this offering

88,103,095 shares (or 90,446,845 shares if the underwriters exercise in full their over-allotment option).

Use of proceeds

We estimate that the net proceeds to us from this offering will be approximately $225 million (or approximately $260 million, if the underwriters exercise in full their over-allotment option), assuming an initial public offering price of $16.00 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. For a sensitivity analysis as to the offering price and other information, see “Use of Proceeds.”

We intend to use these proceeds for general corporate purposes, which may include the repayment of certain indebtedness.

Conflicts of Interest

Affiliates of KKR beneficially own in excess of 10% of our issued and outstanding common stock. Because KKR Capital Markets LLC, an affiliate of KKR, is an underwriter in this offering and its affiliates own in excess of 10% of our issued and outstanding common stock, KKR Capital Markets LLC is deemed to have a “conflict of interest” under Rule 5121, or Rule 5121, of the Financial Industry Regulatory Authority, Inc., or FINRA. Accordingly, this offering is being made in compliance with the requirements of Rule 5121, which requires, among other things, that a “qualified independent underwriter” participate in the preparation of, and exercise the usual standards of “due diligence” with respect to, the registration statement and this prospectus. Credit Suisse Securities (USA) LLC has agreed to act as a qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11 thereof. Credit Suisse Securities (USA) LLC will not receive any additional fees for serving as a qualified independent underwriter in connection with this offering. We have agreed to indemnify Credit Suisse Securities (USA) LLC against liabilities incurred in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act. See “Underwriting (Conflicts of Interest).”

Controlled company

After the completion of this offering, KKR Stockholders will collectively beneficially own approximately 70% of the voting power of our common stock. We currently intend to avail ourselves of the controlled company exemption under the corporate governance standards of Nasdaq.

Dividend policy

We have no current plans to pay dividends on our common stock. Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, legal, tax, regulatory and contractual restrictions, including restrictions in the agreements governing our indebtedness, and other factors that our board of directors may deem relevant. See “Dividend Policy.”

Risk factors

Investing in shares of our common stock involves a high degree of risk. See “Risk Factors” for a discussion of factors you should carefully consider before investing in shares of our common stock.

Material U.S. federal income and estate tax consequences to non-U.S. holders

For a discussion of certain U.S. federal income and estate tax consequences that may be relevant to non-U.S. stockholders, see “Material U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders.”

Proposed Nasdaq trading symbol

“ASO.”

Unless we indicate otherwise or the context otherwise requires, this prospectus reflects and assumes:

•

no exercise of the underwriters’ option to purchase additional shares of our common stock;

•

an initial public offering price of $16.00 per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus;

•

the consummation of the Reorganization Transactions substantially concurrently with the pricing of this offering, pursuant to which, among others, we will issue one share of our common stock for every 3.15 membership units of New Academy Holding Company, LLC contributed to us by the existing unitholders of New Academy Holding Company, LLC, or such ratio, the contribution ratio; and

•

the filing and effectiveness of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws immediately prior to the consummation of this offering.

The number of shares of common stock to be outstanding after this offering excludes:

•

9,833,311 shares of common stock issuable upon exercise of outstanding options, (i) 6,663,598 of which are vested, with a weighted-average exercise price of $9.23 per share, and (ii) 3,169,713 of which are not vested, with a weighted-average exercise price of $16.88 per share, in each case, issued under the New Academy Holding Company, LLC 2011 Unit Incentive Plan, or the 2011 Equity Plan, and adjusted based on the contribution ratio. See “Executive Compensation—Equity Compensation Plans—2011 Equity Plan;”

•

2,217,196 shares of common stock issuable upon settlement of outstanding restricted stock units, (i) 802,510 of which are vested and (ii) 1,414,686 of which are not vested, in each case, issued under the 2011 Equity Plan, and adjusted based on the contribution ratio. See “Executive Compensation—Equity Compensation Plans—2011 Equity Plan;”

•

5,150,000 shares of common stock reserved for future issuance under our new 2020 Omnibus Incentive Plan, or the 2020 Equity Plan, which we intend to adopt in connection with this offering, which number of shares includes the awards we expect to grant concurrently with the pricing or the closing, as applicable, of this offering in the form of 112,844 options and 10,409 restricted stock units. See “Executive Compensation—Long-Term Equity Incentive Compensation—IPO Equity Awards under 2020 Equity Plan” and “Executive Compensation—Equity Compensation Plans—2020 Equity Plan;” and

•

1,000,000 shares of common stock reserved for future issuance under our new 2020 Employee Stock Purchase Plan, or the ESPP, which we intend to adopt in connection with this offering. See “Executive Compensation—Equity Compensation Plans—2020 Employee Stock Purchase Plan.”

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

Set forth below is the summary historical consolidated financial and other data for New Academy Holding Company, LLC and its subsidiaries. The summary historical financial data for 2019, 2018 and 2017 has been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary historical financial data as of August 1, 2020 and for the twenty-six weeks ended August 1, 2020 and August 3, 2019 has been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The results of operations for any period are not necessarily indicative of our future financial condition or results of operations.

The summary historical consolidated financial data of Academy Sports and Outdoors, Inc. has not been presented, as Academy Sports and Outdoors, Inc. is a newly incorporated entity, has had no business transactions or activities to date other than in connection with its formation and this offering and had no assets or liabilities during the periods presented in this section.

You should read the following summary financial and other data below together with the information under “Selected Historical Consolidated Financial Data,” “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes and our unaudited condensed consolidated financial statements and related notes, each included elsewhere in this prospectus.


	Fiscal Year Ended									Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			August 1, 2020			August 3, 2019
Period length		52 weeks			52 weeks			53 weeks			26 weeks			26 weeks
(In thousands)
Statement of Income Data:
Net sales⁽¹⁾	$	4,829,897		$	4,783,893		$	4,835,582		$	2,742,721		$	2,314,202
Costs of goods sold		3,398,743			3,415,941			3,436,618			1,948,275			1,616,002

Gross margin		1,431,154			1,367,952			1,398,964			794,446			698,200
Selling, general and administrative expenses		1,251,733			1,239,002			1,241,643			596,636			614,172

Operating income		179,421			128,950			157,321			197,810			84,028
Interest expense, net		101,307			108,652			104,857			48,088			52,586
(Gain) on early retirement of debt, net⁽²⁾		(42,265	)		—			(6,294	)		(7,831	)		(42,265	)
Other (income), net		(2,481	)		(3,095	)		(2,524	)		(1,621	)		(1,454	)

Income before income taxes		122,860			23,393			61,282			159,174			75,161
Income tax expense		2,817			1,951			2,781			1,518			1,408

Net income	$	120,043		$	21,442		$	58,501		$	157,656		$	73,753


	Fiscal Year Ended									Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			August 1, 2020			August 3, 2019
Period length		52 weeks			52 weeks			53 weeks			26 weeks			26 weeks
(In thousands, except store data)

Balance Sheet Data (end of period):
Cash and cash equivalents	$	149,385		$	75,691		$	31,045		$	884,029		$	52,090
Merchandise inventories, net		1,099,749			1,134,156			1,223,486			899,086			1,203,806
Working capital⁽³⁾		538,795			582,789			605,083			758,081			495,572
Total assets⁽³⁾		4,331,321			3,238,957			3,323,046			4,842,848			4,366,629
Total debt, net of deferred loan costs		1,462,658			1,625,060			1,675,356			1,431,050			1,488,358
Total equity		988,219			857,039			832,687			1,149,096			925,302

Cash Flow Data:
Net cash provided by operating activities	$	263,669		$	198,481		$	83,355		$	773,621		$	103,961
Net cash used in investing activities		(66,783	)		(99,027	)		(115,901	)		(13,850	)		(31,767	)
Net cash provided by (used in) financing activities		(123,192	)		(54,808	)		8,514			(25,127	)		(95,795	)
Capital expenditures		62,818			107,905			132,126			13,850			27,802

Store Data (unaudited):
Comparable sales increase (decrease)		(0.7	)%		(2.5	)%		(5.2	)%		15.9	%		(4.3	)%
Number of stores at end of period		259			253			244			259			254
Total square feet at end of period (in millions)		18.3			17.9			17.3			18.3			18.0
Net sales per square foot⁽⁴⁾	$	264		$	267		$	279		$	150		$	129

Other Financial Data (unaudited):
Adjusted EBITDA⁽⁵⁾	$	322,814		$	300,259		$	315,420		$	282,902		$	156,837
Adjusted Net Income⁽⁵⁾		101,469			55,405			72,078			179,106			43,800
Pro Forma Adjusted Net Income⁽⁵⁾		75,927			41,338			53,732			134,844			32,737
Adjusted Free Cash Flow⁽⁵⁾		196,886			99,454			(32,546	)		759,771			72,194

(1)	The impact of the 53rd week to 2017 net sales was $60.6 million.

(2)

In first half 2020 and in 2019 and 2017, we repurchased principal on our Term Loan Facility, which was trading at a discount and recognized a gain, net of the write-off of related deferred loan costs. In first half 2020, we repurchased a total of $23.9 million of principal in open market transactions for an aggregate price of $16.0 million and recognized a related net gain of $7.8 million. In 2019, we repurchased a total of $147.7 million of principal in open market transactions for an aggregate purchase price of $104.6 million and recognized a related net gain of $42.3 million. In 2017, we repurchased $26.2 million of principal in open market transactions for an aggregate purchase price of $19.7 million and recognized a related net gain of $6.3 million.

(3)

Effective February 3, 2019, we adopted the New Lease Standard, which requires that lessees recognize assets and liabilities arising from operating leases on the balance sheet. Adoption of the new standard resulted in $1.2 billion in right-of-use assets and a combined $1.2 billion between current lease liabilities and long-term lease liabilities included on the balance sheet as of February 3, 2019. See Note 2 and Note 14 to our audited consolidated financial statements included elsewhere in this prospectus for further details regarding the adoption of this standard.

(4)	Calculated using net sales and square footage of all stores open at the end of the respective period. Square footage includes the in-store storage, receiving and office space that generally occupies approximately 15% of total store space in our stores.

(5)

income (loss) to Adjusted EBITDA in the applicable table below. We define Adjusted Net Income (Loss) as net income (loss), plus consulting fees, Adviser monitoring fees, stock based compensation expense, gain on early extinguishment of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, inventory write-down adjustments associated with strategic merchandising initiative and other adjustments, less the tax effect of these adjustments. We define Pro Forma Adjusted Net Income (Loss) as Adjusted Net Income (Loss) plus the estimated federal tax liability based on our proposed C-Corporation structure after this offering. We describe these adjustments reconciling net income (loss) to Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) in the applicable table below. We define Adjusted Free Cash Flow as net cash provided by (used in) operating activities less net cash used in investing activities. We describe these adjustments reconciling net cash provided by operating activities to Adjusted Free Cash Flow in the applicable table below.

Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow have been presented in this prospectus as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management believes Adjusted Free Cash Flow is a useful measure of liquidity and an additional basis for assessing our ability to generate cash. Management uses Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish and award discretionary annual incentive compensation, to report our compliance with certain covenants in our debt agreements, and to compare our performance against that of other peer companies using similar measures.

Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or net cash provided by operating activities as a measure of liquidity, or any other performance measures derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) should not be construed to imply that our future results will be unaffected by unusual or non-recurring items. In evaluating Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow supplementally.

Our Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•

Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) do not reflect costs or cash outlays for capital expenditures or contractual commitments;

•

Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) do not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, and Adjusted Free Cash Flow does not reflect the cash requirements necessary to service principal payments on our debt;

•

Adjusted EBITDA does not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;

•

Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted Free Cash Flow do not reflect cash requirements for such replacements; and

•

other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.

The following tables provide reconciliations of net income (loss) to Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) for the periods presented:


	Fiscal Year Ended								Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019		February 3, 2018			August 1, 2020			August 3, 2019
(In thousands)
Net income	$	120,043		$	21,442	$	58,501		$	157,656		$	73,753
Interest expense, net		101,307			108,652		104,857			48,088			52,586
Income tax expense		2,817			1,951		2,781			1,518			1,408
Depreciation, amortization and impairment		117,254			134,190		135,680			54,151			59,097
Consulting fees (a)		3,601			949		10,263			92			3,280
Adviser monitoring fee (b)		3,636			3,522		3,387			1,840			1,760
Stock based compensation (c)		7,881			4,633		4,580			3,690			4,467
Gain on early extinguishment of debt, net		(42,265	)		—		(6,294	)		(7,831	)		(42,265	)
Severance and executive transition costs (d)		1,429			4,350		7,409			4,137			—
Costs related to the COVID-19 pandemic (e)		—			—		—			17,632			—
Inventory write-down adjustments associated with strategic merchandising initiative (f)		—			18,225		4,400			—			—
Other (g)		7,111			2,345		(10,144	)		1,929			2,751

Adjusted EBITDA	$	322,814		$	300,259	$	315,420		$	282,902		$	156,837


	Fiscal Year Ended									Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			August 1, 2020			August 3, 2019
(In thousands)
Net income	$	120,043		$	21,442		$	58,501		$	157,656		$	73,753
Consulting fees (a)		3,601			949			10,263			92			3,280
Adviser monitoring fee (b)		3,636			3,522			3,387			1,840			1,760
Stock based compensation (c)		7,881			4,633			4,580			3,690			4,467
Gain on early extinguishment of debt, net		(42,265	)		—			(6,294	)		(7,831	)		(42,265	)
Severance and executive transition costs (d)		1,429			4,350			7,409			4,137			—
Costs related to the COVID-19 pandemic (e)		—			—			—			17,632			—
Inventory write-down adjustments associated with strategic merchandising initiative (f)		—			18,225			4,400			—			—
Other (g)		7,111			2,345			(10,144	)		1,929			2,751
Tax effects of these adjustments (h)		33			(61	)		(24	)		(39	)		54

Adjusted Net Income	$	101,469		$	55,405		$	72,078		$	179,106		$	43,800

Estimated tax effect of change to C-Corporation status (i)		(25,542	)		(14,067	)		(18,346	)		(44,262	)		(11,063	)

Pro Forma Adjusted Net Income	$	75,927		$	41,338		$	53,732		$	134,844		$	32,737

(a)	Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives.

(b)	Represents our contractual payments under our Monitoring Agreement with the Adviser. See “Certain Relationships and Related Party Transactions—Monitoring Agreement.”

(c)	Represents non-cash charges related to the 2011 Equity Plan, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures.

(d)	Represents severance costs associated with executive leadership changes and enterprise-wide organizational changes.

(e)

Represents costs incurred as a result of the COVID-19 pandemic, including temporary wage premiums, additional sick time, costs of additional cleaning supplies and third party cleaning services for the stores, corporate office and distribution centers, accelerated freight costs associated with shifting our inventory purchase earlier in the year to maintain stock and legal fees associated with consulting in local jurisdictions.

(f)	Represents inventory write-down adjustments in connection with our new merchandising strategy adopted as part of our strategic transformation, including exiting certain categories of products.

(g)

Other adjustments include (representing deductions or additions to Adjusted EBITDA and Adjusted Net Income (Loss), as applicable) amounts that management believes are not representative of our operating performance, including investment income, net losses associated with Hurricane Harvey, additional profits associated with the 53rd week in fiscal year 2017, additional profits associated with Houston Astros World Series appearances, installation costs for energy savings associated with our profitability initiatives, store exit costs and other costs associated with strategic cost savings and business optimization initiatives.

(h)	Represents the tax effect of the total adjustments made to arrive at Adjusted Net Income (Loss) at our historical tax rate.

(i)

Represents the tax effect of Adjusted Net Income (Loss) at our estimated effective tax rate of 24.5%. We are currently treated as a flow through entity for U.S. federal and state income tax purposes, and thus no federal income tax expense has been recorded in our consolidated statements of income. After consummation of this offering, we will become subject to U.S. federal and state income taxes and be taxed at the prevailing corporate rates. Our actual federal tax rate, and our actual income tax liability, after this offering may be different from our assumed rate, and such difference may be material.

The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flow for the periods presented:


	Fiscal Year Ended									Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			August 1, 2020			August 3, 2019
(In thousands)
Net cash provided by (used in) operating activities	$	263,669		$	198,481		$	83,355		$	773,621		$	103,961
Net cash used in investing activities		(66,783	)		(99,027	)		(115,901	)		(13,850	)		(31,767	)

Adjusted Free Cash Flow	$	196,886		$	99,454		$	(32,546	)	$	759,771		$	72,194

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information set forth in this prospectus before deciding to invest in shares of our common stock. If any of the following risks actually occurs, our business, results of operations and financial condition may be materially adversely affected. In such case, the trading price of our common stock could decline and you may lose all or part of your investment.

Risks Related to Our Business

Our results of operations are highly dependent on the U.S. economy and U.S. consumer discretionary spending and an economic and financial downturn may cause a decline in U.S. consumer discretionary spending and may adversely affect our business, operations, liquidity, capital resources and financial results.

Our results of operations are affected by the relative condition of the U.S. economy. All of our sales are generated within the United States, making our results of operations highly dependent on the U.S. economy and U.S. consumer discretionary spending. A decline in discretionary spending by U.S. consumers could negatively affect our business and results of operations.

The general conditions that affect U.S. consumer discretionary spending in our markets include:

•

health of the economy;

•

consumer confidence in the economy;

•

financial market volatility;

•

wages, jobs and unemployment trends;

•

the housing market, including real estate prices and mortgage rates;

•

consumer credit availability;

•

consumer debt levels;

•

gasoline and fuel prices;

•

interest rates and inflation;

•

tax rates and tax policy;

•

immigration policy;

•

import and customs duties/tariffs and policy;

•

impact of natural or man-made disasters;

•

legislation and regulations;

•

international unrest, trade disputes, labor shortages, and other disruptions to the supply chain;

•

changes to raw material and commodity prices;

•

national and international security and safety concerns; and

•

impact of public health pandemics on team members and the economy.

Increasing volatility in financial markets may cause some of the aforementioned conditions to change with even greater degree of frequency and magnitude. In addition, the recent COVID-19 pandemic, or fear of such an event, could evolve into a worldwide crisis that could adversely affect the economies and financial markets of many countries, including the United States, resulting in an economic downturn that could affect demand for our

products, materially adversely affect our business operations, our team members, facilities, partners, suppliers, distributors or customers, decrease traffic to our stores, create delays and inefficiencies in our supply chain, and make it difficult or impossible for us to deliver products to our customers.

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 job losses, foreclosures, bankruptcies, higher consumer debt and interest rates, higher taxes, reduced access to credit, falling home prices and lower consumer confidence. A reduction in overall consumer spending which causes customers to shift their spending to products other than those sold by us or to products sold by us that are less profitable could result in lower net sales, decreases in inventory turnover or a reduction in profitability due to lower margins, which could make it more difficult for us to generate cash flow sufficient to satisfy our obligations under our indebtedness. A prolonged period of depressed consumer spending could have a material adverse effect on our business.

