What surprised you since the April Analyst Day, how are gas prices affecting consumption, and is Q2 still the weakest comp quarter?
Gas is a real headwind (an article cited ~$17.5B/month of discretionary spend pulled out), and the business slowed in Q2 to flat comp through Memorial Day. Management remains optimistic given initiatives still ahead (World Cup, credit-card relaunch, Father's Day, America's 250th). Carl added the quarter generally came in as expected but toward the high side of guidance, with known GM pressure from lapping the tariff-free Q1 and lapping $7.5M of Nike/Jordan launch costs.
Did the strength in lower-margin ammo contribute to the gross-margin shortfall, and how should we think about the tariff cadence for the rest of the year?
Of the 71 bps of GM degradation, 110 bps was tariff-driven (full IEEPA burden vs. essentially none last year), offset by 20 bps of shrink and 10 bps of shipping favorability. Total field was up 12% and carries a lower margin, but it was offset by other puts and takes in the mix.
What's changed versus your initial view for the balance of the year, and is ammo a bigger tailwind than originally thought?
Elevated tax refunds muted the gas-price impact in Q1, and the exit rate moved from ~+3% comp to more like flat. Confidence in the rest of the year rests on self-help initiatives (credit-card relaunch, Ariat/Work Western, new brands, dot-com). Ammo was a strong tailwind before the Iran conflict, moderated as the conflict deepened, and should move from a strong to a still-positive tailwind against tough comparisons.
What are the trends in the combined Nike/Jordan business and what growth is embedded for the rest of the year?
Combined Nike/Jordan was up mid-single digits, running an increase even as it lapped the April Jordan launch. Management expects that trend to continue and sees Nike as a growth engine, with Vomero going into ~150 doors for back-to-school (roughly double last year).
Can you break down the comp guidance by quarter and how you're thinking about Q2?
No quarterly guidance is given, but Q2 was the best quarter last year (up 0.2% comp) and the business is tracking flat through Memorial Day. Management expects the remainder of the year to be somewhere between flat and up 2% comp, inclusive of Q2. Carl added Q1's +2.9% will be the strongest quarter of the year.
What drives the gross-margin inflection in the back half - is it just tariffs rolling off?
Yes, that is the main driver. The full weighted-average-cost burden of IEEPA tariffs hit late last year, so Q1 lapped a period with none; that tariff burden moderates through the year. Shrink improvement may continue, while fuel is expected to be a headwind for the year.
How dependent is full-year comp guidance on the lower-income cohort improving versus continued higher-income outperformance?
Households over $100K (quintiles four and five) were up mid-single digits and are the largest, fastest-growing cohort, which is embedded in guidance. The below-$50K cohort was only down low single digits in Q1 - 'less bad,' possibly aided by tax refunds but offset by higher fuel. The high/low ends of the guidance range hinge largely on whether that lower-income cohort stabilizes or worsens.
What happened in Q1 that may not repeat, and does the implied ~50-100 bps comp for the rest of the year mean upside if the macro doesn't worsen?
Q1 benefited from tax refunds blunting higher gas prices; the natural run-rate has since moved to roughly flat. Initiatives alone get to the ~+1% midpoint, with new stores comping high single digits (above pro forma) and e-comm a tailwind. The spread between flat and +2% depends on the magnitude of external events (World Cup, 250th) and the health of the below-$50K consumer. The low end of profit/net-income guidance was raised simply because Q1 came in high, taking the Q1 low side off the table while keeping Q2-Q4 ranges unchanged.