Good morning, ladies and gentlemen, and welcome to the Academy Sports + Outdoors second quarter of fiscal year 2021 earnings conference call. At this time, this call is being recorded and all participants are in a listen-only mode. Following the prepared remarks, there will be a brief question-and-answer session. Questions will be limited to analysts and investors. Please limit yourself to 1 question and 1 follow-up. To ask your question during the call, please press star 1. If you require any operator assistance during the call, please press star 0. I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports + Outdoors. Matt, please go ahead. Thanks, operator. Good morning, everyone, and thank you for joining the Academy Sports + Outdoors second quarter 2021 results call today. Participating on the call are Ken Hicks, Chairman, President, and CEO; Michael Mullican, Executive Vice President and CFO; and Steve Lawrence, Executive Vice President and Chief Merchandising Officer. As a reminder, statements in today's earnings release and the comments made by management during this call may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our filings with the SEC. The company undertakes no obligation to revise any forward-looking statements. Today's remarks refer to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in today's earnings release, which is provided on our investor relations website, investors.academy.com. I will now turn the call over to Ken Hicks, CEO. Thanks, Matt. Good morning, everyone. Let me start by saying that our thoughts and prayers go out to everyone impacted by Hurricane Ida. I'm very proud to say that thanks to the tremendous efforts of our stores, operations, and supply chain team, that all of our stores in the impacted area are now open. We are assisting affected team members and their families get the help they need to recover as quickly as possible and also supporting our customers and our communities. We're working to get all of our stores in the impacted area fully stocked and staffed so that they can continue to support and serve their local community and customers. Now shifting to our second quarter results. Last quarter, I said we were focused on winning the summer season, especially the major holidays. I'm very pleased to share that we achieved the highest sales weeks in the company's history for Memorial Day, Father's Day, and the Fourth of July. This was primarily driven by our customers coming back more often, spending more, and shopping more areas of the store. The success of these events helped drive record second quarter sales of $1.8 billion, comparable sales of 11.4%, and sales growth of 44.8% when compared to the second quarter of 2019. Academy has now posted eight consecutive quarters of positive comparable sales and operating profit growth dating back to the third quarter of 2019. We also achieved record gross margin of $642.5 million, driven by continued favorable product mix, less promotional activity, and fewer markdowns. Our gross margin growth more than offset higher product and shipping cost increases, and we're still providing great value to our customers. In terms of labor costs, we've made market adjustments as needed to reward and retain employees, but have also implemented changes using our labor management tools to reduce unproductive store activities, letting team members focus on serving the customer. Overall, we ended the quarter with net earnings of $190.5 million, the highest quarterly earnings in the company's history. Our inventory position at the end of the quarter was up 24% compared to last year. There's been a lot of discussion about inventory availability and supply chain constraints. We've been working diligently with all of our vendor partners to ensure merchandise flow and allocations. Given our strong relationship with suppliers such as Nike, Adidas, and Under Armour, we are in a position of sufficient supply right now, and while there will be challenges, believe we have a good line of sight on what to expect over the next few months. The team is doing an excellent job navigating this dynamic environment, and we're excited about back to school and sport in the fall and holiday season. Our consistent, strong financial performance over the last two years demonstrates that the operational changes we implemented prior to the pandemic and the continued refinements being made to grow top-line sales, improve margin and profit, and enhance customer satisfaction are working. Along with our well-performing operating model, we are a leader in the sports and outdoors category at a time when more consumer spending continues to shift to the estimated $100 billion sports and outdoors category. People are making lasting lifestyle changes focused on health and wellness sharing outdoor experiences and nesting at home in their backyard oasis. In addition, as working from home has become more prominent, customers are also shopping for more casual work attire. We believe all these trends will continue for the foreseeable future, and that our broad assortment of quality and value products positions us as an excellent option for consumers to meet all of their needs. Given the strength of our balance sheet, our consistent financial performance, and the confidence in our future, I'm excited to announce that Academy's Board of Directors has authorized a $500 million share repurchase program. We are establishing a disciplined capital allocation strategy built on prioritizing the financial security of the company, reinvesting in the business for growth, and returning capital to shareholders. Lastly, based on the strong Q2 sales, we're increasing our full year 2021 comparable sales and EPS guidance, once again, being mindful of numerous ever-changing external factors. I will now turn the call over to Michael for a review of the financials. Michael? Thanks, Ken. Good morning, everyone. Our second quarter results set company records across key financial metrics, including revenue, gross margin, pre-tax income, and net earnings. I will start by reviewing our record second quarter results, then discuss our updated 2021 outlook, which we are raising based on the continued strength of our business and healthy market trends. Net sales were $1.8 billion, with comparable sales of 11.4% on top of last year's 27% comp. When compared to Q2 2019, sales increased 44.8%. As Ken mentioned, it is our eighth consecutive quarter of positive comparable sales, of which the last five have been double-digit increases. The growth was broad-based and is the third consecutive quarter that all four merchandise divisions have had positive comparable sales growth. The