Additionally, if the U.S. or global economy experiences a crisis or downturn, including any capital markets volatility or government intervention in the financial markets, or if the U.S. or global economy experiences a prolonged period of decelerating or negative growth, then our liquidity, capital resources or results of operations could be materially and adversely impacted. For example, although we typically generate funds from our operations to pay our operating expenses and fund our capital expenditures, our ability to continue to meet these cash requirements over the long-term may require access to additional sources of funds, including our ABL Facility, incremental term loan facilities and the equity and debt capital markets. Adverse financial and economic conditions may adversely affect our ability to draw on our ABL Facility, the ability of banks to honor draws on our ABL Facility or our ability to obtain incremental term loan facilities or access the equity and debt capital markets. In addition, adverse economic conditions could adversely affect our suppliers’ access to the capital and liquidity required to maintain their inventory, production levels, timeliness and product quality and to operate their businesses, which could adversely affect our supply chain, or could reduce our suppliers’ offerings of trade credit, customer incentives, vendor allowances, cooperative marketing expenditures and product promotions, which could adversely affect our results of operations. Adverse economic conditions could also make it difficult for both us and our suppliers to accurately forecast future product demand trends, which could cause us to carry too much or too little merchandise in various product categories, or could adversely affect our landlords and real estate developers of retail space, which may limit the availability of attractive leased store locations. The potential ongoing effects of an economic and financial crisis are difficult to forecast and mitigate. We may experience difficulties in operating and growing our operations to react to a U.S. or global financial or economic crisis or downturn. We may be unable, in such cases, to predict how robust a recovery of the U.S. or global economy will be or whether or not it will be sustained.

If we are unable to predict or effectively react to changes in consumer tastes and preferences, or if we fail to acquire and sell brand name merchandise at competitive prices, or if we are not successful in managing our inventory balances, then we may lose customers and our sales may decline and our results of operations may be negatively affected.

The level of success we achieve is dependent on, among other factors, the frequency of merchandise and service innovations, how accurately and timely we predict consumer tastes and preferences regarding sporting goods and outdoor recreation merchandise, the level of consumer demand, the availability of merchandise, the related impact on the demand for existing merchandise, and the competitive environment. Our products must appeal to a broad range of customers whose preferences cannot be predicted with certainty and are subject to change. We must identify, obtain supplies of, and offer to our customers, attractive, innovative and high-quality merchandise on a continuous basis. It is difficult to predict consistently and successfully the products and services our customers will demand as we often purchase products from our vendors several months in advance of the proposed delivery. Our failure to timely identify or effectively respond to changing consumer tastes, preferences and spending patterns could negatively affect our relationship with our customers, the demand for our merchandise and services and our market share, which could have a material adverse effect on our net sales and results of operations.

An unexpected major shift in consumer demand away from sporting goods, sports and casual apparel and footwear, and outdoor recreation products could have a material adverse effect on our business, results of operations and financial condition. 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:

•

shifts in behavior away from team sports and outdoor activities in favor of 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.;

•

legal and regulatory changes in federal and state hunting and fishing seasons, bag limits and firearm and ammunition restrictions;

•

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;

•

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; and

•

natural or man-made disasters (e.g., an oil spill closing large areas of hunting or fishing), including 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.

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. Our results of operations could be negatively affected if consumer spending on sporting goods and outdoor recreation products or sports participation rates decline.

Our business is highly dependent upon our ability to purchase brand name merchandise from our vendors at competitive prices. We cannot guarantee that we will be able to acquire such brand name merchandise at competitive prices or on competitive terms in the future. In this regard, brand name merchandise that is in high demand may be allocated by brand name vendors based upon the vendors’ internal criterion which is beyond our control. If we lose any of our brand name vendors or if any of our brand name vendors fail to supply us with brand name merchandise, we may not be able to meet the demand of our customers for their brand names.

We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business. A shortage of popular merchandise could reduce our net sales. Conversely, we also must seek to avoid accumulating excess inventory to maintain appropriate in-stock levels. If we overstock unpopular merchandise, then we may be forced to take significant inventory markdowns or miss opportunities for the sale of other merchandise, both of which could have a negative impact on our profitability, and, in turn, our sales may decline or we may be required to sell the merchandise we have obtained at lower prices. For example, the popularity of much of the licensed apparel we offer is dependent on the performance of certain sporting teams throughout the course of the applicable sports seasons. If we overestimate or underestimate the projected success of a certain sports team, we may have to take significant mark-downs of our licensed apparel for that sports team or we may miss the opportunity to sell additional licensed apparel or other products with that sports team’s logo. The success of sporting teams is highly uncertain and difficult to predict. In addition, macro factors, such as the COVID-19 pandemic, 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. 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.

Intense competition in the sporting goods and outdoor recreation retail industries could limit our growth and reduce our profitability.

The market for sporting and outdoor recreation goods is highly fragmented and intensely competitive. 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. We compete directly or indirectly with the following categories of companies:

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mass general merchants;

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large format sporting goods stores;

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traditional sporting goods stores;

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specialty outdoor retailers;

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specialty footwear retailers; and

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catalogue and internet retailers.

Pressure from our competitors could require us to reduce our prices or increase our spending for advertising and promotion. Traditional competitors have become increasingly promotional and, if our competitors reduce their prices, it may be difficult for us to reach our net sales goals without reducing our prices, which could impact our margins. 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. 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. 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.

The impact of COVID-19 may adversely affect our business and financial results.

The worldwide COVID-19 pandemic has negatively impacted the global and U.S. economies, disrupted consumer spending and global supply chains, and created significant volatility and disruption of labor and financial markets. The COVID-19 pandemic may have an adverse impact on our business and financial performance, including an economic downturn that adversely affects demand for our products, adversely affects our business operations, our team members, facilities, partners, suppliers, distributors or customers, decreases demand for our products, creates delays and inefficiencies in our supply chain, and makes it difficult for us to timely provide products to our customers. The extent of the impact of the COVID-19 pandemic on our business and financial performance, including our ability to execute our near-term and long-term business strategies and initiatives in the expected time frame, will depend on future developments, including the duration and severity of the pandemic, which are uncertain and cannot be predicted.

As a result of the COVID-19 pandemic, various governmental authorities and we have imposed and may further impose numerous requirements and restrictions on the operations of our facilities that are intended to protect the health and safety of our team members, consumers and communities, including temporary full or partial closures of our stores, distribution centers and corporate headquarters, restrictions on our goods and services eligible for sale, restrictions on the ability of customers and team members to reach our stores and other facilities and the neighboring businesses upon which we rely to drive traffic to our stores, and the closures of schools and businesses that our team members may rely upon for childcare while they work. The situation also

has necessitated the imposition of significant new safety measures to which we must adhere to safely serve our customers while also providing for the safety of our team members and suppliers, including limitations on the number of customers and team members allowed in our stores at any given time, shorter operating hours, and increased distancing, face covering, cleaning and sanitization protocols. Each of these necessary measures has substantially increased our operating costs, including, but not limited to, costs incurred to implement the operational changes described above and certain payments to or other costs relating to team members who are not working during the pandemic. These limitations, requirements and decreases, which are unprecedented, unexpected, ongoing and indefinite, may adversely impact our business and results. During the first quarter 2020, we closed our corporate headquarters, temporarily furloughed a significant portion of our corporate team members, and most of our active corporate team members worked from home due to local shutdown orders, and any need to take these actions again in the future may negatively impact productivity and cause other disruptions to our business. We began partially reopening our corporate headquarters during May 2020 to a limited number of team members and the remainder of our corporate team members returned to our corporate headquarters on June 8, 2020, in accordance with local guidelines. Our information technology systems and cybersecurity could also be adversely affected due to any significant increase in remote working of our team members due to any future closing of our corporate headquarters and in online orders due to a significant increase in online transactions. The operations of our stores, distribution centers, and corporate office could be further restricted, if we deem necessary or if recommended or mandated by authorities and these measures could have an adverse impact on our sales and profits.

As a result of the COVID-19 pandemic, we may have fewer resources to operate our business and we could also see deterioration in macroeconomic factors that typically affect us. In addition, consumer fears about becoming ill with the disease may continue, which will adversely affect traffic to our stores. Any significant reduction in consumer willingness to visit stores, levels of consumer spending at our stores or team member willingness to staff our facilities, or the further temporary closure of our facilities, relating to the pandemic or its impact on the economy, consumer sentiment or health concerns, could result in a loss of sales and profits and other material adverse effects. Consumer spending generally may also be negatively impacted by general macroeconomic conditions and consumer confidence, including the impacts of any recession, resulting from the COVID-19 pandemic. Any decreased spending at stores or online caused by decreased consumer confidence and spending following the pandemic could result in a loss of sales and profits and other material adverse effects. Also, if we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate for a particular region or our company as a whole, we could suffer damage to our reputation and our brand, which could adversely affect our business in the future.

The COVID-19 pandemic also has the potential to significantly impact our supply chain if the factories that manufacture our products, the distributors that distribute our products, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers are disrupted, temporarily closed or experience worker shortages. We may also see further disruptions or delays in shipments and negative impacts to pricing of certain components of our products. The COVID-19 pandemic has already impacted the suppliers of products we sell, particularly as a result of mandatory shutdowns in locations where our products are manufactured.

A significant amount of our merchandise is produced in China and the recent COVID-19 outbreak in China has resulted in 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. 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. 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. If our third-party manufacturers’ operations are curtailed, we may need to seek alternate manufacturing sources, which may be more expensive. 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. While the disruptions and restrictions on the ability to travel, quarantines, and temporary closures of the facilities of our third-party manufacturers and suppliers, as well as general limitations on movement in the region, are expected to be temporary, the duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time. Should the production and distribution closures continue for an extended period of time, the impact on our supply chain in China and globally could have a material adverse effect on our results of operations and cash flows.

The extent to which COVID-19 impacts our results, financial position and liquidity will depend on future developments, including new information which may emerge concerning the severity of the pandemic and any actions or inactions to contain COVID-19 or mitigate its impact, among others, which are highly uncertain and cannot be predicted. The extent of the impact of COVID-19 on our business and financial results will also depend on the duration and spread of the outbreak, including whether there is a “second wave” caused by additional periods of increases or spikes in the number of COVID-19 cases, further mutations or related strains of the virus (or even the threat or perception that this could occur), within the markets in which we operate and the related impact on consumer confidence and spending, labor supply or product supply, all of which are highly uncertain. Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may result in the Company becoming a party to litigation claims and/or legal proceedings, including claims relating to our customers or team members getting ill after visiting or working in our stores and other facilities, which could consume significant financial and managerial resources, result in decreased demand for our products and injury to our reputation. We may also face further closure requirements and other operational restrictions with respect to some or all of our facilities for prolonged periods of time due to, among other factors, evolving and increasingly stringent governmental restrictions including public health directives, quarantine policies or social distancing measures. An extended period of ongoing disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition.

Any failure to protect the integrity, security and use of sensitive or confidential data that we hold relating to us and our customers, team members and vendors, whether as a result of unauthorized disclosure, data loss or a breach of our information technology systems, could result in lost sales, fines and/or lawsuits, a loss of confidence in us, and harm to our reputation, business, results of operations and financial condition.

The secure processing, maintenance, transmission and storage of our customer, team member, vendor and company data is critical to us, and we devote significant resources to protecting this data. We collect and store sensitive and confidential data, including our intellectual property and proprietary business information and that of our vendors, and personally identifiable information of our customers and team members, in our data centers and on our networks. Additionally, the success of our retail stores and online operations depends upon the secure transmission of confidential information, including the use of cashless payments. Our customers provide personal, payment card and gift card information to purchase products or services, enroll in promotional programs, apply for credit, register and make purchases on our website, or otherwise communicate and interact with us. We may share information about such persons with vendors that assist with performing certain aspects of our business.

We and our vendors rely on commercially available information technology security measures, including systems, software, tools, plans and monitoring to provide security for processing, maintenance, transmission and storage of our customer, team member, vendor and company data. Despite the security measures we and our vendors have in place, our facilities and information technology systems, and those of our third-party service providers, may be vulnerable to, and unable to detect and appropriately respond to, security breaches, cyber-security attacks by computer hackers, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar disruptions. Any security breach could compromise our networks and the data and confidential personal or business information stored there could be accessed, publicly disclosed, misappropriated, destroyed, lost or stolen. In addition, data and security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breach by our team members or by persons with whom we have commercial relationships that result in the unauthorized release of confidential personal or business

information. Any such breach, access, misappropriation, loss or other unauthorized or inadvertent disclosure of confidential information, whether by us or our vendors, could attract a substantial amount of media attention, damage our relationships with our customers, team members and vendors and cause a loss of confidence in us, violate applicable privacy laws and obligations and expose us to costly government enforcement actions or private litigation and financial liability (possibly beyond the scope or limits of our insurance coverage), increase the costs we incur to protect against or remediate such breaches and comply with consumer protection and data privacy laws and obligations or 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.

Despite our security measures, it is possible that computer hackers or other parties might defeat these security measures and obtain sensitive or confidential data that we hold relating to us and our customers, team members and vendors. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems, change frequently and often are not recognized until launched against a target, and we may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Actual or anticipated attacks could require that we expend significant resources related to our information systems and infrastructure and could subject us to additional legal and financial risks, including increased investments in protection technologies, costs to deploy additional personnel, train team members and engage third-party experts and consultants, costs of compliance with privacy laws and obligations, expenses associated with providing our customers with credit protection and potential fees and penalties from our credit card processing partners, any of which could adversely affect our reputation, business, results of operations and financial condition.

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 owned brand merchandise, is manufactured in countries such as China, Vietnam, El Salvador and Bangladesh. 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). 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. Merchandise or raw materials purchased from alternative sources may be of lesser quality or more expensive than the merchandise or raw materials we currently purchase abroad. If any of these or other factors were to cause a disruption of trade from the countries in which our suppliers are located, our inventory levels may be reduced or the costs of our merchandise may increase.

The political, health, safety, security, and economic environments of the countries in which we or our vendors obtain merchandise or raw materials have the potential to materially affect our operations. In the event of disruptions or delays in supply due to economic, political, health, safety or security conditions in foreign countries or their relations with the United States, such disruptions or delays could adversely affect our results of operations unless and until alternative supply arrangements could be made. Also, the imposition of trade tariffs, sanctions or other regulations against merchandise imported by us, or the loss of “normal trade relations” status with the countries in which we or our vendors obtain merchandise or raw materials, could significantly increase our cost of products imported into the United States and harm our business. The prices charged for the merchandise that we purchase by foreign manufacturers may be affected by the fluctuation of their local currency against the U.S. dollar.

In addition, the federal government periodically considers other restrictions on the importation of products obtained by our vendors and us. 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 no longer be available at a commercially attractive price or at all, which in turn could have a material adverse effect on our business, financial condition and results of operations.

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. 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.

General trade tensions between the United States and China began escalating in 2018, with multiple rounds of U.S. tariffs on Chinese goods taking effect. Recently, the Trump administration imposed multiple rounds of tariffs on imports from China, where we and many of our vendors source commodities. As a result, we have experienced rising inventory costs on owned brand products we directly source from China, as well as national brand products from China that we source through our vendors. These higher inventory costs have resulted in higher prices and/or lower margins, thus resulting in a negative impact to sales and/or gross margin. Additionally, these tariffs have resulted in and could result in further retaliatory tariff actions by China and could ultimately result in further tariffs on merchandise that we, and many of our vendors, import from China. These tariffs could have an adverse or material adverse effect on our business, financial condition and results of operations. If any of these events continue as described, we may need to seek alternative suppliers or vendors, raise prices, or make changes to our operations, any of which could have a material adverse effect on our sales and profitability, results of operations and financial condition. On January 15, 2020, President Trump signed Phase I of a new trade agreement with China, signaling potential cooperation and resolution between the two countries in 2020 to the ongoing trade war. However, as of our report date, no significant modifications have been enacted relative to the escalated tariffs which impact our business.

We are subject to costs and risks associated with laws and regulations affecting our business, including those relating to the sale, manufacture and import of consumer products and other matters, and such laws may change or become more stringent.

We operate in a complex regulatory and legal environment that exposes us to regulatory, compliance and litigation risks that could materially affect our operations and financial results. We are subject to regulation by numerous federal, state and local regulatory agencies and authorities, including the U.S. Consumer Product Safety Commission, Equal Employment Opportunity Commission, Department of Labor, Occupational Safety and Health Administration, Department of Justice, Department of Treasury, Federal Trade Commission, Customs and Border Protection, Bureau of Alcohol, Tobacco, Firearms and Explosives, SEC, Internal Revenue Service, or IRS, and Environmental Protection Agency and comparable state and local agencies.

Laws and regulations affecting our business may change, sometimes frequently and significantly, as a result of political, economic, social or other events. Some of the federal, state or local laws and regulations that affect us include but are not limited to:

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consumer product safety, product liability or consumer protection laws;

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laws related to advertising, marketing, pricing and selling our products, including but not limited to firearms, ammunition, and related accessories;

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labor and employment laws, including wage and hour laws;

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tax laws or interpretations thereof, including collection of state sales tax on e-commerce sales;

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data protection and privacy laws and regulations;

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environmental laws and regulations;

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hazardous material laws and regulations;

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customs or import and export laws and regulations, including collection of tariffs on product imports;

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intellectual property laws;

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antitrust and competition regulations;

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banking and anti-money laundering regulations;

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Americans with Disabilities Act, or ADA, and similar state and local laws and regulations;

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website design and content regulations; and

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securities and exchange laws and regulations.

We sell firearms, ammunition, and related accessories. Firearms represented less than 6% of our net sales in 2019. Numerous federal, state and local laws and regulations govern the procurement, transportation, storage, distribution and sale and marketing of firearms, ammunition, and related accessories, including the regulations governing the performance of federally and state mandated procedures for determining customer firearm purchase eligibility (such as age and residency verification, background checks and proper completion of required paperwork). In the future, there may be increased federal, state or local regulation affecting the sale of firearms, ammunition, and related accessories, including taxation or restrictions on the type of firearms and ammunition available for retail sale, which could reduce our sales and profitability. A failure by us to follow these laws or regulations may subject us to claims, lawsuits, fines, penalties, adverse publicity and government action (up to and including the possible revocation of licenses and permits allowing the sale of firearms and ammunition), which could have a material adverse effect on our business and results of operations.

Another significant risk relating to our operations is compliance with the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act, or UKBA, and other anti-corruption laws applicable to our international operations. In many foreign countries, particularly in those with developing economies, it may be a local custom that businesses operating in such countries engage in bribery and other business practices that are prohibited by the FCPA, the UKBA or other U.S. and foreign laws and regulations applicable to us.

We have internal policies, procedures and standards that we require all of our team members, agents and vendors to meet. Although we have implemented policies, procedures and standards of conduct designed to ensure compliance with the laws or regulations affecting our business, there can be no assurance that all of our team members, agents and vendors will comply with such laws, policies, procedures and standards of conduct. If we or one of our domestic or foreign agents or vendors fails to comply with a law or regulation, including any of the foregoing laws or regulations, or if we or one of our domestic or foreign agents or vendors fails to comply with our required policies, procedures or standards of conduct, then we may be forced to discontinue conducting business with the agent or vendor and we or they may be subject to claims, lawsuits, fines, penalties, loss of a license or permit and adverse publicity or other consequences that 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.

From time to time we may be involved in lawsuits, demands or other claims arising in the ordinary course of business. For example, we are, and may in the future, be subject to claims, demands and lawsuits, and we may suffer losses and adverse effects to our reputation, related to:

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injuries or crimes associated with merchandise we sell, that has been associated with an increased risk of injury, including but not limited to firearms, ammunition, firearm accessories, air pistols, crossbows

and other archery equipment, knives, deer stands and other hunting equipment, trampolines, wheeled goods such as bicycles and ride-on toys, certain merchandise qualifying as hazardous material and other products;

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product liability claims from customers or actions required or penalties assessed by government agencies relating to products we sell, including but not limited to products that are recalled, defective or otherwise alleged to be harmful;

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the design, purchase, manufacture, import, distribution and sale of our owned brand products;

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the procurement, transportation, storage, distribution and sale of firearms and ammunition, including improper performance of federally mandated procedures for determining customer firearm purchase eligibility (such as age and residency verification, background checks and proper completion of required paperwork);

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municipalities or other organizations attempting to recover costs from firearm manufacturers and retailers, relating to the use of firearms and ammunition;

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the operations of a fleet of trucks for distribution purposes, including transportation of hazardous materials by such fleet;

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the procurement and ownership, leasing or operation of property for retail stores, distribution centers and other corporate needs;

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the alleged infringement upon intellectual property rights to merchandise we sell or technology or services we use, including information technology, marketing and advertising services;

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global sourcing, including international, customs and trade issues;

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real estate issues, including construction, leasing, zoning and environmental issues;

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employment issues, including actions by team members, the Equal Employment Opportunity Commission, the Department of Labor, the Occupational Safety and Health Administration and other federal and state employment agencies;

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commercial disputes, including contractual and business disputes with vendors, landlords, or competitors;

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tort, personal injury and property damage claims related to our stores, e-commerce, distribution centers or corporate headquarters; and

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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. 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. 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. We may be subjected to claims and lawsuits, including potential class actions, relating to our policies and practices on the sale of firearms, ammunition, or related accessories. We are, and may in the future also be, subjected to claims and lawsuits relating to the improper use of firearms, ammunition, or related accessories sold by us, including lawsuits by victims or municipalities or other organizations attempting to recover losses or costs from manufacturers and retailers of firearms, ammunition, and related accessories.

Due to the inherent uncertainties of claims and lawsuits, we cannot accurately predict the ultimate outcome of any such matters. These claims and lawsuits could cause us to incur significant expenses and devote

substantial resources to defend against them and, in some cases, we could incur significant losses in the form of settlements, judgments, fines, penalties, injunctions or other orders, as well as negative publicity, that could have a material adverse effect on our business, results of operations and financial condition. Even if a claim is unsuccessful or is not fully pursued, the negative publicity surrounding any such assertions could adversely affect our reputation.

To offset negative insurance market trends, we may elect to self-insure, accept higher insurance deductibles or reduce the amount of insurance coverage in response to market changes. Additionally, we self-insure a portion of expected losses under our workers’ compensation, general liability, Academy, Ltd. Texas Work Injury Benefit Plan, and group health insurance programs. We use the services of independent actuaries for loss adjustment expense reserve analyses for the aforementioned lines of insurance. Liabilities associated with these lines of insurance are based on actual claim data and estimates of incurred but not reported claims, developed using actuarial methodologies, and may be based on historical claim trends, industry factors, claim development, as well as other actuarial assumptions. Unanticipated changes in any applicable actuarial assumptions and management estimates underlying our recorded liabilities for these losses, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes in discount rates could result in materially different expenses than expected under these programs, which could have a material adverse effect on our results of operations and financial condition.

We require many of our vendors to carry their own insurance, and we have indemnity agreements with many of our vendors, but we cannot be assured that (1) any specific claim or lawsuit will be subject to a vendor’s insurance or indemnity agreement, (2) our vendors will meet their indemnity obligations or (3) we will be able to collect payments from our vendors sufficient to offset liability losses or, in the case of our owned brand products, where almost all of the manufacturing occurs outside the United States, that we will be able to collect anything at all. Due to the inherent uncertainties of litigation and other claims, we cannot accurately predict the ultimate outcome of any such matters.

Any insurance we carry, including the aforementioned insurance coverage, reflects deductibles, self-insured retentions, limits of liability and similar provisions that we believe are prudent based on our operations. With all claims and lawsuits, however, there is a risk that liabilities, fines and losses may not be covered by insurance or may exceed insurance coverage. We also may be unable to procure insurance in the future at the coverage levels, terms or rates available to us today, and we cannot be guaranteed that our insurance at the time will be adequate for any particular claim or lawsuit.

Harm to our reputation could adversely impact our ability to attract and retain customers, team members, vendors and/or other partners.

Negative publicity or perceptions involving us or our brands, products, team members, operations, vendors, spokespersons, or marketing and other partners may negatively impact our reputation and adversely impact our ability to attract and retain customers, team members, vendors and/or other partners. 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. 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, our policies related to the sale of firearms, ammunition and accessories, public stances on controversial social or political issues, 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. A variety of risks are associated with our social media activity and digital marketing, including the improper disclosure of proprietary information, negative comments about or negative incidents regarding us, exposure of personally identifiable information, fraud or out-of-date information. The inappropriate use of social media and digital marketing vehicles by us, our customers, team members or others could increase our costs, lead to

litigation or result in negative publicity that could damage our reputation. Many social media platforms immediately publish the content, videos and/or photographs created or uploaded by their subscribers and participants, often without filters or checks on accuracy of the content posted. Information posted on such platforms at any time may be adverse to our interests and/or may be inaccurate. The dissemination of negative information related to us or our brands, products, team members, operations, vendors, spokespersons or partners could harm our business, results of operations and financial condition, regardless of the information’s accuracy, and the harm may be immediate without affording us an opportunity for redress or correction. Furthermore, the prevalence of news coverage, the internet, and social media may accelerate and increase the potential scope of any negative publicity we might receive and could increase the negative impact of these issues on our reputation, business, results of operations, and financial condition.

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.

The efficient operation of our business is dependent on the successful integration and operation of our information technology systems. 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.

Our information technology systems, if not functioning properly, 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. 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 (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. 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.

From time to time, our computer and information technology systems may require upgrade, enhancement, integration and/or replacement for us to maintain successful current operations and achieve future sales and store growth.

Updating our existing information technology systems subjects us to numerous risks, including:

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loss of information;

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disruption of normal operations;

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changes in accounting or other operating procedures;

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changes in internal control over financial reporting or general computer controls;

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problems maintaining accuracy of historical data;

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allocation and dedication of key business resources to the updating of existing systems;

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ability to attract and retain adequate experienced technical resources and third-party contractors for the updating of existing systems;

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unknown impact on remaining systems;

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adequacy of training and change management to address critical changes in business processes and job functions; and

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updated information technology system ultimately does not meet the needs of the business.

Any failure to successfully update 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.

From time to time, we may undertake initiatives involving numerous information technology systems, including our merchandise management, warehouse management, point of sale, e-commerce, data security, and credit card fraud detection systems. 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.

We depend on approximately 1,300 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.

We depend on approximately 1,300 suppliers to supply us in a timely and efficient manner with the merchandise we purchase for resale. Our significant dependence on these suppliers exposes us to various risks that could have a material adverse effect on our business and results of operations. In 2019, purchases from our largest vendor represented approximately 14% of our total inventory purchases. The merchandise we sell is sourced from a wide variety of domestic and international suppliers and our ability to find qualified suppliers and access merchandise in a timely and efficient manner is often challenging, particularly with respect to merchandise sourced outside the United States. We generally do not have long-term written contracts with our suppliers that would require them to continue supplying us with merchandise, particular payment terms or the extension of credit. As a result, these suppliers could modify the terms of these relationships due to general economic conditions or otherwise. 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 the measures taken by the Chinese government in response to the recent COVID-19 coronavirus outbreak), 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 have a material affect our results of operations and our customers’ confidence in us. 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. 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. 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.

A failure of our third-party vendors of outsourced business services and solutions to meet our performance standards and expectations could adversely affect our operations.

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. 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. 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.

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.

Our strategy includes opening stores in existing markets and, from time to time, new markets. We must successfully choose our store sites, execute favorable real estate transactions on terms that are acceptable to us, construct and equip the stores with furnishings and appropriate merchandise, hire and train competent personnel and effectively open and operate these new stores and integrate the stores into our operations, and we may need to expand our distribution infrastructure, including the addition of new distribution centers. Our plans to increase our number of retail stores will depend in part on the availability of existing retail stores or store sites. 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. We cannot expect that stores or sites will be available to us, or that they will be available on terms acceptable to us. If additional retail store sites are unavailable on acceptable terms, we may not be able to carry out a significant part of our growth strategy. Rising real estate costs and acquisition, construction and development costs, available credit to landlords and developers and landlord bankruptcies could also inhibit our ability to grow. 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.

We lease our stores under operating leases with 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. Similarly, we may be committed to perform our obligations under the applicable leases even if current locations of our stores become unattractive as demographic patterns change. 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.

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. 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. Expansion into new markets could also bring us into direct competition with retailers with whom we have no past experience as direct competitors. To the extent that we become increasingly reliant on entry into new markets to grow, we may face additional risks and our results of operations could suffer. To the extent that we are not able to meet new challenges, our sales could decrease and our operating costs could increase.

There also can be no assurance that we will be able to continue our expansion plans successfully or continue to manage our growth effectively, or that our new stores will generate sales levels necessary to achieve store-level profitability or profitability comparable to that of our existing stores. Our continued growth also depends, in

large part, upon our ability to open new stores in a timely manner and to operate them profitably. A slower than expected pace of new store openings may negatively impact our net sales growth and operating income. New stores also may face greater competition and have lower anticipated sales volumes relative to previously opened stores during their comparable years of operation. We may not be able to advertise cost-effectively in new or large markets in which we have less store density, which could slow sales growth at such stores. 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. Thus, our failure to achieve our expansion plans could materially and adversely affect our business, financial condition and results of operations.

Our e-commerce activities expose us to various risks that could have a material adverse impact on our overall results of operations.

Our customers are increasingly using computers, tablets, mobile phones and other devices to shop in our stores and on-line for our products. Our business has become increasingly omnichannel as we strive to deliver a seamless shopping experience to our customers through both online and in-store shopping experiences. We utilize our own e-commerce platform that allows us to control our customer experience without relying on a single third-party provider. Maintaining and continuing to improve our e-commerce platform involves substantial investment of capital and resources, integrating a number of information and management systems from different vendors, increasing supply chain and distribution capabilities, attracting, developing and retaining qualified personnel with relevant subject matter expertise, and effectively managing and improving the customer experience. Our e-commerce operations are subject to numerous risks that could have a material adverse impact on our overall results of operations, including:

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expansion of our sales across the United States, thereby, subjecting us to the regulatory and other requirements of the 50 states;

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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;

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the need to keep pace with rapid technological change and maintain investments necessary for our e-commerce operation;

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legal compliance issues related to the online sale of merchandise;

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intellectual property litigation related to the enforcement of patent rights;

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privacy and personal data security;

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protection against credit card and gift card fraud;

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fulfillment, inventory control and shipping issues for e-commerce transactions;

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tax issues, including state sales tax collection for e-commerce transactions;

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hiring, retention and training of personnel qualified to conduct our e-commerce operation;

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ability to procure adequate computer hardware and software and technology services and solutions from third-party providers; and

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reduction in visits to, diversion and/or cannibalization of sales from, existing retail stores.

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. 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.

Further, governmental regulation of e-commerce continues to evolve in such areas as marketing and advertising, taxation, privacy, data protection and privacy, pricing, content, copyrights, distribution, mobile communications, electronic contracts and other communications, consumer protection, the provision of online payment services, the design and operation of websites and the characteristics and quality of products and services. Unfavorable changes to regulations in these areas could have a material adverse impact on our e-commerce activities.

Our owned brand merchandise exposes us to various risks generally encountered by companies that source, manufacture, market and retail exclusive owned brand merchandise.

In addition to national brand merchandise, we offer customers owned brand merchandise that is not available in other stores. The sale of owned brand merchandise subjects us to certain risks, including:

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our ability to successfully and profitably conduct sourcing and manufacturing activities internally or with third-party agents, manufacturers and distributors;

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our failure or our manufacturers’ failure to comply with federal, state and local regulatory requirements, including product safety, working age and conditions, anti-corruption, import and customs and retail sale restrictions;

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potential mandatory or voluntary product recalls;

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claims and lawsuits resulting from injuries associated with the use of our owned brand merchandise;

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our ability to successfully protect our intellectual property or other proprietary rights (e.g., defending against counterfeit, knock-offs, grey-market, infringing or otherwise unauthorized goods);

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our ability to successfully navigate and avoid claims related to the intellectual property or other proprietary rights of third parties;

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our ability to successfully administer and comply with the obligations under license agreements that we have with the licensors of brands, including in some instances certain sales minimums that if not met could cause us to lose the licensing rights or pay damages;

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sourcing and manufacturing outside the United States, including foreign laws and regulations, political unrest, disruptions or delays in cross-border shipments, changes in economic conditions in foreign countries, exchange rate and import duty fluctuations and conducting activities with third-party manufacturers; and

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increases in the price of raw materials used in the manufacturing of our owned brand merchandise and other risks generally encountered by entities that source, manufacture, market and retail owned brand merchandise.

Our failure to adequately address some or all of these risks could have a material adverse effect on our business, results of operations and financial condition.

A disruption in the operation of our distribution centers would affect our ability to deliver merchandise to either our stores or customers, which could adversely impact our revenues and harm our business and financial results.

We operate three distribution centers located in Katy, Texas, Twiggs County, Georgia, and Cookeville, Tennessee. We receive and ship substantially all of our merchandise through our distribution centers. Any natural or man-made disaster in the areas or regions of these facilities (for example, hurricanes, tornadoes, floods, explosions, or fires) could damage a portion of our inventory and any serious disruption to these facilities or their staffs (including due to any widespread health emergencies) 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.

Our quarterly operating results and comparable sales may fluctuate due to seasonality and other factors outside of our control.

We have historically experienced and expect to continue to experience seasonal fluctuations in our net sales, operating income and net income. A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter. 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. 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.

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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general regional and national economic conditions;

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consumer confidence in the economy;

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unseasonal or extreme weather conditions, natural or man-made disasters (such as snow storms, hurricanes, tornadoes, and floods);

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catastrophic or tragic events (such as tragedies involving firearms or public health pandemics) in or affecting our markets;

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changes in demand for the products that we offer in our stores;

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lack of new product introduction;

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lockouts or strikes involving professional sports teams;

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retirement of sports superstars used in marketing various products;

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sports scandals, including those involving leagues, associations, teams or athletes with ties to us or our markets;

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costs related to the closure of existing stores;

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litigation;

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the success or failure of college and professional sports teams in our markets;

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expansion of existing or entry of new competitors into our markets;

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consolidation of competitors in our markets;

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shift in consumer tastes and fashion trends;

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calendar shifts or holiday or seasonal periods;

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the timing of income tax refunds to customers;

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changes in laws and regulations, politics or consumer advocacy affecting our business, including sentiment relating to the sale of firearms and ammunition;

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cancellations of tax-free holidays in certain states;

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pricing, promotions or other actions taken by us or our existing or possible new competitors; and

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changes in other tenants or landlords or surrounding geographic circumstances in the shopping centers in which we are located.

Our quarterly operating results and comparable sales may also be affected by the timing of new store openings and the relative proportion of new stores to mature stores, the level of pre-opening expenses associated with new stores and the amount and timing of net sales contributed by new stores. Furthermore, our operating margins may be impacted in periods in which incremental expenses are incurred as a result of upcoming new store openings.

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.

Unforeseen events, including public health issues such as contagious viruses, natural disasters such as earthquakes, hurricanes, tornadoes, snow or ice storms, floods and heavy rains, 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. In addition, extreme weather conditions could result in disruption or delay of production and delivery of materials and products in our supply chain and cause staffing shortages in our stores. Socio-political factors, such as civil unrest or other economic or political uncertainties that contribute to consumer unease or harm to our store base, may also result in decreased discretionary spending, property damage and/or business interruption losses. For example, we may face losses related to the civil unrest in the United States that began 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. We believe that we take reasonable precautions to prepare particularly for unforeseen catastrophic or weather-related events; however, our precautions may not be adequate to deal with such events in the future. 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.

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.

Our trademarks, service marks, copyrights, patents, processes, trade secrets, domain names and other intellectual property, including our Academy Sports + Outdoors brand, our owned brands, such as Academy Sports + Outdoors, Magellan Outdoors, BCG, O’rageous and Outdoor Gourmet, and our goodwill, designs, names, slogans, images and trade dress associated with these brands, are valuable assets that are critical to our success. 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. In addition, any infringement or other intellectual property claim made by or against us, whether or not it has merit, could be time-consuming, result in costly litigation, cause product delays, cause us to discontinue affected products, distract key resources from our core business or require us to enter into royalty or licensing agreements. As a result, any such claim made by or against us or our failure to protect our intellectual property could have an adverse effect on our results of operations.

Our business is significantly dependent on our ability to meet our labor needs.

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. We plan to expand our team member base to manage our anticipated growth. Competition for non-entry-level personnel, particularly for team members with retail experience, is highly competitive. Additionally, our ability to maintain consistency in the quality of customer service in our stores is critical to our success. Many of our store team members are in entry-level or part-time positions that historically have high rates of turnover. We are also dependent on the team members who staff our distribution centers, many of whom are skilled. 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, 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 the COVID-19 pandemic. Recently, various legislative movements have sought to increase the federal minimum wage in the United States, as well as the minimum wage in a number of individual states. As federal or state minimum wage rates increase, we may need to increase not only the wage rates of our minimum wage team members, but also the wages paid to our other hourly team members as well. Further, should we fail to increase our wages competitively in response to increasing wage rates, the quality of our workforce could decline, causing our customer service to suffer. Additionally, the U.S. Department of Labor has proposed rules that 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. If we are unable to hire and retain store-level team members capable of providing a high level of customer service, skilled distribution center team members or other qualified personnel, our business could be materially adversely affected.

Although none of our team members are currently covered under collective bargaining agreements, we cannot guarantee that our team members will not elect to be represented by labor unions in the future. If some or our entire workforce were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements or work practice, it could have a material adverse effect on our business, financial condition and results of operations.

Our stores are located primarily in the southern United States which could subject us to regional risks.

Because our stores are located primarily in the southern United States, we are subject to regional risks, such as the regional economy, weather conditions and natural disasters such as floods, droughts, tornadoes and hurricanes. Man-made disasters, such as an oil spill in the Gulf of Mexico, a nuclear power plant crisis or other events, may also impact our regional area. We sell a significant amount of merchandise related to outdoor activities which can be adversely affected by such events that may postpone the start of or shorten sports seasons or inhibit participation in other outdoor activities or otherwise have a significant impact on our operations. Several of our competitors operate stores across the United States and thus are not as vulnerable to the risks of operating in one region. If a region of our stores’ footprint suffers an economic downturn or any other adverse regional event, there could be an adverse impact on our net sales and results of operations and our ability to implement our planned expansion program.

Fluctuations in merchandise costs and availability due to fuel price uncertainty, demand changes, increases in commodity prices, labor shortages and other factors could negatively impact our consolidated and combined results of operations.

The cost of our merchandise is affected, in part, by the price of raw materials. A substantial rise in the price of raw materials could dramatically increase the costs associated with manufacturing the merchandise that we purchase from our suppliers, which could cause the price of our merchandise to increase and could have a

negative impact on our sales and profitability. In addition, increases in commodity prices could also adversely affect our results of operations. If we increase the price for our products in order to maintain gross margins for our products, such increase may adversely affect demand for, and sales of, our products, which could have a material adverse effect on our financial condition and results of operations.

We rely upon various means of transportation, including ships and trucks, to deliver products from vendors to our distribution centers and from our distribution centers to our stores. Consequently, our results can vary depending upon numerous factors affecting transportation, including the price of fuel and the availability of trucks and ships. 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. 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.

Labor shortages in the transportation industry could 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.

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 natural disasters or health pandemics, could negatively affect our business.

If we are unable to manage the growth of our business, our revenues may not increase as anticipated, our cost of operations may rise and our results of operations may decline.

As our business grows, we will face many risks associated with growing companies, including the risk that our management, financial controls, staff levels, and information systems will be inadequate to support our expansion in the future. Our growth will require our management to expend significant time and effort and additional resources to ensure the continuing adequacy of our associate staff levels, financial controls, operating procedures, information systems, product purchasing, warehousing and distribution systems and team member training programs. We cannot predict whether we will be able to effectively manage these increased demands or respond on a timely basis to the changing demands that our expansion will impose on our management, financial controls and information systems. If we fail to manage successfully the challenges of growth, do not continue to improve these systems and controls or encounter unexpected difficulties during expansion, our business, financial condition, results of operations or cash flows could be materially adversely affected.

The loss of our key executives could have a material adverse effect on our business.

Our future success depends on the continued services of our senior executive management. Any loss or interruptions of the services of our senior executive management could significantly reduce our ability to effectively manage our operations and implement our key initiatives because we may not be able to timely recruit appropriate replacements for our senior executive management should the need arise. If we were to lose any key senior executive management, our business could be materially adversely affected.

We may pursue strategic acquisitions, which could have an adverse impact on our business, as could assimilation of companies following acquisition.

Although we have never done so in the past, we may from time to time acquire companies or businesses in the future. Acquisitions may result in difficulties in assimilating acquired companies, and may result in the diversion of our capital and our management’s attention from other business issues and opportunities. We may not be able to successfully integrate companies or businesses that we acquire, including their personnel, financial

systems, distribution, operations and general store opening procedures. If we fail to successfully integrate acquisitions, our business could suffer. In addition, the integration of any acquired business and their financial results may adversely affect our results of operations.

We are subject to payment-related risks.

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. Accordingly, we are, and will continue to be, subject to significant and evolving regulations and compliance requirements, including obligations to implement enhanced authentication processes that could result in increased costs and liability, and reduce the ease of use of certain payment methods. For certain payment methods, including credit and debit cards, as well as electronic payment systems, we pay interchange and other fees, which may increase over time. We rely on independent service providers for payment processing, including credit and debit cards. 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. 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. If we fail to comply with these rules or requirements, or if our data security systems are breached or compromised, we may be liable for losses incurred by card issuing banks or customers, subject to fines and higher transaction fees, lose our ability to accept credit or debit card payments from our customers, or process electronic fund transfers or facilitate other types of payments. Any failure to comply could harm our brand, reputation, business and results of operations.

Our success depends on the effectiveness of our marketing and advertising programs.

Brand marketing and advertising significantly affect sales at our locations, as well as e-commerce sales. Our marketing and advertising programs may not be successful, which may prevent us from attracting new customers and retaining existing customers. If sales decline, we will have fewer funds available for marketing and advertising, which could materially and adversely affect our revenues, business and results of operations. As part of our marketing efforts, we rely on print, television and radio advertisements, as well as search engine marketing, web advertisements, social media platforms and other digital marketing to attract and retain customers. These efforts may not be successful, resulting in expenses incurred without the benefit of higher revenues or increased customer or team member engagement. Customers are increasingly using internet sites and social media to inform their purchasing decisions and to compare prices, product assortment, and feedback from other customers about quality, responsiveness and customer service before purchasing our services and products. 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.

Risks Related to Our Indebtedness

Our high level of indebtedness requires that we dedicate a substantial 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.

As of August 1, 2020, we had approximately $1.4 billion outstanding under the Term Loan Facility. As of August 1, 2020, we had no borrowings outstanding under the ABL Facility, an available borrowing capacity under the ABL Facility of approximately $694.1 million (which is subject to customary borrowing conditions, including a borrowing base), and outstanding letters of credit of $29.7 million, $19.9 million of which were issued under the ABL Facility.

Our overall level of indebtedness requires that we dedicate a substantial portion of our cash flows to debt service payments. The Term Loan Facility requires quarterly principal and cash interest payments through June 30, 2022. The ABL Facility matures on May 22, 2023, subject to a springing maturity clause which is triggered 91 days before the July 2, 2022 maturity of the Term Loan Facility should it not be paid off or extended at least 91 days beyond the May 22, 2023 maturity date of the ABL Facility.

Our substantial indebtedness reduces the funds that would otherwise be available for operations, future business opportunities and payments of our debt obligations and limits our ability to:

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obtain additional financing, if necessary, for working capital and operations, or such financing may not be available on favorable terms;

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make needed capital expenditures;

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make strategic acquisitions or investments or enter into joint ventures;

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react to changes or withstand a future downturn in our business, the industry or the economy in general;

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meet store growth, distribution center expansion, e-commerce growth, budget targets and forecasts of future results;

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engage in business activities, including future opportunities that may be in our interest; and

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react to competitive pressures or compete with competitors with less debt.

These limitations could adversely affect our operating performance, growth, profitability and financial condition, which would make it more difficult for us to generate cash flow sufficient to satisfy our obligations under our indebtedness.

Our ability to make scheduled payments on our debt obligations also depends on our financial condition, results of operations and capital resources, which are subject to, among other things: the business, financial, economic, industry, competitive, regulatory and other factors discussed in these risk factors, and on other factors, some of which are beyond our control, including: the level of capital expenditures we make, including those for acquisitions, if any; our debt service requirements; fluctuations in our working capital needs; our ability to borrow funds and access capital markets; and restrictions on debt service payments and our ability to make working capital borrowings for debt service payments contained in our debt instruments.

If we are unable to generate sufficient cash flow to permit us to make scheduled service payments on our debt, then we will be in default and holders of that debt could declare all outstanding principal and interest to be due and payable. If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full. In addition, in the event of a default, the lenders under the ABL Facility could terminate their further commitments to loan money and our secured lenders under the Term Loan Facility and the ABL Facility could foreclose against the assets securing their borrowings, and we could be forced into bankruptcy or liquidation.

Despite our high level of indebtedness, we may still be able to incur substantially more debt, which could further increase the risks to our financial condition described above.

Despite our high level of indebtedness, we may be able to incur significant additional indebtedness in the future, including off-balance sheet financings, trade credit, contractual obligations and general and commercial liabilities. Although the credit agreements governing the Term Loan Facility and the ABL Facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. 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. As of August 1, 2020, we had no borrowings outstanding under the ABL Facility, and an available borrowing capacity under the ABL Facility of approximately $694.1 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. We may also be able to increase the capacity under the Term Loan Facility by up to $200.0 million plus an additional amount, subject to certain conditions, which borrowings would be secured indebtedness. The addition of new debt to our current debt levels could further exacerbate the related risks to our financial condition that we now face.

If we are unable to generate sufficient cash to service all of our indebtedness, we may be forced to take other actions to fund the satisfaction of our obligations under our indebtedness, which may not be successful.

If our cash flow is insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, raise additional debt or equity capital or restructure or refinance our indebtedness. However, we may not be able to implement any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. Even if new financing were available, it may be on terms that are less attractive to us than our then existing indebtedness or it may not be on terms that are acceptable to us. In addition, the credit agreements governing the Term Loan Facility and the ABL Facility restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. Thus, we may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

If we cannot generate sufficient cash flow to permit us to make scheduled payments on our debt, then we will be in default and holders of that debt could declare all outstanding principal and interest to be due and payable. If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full. In addition, in the event of a default, the lenders under the ABL Facility could terminate their further commitments to loan money and our secured lenders under the Term Loan Facility and the ABL Facility could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.

The terms of our outstanding indebtedness may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

The credit agreements governing the Term Loan Facility and the ABL Facility contain restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our best interest, including restrictions on our ability to:

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incur additional indebtedness and guarantee indebtedness;

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pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

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prepay, redeem or repurchase certain debt;

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make loans, investments and other restricted payments;

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sell or otherwise dispose of assets;

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incur liens;

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enter into transactions with affiliates;

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alter the businesses we conduct;

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enter into agreements restricting our subsidiaries’ ability to pay dividends; and

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consolidate, merge or sell all or substantially all of our assets.

Additionally, at certain times, the ABL Facility requires maintenance of a certain minimum adjusted fixed charge coverage ratio. Our ability to comply with the covenants and restrictions contained in our credit agreements may be affected by events beyond our control. If market or other economic conditions deteriorate, our ability to comply with these covenants and restrictions may be impaired.

A breach of the covenants under one of these agreements could result in an event of default under the applicable indebtedness, which, if not cured or waived, could have a material adverse effect on our business, results of operations and financial condition. Such a default, if not cured or waived, may allow the creditors to accelerate the related debt principal and/or related interest payments and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full. In addition, an event of default under the credit agreements governing our Term Loan Facility and ABL Facility would permit the lenders under our ABL Facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our Term Loan Facility and ABL Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness, and we could be forced into bankruptcy or liquidation.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Term Loan Facility and ABL Facility are at variable rates of interest and expose us to interest rate risk. 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. 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. 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.

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. Some of these reforms are already effective, while others are still to be implemented. These reforms may cause such benchmarks to perform differently than in the past, or to disappear entirely, or have other consequences that cannot be predicted. Any such consequence could have a material adverse effect on our existing facilities, our interest rate swap agreement or our future debt linked to such a “benchmark” and our ability to service debt that bears interest at floating rates of interest.

If the financial institutions that are lenders under the ABL Facility fail to extend credit under the facility or reduce the borrowing base, our liquidity and results of operations may be adversely affected.

One of our sources of liquidity is the ABL Facility. 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. 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. 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 high 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.

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. Our high 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. This could negatively impact the profitability of new and existing stores and potentially limit the number of viable new store locations or replacement store locations for expiring store leases.

Our successful retail strategy is partially attributable to our ability to negotiate favorable trade terms with our vendors. Our high level of indebtedness may adversely affect our credit profile or rating, which may adversely affect our ability to negotiate favorable trade terms from our current or future merchandise vendors, including pricing, payment, delivery, inventory, transportation, defective and marketing allowances and other terms, and may increase our need to support merchandise purchases with letters of credit. We may also be unable to negotiate favorable trade terms for our current or future service and non-merchandise vendors, including vendors that assist us in critical aspects of the business such as real estate, transportation and logistics, customs, hazardous material and firearm compliance, warehousing and storage, insurance and risk management, procurement, marketing and advertising, store and online operations and information technology. This could negatively impact the profitability of our business and our ability to effectively compete against other retailers. Thus, our high level of indebtedness could adversely affect the profitability of our business, which could make it more difficult for us to generate cash flow sufficient to satisfy our obligations under our indebtedness.

Risks Related to this Offering and Ownership of Our Common Stock

We will be a “controlled company” within the meaning of the rules of Nasdaq and the rules of the SEC and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of other companies that are subject to such requirements.

After completion of this offering and the application of net proceeds therefrom, KKR Stockholders will collectively beneficially own approximately 70% of the voting power of common stock (or approximately 68% if the underwriters exercise in full their over-allotment option). As a result, we will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that:

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a majority of our board of directors consist of “independent directors” as defined under the rules of Nasdaq;

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our director nominees be selected, or recommended for our board of directors’ selection by a nominating/governance committee comprised solely of independent directors; and

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the compensation of our executive officers be determined, or recommended to our board of directors for determination, by a compensation committee comprised solely of independent directors.

Following this offering, we intend to utilize these exemptions. As a result, we may not have a majority of independent directors, our compensation committee and nominating and governance committee may not consist entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

KKR Stockholders control us and their interests may conflict with yours in the future.

Immediately following this offering, KKR Stockholders will collectively beneficially own approximately 70% of the voting power of our common stock (or approximately 68% if the underwriters exercise in full their over-allotment option). KKR Stockholders will be able to control the election and removal of our directors and thereby determine our corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, amendment of our certificate of incorporation or bylaws and other significant corporate transactions for so long as KKR Stockholders and their affiliates retain significant ownership of us. KKR Stockholders and their affiliates may also direct us to make significant changes to our business operations and strategy, including with respect to, among other things, store openings and closings, new product and service offerings, team member headcount levels and initiatives to reduce costs and expenses. This concentration of our ownership may delay or deter possible changes in control of the Company, which may reduce the value of an investment in our common stock. So long as KKR Stockholders continue to own a significant amount of our voting power, even if such amount is less than 50%, KKR Stockholders will continue to be able to strongly influence or effectively control our decisions and, so long as KKR Stockholders and their affiliates collectively own at least 5% of all outstanding shares of our stock entitled to vote generally in the election of directors, KKR Stockholders will be able to appoint individuals to our board of directors under the stockholders agreement that we expect to enter into in connection with this offering. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.” The interests of KKR Stockholders may not coincide with the interests of other holders of our common stock.

In the ordinary course of their business activities, KKR Stockholders and their affiliates may engage in activities where their interests conflict with our interests or those of our stockholders. Our certificate of incorporation will provide that any of KKR Stockholders, any of their affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will not have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. KKR Stockholders and their affiliates also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. In addition, KKR Stockholders may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you.

In addition, KKR Stockholders and their affiliates will be able to determine the outcome of all matters requiring stockholder approval and will be able to cause or prevent a change of control of the Company or a change in the composition of our board of directors and could preclude any acquisition of the Company. This concentration of voting control could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of the Company and ultimately might affect the market price of our common stock.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, and our management will be required to devote substantial time to new compliance matters, which could lower our profits or make it more difficult to run our business.

As a public company, we will incur significant legal, regulatory, finance, accounting, investor relations, insurance, and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and related rules implemented by the SEC, and Nasdaq. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management will need to devote a substantial amount of time to ensure

that we comply with all of these requirements, diverting the attention of management away from revenue-producing activities. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price.

As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act, or Section 404.

As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our results of operations. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report following the completion of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report. Our testing, or the subsequent testing (if required) by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Any material weaknesses could result in a material misstatement of our annual or quarterly consolidated financial statements or disclosures that may not be prevented or detected.

We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 or our independent registered public accounting firm may not issue an unqualified opinion. If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock.

There has been no prior public market for our common stock and there may not develop or continue an active, liquid trading market for shares of our common stock, which may cause shares of our common stock to trade at a discount from the initial offering price and make it difficult to sell the shares of common stock you purchase.

Prior to this offering, there has not been a public trading market for shares of our common stock. We cannot predict the extent to which investor interest in us will lead to the development of a trading market or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have difficulty selling your shares of our common stock at an attractive price or at all. If you purchase shares of our common stock in this offering, you will pay a price that was not established in a competitive market. Instead, the initial public offering price per share of common stock will be determined by agreement among us and the representative(s) of the underwriters, and may not be indicative of the price at which shares of our common stock will trade in the public market after this offering. The market price of our common stock may decline below the initial offering price and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. Furthermore, an inactive market may also impair our ability to raise capital by selling shares of our common stock.

Our stock price may change significantly following this offering, 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.

Even if a trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. You may not be able to resell your shares at or above the initial public offering price due to a number of factors such as those listed in “—Risks Related to Our Business” and the following:

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results of operations that vary from the expectations of securities analysts and investors;

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results of operations that vary from those of our competitors;

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changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

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changes in economic conditions for companies in our industry;

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changes in market valuations of, or earnings and other announcements by, companies in our industry;

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declines in the market prices of stocks generally, particularly those of sporting goods and outdoor recreation retail companies;

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additions or departures of key management personnel;

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strategic actions by us or our competitors;

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announcements by us, our competitors our suppliers of significant contracts, price reductions, new products or technologies, acquisitions, dispositions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;

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changes in preference of our customers and our market share;

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changes in general economic or market conditions or trends in our industry or the economy as a whole;

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changes in business or regulatory conditions;

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future sales of our common stock or other securities;

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investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives;

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changes in the way we are perceived in the marketplace, including due to negative publicity or campaigns on social media to boycott certain of our products, our business or our industry;

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the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

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changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business;

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announcements relating to litigation or governmental investigations;

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guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

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the development and sustainability of an active trading market for our common stock;

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changes in accounting principles; and

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other events or factors, including those resulting from informational technology system failures and disruptions, epidemics, pandemics, natural disasters, war, acts of terrorism, civil unrest 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. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation against various issuers. If we were to become involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation, which may adversely affect the market price of our common stock.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price per share of common stock will be substantially higher than our pro forma net tangible book value (deficit) per share immediately after this offering. As a result, you will pay a price per share of common stock that substantially exceeds the per share book value of our tangible assets after subtracting our liabilities. In addition, you will pay more for your shares of common stock than the amounts paid by our existing owners. Assuming an initial public offering price of $16.00 per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, you will incur immediate and substantial dilution in an amount of $(19.62) per share of common stock. If the underwriters exercise their over-allotment option, you will experience additional dilution. See “Dilution.”

You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise.

After this offering we will have approximately 211,896,905 shares of common stock authorized but unissued (or 209,553,155 shares if the underwriters exercise in full their over-allotment option). Our amended and restated certificate of incorporation to become effective immediately prior to the consummation of this offering will authorize us to issue these shares of common stock, options and other equity awards relating to common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise. We have reserved shares for issuance under our 2011 Equity Plan, our 2020 Equity Plan and ESPP. See “Executive Compensation—Equity Compensation Plans.” Any common stock that we issue, including under our 2011 Equity Plan, 2020 Equity Plan, ESPP or other

equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who purchase common stock in this offering. In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

Our ability to raise capital in the future may be limited.

Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt or a combination of both. Additional financing may not be available on favorable terms or at all. If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements. If we issue new debt securities, the debt holders would have rights senior to holders of our common stock to make claims on our assets and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity securities or securities convertible into equity securities, existing stockholders will experience dilution and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, you bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.

Because we have no current plans to pay cash dividends on our common stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We have no current plans to pay cash dividends on our common stock. The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors, and will depend on, among other things, general and economic conditions, our results of operations and financial condition, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, including restrictions under our credit agreements and other indebtedness we may incur, and such other factors as our board of directors may deem relevant. See “Dividend Policy.” As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than your purchase price.

Academy Sports and Outdoors, Inc. is a holding company and depends on its subsidiaries for cash to fund its operations and expenses, including future dividend payments, if any.

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, if any, is highly dependent on the earnings of, and the receipt of funds from, our subsidiaries via dividends or intercompany loans. We do not currently expect to declare or pay dividends on our common stock for the foreseeable future; however, to the extent that we determine in the future to pay dividends on our common stock, the agreements governing our indebtedness may restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock.

Future sales, or the perception of future sales, by us or our existing owners in the public market following this offering could cause the market price for our common stock to decline.

The sale of substantial amounts of shares of our common stock in the public market, or the perception that such sales could occur, including sales by our existing owners, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon completion of this offering we will have a total of 88,103,095 shares of our common stock outstanding (or 90,446,845 shares if the underwriters exercise in full their over-allotment option). Of the outstanding shares, the 15,625,000 shares sold in this offering (or 17,968,750 shares if the underwriters exercise in full their over-allotment option) will be freely tradable without restriction or further registration under the Securities Act, except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act, or Rule 144, including our directors, executive officers and other affiliates (including our existing owners), may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale.”

The remaining outstanding 72,478,095 shares of common stock held by our existing owners after this offering, representing approximately 82% of the total outstanding shares of our common stock following this offering (or approximately 80% if the underwriters exercise in full their over-allotment option), will be “restricted securities” within the meaning of Rule 144 and subject to certain restrictions on resale. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144, as described in “Shares Eligible for Future Sale.”

We, our executive officers, directors and certain of our existing owners, will sign lock-up agreements with the underwriters that will, subject to certain customary exceptions, restrict the sale of the shares of our common stock and certain other securities held by them for 180 days following the date of this prospectus. Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC may, in their sole discretion and at any time without notice, release all or any portion of the shares or securities subject to any such lock-up agreements. See “Underwriting (Conflicts of Interest)” for a description of these lock-up agreements.

Upon the expiration of the lock-up agreements described above, all of such shares will be eligible for resale in a public market pursuant to Rule 144, subject to our compliance with the public information requirement and, in the case of shares held by our affiliates, to volume, manner of sale and other limitations under Rule 144. We expect that certain of our existing owners will be considered an affiliate upon the expiration of the lock-up period based on their expected share ownership, as well as their board nomination rights (if applicable). Certain other of our stockholders may also be considered affiliates at that time.

In addition, pursuant to a registration rights agreement, KKR Stockholders and the Gochman Investors will each have the right, subject to certain conditions, to require us to register the sale of their shares of our common stock under the Securities Act. See “Certain Relationships and Related Party Transactions—Registration Rights Agreement.” By exercising their registration rights and selling a large number of shares, KKR Stockholders and/or the Gochman Investors could cause the prevailing market price of our common stock to decline. Certain of our existing owners have “piggyback” registration rights with respect to future registered offerings of our common stock. Following completion of this offering, the shares covered by registration rights would represent approximately 82% of our total common stock outstanding (or approximately 80% if the underwriters exercise in full their over-allotment option). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”

We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock or securities convertible into or exchangeable for shares of our common stock issued pursuant to our existing 2011 Equity Plan and our 2020 Equity Plan and the ESPP to be adopted in connection with this offering. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. We expect that the initial registration statement on Form S-8 will cover 15,983,311 shares of our common stock.

As restrictions on resale end, or if the existing owners exercise their registration rights, the market price of our shares of common stock could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

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.

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. We do not control these analysts. 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. 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.

Our management may spend the proceeds of this offering in ways with which you may disagree or that may not be profitable.

Although we anticipate using the net proceeds from the offering as described under “Use of Proceeds,” we will have broad discretion as to the application of the net proceeds and could use them for purposes other than those contemplated by this offering. You may not agree with the manner in which our management chooses to allocate and spend the net proceeds. Our management may use the proceeds for corporate purposes that may not increase our profitability or otherwise result in the creation of stockholder value. In addition, pending our use of the proceeds, we may invest the proceeds primarily in instruments that do not produce significant income or that may lose value.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt, or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.

These provisions will provide for, among other things:

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a classified board of directors, as a result of which our board of directors will be divided into three classes, with each class serving for staggered three-year terms;

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the ability of our board of directors to issue one or more series of preferred stock;

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advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

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certain limitations on convening special stockholder meetings;

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the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66²/₃% of the shares of common stock entitled to vote generally in the election of directors if KKR Stockholders and their affiliates cease to beneficially own at least 40% of shares of common stock entitled to vote generally in the election of directors; and

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that certain provisions may be amended only by the affirmative vote of at least 66²/₃% of shares of common stock entitled to vote generally in the election of directors if KKR Stockholders and their affiliates cease to beneficially own at least 40% of shares of common stock entitled to vote generally in the election of directors.

These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. See “Description of Capital Stock.”

Our board of directors will be authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.

Our amended and restated certificate of incorporation will authorize 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. 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 will provide, 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.

Our amended and restated certificate of incorporation will provide, subject to limited exceptions, that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee or stockholder of our company to the Company or our stockholders, creditors or other constituents, (iii) action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the Delaware General Corporation Law, or the DGCL, or our amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, which already provides that such claims must be bought exclusively in the federal courts. Our amended and restated certificate of incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the U.S. federal district courts will be the exclusive forum for the resolution of any actions or proceedings asserting claims arising under the Securities Act. 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. Our exclusive forum provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be 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 will be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other team members or stockholders. Alternatively, if a court were to find the choice of forum provision contained in our amended restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial conditions.

FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. These forward-looking statements are included throughout this prospectus, including in the sections entitled “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words or similar terms and phrases to identify forward-looking statements in this prospectus.

The forward-looking statements contained in this prospectus are based on management’s current expectations and are not guarantees of future performance. The forward-looking statements are subject to various risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include but are not limited to those described under “Risk Factors” and the following:

•

overall decline in the health of the economy and consumer discretionary spending;

•

our ability to predict or effectively react to changes in consumer tastes and preferences, to acquire and sell brand name merchandise at competitive prices and/or to manage our inventory balances;

•

intense competition in the sporting goods and outdoor recreation retail industries;

•

the impact of COVID-19 on our business and financial results;

•

our ability to safeguard sensitive or confidential data relating to us and our customers, team members and vendors;

•

risks associated with our reliance on internationally manufactured merchandise;

•

our ability to comply with laws and regulations affecting our business, including those relating to the sale, manufacture and import of consumer products;

•

claims, demands and lawsuits to which we are, and may in the future, be subject and the risk that our insurance or indemnities coverage may not be sufficient;

•

harm to our reputation;

•

our ability to operate, update or implement our information technology systems;

•

risks associated with disruptions in our supply chain and losses of merchandise purchasing incentives;

•

any failure of our third-party vendors of outsourced business services and solutions;

•

our ability to successfully continue our store growth plans or manage our growth effectively, or any failure of our new stores to generate sales and/or achieve profitability;

•

risks associated with our e-commerce business;

•

risks related to our owned brand merchandise;

•

any disruption in the operation of our distribution centers;

•

quarterly and seasonal fluctuations in our operating results;

•

the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, social and political conditions or civil unrest;

•

our ability to protect our intellectual property and avoid the infringement of third-party intellectual property rights;

•

our dependence on our ability to meet our labor needs;

•

the geographic concentration of our stores;

•

fluctuations in merchandise costs and availability;

•

our ability to manage the growth of our business;

•

our ability to retain key executives;

•

our ability to successfully pursue strategic acquisitions and integrate acquired businesses;

•

payment-related risks;

•

the effectiveness of our marketing and advertising programs; and

•

our substantial indebtedness.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.

Any forward-looking statement made by us in this prospectus speaks only as of the date of this prospectus and are expressly qualified in their entirety by the cautionary statements included in this prospectus. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other strategic transactions we may make. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $225 million (or approximately $260 million, if the underwriters exercise in full their over-allotment option) from the sale of shares of our common stock in this offering, assuming an initial public offering price of $16.00 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 1,000,000 shares from the expected number of shares of common stock to be sold by us in this offering, assuming no change in the assumed initial offering price per share, would increase (decrease) our net proceeds from this offering by $14.9 million. A $1.00 increase (decrease) in the assumed initial offering price would increase (decrease) the net proceeds to us from this offering by $14.6 million, assuming the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use these proceeds for general corporate purposes, which may include the repayment of certain indebtedness.

DIVIDEND POLICY

We currently expect to retain all future earnings for use in the operation and expansion of our business and have no current plans to pay dividends on our common stock. The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors, and will depend on, among other things, general and economic conditions, our results of operations and financial condition, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, including restrictions under our credit agreements and other indebtedness we may incur, and such other factors as our board of directors may deem relevant. If we elect to pay such dividends in the future, we may reduce or discontinue entirely the payment of such dividends at any time. Academy Sports and Outdoors, Inc. is a holding company and its operations are conducted through its wholly owned subsidiaries. In the event that we do pay a dividend, we intend to cause our operating subsidiaries to make distributions to us in an amount sufficient to cover such dividend. Our operating subsidiary, Academy, Ltd. and its subsidiaries are currently subject to certain restrictions and covenants under the credit agreements governing the ABL Facility and the Term Loan Facility, including limits on amounts of leverage, interest charges and capital expenditures. These restrictions and covenants may restrict the ability of those entities to make distributions to Academy Sports and Outdoors, Inc. See “Description of Certain Indebtedness.” Any additional financing arrangement we enter into in the future may include restrictive covenants that limit our subsidiaries’ ability to pay dividends to us. In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock.

On August 28, 2020, New Academy Holding Company, LLC paid a $257.0 million one-time special distribution to its unitholders of record as of August 25, 2020, of which $218.3 million was paid to Allstar LLC, an investment entity owned by KKR, $24.9 million was paid to the Gochman Investors and the remaining $4.8 million was paid to other unitholders. $248.0 million of such one-time special distribution was funded through cash on hand, with the remainder distributed through an offset of outstanding loans receivable from certain unitholders as well as state income tax withholdings made on behalf of our unitholders.

CAPITALIZATION

The following table sets forth the cash and cash equivalents and capitalization as of August 1, 2020 of New Academy Holding Company, LLC on an actual basis and of Academy Sports and Outdoors, Inc. on a pro forma basis to reflect:

•

the $257.0 million one-time special distribution paid on August 28, 2020 to New Academy Holding Company, LLC’s unitholders;

•

the Reorganization Transactions; and

•

the sale of 15,625,000 shares of our common stock offered by us in this offering at an assumed initial public offering price of $16.00 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, and the application of the net proceeds to us therefrom as described under “Use of Proceeds.”

You should read this table in conjunction with the information contained in “Use of Proceeds,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Certain Indebtedness” as well as our audited consolidated financial statements and related notes and our unaudited condensed consolidated financial statements and related notes, each included elsewhere in this prospectus.


	As of August 1, 2020
	New Academy Holding Company, LLC			Academy Sports and Outdoors, Inc.
	Actual			Pro Forma⁽¹⁾
	(unaudited)			(unaudited)
(In thousands, except par value)
Cash and cash equivalents	$	884,029		$	861,024	⁽³⁾

Debt:
ABL Facility⁽²⁾		—
Term Loan Facility		1,433,965			1,433,965

Total debt	$	1,433,965		$	1,433,965

Partners’/Stockholders’ equity:
Partners’ equity		321,376			—
Common stock, $0.01 par value per share, 300,000 shares authorized, 88,103 shares issued and outstanding, pro forma		—			881
Additional paid-in capital		—			288,495	⁽⁴⁾
Accumulated and other comprehensive income (loss)		(8,339	)		(8,339	)
Retained earnings		836,059			836,059

Total partners’/stockholders’ equity		1,149,096			1,117,096

Total capitalization	$	2,583,061		$	2,551,061

(1)

A $1.00 increase (decrease) in the assumed initial public offering price of $16.00 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds that we receive in this offering and each of additional paid-in capital, total stockholders’ equity and total capitalization by approximately $14.6 million, assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. An increase

(decrease) of 1,000,000 shares in the expected number of shares to be sold by us in this offering, assuming no change in the assumed initial public offering price, would increase (decrease) our net proceeds from this offering and each of additional paid-in capital, total stockholders’ equity and total capitalization by approximately $14.9 million . The pro forma column reflects the issuance of 72,478,095 shares of common stock of Academy Sports and Outdoors, Inc. in connection with the contribution of New Academy Holding Company, LLC by its unitholders and related reorganization transactions and related cancellation of all outstanding partners’ equity at New Academy Holding Company, LLC in connection with the offering.

(2)	As of August 1, 2020, there were $29.7 million letters of credit outstanding, $19.9 million of which were issued under the ABL Facility. For a further description of our ABL Facility, see “Description of Certain Indebtedness.”

(3)

Pro forma cash and cash equivalents reflects (i) a decrease of $248.0 million in cash, which amount was used to fund the special distribution on August 28, 2020, and (ii) an increase of $225 million from the application of the net proceeds from this offering as cash and cash equivalents pending application as set forth in “Use of Proceeds.”

(4)

Pro forma additional paid-in capital reflects (i) a decrease of $257 million in partners’ equity at New Academy Holding Company, LLC due to the special distribution to its unitholders and (ii) an increase of $224 million from the sale of shares in this offering at an assumed initial public offering price of $16.00 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, net of $881,000 allocated to pro forma common stock.

DILUTION

If you invest in our common stock in this offering, your ownership interest in us will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book (deficit) per share of our common stock after giving effect to this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the pro forma net tangible book value per share attributable to our existing owners.

Our pro forma net tangible book (deficit) as of August 1, 2020 was approximately $(544) million, or $(7.50) per share of our common stock. We calculate pro forma net tangible book (deficit) per share by taking the amount of our total tangible assets (including our right-of-use assets related to our leases), reduced by the amount of our total liabilities, in each case, after giving effect to the $257.0 million one-time special distribution paid on August 28, 2020 to our existing owners, or the Distribution, and then dividing that amount by the total number of shares of common stock outstanding on a pro forma basis giving effect to the Reorganization Transactions.

After giving effect to (i) our sale of 15,625,000 shares of common stock in this offering at an assumed initial public offering price of $16.00 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and (ii) the use of proceeds therefrom, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book (deficit) as of August 1, 2020 would have been $(319) million, or $(3.62) per share of our common stock. This amount represents an immediate decrease in pro forma net tangible book (deficit) of $3.88 per share of common stock to our existing owners and an immediate and substantial dilution in pro forma net tangible book value of $(19.62) per share of common stock to new investors purchasing shares in this offering.

The following table illustrates this dilution on a per share of common stock basis assuming the underwriters do not exercise their option to purchase additional shares of common stock:


Assumed initial public offering price per share of common stock	$	16.00
Pro forma net tangible book (deficit) per share of common stock as of August 1, 2020 after giving effect to the Distribution and the Reorganization Transactions		(7.50	)
Increase in pro forma net tangible book value per share of common stock attributable to investors in this offering		3.88
Pro forma net tangible book (deficit) per share of common stock after giving effect to this offering		(3.62	)

Dilution per share of common stock to investors in this offering	$	(19.62	)

Dilution is determined by subtracting pro forma net tangible book (deficit) per share of common stock after the offering from the initial public offering price per share of common stock.

Each $1.00 increase or decrease in the assumed initial public offering price per share of common stock would increase or decrease, as applicable, the pro forma net tangible book value by $0.16 per share and the dilution to new investors in the offering by $(0.84) per share, assuming that the number of shares offered in this offering, as set forth on the cover page of this prospectus, remains the same. The pro forma information discussed above is for illustrative purposes only. Our net tangible book (deficit) following the completion of the offering is subject to adjustment based on the actual offering price of our common stock and other terms of this offering determined at pricing.

The following table summarizes, on the same pro forma basis as of August 1, 2020, the total number of shares of common stock purchased from us, the total cash consideration paid to us and the average price per

share of common stock paid by our existing owners and by new investors purchasing shares of common stock in this offering.


	Shares Purchased					Total Consideration					Average Price Per Share
	Number		Percent			Amount		Percent			Average Price Per Share
						(in thousands)
Existing owners		72,478,095		82	%	$	992,000		80	%	$	13.69
New investors in this offering		15,625,000		18	%	$	250,000		20	%	$	16.00

Total		88,103,095		100	%	$	1,242,000		100	%	$	14.10

If the underwriters were to exercise in full their option to purchase 2,343,750 additional shares of our common stock from us, the percentage of shares of our common stock held by existing owners as of August 1, 2020 would be 80% and the percentage of shares of our common stock held by new investors in this offering would be 20%.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

Set forth below is our selected historical consolidated financial data as of the dates and for the periods indicated. The selected historical financial data as of February 1, 2020 and February 2, 2019 and for 2019, 2018 and 2017 has been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected historical financial data as of February 3, 2018, January 28, 2017 and January 30, 2016 and for 2016 and 2015 has been derived from our consolidated financial statements not included in this prospectus. The selected historical financial data as of and for the twenty-six weeks ended August 1, 2020 and August 3, 2019 has been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The results of operations for any period are not necessarily indicative of the results to be expected for any future period.

The selected historical consolidated financial data of Academy Sports and Outdoors, Inc. has not been presented, as Academy Sports and Outdoors, Inc. is a newly incorporated entity, has had no business transactions or activities to date other than in connection with its formation and this offering and had no assets or liabilities during the periods presented in this section.

Pro forma balance sheet data as of August 1, 2020 presented below gives effect to the $257.0 million one-time special distribution to our unitholders paid on August 28, 2020, $248.0 million of which was paid with cash on hand and the remainder of which was distributed through an offset of outstanding loans receivable from certain unitholders as well as state income tax withholdings made on behalf of our unitholders. Pro forma net income data presented below gives effect to the anticipated conversion of New Academy Holding Company, LLC to a C Corporation. Pro forma net income per share data for 2019 and the twenty-six weeks ended August 1, 2020 presented below gives effect to the Reorganization Transactions and also assumes that 8,559,813 and 3,315,875 additional shares of common stock were outstanding for 2019 and the twenty-six weeks ended August 1, 2020, respectively, and were used to fund the amount of the special distribution in excess of our net income for such period.

