Provides update to its full year 2024 guidance

WEST JORDAN, Utah, Sept. 03, 2024 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. (“Sportsman's Warehouse” or the “Company”) (Nasdaq: SPWH) today announced financial results for the thirteen weeks ended August 3, 2024.

“We continued to make substantial progress on our initiatives to reset the business and improve our overall operations; however, we were disappointed that sales and margins came in below our expectations,” said Paul Stone, Chief Executive Officer and President. “While we were more aggressive with our promotional activities during the quarter, our core customer remains firmly under pressure due to the difficult macroenvironment and pullback in discretionary spending. We will continue to carefully manage the business and find ways to take non-customer facing costs out of the business. Although the current conditions are challenging, we are not slowing our progress to transform our business and get back our edge as the leading outdoor specialty retailer. We still have a lot of work ahead of us, but we remain confident that our strategic initiatives have us on the right path to turnaround this business.”

For the thirteen weeks ended August 3, 2024:

• Net sales were $288.7 million, compared to $309.5 million in the second quarter of fiscal year 2023, a decrease of 6.7%. This net sales decrease was primarily due to lower demand across most product categories and a decline in store traffic resulting from the continued impact of consumer inflationary pressures on discretionary spending, partially offset by increased same store sales growth in our fishing department and the opening of six new stores since July 29, 2023.

• Same store sales decreased 9.8% during the second quarter of fiscal year 2024, compared to the second quarter of fiscal year 2023, primarily as a result of the same factors noted above that impacted net sales.

• Gross profit was $90.0 million, or 31.2% of net sales, compared to $100.8 million, or 32.6% of net sales, in the corresponding period of fiscal year 2023. This decrease as a percentage of net sales was primarily driven by increased costs associated with shrink, and from seasonal markdowns within our camping and apparel departments in an effort to end the season with clean inventory.

• Selling, general, and administrative (SG&A) expenses were $94.3 million, or 32.7% of net sales, compared to $102.3 million, or 33.1% of net sales, in the second quarter of fiscal year 2023. These decreases were largely due to expense reduction efforts, primarily in payroll and increased operational efficiencies across the entire organization, and no new store pre-opening expenses in the second quarter of this year. On a per store basis, payroll and other operating expenses decreased approximately 17% and 3%, respectively, compared with the same period in fiscal year 2023.

• Net loss was $(5.9) million, compared to a net loss of $(3.3) million in the second quarter of fiscal year 2023. Adjusted net loss was $(5.3) million compared to adjusted net loss of $(1.6) million in the second quarter of fiscal year 2023 (see “GAAP and Non-GAAP Financial Measures”).

• Adjusted EBITDA was $7.4 million, compared to $10.9 million in the corresponding prior-year period (see “GAAP and Non-GAAP Financial Measures”).

• Diluted loss per share was $(0.16) compared to diluted loss per share of $(0.09) in the corresponding prior-year period. Adjusted diluted loss per share was $(0.14) compared to adjusted diluted loss per share of $(0.04) in the second quarter of fiscal year 2023 (see “GAAP and Non-GAAP Financial Measures”).
  
  

For the twenty-six weeks ended August 3, 2024:

• Net sales were $533.0 million, a decrease of 7.6%, compared to the first six months of fiscal year 2023. This net sales decrease was primarily driven by lower demand across most product categories and a decline in store traffic due to the continued consumer inflationary pressures on discretionary spending, partially offset by the opening of six new stores since July 29, 2023 and increased same store sales in our fishing department.

• Same store sales decreased 11.5% compared to the first six months of fiscal year 2023, primarily as a result of the same factors noted above that impacted net sales.

• Gross profit was $163.8 million or 30.7% of net sales, compared to $180.9 million or 31.3% of net sales for the first six months of fiscal 2023. This decrease as a percentage of net sales was primarily due to a greater portion of our sales from promotional activities within our camping and apparel departments, and increased shrink.

• SG&A expenses decreased to $188.8 million or 35.4% of net sales, compared with $201.3 million or 34.9% of net sales for the first six months of fiscal year 2023. This decrease of $12.6 million was primarily the result of lower payroll and no new store pre-opening expenses due to our ongoing cost reduction efforts and the decision not to open new stores in fiscal year 2024. These decreases were partially offset by increases in rent and depreciation primarily as a result of opening six new stores since July 29, 2023.

