As Tariffs Loom, Academy Sports Keeps Eye on Prices

Potential new tariffs could lead to higher prices on things such as Nike and Adidas shoes at Academy Sports & Outdoors stores, but the retailer hopes a laser focus on keeping its prices lower than competitors facing the same tariffs will give it an edge.

- JENNIFER WILLIAMS

Changes that Academy has made to its supply chain to cut back on the amount of private-label goods it imports from China also could blunt the impact of tariffs proposed by President-elect Donald Trump.

Tariffs or no tariffs, Academy hopes its pricing will bring inflation-weary consumers hunting for deals to its doors.

"We're going to stay committed to being an everyday value retailer, which in the current state means on things like Nike T-shirts and Nike shoes, we price our goods $5 below" the manufacturer's suggested retail price, said Carl Ford, chief financial officer at Academy. "If Nike takes those MSRP's up...we will continue at that same level below MSRP, but at a higher level." Trump has proposed a universal tariff of 10% to 20% on all imports to the U.S. and a 60% or more tariff on goods from China. He has threatened 25% tariffs on goods imported from Canada and Mexico. The potential for stiffer tariffs is spurring executives across industries, from Costco Wholesale to Mama's Creations and Hasbro, to think through possible impacts. Executives are preparing for potential levies by negotiating with suppliers, diversifying supply chains and pulling forward orders where possible. Some businesses, such as Academy, will look to pass their own higher costs onto consumers.

Academy is looking at the potential tariffs through two lenses.

The first is its private-label business, which includes its namesake brand as well as Magellan Outdoors and Outdoor Gourmet labels. The 19 brands represent around 21% of Academy's sales, according to Ford. Roughly half the private-label items are sourced from China, he said.

Academy over the past few years has diversified its sourcing of private-label goods.

More than 70% of the items came from China in 2019, and the percentage could drop further. "We're going to continue to diversify," the CFO said.