This discussion analyzes how tariffs are expected to impact Academy Sports and Outdoors' gross margin in 2026, focusing on a front-loaded margin drag in the first half of the year as outlined in the 2025 Q4 earnings call.
Generated by Dafinchi AI. Source-grounded AI analysis, not investment advice.
Can you quantify the expected gross-margin drag from tariffs in H1 2026 versus the back half of the year in dollar or bps terms?
Analysis of Expected Gross-Margin Drag from Tariffs in H1 2026 vs. H2 2026 for Academy Sports and Outdoors, Inc. (ASO)
From the 2025 Q4 earnings transcript and guidance commentary, the company specifically addresses the impact of tariffs on gross margins in 2026:
Tariff Impact Concentrated in First Half of 2026:
Management notes a continued tariff impact especially in the first half of the year with a partial offset from other areas such as merch margin growth from brand expansions, shrink improvement via RFID rollout, and pricing initiatives 1.
Quantitative Margin Guidance for 2026:
The expected full-year gross margin rate is guided in the range of 34.5% to 35.0% 12. For context, the full-year gross margin in 2025 was 34.8%, up by about 90 basis points year-over-year, largely assisted by supply chain efficiencies which offset tariff-related pressures 34.
Tariff Drag Specificity:
While there is no explicit dollar figure or basis points clearly isolated in the commentary for the tariff drag specifically split between H1 and H2 2026, the narrative provides directional guidance that:
Offsetting Factors:
The company offsets tariff impacts with a combination of increased prices, promotional optimization, new brand launches, and ongoing supply chain efficiencies 3, as well as improvements in shrink and inventory management 1.
Impact in Price and Margin Terms:
In 2025, the tariff impact was largely mitigated by a 6% increase in average unit retail and gross margin expansion of 140 basis points in Q4 over prior year even though merch margins inclusive of tariffs remained flat 34. This experience suggests the tariff drag in 2026 will be at least partially offset by pricing and mix.
No Explicit Dollar or Bps Quantification Given:
Importantly, neither the CFO nor CEO provides explicit quantification in basis points or dollar terms for the tariff drag broken down between calendar halves. Instead, the tariffs are identified qualitatively as a notable margin pressure in H1 that should moderate by H2 as price effects are lapped.
Academy Sports expects tariff-related gross-margin pressure to be front-loaded in the first half of 2026, causing a gross margin drag primarily in H1 compared to a more normalized or stabilized gross margin situation in H2 2026 after lapping those tariff costs 15.
The full-year gross margin rate guidance for 2026 is 34.5% to 35.0%, roughly in line with 2025’s 34.8% rate, suggesting the tariff drag is not expected to materially compress full-year margins overall due to offsetting initiatives 123.
No exact basis points or dollar quantification for the tariff drag differential between the first and second halves is provided, but the implication is that the tariff headwind impact in the first half of 2026 will be significant enough to be noted as a partial gross margin offset and will ease in the back half as pricing and cost pass-through stabilize 15.
Gross margin gains in 2025 benefited from supply chain efficiencies and pricing actions, which helped absorb tariff cost increases — a playbook management expects to continue in 2026 34.
The company’s tariff-related uncertainty in 2026 also affected the timing of new store openings, which were pushed to later in the year due to construction cost uncertainty from tariffs, potentially affecting SG&A leverage and sales flow dynamics 16.
In conclusion: Although Academy Sports explicitly flags tariffs as a gross margin headwind primarily in H1 2026, it does not provide specific dollar or basis points impact quantification broken out by halves of the year. However, with stable full-year gross margin guidance near 34.5%-35.0%, the gross margin drag from tariffs in H1 2026 is expected to moderate or be neutralized in H2 2026 through pricing, merchandise mix changes, supply chain efficiencies, and inventory/shrink management 1523.
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