growth was driven by an increase in transactions, average unit retails, and ticket size. Our differentiated value-based assortment and excellent service is resonating with our customers at a time where everyone is looking to have more fun. We are pleased with the progress of our e-commerce business. Sales were down slightly, minus 9.10% for the quarter. However, when compared to the second quarter of 2019, sales increased 207%. The sales penetration rate in Q2 2020 was 8.4% of sales, more than double the penetration rate in Q2 2019. Buy online, pick up in-store sales exceeded 50% of e-commerce sales and continues to be a very effective and profitable way for us to transact with our customers. The investments being made in omnichannel, such as the July launch of our mobile app, more relevant product recommendations, enhanced ship to store capabilities, and new search and checkout functionality, will drive continued growth. academy.com sales were positive for the last seven weeks of the quarter, the sales trajectory is encouraging. Merchandise margins were once again very strong. Similar to the first quarter, margins benefited from a shift towards a normalized product sales mix, higher average unit retails, and fewer markdowns. The gross margin rate expanded by 500 basis points to 35.9%, leading to a record gross margin dollar performance of $642.5 million, a 29% increase over Q2 2020 and a 67% increase over Q2 2019. SG&A expenses were $388 million, or 21.7% of sales, which was 220 basis points higher than Q2 2020, 360 basis points lower than Q2 2019. Last year, due to the onset of the pandemic, we reduced certain operating expenses, such as advertising and payroll, compared to a more normalized run rate this quarter. This year, we also recorded one-time stock compensation expenses associated with some accelerated share vesting. Excluding the non-recurring expenses, SG&A expenses would have been 19.2% of sales. The record sales and margin results led to pre-tax income of $240.9 million, a 42.8% increase compared to $168.7 million last year. After applying the second quarter tax rate of 21%, we finished the quarter with record net income of $190.5 million. Q2 diluted earnings per share were $1.99 per share, compared to $2.25 per share in Q2 2020. The decrease is due to the number of shares outstanding compared to the prior year quarter and a lower tax rate as the company was not subject to federal income tax prior to the October 2020 IPO. Pro forma adjusted net income, which excludes the impact of certain extraordinary items, increased 67.1% to $224.6 million, compared to $134.4 million in Q2 2020. Pro forma diluted earnings per share were $2.34, compared to $1.81 per share last year. Looking at the balance sheet, we are in a strong financial position with $554 million in cash at the end of the quarter. We remain undrawn on our ABL facility with over $850 million of borrowing capacity. In addition, after reducing our term loan by $99 million this quarter and lowering our leverage ratio, our debt was upgraded by Moody's and S&P. The ending inventory balance was $1.1 billion. This is 24% higher than Q2 2020, 3% higher than at the end of last quarter, and 7% less than Q2 2019. During Q2, the company generated $170 million in adjusted free cash flow. Lastly, capital expenditures are expected to be approximately $90 million in fiscal 2021, as we have accelerated certain growth initiatives. At the beginning of the fiscal year, we identified four main sales-driving opportunities. Those opportunities were capitalizing on the shopping velocity of new and existing customers, replenishing and growing categories where inventory was constrained throughout most of 2020, the growth of several product categories that were challenged last year but would benefit from the reopening of the economy, and improving our management of seasonal categories where demand exceeded supply in 2020. Here's our mid-year report card. First, the number of existing customers who made a purchase in a new category over the last 12 months and then purchased that category again continues to increase. Second, ending inventory of constrained categories has improved. For example, we are back in stock in categories like bikes and fitness equipment. Third, compared to the first half of 2020, team sports, apparel, and footwear have exceeded the company's comp sales growth rate. Sales in seasonal categories like water sports and outdoor furniture, where we didn't have enough supply last year, have also exceeded the company's second quarter comp. We are growing the business by having the right products in stock at the right price at the right time by driving deeper engagement with existing customers and gaining market share. Our stores are becoming more productive and profitable. Over the trailing 12 months, we have increased our average sales per store and sales per square foot by 20%. EBIT for the same period grew by 125%, $2.7 million per store compared to $1.2 million. When compared to 2019, sales per store have increased 31%, and EBIT per store has grown 320%. On a trailing 12-month basis, 100% of our stores are profitable and accretive to earnings. To our updated outlook for fiscal 2021. Based on Q2 results, recent trends, and the visibility we currently have into Q3 and Q4, we are raising our comparable sales forecast from up 6%-9% to an increase of 14%-17% for the full year. On a two-year basis, this would represent comp growth of 30%-33%. GAAP diluted earnings per share are now forecasted to range from $5.45 per share-$5.80 per share, based on 96.5 million diluted weighted average shares outstanding for the full year. This EPS range does not include the impact of any potential share repurchases. This guidance accounts for various market scenarios and possible outcomes for the remainder of the year, varying from business as it is today to a challenging environment with more supply chain constraints or a much more promotional and competitive marketplace. With that, I will now turn the call over to Steve for more details around merchandising and operations. Steve? Thanks, Michael. Now I'd like to give you a little more color around our second quarter performance. As we already mentioned, our growth trend continued, and we delivered an 11.4% comp versus 2020, which was up 44.8% when you compare it against 2019. We're pleased to see the momentum in the business carry into Q2 with all four divisions posting increases, which was significant since we're up against our largest comp from last year at +27%. Looking at the results by division, apparel and footwear were once again our two strongest divisions during the quarter. Apparel sales