• Net loss was $(24.0) million, compared to net loss of $(18.9) million in the prior year period. Adjusted net loss was $(23.1) million, compared to adjusted net loss of $(16.4) million in the first six months of fiscal year 2023 (see “GAAP and Non-GAAP Financial Measures”).

• Adjusted EBITDA was $(1.3) million compared to $3.1 million in the prior year period (see “GAAP and Non-GAAP Financial Measures”).

• Diluted loss per share was $(0.64), compared to diluted loss per share of $(0.50) in the first six months of fiscal year 2023. Adjusted diluted loss per share was $(0.61), compared to adjusted diluted loss per share of $(0.44) in the prior year period (see “GAAP and Non-GAAP Financial Measures”).
  
  

Balance sheet and capital allocation highlights as of August 3, 2024:

• The Company ended the second quarter with net debt of $152.5 million, comprised of $131.1 million of borrowings outstanding under the Company’s revolving credit facility, $24.0 million of net borrowings outstanding under the Company’s term loan facility, and $2.6 million of cash and cash equivalents. Inventory at the end of the second quarter was $363.4 million, a decrease of $93.8 million, compared with the same period in fiscal year 2023.

• Total liquidity was $99.9 million as of the end of the second quarter of fiscal year 2024, comprised of $97.3 million of availability on the revolving credit facility and the term loan facility and $2.6 million of cash and cash equivalents. As of the end of fiscal August, our credit facility availability increased by $30 million to approximately $127 million.
  
  

Fiscal Year 2024 Outlook:

Jeff White, Chief Financial Officer of Sportsman’s Warehouse, said, “During the second quarter we successfully obtained a $45 million term loan through a partnership with Pathlight Capital, of which we have drawn $25 million. This strengthens our balance sheet, allowing us to focus our efforts on a continued reset of the business, providing the flexibility to make strategic inventory purchases and targeted marketing campaigns to drive sales.”

“Our expense reduction and business efficiency efforts also continue to yield results, with operating expenses down versus the prior year,” continued White. “In the quarter, to stay market competitive, we offered a series of aggressive promotions and markdowns, including a push to end the summer outdoor season with clean inventory. This placed additional pressure on second quarter gross margins and we expect, given the current environment, to continue this level of promotional activities to stay competitive in the market. Given these factors we are taking a more cautious approach to the back half of the year and are updating our guidance to reflect the ongoing consumer pressure. We are confident in the health of our inventory and strength of our balance sheet and expect to generate positive free cash flow for the full year, which we intend to use to pay down our debt.”

The Company is adjusting its guidance for fiscal year 2024 and expects net sales to be in the range of $1.13 billion to $1.17 billion and adjusted EBITDA to be in the range of $20 million to $35 million. The low end of the adjusted EBITDA range still assumes positive free cash flow for the full year. The Company continues to expect capital expenditures for 2024 to be in the range of $20 million to $25 million, primarily consisting of technology investments relating to merchandising and store productivity. No new store openings for the remainder of fiscal 2024 are currently anticipated.

The Company has not reconciled expected adjusted EBITDA for fiscal year 2024 to GAAP net income because the Company does not provide guidance for net (loss) income and is not able to provide a reconciliation to net (loss) income without unreasonable effort. The Company is not able to estimate net (loss) income on a forward-looking basis without unreasonable efforts due to the variability and complexity with respect to the charges excluded from Adjusted EBITDA, including stock-based compensation expense.

Conference Call Information:

A conference call to discuss second quarter 2024 financial results is scheduled for September 3, 2024, at 5:00 PM Eastern Time. The conference call will be held via webcast and may be accessed via the Investor Relations section of the Company’s website at www.sportsmans.com.