You should read the following selected financial data below together with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes and our unaudited condensed consolidated financial statements and related notes, each included elsewhere in this prospectus.


	Fiscal Year Ended															Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			January 28, 2017			January 30, 2016			August 1, 2020			August 3, 2019
Period length	52 weeks			52 weeks			53 weeks			52 weeks			52 weeks			26 weeks			26 weeks
(In thousands)
Statement of Income Data:
Net sales⁽¹⁾	$	4,829,897		$	4,783,893		$	4,835,582		$	4,738,474		$	4,646,686		$	2,742,721		$	2,314,202
Costs of goods sold		3,398,743			3,415,941			3,436,618			3,419,784			3,299,972			1,948,275			1,616,022

Gross margin		1,431,154			1,367,952			1,398,964			1,318,690			1,346,714			794,446			698,200
Selling, general and administrative expenses		1,251,733			1,239,002			1,241,643			1,171,411			1,094,500			596,636			614,172

Operating income		179,421			128,950			157,321			147,279			252,214			197,810			84,028
Interest expense, net		101,307			108,652			104,857			96,610			114,821			48,088			52,586
(Gain) loss on early retirement of debt, net⁽²⁾		(42,265	)		—			(6,294	)		—			55,498			(7,831	)		(42,265	)
Other (income), net		(2,481	)		(3,095	)		(2,524	)		(5,201	)		(804	)		(1,621	)		(1,454	)

Income before income taxes		122,860			23,393			61,282			55,870			82,699			159,174			75,161
Income tax expense		2,817			1,951			2,781			1,814			1,614			1,518			1,408

Net income	$	120,043		$	21,442		$	58,501		$	54,056		$	81,085		$	157,656		$	73,753


	Fiscal Year Ended															Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			January 28, 2017			January 30, 2016			August 1, 2020			August 3, 2019
Period length	52 weeks			52 weeks			53 weeks			52 weeks			52 weeks			26 weeks			26 weeks
(In thousands, except share and per share amounts and store data)
Per Share Data (unaudited):
Pro forma net income⁽³⁾		89,942															118,658
Pro forma net income per share⁽³⁾⁽⁴⁾:
Basic	$	1.11														$	1.57
Diluted	$	1.08														$	1.53
Weighted average shares of common stock outstanding⁽⁴⁾:
Basic		81,037,194															75,792,106
Diluted		83,356,358															77,803,352

Cash Flow Data:
Net cash provided by operating activities	$	263,669		$	198,481		$	83,355		$	164,555		$	249,376		$	773,621		$	103,961
Net cash used in investing activities		(66,783	)		(99,027	)		(115,901	)		(153,215	)		(118,096	)		(13,580	)		(31,767	)
Net cash provided by (used in) financing activities		(123,192	)		(54,808	)		8,514			(8,392	)		(287,052	)		(25,127	)		(95,795	)
Capital expenditures		62,818			107,905			132,126			177,628			197,710			13,850			27,802

Store Data (Unaudited):
Comparable sales increase (decrease)		(0.7	)%		(2.5	)%		(5.2	)%		(3.4	)%		3.1	%		15.9	%		(4.3	)%
Number of stores at end of period		259			253			244			228			209			259			254
Total square feet at end of period (in millions)		18.3			17.9			17.3			16.3			15.0			18.3			18.0
Net sales per square foot⁽⁵⁾	$	264		$	267		$	279		$	291		$	309		$	150		$	129


	As of
	February 1, 2020		February 2, 2019		February 3, 2018		January 28, 2017		January 30, 2016		August 1, 2020 (Actual)		August 1, 2020 (Pro Forma)⁽⁶⁾		August 3, 2019
(In thousands)
Balance Sheet Data:
Cash and cash equivalents	$	149,385	$	75,691	$	31,045	$	55,077	$	52,129	$	884,029	$	636,024	$	52,090
Merchandise inventories, net		1,099,749		1,134,156		1,223,486		1,090,899		1,028,032		899,086		899,086		1,203,806
Working capital⁽⁷⁾		538,795		582,789		605,083		491,126		344,511		758,081		749,086		495,572
Total assets⁽⁷⁾		4,331,321		3,238,957		3,323,046		3,258,354		3,257,275		4,842,848		4,585,848		4,366,629
Total debt, net of deferred loan costs		1,462,658		1,625,060		1,675,356		1,681,264		1,699,360		1,431,050		1,431,050		1,488,358
Total equity		988,219		857,039		832,687		756,262		689,106		1,149,096		892,096		925,302

(1)	The impact of the 53rd week to 2017 net sales was $60.6 million.

(2)

In first half 2020, 2019 and 2017, we repurchased principal on our Term Loan Facility, which was trading at a discount, and recognized as a gain, net of the write-off of related deferred loan costs. In first half 2020, we repurchased a total of $23.9 million of principal in open market transactions for an aggregate purchase price of $16.0 million and recognized a related net gain of $7.8 million. In 2019, we repurchased a total of $147.7 million of principal in open market transactions for an aggregate purchase price of $104.6 million and recognized a related net gain of $42.3 million. In 2017, we repurchased $26.2 million of principal in open market transactions for an aggregate purchase price of $19.7 million and recognized a related net gain

of $6.3 million. In 2015, we entered into the Term Loan Facility and 2015 ABL Facility and used the proceeds to pay off our previous term loan facility and notes. We had a related loss on early retirement of debt of $55.5 million from the write-off of deferred loan costs and the payment of prepayment and professional fees.

(3)

Pro forma net income data gives effect to the anticipated conversion of New Academy Holding Company, LLC to a C corporation. We are currently treated as a flow through entity for U.S. federal income tax purposes, and thus no federal income tax expense has been recorded in our consolidated statements of income (loss). After consummation of this offering, we will become subject to U.S. federal income taxes and additional state income taxes and be taxed at the prevailing corporate rates. The pro forma tax expense assumed in the pro forma net income data is estimated to be 24.5% plus certain state taxes we currently include in income tax expense as a flow through entity. Our actual income tax rate, and our actual income tax liability, after this offering may be different from our assumed rate, and such difference may be material.

(4)

Basic and diluted pro forma net income per share data for 2019 and for the twenty-six weeks ended August 1, 2020 also assumes that $137.0 million and $53.1 million, respectively, of the proceeds of the proposed offering were used to fund the one-time special distribution to our unitholders paid on August 28, 2020. The number of shares of common stock that we would have been required to issue to fund the distribution was calculated by dividing the $137.0 million and $53.1 million, respectively, (representing the amount by which the $257.0 million gross amount of the special distribution exceeds historical net income during 2019 or the previous twelve months ended August 1, 2020, as applicable) by an assumed initial public offering price of $16.00 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus. The number of shares used for purposes of pro forma per share data represents the total number of shares that would have been outstanding for 2019 or for the twenty-six weeks ended August 1, 2020, as applicable, after giving effect to such number of shares of common stock, the proceeds of which is assumed to be used to fund the distribution, but not the other shares to be issued and sold in the offering. As such, the number of shares being added to the denominator for purposes of pro forma per share data will not exceed the total number of shares to be issued in the offering.

The table below sets forth the computation of our unaudited basic and diluted pro forma net income per share for 2019 and the twenty-six weeks ended August 1, 2020:


	Fiscal Year Ended February 1, 2020				Twenty-Six Weeks Ended August 1, 2020
(In thousands, except share and per share data)	Basic		Diluted		Basic		Diluted
Pro forma net income	$	89,942	$	89,942	$	118,658	$	118,658
Weighted average shares of common stock outstanding after giving effect to the Reorganization Transactions		72,477,381		74,796,545		72,476,231		74,487,477
Adjustment to weighted average shares of common stock outstanding related to the distribution		8,559,813		8,559,813		3,315,875		3,315,875

Pro forma weighted average shares of common stock outstanding		81,037,194		83,356,358		75,792,106		77,803,352
Pro forma net income per share	$	1.11	$	1.08	$	1.57	$	1.53

(5)	Calculated using net sales and square footage of all stores open at the end of the respective period. Square footage includes the in-store storage, receiving and office space that generally occupies approximately 15% of total store space in our stores.

(6)	Pro forma balance sheet data as of August 1, 2020 gives effect to the use of $248.0 million of cash on hand to fund the special distribution and the related $257.0 million decrease to the partners’ equity.

(7)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion analyzes the financial condition and results of operations of New Academy Holding Company, LLC and its subsidiaries and should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. The historical consolidated financial data of Academy Sports and Outdoors, Inc. is not discussed below, as Academy Sports and Outdoors, Inc. is a newly incorporated entity, has had no business transactions or activities to date other than in connection with its formation and this offering and had no assets or liabilities during the periods presented in this section. Prior to the consummation of this offering, New Academy Holding Company, LLC, the current holding company for the business described in this prospectus, will be contributed to Academy Sports and Outdoors, Inc., by its unitholders and become a wholly owned subsidiary of Academy Sports and Outdoors, Inc. and Academy Sports and Outdoors, Inc. will be the holding company of the business described in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that characterize our business. Known material factors that could affect our financial performance and actual results, and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this discussion or otherwise made by our management, are described in “Risk Factors.” Factors that could cause or contribute to such difference are not limited to those identified in “Risk Factors.” All statements in this discussion and analysis concerning our current and planned operations are modified by reference to our discussion of recent developments related to the COVID-19 pandemic, and our ability to carry out our current and planned operations are dependent on further developments associated with the COVID-19 pandemic.

Our fiscal year represents the 52- or 53- week period ending on the Saturday closest to January 31. All references in this discussion and analysis to “2019”, “2018” and “2017” or like terms relate to our fiscal years as follows:


Fiscal Year	*Ended*	*Weeks*
2019	February 1, 2020	52
2018	February 2, 2019	52
2017	February 3, 2018	53

Any reference in this discussion and analysis to the “first half 2020” or similar reference refers to the twenty-six week period ended August 1, 2020, any reference to “first half 2019” or similar reference refers to the twenty-six week period ended August 3, 2019, and any reference to “first quarter 2020” or similar reference refers to the thirteen week period ended May 2, 2020, and any reference to “first quarter 2019” or similar reference refers to the thirteen week period ended May 4, 2019.

Overview

We are one of the leading full-line sporting goods and outdoor recreation retailers in the United States. We estimate that we served 30 million unique customers and completed approximately 80 million transactions in 2019 across our seamless omnichannel platform and highly productive stores, resulting in net sales of $4.8 billion and making us the largest value-oriented sporting goods and outdoor recreation retailer in the country. Our mission is to provide “Fun for All” and fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers. Our broad and localized assortment appeals to all ages, incomes and aspirations, including beginning and advanced athletes, families enjoying outdoor recreation, and enthusiasts pursuing their passion for sports and the outdoors.

We sell a range of sporting and outdoor recreation products, including sporting equipment, apparel, footwear, camping gear, patio furniture, outdoor cooking equipment, and hunting and fishing gear, among many others. Our strong merchandise assortment is anchored by our broad offering of year-round items, such as fitness equipment and apparel, work and casual wear, folding chairs, wagons and tents, training and running shoes, and coolers. We also carry a deep selection of seasonal items, such as sports equipment and apparel, seasonal wear and accessories, hunting and fishing equipment and apparel, patio furniture, trampolines, play sets, bicycles, and severe weather supplies. We provide locally relevant offerings, such as crawfish boilers in Louisiana, licensed apparel for area sports fans, baits and lures for area fishing spots, and beach towels in coastal markets. Our value-based assortment also includes exclusive products from our portfolio of 17 owned brands. Nearly 20% of our 2019 sales were from our owned brands, such as Magellan Outdoors and BCG, which offer a distinct offering to our customers. Our merchandising creates a balanced sales mix throughout the year with no single season accounting for more than 28% of our annual sales.

As of August 1, 2020, we operated 259 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 16 contiguous states located primarily in the southern United States. Our stores are supported by over 20,000 team members, three distribution centers, and our rapidly growing e-commerce platform, www.academy.com. We are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities, such as our BOPIS program, which we launched in 2019.

Trends and Other Factors Affecting Our Business

Various trends and other factors affect or have affected our operating results, including:

Overall Economic Trends. All of our sales are generated within the United States, making our results of operations highly dependent on the U.S. economy and U.S. consumer discretionary spending. Macroeconomic factors that may affect customer spending patterns, and thereby our results of operations, include, but are not limited to: health of the economy; consumer confidence in the economy; financial market volatility; wages, jobs and unemployment trends; the housing market, including real estate prices and mortgage rates; consumer credit availability; consumer debt levels; gasoline and fuel prices; interest rates and inflation; tax rates and tax policy; immigration policy; import and customs duties/tariffs and policy; impact of natural or man-made disasters; legislation and regulations; international unrest, trade disputes, labor shortages, and other disruptions to the supply chain; changes to raw material and commodity prices; national and international security and safety concerns; and impact any of public health pandemics. Factors that impact consumer discretionary spending, which remains volatile globally, continue to create a complex and challenging retail environment for us. See “—Impact of COVID-19 on Our Business.”

Consumer Preferences and Demands. The level of success we achieve is dependent on, among other factors, how accurately and timely we predict consumer tastes and preferences regarding sporting goods and outdoor recreation merchandise, the level of consumer demand, the availability of merchandise, and the competitive environment. Our products must appeal to a broad range of customers whose preferences cannot be predicted with certainty and are subject to change. We must identify, obtain supplies of, and offer to our customers, attractive and high-quality merchandise on a continuous basis. It is difficult to predict consistently and successfully the products and services our customers will demand as we often purchase products from our vendors several months in advance of the proposed delivery. If we misjudge the market for our products, we may be faced with excess inventories for some products. We utilize a variety of measures to help us identify products that are relevant to our customer base and to better understand changing customer trends, such as social media analysis, internet search analytics, internal customer insights and vendor intelligence.

Strategic Inventory Management. We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business. A shortage of popular merchandise could reduce our net

sales. Conversely, we also must seek to avoid accumulating excess inventory to maintain appropriate in-stock levels. If we overstock unpopular merchandise, then we may be forced to take significant inventory markdowns or miss opportunities for the sale of other merchandise, both of which could have a negative impact on our profitability, and, in turn, our sales may decline or we may be required to sell the merchandise we have obtained at lower prices. Much of our margin expansion from 2017 through 2019 can be attributed to our improvements in inventory management. We have deployed several new tools over recent years to improve inventory handling and vendor management, including third party programs to analyze our inventory stock and execute a disciplined markdown strategy throughout the year at every location. This implementation has allowed us to improve our inventory management in stores, increasing our average inventory turns from 2.68x in 2017 to 2.84x in 2019 and 3.36x for the twelve months ended August 1, 2020, and has helped us to identify and exit certain product categories, such as luggage and toys. We have coupled these tools with the data we have been able to collect from our Academy Credit Card program and targeted customer surveys, so that we can better estimate future inventory requirements. It is imperative that we continue to find innovative ways to strengthen our inventory management if we are to remain competitive and expand our margins on a go-forward basis. During the first half 2020, we experienced significant inventory reductions from high sell-through during the period. We expect to use cash to replenish such inventory throughout the rest of the current fiscal year, which we expect will impact our net cash provided by operating activities for the second half 2020.

Value Strategy. We offer a broad assortment of products at competitive prices that offer extraordinary value. Our in-store experience includes value-added customer service delivered by our highly trained and passionate staff, such as free assembly of certain products (such as bicycles, grills, and bows), fitness equipment demonstrations, issuances and renewals of hunting and fishing licenses, fishing line spooling and assisting customers with carrying bulk items to the car, among others. Our goal is to consistently offer better value than our peer retailers. Our value-based pricing gives us an advantage over the specialty retailers and other large format retailers, who typically offer their more limited assortment at premium prices. Our broad assortment gives us an advantage over mass general merchants who typically do not carry the leading national brands sold at Academy. We have also continued to add owned brand products to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer. A shift in our sales mix in which we sell more units of our owned brand products and fewer units of the national brand products would generally have a positive impact on our gross margin but an adverse impact on our total net sales.

E-commerce/BOPIS. We expect that the expansion and enhancement of our omnichannel capabilities will be a key driver of growth in our net sales and gross margin. We continue to invest in initiatives that will increase traffic to our e-commerce website, which reached over 217 million visits in 2019, and drive increased online sales conversion. Our improved website also supports our stores with digital marketing and our BOPIS program. Since we launched our BOPIS program in 2019, we have seen significant penetration in e-commerce that generates high average order value and incremental in-store purchases. In 2019 and the twenty-six weeks ended August 1, 2020, BOPIS accounted for 24% and 50%, respectively, of our e-commerce sales and 1% and 5.4%, respectively, of total net sales for such periods. Our website also has allowed us to reach customers outside of our current store footprint and is also introducing new customers to the Academy brand, with approximately 25% of our first half 2020 e-commerce sales coming from new households. Our website is also a platform for marketing and product education, allowing us to connect further with our customers. We believe it is important that we continue to grow our omnichannel capabilities, especially in light of changing consumer preferences as a result of the COVID-19 pandemic, which, together with recent enhancements made to our website and omnichannel capabilities, contributed to the substantial increase in e-commerce sales during the first half 2020. It is, however, difficult to ascertain with precision what portion of our increased e-commerce sales during the first half 2020 is attributable to the COVID-19 pandemic as compared to such recent enhancements. Since 2011, we have made a $225 million investment in our omnichannel and information technology capabilities. We expect that expanding and enhancing these capabilities, including BOPIS, will continue to require significant investments by us.

Competition. The U.S. sporting goods and outdoor recreation retail industries are highly competitive and fragmented. We compete with specialty footwear and outdoor retailers, traditional sporting goods stores, large format sporting goods stores, mass general merchants and catalogue and internet retailers. This competition takes place both in physical retail locations and online. Some of our competitors may be significantly larger and have substantially greater resources than us. Pressure from our competitors could require us to reduce our prices or increase our spending for advertising and promotion. Traditional competitors have become increasingly promotional and, if our competitors reduce their prices, it may be difficult for us to reach our net sales goals without reducing our prices, which could impact our margins. 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.

Sourcing and Supply Chain Management. For our business to be successful, our suppliers must provide us with quality products in substantial quantities, in compliance with regulatory requirements, at acceptable costs and on a timely basis. Competition for resources throughout the supply chain, such as production and transportation capacities, has increased. Trends affecting the supply chain include the impact of fluctuating prices of labor and raw materials on our suppliers, as well as the impact of the COVID-19 pandemic. We depend on approximately 1,300 suppliers to supply us in a timely and efficient manner with the merchandise we purchase for resale. In 2019, purchases from our largest vendor represented approximately 14% of our total inventory purchases. The merchandise we sell is sourced from a wide variety of domestic and international suppliers and our ability to find qualified suppliers and access merchandise in a timely and efficient manner is often challenging, particularly with respect to merchandise sourced outside the United States. We generally do not have long-term written contracts with our suppliers that would require them to continue supplying us with merchandise, particular payment terms or the extension of credit. As a result, these suppliers could modify the terms of these relationships due to general economic conditions or otherwise. 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. 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. In addition, the announcement or imposition of any new or increased tariffs, duties or taxes as a result of trade or political tensions between the United States and other countries or otherwise could adversely affect our supply chain. In recent years, the Trump administration imposed multiple rounds of tariffs on exports from China, where we and many of our vendors source commodities. As a result, we have experienced rising inventory costs on owned brand products we directly source from China, as well as national brand products from China that we source through our vendors. These higher inventory costs have resulted in higher prices and/or lower margins, thus resulting in a negative impact to net sales and/or gross margin. On January 15, 2020, President Trump signed Phase I of a new trade agreement with China, signaling potential resolution between the two countries to the ongoing trade war in 2020. However, no significant modifications have been enacted to date, relative to the escalated tariffs which impact our business.