were up 19% versus 2020 and 37% when compared to 2019. Footwear ran a 15 comp and was up 27% when compared against 2019. One common theme across both of these divisions was the strength we saw in our youth apparel and footwear businesses. Both of these categories outperformed. We believe that this demonstrates the continued strengthening of our position with young families, particularly in our newer markets. With a more normalized back to school this year, youth businesses should continue to be a growth driver for us into Q3 and beyond. I'd also note that our businesses with key national brands such as Nike, Adidas, Under Armour, Columbia, and The North Face all had strong performance, which we'd attribute to improving inventory positions, better content, and more controlled distribution in the marketplace. Our partnerships with our key national brands are only getting stronger, which is helping us stay in stock while also delivering new, innovative offerings that our customers love. We're also excited that our private brand business outperformed the total company comp. We saw continued momentum driven by our two new rollouts for 2021 from Magellan Outdoors Pro and Freely, both of which continue to outpace our original plans. We expect private brands to continue to be sales drivers for us in the back half of the year, fueled by the rollout of Women's Freely in plus sizes, along with the launch of our first collaboration with Magellan Outdoors. We will partner with Whataburger to deliver a fun, co-branded limited edition capsule. As we'd expected, our licensed sports business trended up as enthusiasm for live sporting events has started to increase. We expect this business will only get stronger as we head into the fall college and pro football seasons. Our sports and rec division also posted a double-digit comp at + 14% versus 2020. It was up 50% versus 2019. We saw continued strength in our team sports business fueled by the return of youth sports being played across our footprint. We had solid growth in the key spring/summer sports of baseball and soccer. Football started kicking in at the tail end of the quarter. It was also good to see we sustained momentum in many of the categories such as outdoor cooking, exercise equipment, and water sports, which ran positive comps despite being up against historic sales increases and volume levels from last year's COVID shutdown. In our outdoor division, we drove a low single-digit comp versus 2020. We're up 59% versus 2019. The camping, coolers, and shooting sports categories all had strong performance during the quarter. The one soft spot was the fishing business, which ran a decrease versus a large surge we saw last year in the second quarter, but is running up strong double-digit increase versus 2019. On the margin front, we achieved a 35.9% gross profit rate during the quarter, which is up 500 basis points higher than last year. Key factors that are driving our merchandise margin growth are, first of all, the work we've done around refining our allocation strategy, coupled with more targeted localization effort, has improved overall inventory productivity and is driving higher AURs through better regular price selling. Second, we continue to see a less promotional marketplace. This has allowed us to scale back discounts during high traffic time periods. Third, the strong sell-through at regular price when coupled with our markdown optimization strategy, has helped reduce the amount of goods we're taking to clearance, along with driving higher AURs and better margins on the clearance we do have. Turning the page to inventory, probably the biggest challenge facing us and the industry are the numerous disruptions to the supply chain. Despite all these challenges, our inventory is improving in terms of overall level and content. We ended the quarter with our inventories up 24% to last year versus starting the quarter at plus 7% to last year. While we're still not at optimal levels across all areas, we're fully back in stock in many of the categories that have seen accelerated demand, such as fitness, fishing, bikes, apparel, and footwear. Other categories, such as ammunition, are not 100% where we'd like them to be. We have enough supply to start building back our inventory levels in stores. Looking forward, we believe we have the strategies and pipeline of inventory, coupled with strong relationships with our key partners to keep receipts flowing and driving sales growth. As we look to the back half of the year, several factors lead us to believe that we'll carry our momentum forward and continue to see improvements in both sales and margin. First, consumer demand for the sports and outdoor merchandise we carry is strong. We expect this to continue for the foreseeable future. Second, the dot-com business is accelerating. We expect it to continue to be a tailwind for us on a long-term basis. Third, over the last 18 months, we've demonstrated that we can overcome external challenges and build our overall inventory levels and in-stocks, which should help propel the business during the back half of this year. Fourth, we're improving the overall effectiveness of our marketing spend through more targeted communications, which are improving conversion rates and driving sales. Fifth, several of our key brands have tightened their distribution, which should continue to funnel more product and more customers into our stores. Finally, we believe that all the strategic work we've done over the past couple of years to improve allocations, to have better localization efforts, and improve execution at our DCs and stores should drive sales, will also help offset the cost pressures that result from the supply chain challenges that the industry is facing. Thanks for your time today, and now I'd like to turn the call back over to Ken. Thanks, Steve. The third quarter is off to a very strong start, driven by a robust back-to-school and sports season, as we are prepared and in stock on the most popular items, including backpacks, youth apparel, footwear, and team sports equipment. With the fall sports season kicking off, our licensed apparel business is also experiencing a very good start to the quarter. Academy is entering a growth phase, and the team is focused on maintaining this positive momentum while retaining the gains achieved over the last year. Market and consumer trends remain strong, and we are in a favorable position to capitalize on a tremendous opportunity. Our goal remains the same: to be the best sports and outdoors retailer in the country. We will do this by executing our priorities, which are building a stronger omnichannel business, improving our in-store and online shopping experience, continuing our power merchandising efforts, increasing our targeted marketing, strengthening our supply chain, and preparing for future store growth. Thank you. We will now open up the call for questions. The company will now open the call up for your questions. To ask your question, please press star one. We will pause for a minute to wait for the queue to fill. Our first question is from Michael Lasser with UBS. Please proceed with your question. Good morning. Thanks a lot for taking my question. Your gross margin is on pace to be in the mid-30% range this year. That compares to 29.6% prior to the onset of the pandemic. Market seems to be struggling with what is the right ongoing run rate for your gross margin. How do you respond to that? Yeah, Michael, we've been gradually expanding our margins well before the pandemic began. As you know, we've been working on a lot of initiatives to do that. If you think about the expansion, I'd say a large part of it has been because we've been able to take AURs up smartly. Again, as we think about our products, we've talked a lot about products that were accommodation items that we had priced too low. Categories like bicycles, where we were the lowest price in the market, but we were providing service that was stronger than our peers. That part of it should be pretty sticky. There will be probably some giveback as more promotions enter the environment. That being said, we still think that the mix hasn't normalized, so there should be, I would say, 50, 60 basis points of improvement still to come as the mix returns back to normal. From a clearance standpoint, we don't expect to go back to the clearance levels that we had in the past. Freight has been a headwind, as you know. That's why we've been tackling the supply chain initiatives to help offset that in the future. I think the days of us going back below 32 and a half, those are well behind us. Somewhere between that 32 and a half and 35, where we're at today, is where we would expect to be long term. It's very helpful. My follow-up question is, you're sitting on well over half a billion dollars in cash on your balance sheet. You just authorized a very large share purchase program. You're setting the stage to deploy capital to open new stores in the coming quarters. How are you prioritizing this potential deployment of cash flow to create value? Your stock trades at a very low multiple on the earnings guidance that you gave today. It suggests you have a lot of opportunities to create value for shareholders. Michael, I agree with that. Our priorities remain the same. First, to ensure the financial stability of the company, making sure that we have the proper amount of cash to run the business. Second is to pursue our substantial growth opportunities, starting with new stores, continuing our efforts in omni-channel, continuing to improve our operations with things like the work we're beginning in our supply chain, continuing the efforts that we've got going on in our power merchandising with better systems and processes there, which have helped our margins. We will continue to provide and ensure that we have adequate capital to support the significant growth that we have and will continue to have in stores, omni-channel, and our operations. Then the third priority is making sure that we reward and recognize our stakeholders. The step we took today, I think, is a big nod to that. We will continue to be good managers of the capital and provide for those three key priorities. Thank you very much, and good luck. Thank you, Michael. Thanks, Michael. Our next question is from Kara McShane with Wells Fargo. Please proceed with your question. Yes. Hi. Thanks very much for the question and congrats on the strong results. Thank you, Kara. Michael, just 1 point of clarification on the EPS outlook of $5.45-$4.80. I presume this is GAAP. Your year-to-date earnings are running about $0.40 above on a pro forma basis. Should we think about the updated guidance as about $5.85-$6.20 on a pro forma basis? I'm just trying to rationalize. Yes the pro forma with the GAAP outlook. Thank you. No, good question. The guidance update we provided is GAAP EPS. Okay. On a pro forma basis, yes, you'd add the $0.40. Great. Thanks for the clarification. Ken, I guess just at a higher level, your business has seen really remarkable consistency versus Q1 relative to 2019 levels. I guess just when you think about the category in general and the durability on the strength of the category, is there a view that we can continue to comp the comp when we look to 2022 and beyond? I think there is some fear that you're seeing a real pull forward right now in demand. Just curious, higher level, how you're thinking about the ongoing durability of the category, particularly maybe as some of these lower ticket categories start to normalize. Thank you. Yeah, we feel very confident in the long-term durability of the business. We see people continue to come back with the things that they started both before and during the pandemic. We are at a much higher level. We've comped the comps and headed to comp the comped comps. We're going to keep driving the business forward, as we stated in our script, that the third quarter is off to a good start. We're pleased with that. We have some pretty big hills ahead of us, but the customer continues to come, and at some point, people have to quit asking, "Is this going to continue?" Because it continues. I think that that's important to understand that the business that we're in and what we're doing is really got some long legs, and we've got expectations, great expectations, for the future. Yeah, Kara McShane, I would just tag onto that a little bit. We have absolutely, as an organization, leveled up operationally. The initiatives that we put in place, they made a difference before the pandemic, they made a difference during the pandemic, and now we're anniversarying it. In markets, frankly, that have been open largely for more than a year. Consumer demand is still very, very strong. In a world, and we read about this all the time, where people are looking to escape the rat race and live in the moment, that's what we do. We help people do that and have fun and be able to participate in a lot of these new activities. We are seeing our existing customers return more frequently. They're spending more when they return. That hasn't changed. Customers that are trying new categories that are new to the division, whether they're new or existing, they're spending more on that first visit, and they are coming back more than they did in the past. All the trends in our business are very healthy right now, and I think we still have a lot to work on organizationally to help us capture that demand. Yeah. Great. Thanks. Best of luck for the back half. Thank you. Our next question is from Greg Melich with Evercore ISI. Please proceed with your question. Hi, thanks. I had two questions. I wanted to start on SG&A. Thanks for calling out the non-recurring part of it. I just wanted to see, should we get back to a clean point of if we can comp high single digits, we're showing leverage? Or is there something unique about the year-over-years in the back half that we should be aware of? No. If we get to that low single-digit comp, we will continue to lever. That is certainly what we are planning to do. Good sales help you do that. We plan on having good sales. We work very hard to make sure that we manage the expenses and so that we're capable of leveraging at, quite frankly, whatever sales level we're at. Perfect. The second question was on the capital allocation. With the $500 million buyback, it looks like your free cash flow is probably around that number, but I think the authorization's good for three years. If we continue at this rate, will it take three years to use that? What's your thought process in terms of allocating that capital to either building more cash, opening stores, or executing the buyback? We are not defining what the terms are of the $500 million buyback at this point. We also do foresee continued expansion in the growth. We're opening eight to 10 stores next year, as we've stated. We plan on those stores being successful. We're working very hard to ensure that they are successful, and that will give us the opportunity to continue to grow there. We will continue to invest in the omni-channel field, and we will continue to work to improve our operations. The good news is that we are able to do all three of our priorities, ensure our financial security, provide for the significant growth. You've heard me say before, I don't think there's another retailer that has the omni-channel, the organic, the operational, and new store growth opportunities that we have, and then recognize that we can support our investors at the same time. That's great. Congrats and good luck. Thank you very much, Greg. Have a good day. Our next question is from Robert Ohmes with Bank of America. Please proceed with your question. Hey, good morning. Congrats on another great quarter. I was hoping that you could, maybe Ken and/or Michael, can you just remind us on the profitability, commerce business and where that is today, maybe versus 2019? Ken, you're mentioning focusing on omni-channel initiatives. Can you give some more detail on where you think you can take omni-channel for Academy Sports from here and what we should be looking for near term? Yeah. With regard to the profitability, our omni-channel is profitable and not quite as profitable as the stores, but it is approaching that level. Our ability to serve our customers both through shipping to their home, but also buy online, pickup in store, has allowed us to have a profitable.com business. We couldn't have the increase that we've had over the last two years of over 200% in omni-channel with the increase in profitability if it wasn't profitable, we continue to work to make it profitable. That's important. The second thing, I think, to the second part of your question, we are doing a lot of things with our omni-channel. We've talked about improving search, payment capabilities. We've added new payment capabilities, we'll continue to add things like that. We introduced a new app within the past month that's gotten off to a very good start. We will provide capabilities on the app that will, I think, get more customers to use it and be supportive of our customers. We are using new technology to communicate with our.com customers. We are going to continue to improve our customer database between the stores and omni-channel. We still have a lot of work left. We were late to the game in omni-channel, and we will look to the customers to decide how big it should be. We haven't said it's got to be this percentage, but I would envision omni-channel is probably going to be, over the next year or two, 15%-20% of our business, and the penetration will continue to grow. We doubled the penetration of our academy.com this year over 2019. We will continue to see that improve. One of the things we're working hard, or two of the things we're working hard to do, one is ensure that it's connected with all of our customers to include our store customers, and that it's a profitable business and we aren't just trying to grow it to grow it. That sounds great. Thanks so much, Ken. That was a mouthful. Hopefully, I got all your points covered. Thanks, Robbie. Our next question is from Daniel Imbro with Stephens Inc. Please proceed with your question. Good morning, guys. Thanks for taking our questions. Ken, want to start on the unit growth side. I think you talked about that in your remarks, obviously, with capital here, being able to start accelerating that. I think last year, you guys cited some really attractive unit economics with smaller format stores. How replicable do you think those kind of returns will be, and how do you envision the role, maybe those small format, maybe infill markets? Is it more expansionary markets? How are you viewing that as we get into next year? Look, two things. One, that's an important point that Michael Mullican likes to have me call out is that all of our stores are profitable on a 12-month trailing basis, and so all of the formats that we've had in time. We have opened a 40,000 sq ft store. We see that as an opportunity as we look to fill in markets to go into some of the urban areas that we're backfilling to take advantage of existing locations that we may take over. We know that's profitable, and it is as profitable as our larger store. We like the larger format more simply because it delivers more volume. Our preference is the larger store where we can, but where we see an opportunity to open a store, we will open that. We do have that capability to have a very productive 40,000 sq ft store in there, as well as our standard store that's a little over 60,000 sq ft. Yeah, Daniel, we're pleased with the 40,000 square foot format. I would like to remind everybody that the larger 60,000, 62,000, 63,000 square foot format still has best-in-class productivity on a sales per square foot basis, on a profitability per square foot basis. Back to Robbie's earlier question about omnichannel, the best way to grow our omnichannel is to grow our fleet because 75% of our e-commerce businesses is fulfilled from the