Non-GAAP Financial Measures

This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (the “SEC”) and that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”): adjusted net (loss) income, adjusted diluted (loss) earnings per share and adjusted EBITDA. The Company defines adjusted net (loss) income as net (loss) income plus expenses incurred relating to director and officer transition costs, costs related to the implementation of our cost reduction plan, a legal settlement and related fees and expenses, and fees and expenses related to a settlement in the cancellation of a contract related to our information technology systems. Net (loss) income is the most comparable GAAP financial measure to adjusted net (loss) income. The Company defines adjusted diluted (loss) earnings per share as adjusted net (loss) income divided by diluted weighted average shares outstanding. Diluted (loss) earnings per share is the most comparable GAAP financial measure to adjusted diluted (loss) earnings per share. The Company defines Adjusted EBITDA as net (loss) income plus interest expense, income tax (benefit) expense, depreciation and amortization, stock-based compensation expense, director and officer transition costs, costs related to the implementation of our cost reduction plan, a legal settlement and related fees and expenses, and fees and expenses related to a settlement in the cancellation of a contract related to our information technology systems. Net (loss) income is the most comparable GAAP financial measure to adjusted EBITDA. The Company has reconciled these non-GAAP financial measures to the most directly comparable GAAP financial measures under “GAAP and Non-GAAP Financial Measures” in this release. As noted above, the Company has not provided a reconciliation of fiscal year 2024 guidance for Adjusted EBITDA, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K.

The Company believes that these non-GAAP financial measures not only provide its management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors and are frequently used by analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Specifically, these non-GAAP financial measures allow investors to better understand the performance of the Company’s business and facilitate a more meaningful comparison of its diluted (loss) earnings per share and actual results on a period-over-period basis. The Company has provided this information as a means to evaluate the results of its ongoing operations.  Management uses this information as additional measurement tools for purposes of business decision-making, including evaluating store performance, developing budgets and managing expenditures. Other companies in the Company’s industry may calculate these items differently than the Company does. Each of these measures is not a measure of performance under GAAP and should not be considered as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s management believes that these non-GAAP financial measures allow investors to evaluate the Company’s operating performance and compare its results of operations from period to period on a consistent basis by excluding items that management does not believe are indicative of the Company’s core operating performance. The presentation of such measures, which may include adjustments to exclude unusual or non-recurring items, should not be construed as an inference that the Company’s future results, cash flows or leverage will be unaffected by other unusual or non-recurring items.

Forward-Looking Statements 

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this release include, but are not limited to, statements regarding our ability to manage business and remove non-customer facing costs out of the business; our ability to reset the business to provide the flexibility to make strategic inventory purchases and targeted marketing campaigns to drive sales; our expense reduction and business efficiency efforts yielding decreased operating expenses versus the prior year; our expectation to continue with competitive promotional activities; our ability to generate positive free cash flow for the full year; and our guidance for net sales and Adjusted EBITDA for fiscal year 2024. Investors can identify these statements by the fact that they use words such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “should,” “target,” “will,” “would” and similar terms and phrases. These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors is very difficult, and we cannot anticipate all factors that could affect our actual results. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to many factors including, but not limited to: current and future government regulations, in particular regulations relating to the sale of firearms and ammunition, which may impact the supply and demand for the Company’s products and ability to conduct its business; the Company’s retail-based business model which is impacted by general economic and market conditions and economic, market and financial uncertainties that may cause a decline in consumer spending; the Company’s concentration of stores in the Western United States which makes the Company susceptible to adverse conditions in this region, and could affect the Company’s sales and cause the Company’s operating results to suffer; the highly fragmented and competitive industry in which the Company operates and the potential for increased competition; changes in consumer demands, including regional preferences, which we may not be able to identify and respond to in a timely manner; the Company’s entrance into new markets or operations in existing markets, including the Company’s plans to open additional stores in future periods, which may not be successful; the Company’s implementation of a plan to reduce expenses in response to adverse macroeconomic conditions, including an increased focus on financial discipline and rigor throughout the Company’s organization; impact of general macroeconomic conditions, such as labor shortages, inflation, rising interest rates, economic slowdowns, and recessions or market corrections; and other factors that are set forth in the Company's filings with the SEC, including under the caption “Risk Factors” in the Company’s Form 10-K for the fiscal year ended February 3, 2024, which was filed with the SEC on April 4, 2024, and the Company’s other public filings made with the SEC and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Company’s assumptions prove incorrect, the Company’s actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this release speaks only as of the date on which the Company makes it. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

About Sportsman’s Warehouse Holdings, Inc.

Sportsman’s Warehouse Holdings, Inc. is an outdoor specialty retailer focused on meeting the needs of the seasoned outdoor veteran, the first-time participant, and everyone in between. We provide outstanding gear and exceptional service to inspire outdoor memories.

For press releases and certain additional information about the Company, visit the Investor Relations section of the Company's website at www.sportsmans.com.

Investor Contact:

Riley Timmer
Vice President, Investor Relations
Sportsman’s Warehouse
(801) 304-2816
[email protected]