Sportsman’s Warehouse Reports Q2 2024 Financial Results

Sportsman’s Warehouse (NASDAQ:SPWH) Holdings, Inc. reported a decline in net sales to $288.7 million for the second quarter of 2024, along with a 9.8% decrease in same-store sales compared to the previous year. Despite these challenges, the company remains optimistic about its strategy of “great gear and great service,” highlighting improvements in store operations and a 3% increase in e-commerce sales.

Key Takeaways

• Net sales fell to $288.7 million, with a 9.8% drop in same-store sales.
• E-commerce sales grew 3%, now making up 19% of total sales.
• The company is investing $20 million in inventory, with a focus on the hunting department.
• Gross margin reduction attributed to increased inventory shrink costs.
• SG&A expenses decreased due to cost-cutting measures.
• A net loss for the quarter increased, with adjusted EBITDA also decreasing.
• Total debt is $155.1 million, with about $100 million in liquidity available.
• Full-year guidance now estimates net sales between $1.13 billion to $1.17 billion and adjusted EBITDA between $20 million to $35 million.
• Aiming for debt reduction and expecting positive free cash flow for the full year 2024.

Company Outlook

• Anticipates positive free cash flow for 2024 and plans to reduce total debt.
• Revised full-year guidance includes net sales expected to be between $1.13 billion and $1.17 billion, and adjusted EBITDA of $20 million to $35 million.

Bearish Highlights

• Decline in gross margin due to increased shrink costs.
• Increased net loss compared to the previous year.
• Cautious outlook for the latter half of the year due to significant headwinds.

Bullish Highlights

• Improved trends in hunting and growth in fishing department sales.
• Clean inventory at the end of the quarter with plans for strategic investments in core products.
• All-time high attachment rates surpassing COVID-19 levels.

Misses

• Markdowns required on seasonal goods to clear summer inventory, affecting profitability.
• Despite cost cuts, decremental margins are high due to limited cutback opportunities and increased promotional activity.

Q&A Highlights

• Executives highlighted a focus on boosting cash flow through EBITDA next year.
• Acknowledgment of running too low on inventory by Q2-end, with plans to reinvest in core segments.
• Strategic inventory investments planned for the holiday season, focusing on core SKUs.

InvestingPro Insights

• Market Cap: $83.61 million, indicative of the company’s market presence.
• P/B Ratio: Low at 0.34, suggesting potential undervaluation.
• Revenue Growth: A 6.84% revenue decline in the last twelve months, showing challenges in growth.
• Debt Burden: High debt levels could impact financial flexibility.
• Analyst Sentiment: Earnings estimates revised downward by four analysts, suggesting profitability concerns.

Conclusion

Sportsman’s Warehouse is grappling with a challenging retail climate but aims to improve through inventory management, customer service, and investments in key product categories while maintaining a cautious outlook for the upcoming quarters.

This article was generated with AI assistance and reviewed for accuracy.