store. We're only in 16 states. That leaves 30+ states that have a chance to experience the Academy magic as we look to grow and bring our winning model outside of our current footprint. Many of those states, by the way, that we're in, we only have one or two stores. We have, within our own market, some excellent fill-in opportunities, but it's a big country and we know there's a lot of people that want and deserve Academy Sports + Outdoors. Great. Thanks for all that color. Then one follow-up on the gross margin outlook. That was a helpful answer to Michael's question earlier. When you talk about the drivers of gross margin, merchandise is obviously strong today. I didn't hear a ton of discussion around the supply chain initiatives, distribution initiatives we talked about with Michael. Are those still on the come, and can you provide any more color on what maybe the lowest hanging fruit is on that supply chain side and what it could mean for earnings or margin? Well, I'll take the, I guess, middle part of the question about the gross margin. We do have significant continued opportunity with the planning and allocation initiatives that we've put in place, markdown optimization, those are all learning systems that will continue to learn and develop more localization, that we're working very hard so that each store has the right assortment for it, whether that's a store that in outdoor grilling, it's a smoking or gas or pellet predominant market, whether it's a store that the work boots are important, and are those work boots more factory and service or more for the oil field. We are really working hard through our systems to tailor that assortment for each of our stores, which will improve the margin and reduce the markdowns. Those initiatives are underway and continue to work. The supply chain initiative literally just starting, but there is some low-hanging fruit that we're looking at, and I'll let Michael talk about some of those things that we're looking to deliver. It too is a longer-term initiative that will continue to deliver over time. I think of the gross margin builders really three categories. The first is mix normalization. Again, probably 50, 60 basis points to come there. All the inventory stuff that Ken talked about, plus clearance, better localization, getting the right product in the right place at the right time. That's the initiative that Steve and team have led. We're still probably middle innings there. The last one is the supply chain that you mentioned. We are just beginning to take that on, and that is a multi-year project that will frankly deliver benefits throughout that time. I haven't quantified them yet, but there's some low-hanging fruit that we'll realize some benefit this year. Case pack optimization Case pack optimization store touching less, better stocked up. More cross-docking, more multi-stop delivery. It's not the sexy stuff like rolling out maybe a new private label brand, but it's the stuff that sticks to your ribs and really matters from a profitability standpoint. Which, by the way, you mentioned in others, we continue to develop in our private label brands. We introduced the Freely, which has done very well. Magellan Pro in our outdoor area and in apparel has done well. New ideas. It was just a side comment in Steve's presentation about what we did with Whataburger, but we had over a million hits and the number of people, we sold out that merchandise in a week. Those type of ideas that drive traffic, improve profitability, and support a strong private label business, that doesn't take away from the important brands that we have, but adds to the things Academy can provide its customers. We'll walk it back from where we're at today, that 35 and change. If you say the environment becomes more promotional and we give up 200 basis points, maybe 250, we still have, I think, 50 to gain from a mix standpoint. I still think there's probably 50, 60, who knows what it is, on the supply chain. Ultimately, I think as we mature, we'll be in a pretty good spot. Great. It's all really helpful color. Thanks so much and good luck, guys. Thanks, Shane. Our next question is from Chris Horvers with JPMorgan. Please proceed with your question. Thanks. Good morning, everybody. Michael, can you provide a little bit of color on the cadence of the back half of the year, obviously implying about an 8.5% comp at the midpoint? Can you talk about how you're thinking about 3Q versus 4Q to the extent that you can on the top line? Then also on the margin front, you're implying about an 8% EBIT margin in the back half. That seems pretty low and pretty conservative. Any cadence color there, and when are you assuming perhaps promotion comes back into the mix? I'll give a couple of brief comments and I'll flip it over to Steve. I'd say, look, we are looking at it relatively conservatively. There's still a lot of the year left to go. There's just as much uncertainty today as there was three months ago, six months ago. We're up against two monster quarters in the back half of last year. The supply chain is challenged. The labor pool has been tough, and it looks like COVID's going to be with us for a while. That being said, business is still very strong today. I'll let Steve talk about some of the other questions there. Yeah. From a cadence perspective, what we're seeing right now is it's more normalized cadence. Last year, we saw back-to-school move out in our markets at least 30-45 days. This year it's moved back. Us, the heart of our back-to-school is that late July, early August time period. As Ken already mentioned, we're off to a really strong start there. We have a more normalized calendar the rest of the way through. We do expect a lot of the tailwinds that we've seen so far to continue through. 