Academy Sports & Outdoors (ASO) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01Increasing volatility in financial markets may cause some of the aforementioned conditions to change with even greater degree of frequency and magnitude
2. 02A significant portion of the merchandise that we sell is manufactured in foreign countries, including China, which exposes us to various international risks, including additional tariffs, that could have a material adverse effect on our business and results of operations
3. 03Problems with operating, updating or implementing our information systems could disrupt our operations and negatively impact our business operations and materially and adversely affect our financial results
4. 04From time to time, our information systems may require repair, upgrade, enhancement, integration and/or replacement for us to maintain successful current operations and achieve future sales and store growth
5. 05If we are not successful in managing our inventory balances, our sales may decline and our results of operations may be negatively affected
6. 06If we are unable to predict or effectively react to changes in consumer tastes and preferences, or if we fail to obtain access to, and sell brand name merchandise at competitive prices, then we may lose customers and our sales may decline and our results of operations may be negatively affected
7. 07Our e-commerce activities expose us to various risks that could have a material adverse impact on our overall results of operations
8. 08Intense competition in the sporting goods and outdoor recreation retail industries could limit our growth and reduce our profitability
9. 09A significant disruption to our distribution network or the timely receipt of inventory could adversely impact sales or increase our transportation costs, which would decrease our profits
10. 10Our success depends on the effectiveness of our marketing and advertising programs
11. 11Our failure to attract, train and retain quality team members in sufficient numbers, increases in wage and labor costs, and changes in laws and other labor issues could adversely affect our business
12. 12If we are unable to protect against inventory shrink, our results of operations and financial condition could be adversely affected
13. 13We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business
14. 14Our stores are located primarily in the southern United States which could subject us to regional risks
15. 15Fluctuations in merchandise costs, increases in commodity prices and other factors could negatively impact our consolidated and combined results of operations
16. 16A 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
17. 17We depend on key personnel in order to support our existing business and future initiatives and may not be able to retain or replace these team members, recruit additional qualified personnel or effectively manage succession
18. 18Our private label brand merchandise exposes us to various risks generally encountered by companies that source, manufacture, market and retail exclusive private label brand merchandise
19. 19A failure of our third-party vendors of outsourced business services and solutions to meet our performance standards and expectations could adversely affect our operations
20. 20Harm to our reputation could adversely impact our ability to attract and retain customers, team members, vendors and/or other partners
21. 21Our quarterly operating results and comparable sales may fluctuate due to seasonality and other factors outside of our control
22. 22We may pursue strategic acquisitions, which could have an adverse impact on our business, as could assimilation of companies following acquisition

Legal and Regulatory Risks

1. 23We 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 the substance or enforcement of such laws may change or become more stringent
2. 24We 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
3. 25Our sales and operating results could be adversely affected by product safety concerns
4. 26We are subject to risks associated with climate change and other sustainability-related matters, or legal, regulatory or market expectations and responses
5. 27Our 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

Risks Related to Our Indebtedness

1. 28These 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
2. 29Despite our 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
3. 30If 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
4. 31The terms of our outstanding indebtedness may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions
5. 32Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly
6. 33If 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
7. 34Our 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

Risks Related to the Ownership of Our Common Stock

1. 35Our stock price may be highly volatile or may decline regardless of our operating performance, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result
2. 36We cannot provide any guaranty of future dividend payments or that we will repurchase our common stock pursuant to our share repurchase program, and our indebtedness could limit our ability to pay future dividends on our common stock
3. 37Anti-takeover provisions in our organizational documents could delay or prevent a change of control
4. 38You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise