Travel Trends - Travel volume reached a record 122 million people, a 2% increase year-over-year [1] - Consumers are prioritizing spending on experiences over material goods, a trend expected to continue into 2026 [2] - While flights and driving saw a 2% increase, other travel forms like buses, trains, and cruises jumped over 9% [3] Cruise Industry Analysis - Cruise lines are perceived as a better value proposition due to their all-inclusive nature [3] - Cruises are on average 25% less expensive than land-based vacations [4] - Approximately one-third of cruise bookings come from first-time cruisers [4] - Cruise lines' investments in private islands in the Caribbean are a significant attraction [5] - Cruise penetration among total travel nights remains in the single digits, indicating growth potential [8] Economic Factors and Consumer Behavior - Consumers are trading up in value by choosing cruises over land-based vacations [7] - The economic recovery favors luxury travel, benefiting companies like Viking [8] - The main cruise customer base is the middle class, who are expected to benefit from future stimulus [9]

This is an interesting kind of situation developing right now because we've talked so much and the economic problems are real. There's no doubt about it and the estimates have been all over the spectrum with regard to just what people are going to spend or even cut back on. What do you see.>> Well, Don, the holiday season is here and price is the battleground. So what we're seeing is that affordability is the main theme as you said and this is because retailers are dealing with a highly discerning consumer ...

Core Insights - McDonald's franchisees will reduce the cost of combo meals by 15% to enhance the brand's image as an affordable dining option for budget-conscious consumers [2][5] - The company is launching promotional offers, including a $5 breakfast and an $8 Big Mac and McNugget combo meal, branded as Extra Value Meals [3][6] - McDonald's is addressing concerns about price increases, clarifying that while some high-priced items exist, they are exceptions rather than the norm [9][10][12] Pricing Strategy - The agreement between McDonald's and its U.S. franchisees includes keeping the cost of eight popular combo meals significantly lower than purchasing items separately [2] - The average price of a Big Mac in the U.S. rose from $4.39 in 2019 to $5.29 in 2023, reflecting a 21% increase due to inflationary pressures [13] Marketing Initiatives - The company introduced a "McValue" menu with a "Buy One, Add One for $1" offer, aiming to attract customers through value-driven promotions [6] - Local franchisees are also implementing special deals, such as discounts on specific items and app-exclusive offers [7]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $1,350 million, down 0.9% year-over-year, resulting in a negative 3.7% comparable sales (comp) [11][25] - Operating income was $69.3 million, with diluted EPS at $0.68 and adjusted EPS at $0.76 [30] - Gross margin improved to 34%, a 60 basis point increase from the previous year, driven by merchandise margin expansion [28][29] Business Line Data and Key Metrics Changes - Footwear and apparel were the strongest categories, with athletic footwear posting a positive 4.5% comp, driven by brands like Nike and Brooks [26][27] - Outdoor category saw low single-digit declines primarily due to softer sales in ammunition, while fishing and firearms performed well [12][28] - E-commerce channel experienced a positive 10% comp for the quarter, with significant contributions from the Jordan brand [25][16] Market Data and Key Metrics Changes - Increased foot traffic from customers with household incomes over $100,000, indicating a shift towards value-seeking behavior [10][37] - The company noted a sequential improvement in sales throughout the quarter, with April finishing positively after a slow February [11][44] Company Strategy and Development Direction - The company is focused on reducing exposure to products made in China, aiming to decrease this from 9% to approximately 6% by year-end [8][10] - New store expansion remains a key growth engine, with plans to open 20 to 25 new stores in 2025 [14][15] - The company is leveraging technology, including RFID and handheld devices, to improve inventory accuracy and customer experience [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about navigating the current tariff environment while maintaining value for customers [5][24] - The company anticipates continued pressure on consumer spending due to inflation but believes its value proposition will attract more customers [24][108] - Guidance for 2025 was updated to reflect a range of sales outcomes based on potential tariff scenarios, with expected sales between $5.97 billion and $6.26 billion [35][36] Other Important Information - The company returned over $100 million of free cash flow to investors in Q1, including share repurchases and dividends [33] - Strategic investments in digital and supply chain technologies are expected to normalize SG&A expenses as the year progresses [30][32] Q&A Session Summary Question: Retention of higher-income consumers - Management noted that higher-income consumers are shopping more frequently and are retaining their loyalty, shopping across various product categories [40][41] Question: Performance in May and comp trends - May showed a slight decline in sales, but management remains optimistic about Q2 due to upcoming shopping events like Father's Day [44][45] Question: Impact of weather and consumer health - Management indicated that weather had a significant impact on sales, particularly in basketball and golf, and noted that consumers are cautious in their spending [94][50] Question: Tariff outlook for FY26 - Management emphasized the importance of diversifying sourcing to mitigate future tariff impacts, but specifics on the tariff situation remain uncertain [79][80] Question: Gross margin guidance - Management explained that gross margin guidance remains unchanged due to strategic inventory management and partnerships with suppliers to mitigate cost increases [54][56]