1 of which is, we brought up the scarcity to supply and the supply chain. That's going to remain a challenge for us and everybody going forward for the foreseeable future. One of the things we're pretty excited about is, if you heard us talk about our inventory, we started the quarter with inventory up about 7% to last year. We ended the quarter with inventory up about 24% to last year. What we've demonstrated is we've been operating in this kind of dysfunctional supply chain world for 12-18 months now, and I think we're operating pretty well against that. We've got good pipeline of inventory, strong visibility of what's coming in. We're doing a good job of prioritizing that, and we think we're going to be in a really good position for holiday. What we think may happen this holiday is similar to what we saw last holiday where there is a scarcity of supply out there in the marketplace. Hopefully that means people will buy earlier at full price, which should hopefully mitigate need to promote as we get deeper into the holiday season. Yeah, a couple important points. The guidance that we provided contemplates all of these risks. We have the goods to achieve the sales targets that we've provided. We've got a diverse vendor base, which actually helps us offset some of the inventory challenges. Our vendor base is much more diverse than others. As it sits today, we feel very comfortable with the guidance that we've provided. If we're able to kind of manage through the challenges in the way we have in the past, we certainly think we can exceed it. Yeah. As you look at it, we plan, and those of you who know me for a long time know, we plan for all the contingencies that can occur. We're overcoming Hurricane Ida that impacted one of our major markets. We've got all of those stores open. The team has done just a phenomenal job there. The area is impacted for a while, and there are some costs as we recover. We've got the continuation of COVID. We have the uncertainty of the consumer. We have the supply chain challenges. All of those have been figured in. What we've demonstrated, and hopefully that you saw with this past quarter and the quarter before that, is through all these challenges, we have been able to continue to perform strongly. That said, we're going to make sure that we've got the contingencies planned and we're able to capture the opportunity as we go forward. I feel confident that with the team that we have here, we will be able to continue to deliver good results. I guess as a follow-up point to that is, you held your two-year CAGR very strongly here in the second quarter versus what you did in the first quarter. That's pretty outstanding. Even in this consumer environment, you're not seeing that from a lot of retailers. Like Steve mentioned, you're a good portion of the way through back to school. Is it fair to assume that you're not seeing any impact from Delta and that so far two-year trends have remained relatively constant? I got a lot of grief last time for my comment where I said, the quarter started off with the same level that we've been performing at, and then people, "What does that mean?" It's true again. We've got challenges, and I think that we will continue to see strong growth. Well, these numbers, and at some point, we all have to come back to earth a little bit. Everybody is spoiled by these huge growth numbers. That said, we continue to see good growth for the company. We are off to a good start this quarter, and as Steve said, we've got the inventory and are positioned well for the back half. There are some things that could come up, but we feel confident. Probably the biggest thing is the consumer continues to say, "We like what you have, we want what you have, and we want to shop at Academy and buy from you. Thanks very much. Best of luck. Okay, thanks. Thanks, Chris. Our next question is from Lavesh Hemnani with Credit Suisse. Please proceed with your question. Hi, thanks for taking my question, and congrats on the strong quarter. I just had one long-term question. Thank you. If I look at just the unit growth outlook, right, for 2022, eight to 10 stores, considering the business is showing strong growth, there are structural changes in the consumer lifestyle trends that you highlighted, the strong free cash flow position. Is there a possibility that you could accelerate store growth stronger than the 8 to 10 that you called out to accelerate those share gains? I think, Lavesh, that for next year, eight to 10 probably is a good number because of the capability. Beyond that, we have the financial wherewithal, we've got the market opportunities, and we are developing the organizational capability to expand beyond that and add more stores. We want to do it right, and we will grow what is appropriate. The eight to 10 number is, I think, a good number for next year. Beyond that, it could be higher. Yeah, the only thing I'd add, just to make sure everybody is clear, we could add up to 100 stores without having to expand our distribution network, so there's plenty of capacity to grow with our existing network. When it costs you $3 million to build a store and you can see the EBITDA we're delivering, 100% of our fleet is profitable, you should build more stores. As Ken said, we're going to put the infrastructure in place and evaluate after 2022 what that cadence is. Yeah. We won't have to wait and delay to build a distribution center, first one. The second thing, I think that's important, this is another point that Michael's made in the past, is one of our requirements is the stores in their first year are cash flow positive. We don't want it, as we expand, it will not be a drain on our ability to continue expanding. Got it. Thank you for the color. Thank you. Thank you. Our next question is from Doug Adams with Loop Capital Markets. Please proceed with your question. Hi, everyone. Thanks for taking the question. Just one for me on capital allocation. I'm curious as to what the thought process was behind the buyback versus a dividend. Just given the balance sheet strength and strong free cash flow generation, do you see yourself as a dividend-yielding company, say, one year from now? Thanks. We will continue to explore what we think is best for the company and for our investors. Right now, given where the stock quite frankly is valued, a buyback makes the most sense. We will evaluate all the options to make sure that we are giving our shareholders the adequate return. Thanks, Ken. That makes a lot of sense. Thank you, Daniel. Congrats, guys. Our next question is from John Heinbockel with Guggenheim. Please proceed with your questions. Hey, Ken, maybe when you step back and look at, You've improved the strategic capabilities of the business in a lot of different areas. Other than supply chain, which we've talked about, what areas would you still like to work on? When I think about use of capital, you think about strategic M&A, are there capabilities that you don't have that might be interesting going down that path, or you pretty much have what you need right now? I think as you talk about things that we need to improve on, we've got continued opportunities in our merchandising. We have a lot of work to continue in our marketing. We have opportunities to, as you said, improve our supply chain, omni-channel, we've talked about, improving our stores and the service and what we're doing in our stores. We've got a lot of things that we can do better. This is a company that fortunately has no shortage of opportunities for improvement. With regard to the