New Store Openings. We expect that new stores will be a key driver of growth in our net sales and gross margin in the future. Our results of operations have been and will continue to be materially affected by the timing and number of new store openings. We are continually assessing the number of locations available that could accommodate our preferred size of stores in markets we would consider and we expect to open eight to 10 new stores per year, starting in 2022, similar to our growth rates from 2018 through 2019. The performance of new stores may vary depending on various factors such as the store opening date, the time of year of a particular opening, the amount of store opening costs, the amount of store occupancy costs and the location of the new store, including whether it is located in a new or existing market. For example, we typically incur higher than normal team member costs at the time of a new store opening associated with set-up and other opening costs. Most of our stores achieve profitability within the first twelve months of opening a store. We have significant whitespace in both our core markets and green field markets. We believe our real estate strategy has positioned us well for further expansion. However, our planned store expansion will place increased demands on our operational, managerial, administrative and other resources. 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 new stores in existing markets. We may have to broaden our assortment to merchandise more locally as we grow into newer markets. Managing our growth effectively will require us to continue to enhance our store management systems, financial and management controls and information systems. We will also be required to hire, train and retain store management and store personnel, which, together with increased marketing costs, affects our operating income and net income.

Interim Results and Seasonality. Our business is subject to seasonal fluctuations. A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter. 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.

53rd Week. We operate on the retail industry’s 4-5-4 calendar. The 4-5-4 calendar is a guide for retailers that ensures sales comparability between years by dividing the year into months based on a 4 weeks – 5 weeks – 4 weeks format. Every five to six years a week is added to the 4-5-4 fiscal calendar. This anomaly has most recently occurred in 2017, which consisted of 53 weeks. 2018 and 2019 each consisted of 52 weeks. The additional week of 2017 contributed approximately $60.6 million of incremental net sales.

Impact of COVID-19 on Our Business

The outbreak of COVID-19, which has been declared a global pandemic by the World Health Organization, has affected our business, as well as our customers, team members and suppliers, and resulted in federal, state and local governmental authority safety recommendations and requirements aimed at mitigating the spread of the virus, such as stay-at-home orders, prohibitions of large group gatherings, travel restrictions and closures of certain businesses.

In response to these restrictions, and in order to serve our customers while also providing for the safety of our customers, team members and service providers, we have taken many actions, including cleaning each store professionally on a regular basis, equipping each store with hand sanitizer stations and signage illustrating how to socially distance within the store, wearing face coverings, limiting the number of customers admitted at one time, and having protective shields installed at cash registers and other countertops. We have incurred increased costs related to the implementation of these measures. We also incurred temporary wage premiums and additional sick time for our active store and distribution center team members. To mitigate the cost of these measures, during the thirteen weeks ended May 2, 2020, we temporarily furloughed a significant number of corporate, store and distribution center team members and enforced temporary pay cuts for executives and remaining active team members as well as other strategic actions to significantly reduce operating expenses during the period. We also drew down $500 million on our ABL Facility as a precautionary measure to ensure financial flexibility and maximize liquidity. We shortened the operating hours of our stores and fully closed six stores at some point during the thirteen weeks ended May 2, 2020, only one of which was closed for more than a week. We have also reduced, deferred or cancelled planned capital expenditures, primarily related to store remodels, and have worked with our business partners to modify vendor and landlord payments and terms. Our temporary furlough period ended by June 8, 2020 for all of our store, distribution center and corporate team members, and on June 25, 2020, we completed repaying the $500 million draw on the ABL Facility. All three of our distribution centers remained open during the thirteen weeks ended May 2, 2020 and as of May 2, 2020, 257 of our 259 stores were fully operational. We continue to monitor the rapidly evolving situation and expect to continue to adapt our operations to address federal, state, and local requirements as well as to implement standards or processes that we determine to be in the best interest of our team members, customers, and communities.

The impact of the pandemic and actions taken in response to it had varying effects on our results of operations and our business was extremely unpredictable during the thirteen weeks ended May 2, 2020. However, as an essential retailer, we have been able to serve our customers as their needs evolved during the pandemic. In early March 2020, we saw the acceleration of sales in specific categories, such as outdoor cooking,

camping, shooting sports and hunting. Later in the first quarter, customers realized they needed to find ways to entertain their families and stay fit while schools and gyms closed, so they turned to us for isolated recreation, outdoor and leisure activities that we support, and as a result, we saw increased sales of weights, yoga mats, treadmills, indoor bicycles, fishing, hunting and camping gear, backyard and driveway games, trampolines, patio seating and grills. We anticipate that the increased popularity of isolated recreation, outdoor and leisure activity products will continue for the duration of the pandemic and will result in a long-term increase to our customer base. At the same time, we experienced decreased sales of certain of our offerings, primarily for apparel and footwear, and have had to cancel certain of our purchase orders for these products.

We believe that our consumers feel comfortable visiting our stores due to the fact that we have big-box stores and curbside pick-up availability for online orders, making it easier to socially distance, and that we are not in, or tethered to, malls, as customers seek to avoid crowded spaces. We have also seen a significant increase in customers purchasing our products through omnichannel platforms, specifically as customers increasingly take advantage of our curbside pickup service, which we launched during the thirteen weeks ended May 2, 2020.

The extent to which our operations and business trends will be impacted by, and any unforeseen costs will result from, the pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted. These developments include, among other things, new information that may emerge concerning the severity of the outbreak and health implications, actions by government authorities to contain the outbreak or treat its impact, and changes in consumer behavior resulting from the outbreak and such government actions. See “Risk Factors—Risks Related to Our Business—The impact of COVID-19 may adversely affect our business and financial results.”

How We Assess the Performance of Our Business

Our management considers a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate projections. These metrics include operational measures and non-GAAP metrics supplemental to our GAAP results.

Comparable Sales. We define comparable sales as the percentage of period-over-period net sales increase or decrease, in the aggregate, for stores open after thirteen full fiscal months, as well as for all e-commerce sales. Stores which have been significantly remodeled or relocated are removed from this calculation until the new store has been in operation for substantially all of the periods being compared. Stores which have been closed for an extended period of time due to circumstances beyond our control are also removed from the calculation. Any sales made through our website are allocated to e-commerce sales for the purpose of measuring comparable sales, regardless of how those sales are fulfilled, whether shipped to home or picked up in-store or curbside through BOPIS. For example, all BOPIS transactions, which are originated by our website, are allocated to e-commerce sales for the purpose of comparable sales, despite the fact that our customers pick-up these purchases from a specific store. Increases or decreases in e-commerce between periods being compared directly impact the comparable sales results. We calculate adjusted comparable sales by excluding from comparable sales additional sales associated with Houston Astros World Series appearances, additional sales of a product driven by free shipping promotion and sales from certain product categories, such as toys, luggage and electronics, that we exited in 2018. See “—Non-GAAP Measures” below for a reconciliation of adjusted comparable sales to comparable sales.

Adjusted comparable sales is a non-GAAP financial measure. We use adjusted comparable sales as the basis for key operating decisions, such as allocation of receipts and inventory to particular categories. We believe that adjusted comparable sales assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance.

Various factors affect comparable sales and adjusted comparable sales, including consumer preferences, buying trends and overall economic trends; our ability to identify and respond effectively to customer

preferences and local and regional trends; our ability to provide an assortment of high quality/value oriented product offerings that generate new and repeat visits to our stores and our website; the customer experience and unique services we provide in our stores; our ability to execute our omnichannel strategy, including the growth of our e-commerce business; changes in product mix and pricing, including promotional activities; the number of items purchased per visit and average order value; a shift in the timing of a holiday between comparable periods; and the number of stores that have been in operation for more than 13 months.

Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow. Management uses Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish and award discretionary annual incentive compensation, to report our compliance with certain covenants in our debt agreements, and to compare our performance against that of other peer companies using similar measures. See “—Non-GAAP Measures” below.

E-commerce Penetration. E-commerce penetration is defined as total e-commerce merchandise sales (which includes BOPIS) divided by total Company merchandise sales.

The following table summarizes our key financial and operating metrics (with nearest GAAP measures where applicable) for the periods indicated:


	Fiscal Year Ended									Twenty-Six Weeks Ended
(In thousands, except percentages)	February 1, 2020			February 2, 2019			February 3, 2018			August 1, 2020			August 3, 2019
Comparable sales		(0.7	)%		(2.5	)%		(5.2	)%		15.9	%		(4.3	)%
Adjusted comparable sales		(0.6	)%		(1.7	)%		(6.1	)%		15.9	%		(4.0	)%
Net income	$	120,043		$	21,442		$	58,501		$	157,656		$	73,753
Adjusted EBITDA		322,814			300,259			315,420			282,902			156,837
Adjusted Net Income		101,469			55,405			72,078			179,106			43,800
Pro Forma Adjusted Net Income		75,927			41,338			53,732			134,844			32,737
Net cash provided by (used in) operating activities		263,669			198,481			83,355			773,621			103,961
Adjusted Free Cash Flow	$	196,886		$	99,454		$	(32,546	)	$	759,771		$	72,194
E-commerce penetration		5	%		5	%		4	%		11	%		3	%

Components of Our Results of Operations

Our profitability is primarily influenced by fluctuations in net sales, gross margin and our ability to leverage selling, general and administrative expenses.

Net Sales. Net sales are derived from in-store and e-commerce merchandise sales, net of sales tax and an allowance for merchandise returns.

Net sales fluctuations can be driven by new store openings, comparable sales increases or decreases, e-commerce sales, our ability to adjust inventory based on sales fluctuations, manage vendor relations and meet customer demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and market and sales promotions.

Gross Margin. Gross margin is our net sales less cost of goods sold. Our cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution. These costs consist primarily of payroll and benefits, occupancy costs and freight and are generally variable in nature relative to our sales volume.

Our gross margin depends on a number of factors, such as net sales increases or decreases, our promotional activities, product mix including owned brand merchandise sales, and our ability to control cost of goods sold, such as inventory and logistics cost management. Our gross margin is also impacted by variables including commodity costs, freight costs, shrinkage and inventory processing costs and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.

Selling, General and Administrative Expenses. Selling, general and administrative, or SG&A, expenses include store and corporate administrative payroll and payroll benefits, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature. We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets. Management of SG&A expenses depends on our ability to balance a control of operating costs, such as store, distribution center, and corporate headcount, information technology infrastructure and marketing and advertising expenses, with efficiently and effectively servicing our customers. In connection with this offering, we expect to incur approximately $15.0 million of stock compensation expense associated with the vesting of certain of the outstanding restricted stock units as a result of the liquidity condition being achieved due to this offering. We expect that our SG&A expenses will increase in future periods due to our continuing growth and in part to additional legal, accounting, insurance and other expenses we expect to incur as a result of being a public company.

Income Tax Expense. New Academy Holding Company, LLC is currently treated as a flow through entity for U.S. federal income tax purposes, and thus no federal income tax expense has been recorded in our consolidated statements of income. Our tax rate is almost entirely the result of state income taxes. After consummation of this offering, Academy Sports and Outdoors, Inc. will become subject to U.S. federal income taxes and we will be taxed at the prevailing corporate tax rates. We will be treated as a U.S. corporation for U.S. federal, state, and local income tax purposes after this offering and accordingly, a provision for income taxes will be recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes.

Results of Operations

Twenty-Six Weeks Ended August 1, 2020 Compared to Twenty-Six Weeks Ended August 3, 2019

The following table sets forth amounts and information derived from our unaudited statements of income for the periods indicated as follows (dollar amounts in thousands):


	Twenty-Six Weeks Ended										Change
(In thousands, except percentages)	August 1, 2020					August 3, 2019					Dollars			Percent
Net sales	$	2,742,721		100.0	%	$	2,314,202		100.0	%	$	428,519			18.5	%
Cost of goods sold		1,948,275		71.0	%		1,616,002		69.8	%		332,273			20.6	%

Gross margin		794,446		29.0	%		698,200		30.2	%		96,246			13.8	%
Selling, general and administrative expenses		596,636		21.8	%		614,172		26.5	%		(17,536	)		(2.9	)%

Operating income		197,810		7.2	%		84,028		3.6	%		113,782			135.4	%
Interest expense, net		48,088		1.8	%		52,586		2.3	%		(4,498	)		(8.6	)%
Gain on early retirement of debt, net		(7,831	)	(0.3	)%		(42,265	)	(1.8	)%		34,434			(81.5	)%
Other (income), net		(1,621	)	(0.1	)%		(1,454	)	(0.1	)%		(167	)		11.5	%

Income before income taxes		159,174		5.8	%		75,161		3.2	%		84,013			111.8	%
Income tax expense		1,518		0.1	%		1,408		0.1	%		110			7.8	%

Net income	$	157,656		5.7	%	$	73,753		3.2	%	$	83,903			113.8	%

*	Percentages in table may not sum properly due to rounding.

The following table summarizes store activity for the periods indicated:


	Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019
Beginning stores		259		253
Q1 new stores		—		1
Q2 new stores		—		2
Closed		—		(2	)

Ending stores		259		254

Relocated stores		—		—
Renovated stores		—		9

Net Sales. Net sales increased $428.5 million, or 18.5%, for the first half 2020 compared to the first half 2019 as a result of additional net sales generated by new locations, as well as increased comparable sales of 15.9%. As of the end of first half 2020, we operated a net five additional stores as compared to the end of first half 2019 and we had a full benefit of three stores opened during the prior year-to-date. Collectively, these five additional stores accounted for a net $53.2 million increase in net sales for the first half 2020.

The 15.9% increase in comparable sales resulted from a 47.3% increase in the outdoors merchandise division and a 22.6% increase in the sports and recreation merchandise divisions, partially offset by declines of 6.5% and 3.3% in the footwear and apparel divisions, respectively. The effects of the COVID-19 pandemic during this period have caused significant increases in popularity of isolated recreation, outdoor and leisure activities that we believe have driven the increases in our outdoors and sports and recreation merchandise divisions. Likewise, we believe that the decreases in our apparel and footwear merchandise divisions were predominately driven by a temporary but significant shift in customer behavior at the substantial beginning of the COVID-19 pandemic, which saw customers focus on purchasing primarily isolated recreation, outdoor and leisure activity products in addition to “essential items.” The outdoors division increase was driven primarily by strong sales in firearms, ammunition and fishing products. The sports and recreation division sales increased as a result of various products such as fitness equipment and accessories, bikes, patio and watersports, barbecues and grills, trampolines, outdoor games and play sets. These increases were partially offset by declining sales in the team sports category. The footwear division sales decreased due to declines in the team sports category and the work, casual and youth category. The apparel division decreased as a result of declines in the outdoor and seasonal apparel and licensed apparel products, partially offset by increases in the athletic apparel products. We believe that the substantial increase in e-commerce sales described below and ongoing improvements to our business, such as enhancements to our merchandising planning and allocation capabilities that began in February 2019 and the launch of the Academy Credit Card in May 2019, together with our big-box store format and the implementation of a number of safety measures within our stores in response to COVID-19 that helped facilitate our customers’ ability to obtain the products they sought in a safe manner, contributed to the increase in comparable sales during this period.

E-commerce net sales increased $220.6 million, or 283.5%, for the first half 2020 compared to the first half 2019 and represented 10.9% of merchandise sales for the first half 2020 compared to 3.4% in the first half 2019. This increase was driven by a change in consumer shopping preferences and sales restrictions resulting from the COVID-19 pandemic. Additionally, enhancements to our website and omnichannel capabilities, such as the introduction of BOPIS at the end of the second quarter 2019 and rapid development of curbside fulfillment to further support BOPIS in the first half 2020, have positioned us well to benefit from such changing consumer preferences and contributed to the increase in e-commerce sales.

Gross Margin. Gross margin increased $96.2 million, or 13.8%, to $794.4 million for the first half 2020 from $698.2 million for the first half 2019. As a percentage of net sales, gross margin decreased 1.2% from 30.2% for the first half 2019 to 29.0% in the first half 2020. The decrease of 120 basis points in gross margin is primarily attributable to:

•

49 basis points of unfavorability related to import freight as a result of increased duties on products sold;

•

37 basis points of unfavorability as a result of decreased vendor allowances including new store allowances;

•

24 basis points of unfavorability related to increased inventory shrinkage; and

•

22 basis points of unfavorability in merchandise margins from higher first half 2020 sales of lower margin goods.

Selling, General and Administrative Expenses. SG&A expenses decreased $17.5 million, or 2.9%, to $596.6 million in the first half 2020 from $614.2 million in the first half 2019. As a percentage of net sales, SG&A expenses were down 4.7% to 21.8% in the first half 2020 compared to 26.5% in the first half 2019. The decrease of 470 basis points in SG&A is primarily attributable to:

•

188 basis point decrease in employee costs as a result of leverage and a reduction of costs that are primarily wage related from temporary salary cuts, reduction of hours and furloughs and permanent headcount reductions, partially offset by increased incentive compensation during the first half 2020;

•

115 basis point decrease in advertising due to leverage and reduced marketing and promotional activities; and

•

various other declines as a result of leveraging SG&A costs on increased sales.

Interest Expense. Interest expense decreased $4.5 million, or 8.6%, in the first half 2020 when compared to the first half 2019, primarily as a result of a lower outstanding principal balance and interest rates on our 2015 Term Loan Facility from prior year and current year principal repurchases of $147.7 million and $23.9 million, respectively, partially offset by higher interest on our ABL Facility due to a higher average outstanding balance.

Gain on early retirement of debt, net. Gain on early retirement of debt, net decreased $34.4 million, or 81.5%, to $7.8 million from $42.3 million in the first half 2019. During the first half 2020, we repurchased $23.9 million in principal on the 2015 Term Loan Facility, which was trading at a discount, in open market transactions for $16.0 million and recognized a net gain of $7.8 million. During the first half 2019, we repurchased $147.7 million in principal on the 2015 Term Loan Facility, which was trading at a discount, in open market transactions for $104.6 million and recognized a net gain of $42.3 million.