Financial Data and Key Metrics Changes - Net sales for Q4 2024 were $1,680,000,000, representing a 6.6% decline compared to the previous year, primarily due to a comparison against a 53-week fiscal year [7][36] - Comparable sales decreased by 3%, with a sequential improvement from Q3 and the first half of the year [8][36] - Gross margin for Q4 was 32.2%, down 110 basis points from the previous year, driven by higher freight and distribution costs [13][37] - Net income for Q4 was $133,600,000, with diluted earnings per share of $1.89 [36] Business Line Data and Key Metrics Changes - The outdoor category was the best performer, with total net sales growth of 2% [11] - The mineral category saw a 1% decline in net sales, rebounding during the holiday season due to strong youth apparel sales [12] - Sports and Recreation net sales improved, finishing down 1% compared to the previous year [12] - Footwear net sales were down 2%, with strong performances from brands like ASICS and New Balance [13] Market Data and Key Metrics Changes - The company gained approximately 40 basis points of store traffic share among households earning over $100,000 annually in December [40] - Traffic growth accelerated by 700 basis points in December compared to October, indicating a positive response to value offerings [40] Company Strategy and Development Direction - The company plans to open 20 to 25 new stores in 2025, having already opened three in Pennsylvania and Maryland [20] - A focus on enhancing the e-commerce experience and expanding fulfillment options is part of the growth strategy [23] - The introduction of the Jordan brand in 145 stores is expected to significantly impact sales and brand presence [26][80] - The company aims to maintain its position as a value leader, especially for lower to middle-income consumers [28] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious consumer environment, with expectations of continued softness in the lower-income demographic [60] - The company anticipates Q1 to be the most challenging quarter, with Q2 expected to show stronger performance due to new initiatives [49][60] - Management expressed optimism about the impact of new store openings and brand launches on future growth [51] Other Important Information - The company generated $528,000,000 in cash from operations in 2024 and returned over $396,000,000 to shareholders through dividends and share repurchases [42][43] - An 18% increase in dividends was approved, resulting in $0.13 per share payable in April 2025 [44] Q&A Session Summary Question: What are the expected drivers of gross margin expansion in 2025? - Management indicated that recapturing supply chain headwinds and a higher penetration of soft lines, supported by Jordan and Nike, are expected to drive gross margin expansion [54][55] Question: How does the company view the impact of weather versus consumer uncertainty? - Management acknowledged a softening in business due to weather but noted a rebound as temperatures warmed, indicating a cautious but stabilizing consumer environment [60][61] Question: What is the expected contribution of new stores to comps in 2025? - Management expects new stores to contribute positively to comps, with a significant number of stores from previous vintages entering the comp base [66] Question: Can you provide more details on the Jordan brand launch? - The Jordan brand will be launched in 145 stores and online, marking the first time Academy will sell Jordan products, with a focus on sport-related items [78][80] Question: What is the company's strategy regarding tariffs and pricing? - Management emphasized a diversified sourcing base to mitigate tariff impacts and a commitment to maintaining competitive pricing on key items [86][87]