capability, because we have the opportunities for growth, I don't think we have to take a risk in looking outside the company for opportunities or trying to think of what's a new idea that might work, that may or may not work. We've got within our bone structure, the capability to grow, to carry that extra weight, if you will, and still be just as fast and nimble as we were, as opposed to having to take the risk and cost of spending money outside. That is something that I think is very important, as you look at a company is, are they growing things that you're pretty sure of, that they know how to do versus is it going to work or isn't it going to work? Okay. Maybe as a follow-up to that, you talk about building a national brand. It's a long way out, but you think about adjustments to how you go to market in the South, Northeast, West Coast. Maybe this is more for Steve, how do you think about merchandising adjustments as you move to the northern part of the country or that's a pretty easy transition to make? It's something that quite frankly, we're learning. We've got stores in Missouri and- Illinois Illinois, weather's different than Texas and Florida. That gets to the point I made earlier about the localization. Lacrosse in North Carolina, they have different sports. They have different cooking. They have different seasons for apparel. Those are things that when I talk about learning and merchandising, we're learning. That localization, I think, will really help us as we go into new markets and understand what's important in a new market, and it's not something that, geez, this is foreign to us. It's a way that we operate. Yeah, I'd say that was a mistake we made in the past when we went into new markets and why they underperformed was, and we talked about this, I think, with a lot of different conversations where we try to take what worked in Texas and apply it there. We're not doing that anymore, so that's a new muscle from a localization, from an assortment perspective that we've learned to exercise. Back to Michael's point earlier, if 100 stores were in the future, most of those would fit within our existing DC structure. That keeps us still somewhat in the southern part of the geography of the United States. I think if we start pushing into the north, yeah, we're going to have to add in some of the winter sports like hockey, maybe skiing at some point, but that's well into the future. I think what's more important is understanding all the local nuances, whether it's in cooking, whether they're grillers using smokers, whether it's propane, whether it's deep frying turkeys. It's all those other nuances when the back-to-school timing is that I think we've gotten a lot better at in terms of how to execute against. One of the most localized things that we do is fishing. Probably the most localized. The most localized because of bait and one market's very different, and that's something we've got a great team there, and it's helping us apply that thought process to other parts of the store. Thank you. Thanks, John. Thanks. Ladies and gentlemen, we do have time for only one more question. That last question would go to John Zolidis with Quo Vadis Capital. Please proceed with your question. Hi, good morning. Many questions have been answered. I do have one question about the reasons you cited for confidence that trends on the top line and gross margin would continue. I think a lot of us understand the demand side of the equation, but a little bit more difficult to quantify and drill down on are some of the things that you mentioned, for example, distribution strategies of key vendors. I don't know if you could talk about that specifically. Secondly, in the post-COVID environment, what's happened from a brick-and-mortar competitive standpoint? Thanks. I think we'll probably all take a chance at answering parts of that question. Back to growth drivers, we already mentioned you brought up strong consumer demand. That's clearly a tailwind for us. We brought up dot-com. Our dot-com business is accelerating. Traditionally, we've been under-penetrated there. Obviously, as we were coming through the first half of the year and anniversarying some of the COVID surges, that business was flattening out a little bit, but it's back to growth for us. That's going to be a traffic and sales driver for us in the future. The improving inventory levels and content we already talked about. We touched on marketing. We are shifting our marketing spend from a more traditional print broadcast to much more digital targeted and talking to the customer on a one-on-one basis. That is going to make us much more efficient and a better retailer. We talked about the underlying strategies that we have from a merchandising perspective that really we put in place pre-COVID that we're fueling the business. The better allocation, the better localization, the better assortments, regular price markdown optimization. You brought up the controlled distribution. That is definitely something that is happening in the market where vendors are controlling the distribution better. That's helping us in a couple different ways. It's funneling more customers into our stores. It's protecting and making those brands more important. It's allowing us and a lot of retailers to pull back on some of the promotionality that undifferentiated retailers were leaning into as a way to drive those brands going forward. All those things we think, in addition to the consumer demand behind our category, are drivers of growth for us. You think, John, of literally the thousands of outlets that have been cut by several of the larger vendors. Those customers didn't all of a sudden dislike that brand, and they're looking to find it, and we're one of the key places in our markets where they can find it, and they know they can get a real good selection of it. Our partnerships, they're just getting stronger. There's been a lot of noise around these vendors moving to more of a digital space. When you think about how much volume is still done in brick-and-mortar stores, and they really value the customers that we reach that they can't reach, we see that continuing to just strengthen our relationship with our key partners going forward. Thanks, guys, and good luck. Thank you very much, John. Thank you, everybody. We appreciate your interest and participation. We hope that you have a better understanding of the opportunities, and you've heard on the call, we're all excited about what we're doing and where we're going, and we've got a great team working on it. Thank you for your support. Have a great day. This concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.