Sportsman’s Warehouse ((SPWH)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Sportsman’s Warehouse presented a balanced sentiment, highlighting significant improvements in profitability, e-commerce growth, and the fishing department’s performance. However, challenges such as a decline in net sales, trade-down in firearms, and increased SG&A expenses were also noted.
Improved Financial Performance
The company reported a substantial improvement in financial performance, with Q4 adjusted EBITDA reaching $15 million, a nearly 300% increase from $5 million in the same quarter last year. Additionally, Sportsman’s Warehouse successfully reduced net debt by $27 million and increased liquidity by $40 million compared to the previous year.
E-commerce Growth
E-commerce sales showed a positive trend, with double-digit growth in the quarter. This growth contributed to higher traffic and transactions, indicating a successful expansion in the digital sales channel.
Strong Performance in Fishing Department
The fishing department experienced a 10.3% increase in sales on a 13-week comparable basis. This growth was driven by improvements in in-stock levels and SKU rationalization, highlighting the department’s robust performance.
Positive Trends in Firearms Sales
Despite an industry decline, Sportsman’s Warehouse outpaced adjusted NICS data, with firearm unit sales increasing by mid-single digits in Q4. This indicates a positive trend in firearms sales despite broader market challenges.
Decline in Net Sales
Net sales for the fourth quarter were $340.4 million, down from $370.4 million in the prior year, which included a 53rd week. Same-store sales decreased by 0.5%, reflecting a challenge in maintaining sales momentum.
Continued Trade-Down in Firearms
The company faced a trade-down in firearms, with consumers opting for more affordable options. This trend led to lower sales dollars in the firearms category, impacting overall sales figures.
SG&A Expense Increase
SG&A expenses rose to 29.4% of net sales, compared to 29% in the fourth quarter of the previous year. This increase highlights a challenge in managing operational costs.
Forward-Looking Guidance
Looking ahead, Sportsman’s Warehouse aims for same-store sales growth, improved gross margins, and further debt reduction in 2025. The company plans to focus on core business areas such as hunting and fishing solutions, which have shown strong potential. They also aim to enhance local product offerings and strengthen brand awareness. Fiscal 2025 net sales are forecasted to range from a decline of 1% to an increase of 3.5%, with adjusted EBITDA expected between $33 million and $45 million.
In summary, the earnings call for Sportsman’s Warehouse reflected a balanced sentiment, with notable improvements in profitability and e-commerce growth. However, challenges such as a decline in net sales and increased SG&A expenses were also highlighted. Looking forward, the company is optimistic about growth in core business areas and aims for improved financial metrics in 2025.