2019 (52 weeks) Compared to 2018 (52 weeks)

The following table sets forth amounts and information derived from our consolidated statements of income for the periods indicated as follows (dollar amounts in thousands):


	Fiscal Year Ended										Change
(In thousands, except percentages)	February 1, 2020					February 2, 2019					Dollars			Percent
Net sales	$	4,829,897		100.0	%	$	4,783,893		100.0	%	$	46,004			1.0	%
Cost of goods sold		3,398,743		70.45	%		3,415,941		71.4	%		(17,198	)		(0.5	)%

Gross margin		1,431,154		29.65	%		1,367,952		28.6	%		63,202			4.6	%
Selling, general and administrative expenses		1,251,733		25.95	%		1,239,002		25.9	%		12,731			1.0	%

Operating income		179,421		3.75	%		128,950		2.7	%		50,471			39.1	%
Interest expense, net		101,307		2.1	%		108,652		2.3	%		(7,345	)		(6.8	)%
Gain on early retirement of debt, net		(42,265	)	(0.9	)%		—		—	%		(42,265	)		NM
Other (income), net		(2,481	)	(0.1	)%		(3,095	)	(0.1	)%		614			(19.8	)%

Income before income taxes		122,860		2.5	%		23,393		0.5	%		99,467			425.2	%
Income tax expense		2,817		0.1	%		1,951		0.0	%		866			44.4	%

Net income	$	120,043		2.5	%	$	21,442		0.4	%	$	98,601			459.8	%

*	Percentages in table may not sum properly due to rounding.

**	NM - Not meaningful

The following table summarizes store activity for the periods indicated:


	Fiscal Year Ended
	February 1, 2020			February 2, 2019
Beginning stores		253			244
Q1 new stores		1			2
Q2 new stores		2			3
Q3 new stores		5			4
Q4 new stores		—			—
Closed		(2	)		—

Ending stores		259			253

Relocated stores		—			3
Renovated stores		11			14

Net Sales. Net sales increased $46.0 million, or 1.0%, in 2019 over the prior year. The 1.0% increase was driven primarily by additional net sales generated by new locations, partially offset by a decline in comparable sales of 0.7%. As of the end of 2019, we operated a net six additional stores compared to the end of 2018, and we had the full benefit of nine stores opened during the prior year. These stores generated sales of $84.8 million, or 1.8% of net sales.

The 0.7% comparable sales decline was driven by a 6.3% decrease in comparable sales from the sports and recreation merchandise division and a 3.1% decrease in the outdoors merchandise division. Declines in each category within the sports and recreation merchandise division, which includes team sports/fitness and recreation, were partially driven by planned exits in product types (such as certain outdoor games and electronics) that did not fit within our future assortment strategies during 2019. The outdoors merchandise division decreased as a result of declines from camping and cooking sales during 2019, as well as lower demand for firearms and ammunition during the first and second quarter 2019. These decreases were largely offset by a

comparable sales increase of 4.7% in apparel and 1.0% in footwear. The apparel merchandise division increased as a result of positive comparable sales across all categories, particularly in licensed apparel, outdoor and seasonal apparel, and athletic apparel. The increase in licensed apparel was largely attributable to sales from Major League Baseball, or MLB, which was driven by regional team playoff success. The footwear merchandise division comparable sales increased, which was the result of an increase in the work and casual footwear category, partially offset by a decrease in athletic footwear. Although we had an overall decrease in comparable sales in 2019, we had positive comparable sales in the back half of 2019. We believe that improvements to our business in the back half of 2019, such as improvements to our website and omnichannel capabilities, including the introduction of BOPIS in July 2019, continued enhancements to our merchandise planning and allocation capabilities, and the launch of the Academy Credit Card in May 2019 were key factors that saw the increase of comparable sales in the back half of 2019.

E-commerce sales increased $17.8 million, or 7.8%, in 2019 when compared to the prior year, and e-commerce sales represented 5.1% and 4.9% of merchandise sales for 2019 and 2018, respectively. This increase was driven by enhancements to our e-commerce platform, including the introduction of BOPIS at the end of the second quarter 2019, as well as changes in consumer shopping preferences.

Gross Margin. Gross margin for 2019 increased $63.2 million, or 4.6%, when compared to 2018. Our gross margin, as a percentage of net sales, was 29.6% in 2019 compared to 28.6% in 2018, an increase of 100 basis points. This increase is primarily due to:

•

78 basis points of favorability on merchandise margins from favorability in inventory valuation adjustments relative to the prior year;

•

34 basis points of favorability in e-commerce shipping due to reduced shipping rates and an overall reduction in shipping costs resulting from to the 2019 deployment of BOPIS; partially offset by

•

24 basis points of unfavorability related to import freight as a result of increased duties during 2019.

Selling, General and Administrative Expenses. SG&A expenses increased $12.7 million, or 1.0%, to $1,251.7 million in 2019 from $1,239.0 million in 2018. As a percentage of net sales, SG&A remained flat at 25.9% in 2019 compared to 2018. The notable changes within SG&A were as follows:

•

31 basis point increase in employee costs that are primarily driven by performance-based compensation and a net six new store openings since the end of the fourth quarter 2018; partially offset by a

•

27 basis point decrease in property and facility expense primarily as a result of prior year implementation expenditures from our profitability and growth initiatives related to energy savings.

Interest Expense. Interest expense decreased $7.3 million, or 6.8%, to $101.3 million in 2019 from $108.7 million in 2018, resulting primarily from a lower outstanding balance on our Term Loan Facility due to the principal repurchases of $147.7 million during 2019.

2018 (52 weeks) Compared to 2017 (53 weeks)

When a 52-week fiscal year follows a 53-week fiscal year, the comparable sales calculation is based on the prior fiscal year’s sales shifted forward one week, as we believe this best approximates current trends in our business.


Fiscal Period	Basis	Current Year Comparable Period	Prior Year Comparable Period	Comparable Sales
2018	Comparable sales	Fifty-two weeks ended February 2, 2019	Fifty-two weeks ended February 3, 2018	(2.5)%
2017	Comparable sales	Fifty-two weeks ended January 27, 2018	Fifty-two weeks ended January 28, 2017	(5.2)%

The following table sets forth amounts and information derived from our consolidated statements of income for the periods indicated as follows (dollar amounts in thousands):


	Fiscal Year Ended										Change
	February 2, 2019					February 3, 2018					Dollars			Percent
Net sales	$	4,783,893		100.0	%	$	4,835,582		100.0	%	$	(51,689	)		(1.1	)%
Cost of goods sold		3,415,941		71.4	%		3,436,618		71.1	%		(20,677	)		(0.6	)%

Gross margin		1,367,952		28.6	%		1,398,964		28.9	%		(31,012	)		(2.2	)%
Selling, general and administrative expenses		1,239,002		25.9	%		1,241,643		25.7	%		(2,641	)		(0.2	)%

Operating income		128,950		2.7	%		157,321		3.3	%		(28,371	)		(18.0	)%
Interest expense, net		108,652		2.3	%		104,857		2.2	%		3,795			3.6	%
Gain on early retirement of debt, net		—		—	%		(6,294	)	(0.1	)%		6,294			NM
Other (income), net		(3,095	)	(0.1	)%		(2,524	)	(0.1	)%		(571	)		22.6	%

Income before income taxes		23,393		0.5	%		61,282		1.3	%		(37,889	)		(61.8	)%
Income tax expense		1,951		0.0	%		2,781		0.1	%		(830	)		(29.8	)%

Net income	$	21,442		0.4	%	$	58,501		1.2	%	$	(37,059	)		(63.3	)%

*	Percentages in table may not sum properly due to rounding.

**	NM - Not meaningful

The following table summarizes store activity for the periods indicated:


	Fiscal Year Ended
	February 2, 2019		February 3, 2018
Beginning stores		244		228
Q1 new stores		2		3
Q2 new stores		3		7
Q3 new stores		4		3
Q4 new stores		—		3
Closed		—		—

Ending stores		253		244

Relocated stores		3		1
Renovated stores		14		20

Net Sales. Net sales decreased $51.7 million, or 1.1%, in 2018 over the prior year. The 1.1% decrease was driven primarily by a decline in comparable sales of 2.5% and higher sales in 2017 from the 53rd week of $60.6 million. As of the end of 2018, we operated nine additional stores compared to the end of 2017 and we had the full benefit of 16 stores opened during the prior year. These stores generated sales of $134.9 million, or 2.8% of net sales.

The following disclosure has been updated to reflect the new merchandise division category and product reclassification completed in 2019. See “Business.”

The 2.5% comparable sales decline in 2018 was driven by a comparable sales decrease of 5.4% in the sports and recreation merchandise division and a 4.1% decrease in the outdoors merchandise division. The outdoors merchandise division experienced a decline in 2018 from the market saturation of specialized drinkware and related coolers, as well as market softness in firearms and ammunition. Also contributing to the decline in the outdoors merchandise division in 2018 was our planned assortment reduction in the camping category. The

decline in the sports and recreation merchandise division in 2018 was caused by declines in both the team sports/fitness and recreation categories. Both the apparel and footwear merchandise divisions comparable sales were relatively flat compared to the prior year with a decrease of 0.4% and an increase of 0.1%, respectively. Within the apparel merchandise division, licensed apparel decreased as we benefited in the prior year on MLB licensed apparel due to team playoff success within our footprint that was partially offset by an increase in outdoor and seasonal apparel. Within the footwear merchandise division, the increase was driven by an increase in work and casual footwear, partially offset by a decrease in athletic footwear.

E-commerce sales increased $40.5 million, or 21.2%, in 2018 when compared to the prior year, and e-commerce sales represented 4.9% and 4.0% of merchandise sales for 2018 and 2017, respectively. This increase was driven by changes in consumer shopping preferences, investments in digital advertising and increased promotional activity.

Gross Margin. Gross margin for 2018 decreased $31.0 million, or 2.2%, when compared to 2017. Our gross margin, as a percentage of net sales, was 28.6% in 2018 compared to 28.9% in 2017, a decrease of 30 basis points. This decrease is primarily due to:

•

33 basis points of unfavorability related to higher inventory overhead expense due to the prior year benefiting from substantial inventory purchases that lowered the inventory turnover rate and resultant overhead expensed;

•

21 basis points of unfavorability on freight due to increased domestic and international freight pricing and duties;

•

15 basis points of unfavorability on merchandise margins due to increased clearance and promotional activities, coupled with the growth of e-commerce sales; and partially offset by

•

34 basis points of favorability due to decreased inventory shrinkage.

Selling, General and Administrative Expenses. SG&A expenses decreased $2.6 million, or 0.2%, to $1,239.0 million in 2018 from $1,241.6 million in 2017. As a percentage of net sales, SG&A was 25.9% in 2018 compared to 25.7% in 2017. SG&A as a percentage of net sales increased 20 basis points primarily driven by:

•

39 basis point increase in property and facility expense due to operating nine additional stores since the end of 2017 and the full impact of 16 stores opened during 2017; and partially offset by

•

18 basis point decrease in professional fees related to our 2017 profitability and growth initiatives.

Interest Expense. Interest expense increased $3.8 million, or 3.6%, to $108.7 million in 2018 from $104.9 million in 2017, resulting primarily from rising interest rates on our Term Loan Facility, which was partially offset by more favorable positions on our interest rate swaps relative to 2017.

Non-GAAP Measures

Adjusted comparable sales

We calculate adjusted comparable sales by excluding from comparable sales additional sales associated with Houston Astros World Series appearances, additional sales of a product driven by free shipping promotion and sales from certain product categories, such as toys, luggage and electronics, that we exited in 2018.

The following table provides a reconciliation of our comparable sales to our adjusted comparable sales for the periods presented:


	Fiscal Year Ended									Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			August 1, 2020			August 3, 2019
Comparable sales		(0.7	)%		(2.5	)%		(5.2	)%		15.9	%		(4.3	)%
Additional sales associated with Houston Astros World Series appearances		(0.4	)%		0.7	%		(0.8	)%		—			—
Additional sales of a product driven by free shipping promotion		—			0.1	%		(0.1	)%		—			—
Sales from the exited product categories		0.5	%		—			—			—			0.3	%

Adjusted comparable sales		(0.6	)%		(1.7	)%		(6.1	)%		15.9	%		(4.0	)%

Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow

We define Adjusted EBITDA as net income (loss) before interest expense, net, income tax expense and depreciation, amortization and impairment, further adjusted to exclude consulting fees, Adviser monitoring fees, stock based compensation expense, gain on early extinguishment of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, inventory write-down adjustments associated with strategic merchandising initiative and other adjustments. We describe these adjustments reconciling net income (loss) to Adjusted EBITDA in the applicable table below. We define Adjusted Net Income (Loss) as net income (loss), plus consulting fees, Adviser monitoring fees, stock based compensation expense, gain on early extinguishment of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, inventory write-down adjustments associated with strategic merchandising initiative and other adjustments, less the tax effect of these adjustments. We define Pro Forma Adjusted Net Income (Loss) as Adjusted Net Income (Loss) plus the estimated federal tax liability based on our proposed C-Corporation structure after this offering. We describe these adjustments reconciling net income (loss) to Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) in the applicable table below. We define Adjusted Free Cash Flow as net cash provided by (used in) operating activities less net cash used in investing activities. We describe these adjustments reconciling net cash provided by operating activities to Adjusted Free Cash Flow in the applicable table below.

Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or net cash provided by operating activities as a measure of liquidity, or any other performance measures derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) should not be construed to imply that our future results will be unaffected by unusual or non-recurring items. In evaluating Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss) and Adjusted Free Cash Flow supplementally.

•

Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) do not reflect costs or cash outlays for capital expenditures or contractual commitments;

•

Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) do not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted EBITDA does not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;

•

other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

The following tables provide reconciliations of net income (loss) to Adjusted EBITDA, Adjusted Net Income (Loss) and Pro Forma Adjusted Net Income (Loss) for the periods presented:


	Fiscal Year Ended								Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019		February 3, 2018			August 1, 2020			August 3, 2019
Period length	52 weeks			52 weeks		53 weeks			26 weeks			26 weeks
(In thousands)
Net income	$	120,043		$	21,442	$	58,501		$	157,656		$	73,753
Interest expense, net		101,307			108,652		104,857			48,088			52,586
Income tax expense		2,817			1,951		2,781			1,518			1,408
Depreciation, amortization and impairment		117,254			134,190		135,680			54,151			59,097
Consulting fees (a)		3,601			949		10,263			92			3,280
Adviser monitoring fee (b)		3,636			3,522		3,387			1,840			1,760
Stock based compensation (c)		7,881			4,633		4,580			3,690			4,467
Gain on early extinguishment of debt, net		(42,265	)		—		(6,294	)		(7,831	)		(42,265	)
Severance and executive transition costs (d)		1,429			4,350		7,409			4,137			—
Costs related to the COVID-19 pandemic (e)		—			—		—			17,632			—
Inventory write-down adjustments associated with strategic merchandising initiative (f)		—			18,225		4,400			—			—
Other (g)		7,111			2,345		(10,144	)		1,929			2,751

Adjusted EBITDA	$	322,814		$	300,259	$	315,420		$	282,902		$	156,837


	Fiscal Year Ended									Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			August 1, 2020			August 3, 2019
Period length	52 weeks			52 weeks			53 weeks			26 weeks			26 weeks
(In thousands)
Net income	$	120,043		$	21,442		$	58,501		$	157,656		$	73,753
Consulting fees (a)		3,601			949			10,263			92			3,280
Adviser monitoring fee (b)		3,636			3,522			3,387			1,840			1,760
Stock based compensation (c)		7,881			4,633			4,580			3,690			4,467
Gain on early extinguishment of debt, net		(42,265	)		—			(6,294	)		(7,831	)		(42,265	)
Severance and executive transition costs (d)		1,429			4,350			7,409			4,137			—
Costs related to the COVID-19 pandemic (e)		—			—			—			17,632			—
Inventory write-down adjustments associated with strategic merchandising initiative (f)		—			18,225			4,400			—			—
Other (g)		7,111			2,345			(10,144	)		1,929			2,751
Tax effects of these adjustments (h)		33			(61	)		(24	)		(39	)		54

Adjusted Net Income	$	101,469		$	55,405		$	72,078		$	179,106		$	43,800

Estimated tax effect of change to C-Corporation status (i)		(25,542	)		(14,067	)		(18,346	)		(44,262	)		(11,063	)

Pro Forma Adjusted Net Income	$	75,927		$	41,338		$	53,732		$	134,844		$	32,737

(a)	Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives.

(b)	Represents our contractual payments under our Monitoring Agreement with the Adviser. See “Certain Relationships and Related Party Transactions—Monitoring Agreement.”

(c)	Represents non-cash charges related to the 2011 Equity Plan, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures.

(d)	Represents severance costs associated with executive leadership changes and enterprise-wide organizational changes.

(e)

Represents costs incurred as a result of the COVID-19 pandemic, including temporary wage premiums, additional sick time, costs of additional cleaning supplies and third party cleaning services for the stores, corporate office and distribution centers, accelerated freight costs associated with shifting our inventory purchase earlier in the year to maintain stock, and legal fees associated with consulting in local jurisdictions.

(f)	Represents inventory write-down adjustments in connection with our new merchandising strategy adopted as part of our strategic transformation, including exiting certain categories of products.

(g)

(h)	Represents the tax effect of the total adjustments made to arrive at Adjusted Net Income (Loss) at our historical tax rate.

(i)

The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flow for the periods presented:


	Fiscal Year Ended									Twenty-Six Weeks Ended
	February 1, 2020			February 2, 2019			February 3, 2018			August 1, 2020			August 3, 2019
Period length	52 weeks			52 weeks			53 weeks			13 weeks			13 weeks
(In thousands)
Net cash provided by (used in) operating activities	$	263,669		$	198,481		$	83,355		$	773,621		$	103,961
Net cash used in investing activities		(66,783	)		(99,027	)		(115,901	)		(13,850	)		(31,767	)

Adjusted Free Cash Flow	$	196,886		$	99,454		$	(32,546	)	$	759,771		$	72,194

Quarterly Results of Operations

The following table sets forth our historical quarterly results of operations as well as certain key metrics for each of our most recent nine fiscal quarters. This information should be read in conjunction with the audited consolidated financial statements and related notes thereto and unaudited condensed consolidated financial statements and related notes thereto, each included elsewhere in this prospectus.


	Thirteen Weeks Ended
(In thousands)	August 1, 2020		May 2, 2020		February 1, 2020		November 2, 2019		August 3, 2019		May 4, 2019		February 2, 2019		November 3, 2018		August 4, 2018		May 5, 2018
Net sales	$	1,606,420	$	1,136,301	$	1,370,492	$	1,145,203	$	1,237,410	$	1,076,792	$	1,342,018	$	1,060,188	$	1,262,207	$	1,119,480
Gross margin		496,501		297,945		370,532		362,422		385,204		312,996		332,133		328,833		387,130		320,356
Selling, general and administrative expenses		312,713		283,923		328,315		309,246		312,570		301,602		326,365		300,195		317,164		295,278