Sportsman’s Warehouse(SPWH) - 2026 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for Sportsman's Warehouse Holdings, Inc., including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, revenue recognition, and specific financial accounts Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheet Highlights | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change | | :-------------------------- | :----------------------------- | :----------------------------- | :----- | | Total Assets | $948,853 | $852,102 | +11.35% | | Merchandise Inventories | $443,499 | $341,958 | +29.69% | | Total Liabilities | $739,966 | $616,398 | +20.05% | | Revolving Line of Credit | $151,215 | $74,654 | +102.56% | | Total Stockholders' Equity | $208,887 | $235,704 | -11.46% | Condensed Consolidated Statements of Operations This section outlines the company's financial performance over specific periods, detailing net sales, gross profit, operating expenses, and net loss Thirteen Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric (13 Weeks) | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Net Sales | $293,899 | $288,734 | +1.8% | | Gross Profit | $93,949 | $90,018 | +4.4% | | Gross Profit Margin | 32.0% | 31.2% | +0.8 pp | | Selling, General, & Admin. Expenses | $97,166 | $94,341 | +3.0% | | Net Loss | $(7,083) | $(5,906) | +19.9% | | Basic Loss Per Share | $(0.18) | $(0.16) | +12.5% | Twenty-Six Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric (26 Weeks) | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Net Sales | $543,002 | $532,974 | +1.9% | | Gross Profit | $169,592 | $163,804 | +3.5% | | Gross Profit Margin | 31.2% | 30.7% | +0.5 pp | | Selling, General, & Admin. Expenses | $192,422 | $188,754 | +1.9% | | Net Loss | $(28,337) | $(23,972) | +18.2% | | Basic Loss Per Share | $(0.74) | $(0.64) | +15.6% | Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity, including accumulated earnings and common stock shares outstanding Condensed Consolidated Statements of Stockholders' Equity Highlights | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change | | :-------------------------- | :----------------------------- | :----------------------------- | :----- | | Total Stockholders' Equity | $208,887 | $235,704 | -11.46% | | Accumulated Earnings | $120,987 | $149,324 | -18.98% | | Common Stock Shares Outstanding | 38,413 | 38,041 | +0.98% | Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities over a specific period Condensed Consolidated Statements of Cash Flows Highlights (26 Weeks) | Metric (26 Weeks) | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Net Cash Used in Operating Activities | $(86,799) | $(16,132) | +438.0% | | Net Cash Used in Investing Activities | $(11,169) | $(7,631) | +46.4% | | Net Cash Provided by Financing Activities | $96,940 | $23,182 | +318.1% | | Cash and Cash Equivalents at End of Period | $1,804 | $2,560 | -29.6% | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements (1) Description of Business and Basis of Presentation Sportsman's Warehouse Holdings, Inc. operates 146 retail sporting goods stores and an e-commerce platform, all aggregated into a single operating and reportable segment - Operates 146 stores in 32 states and an e-commerce platform[37] - Aggregated into one operating and reportable segment[37] (2) Summary of Significant Accounting Policies The company consistently applies its accounting policies and is evaluating the impact of recently issued accounting pronouncements on income tax and expense disclosures - Evaluating ASU No. 2023-09 (Income Tax Disclosures), effective for annual periods after December 15, 2024[40] - Evaluating ASU No. 2024-03 (Expense Disaggregation Disclosures), effective for annual periods after December 15, 2026[41][43] (3) Revenue Recognition The company recognizes revenue from retail store sales, e-commerce, gift cards, and loyalty programs upon transfer of control, maintaining reserves for returns and recognizing breakage based on historical rates - Revenue recognized for single performance obligations: retail store sales, e-commerce sales, gift cards, and loyalty rewards program[45][49] - Gift card breakage rate: 4.0%[48] - Loyalty reward point breakage rate: 35.0%[50] Contract Balances | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Right of return assets | $2,201 | $1,732 | | Estimated gift card contract liability, net of breakage | $(27,949) | $(30,872) | | Estimated loyalty contract liability, net of breakage | $(1,647) | $(2,606) | | Sales return liabilities | $(3,285) | $(2,585) | Revenue Disaggregation by Department (Percentage of Net Sales) | Department | August 2, 2025 (13 Weeks) | August 3, 2024 (13 Weeks) | August 2, 2025 (26 Weeks) | August 3, 2024 (26 Weeks) | | :---------------------------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Camping | 14.5% | 16.4% | 11.8% | 13.1% | | Apparel | 6.3% | 6.6% | 6.1% | 6.1% | | Fishing | 18.3% | 16.8% | 15.5% | 14.2% | | Footwear | 6.1% | 6.3% | 5.7% | 5.8% | | Hunting and Shooting | 48.9% | 47.9% | 55.7% | 55.2% | | Optics, Electronics, Accessories, and Other | 5.9% | 6.0% | 5.2% | 5.6% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | (4) Property and Equipment Net property and equipment decreased to $160.997 million as of August 2, 2025, from $167.838 million on February 1, 2025, primarily due to accumulated depreciation and amortization Property and Equipment, Net | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change | | :-------------------------- | :----------------------------- | :----------------------------- | :----- | | Total Property and Equipment, Net | $160,997 | $167,838 | -4.0% | | Accumulated Depreciation and Amortization | $(260,383) | $(240,634) | +8.2% | (5) Accrued Expenses Total accrued expenses increased to $99.002 million as of August 2, 2025, from $95.946 million on February 1, 2025, driven by increases in book overdraft, sales and use tax payable, and other accrued expenses Accrued Expenses Highlights | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change | | :-------------------------- | :----------------------------- | :----------------------------- | :----- | | Total Accrued Expenses | $99,002 | $95,946 | +3.2% | | Book Overdraft | $22,832 | $21,929 | +4.1% | | Unearned Revenue | $32,514 | $36,600 | -11.2% | | Accrued Payroll and Related Expenses | $10,730 | $11,397 | -5.9% | (6) Leases The company's operating leases typically have terms up to 15 years, with total lease expense for the twenty-six weeks ended August 2, 2025, at $47.460 million, and a weighted-average remaining lease term of 6.17 years Lease Expense and Metrics (26 Weeks) | Metric (26 Weeks) | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Total Lease Expense | $47,460 | $46,750 | +1.5% | | Operating Cash Outflows from Operating Leases | $36,532 | $37,226 | -1.9% | Weighted-Average Lease Metrics (As of) | Metric (As of) | August 2, 2025 | August 3, 2024 | | :-------------------------- | :------------- | :------------- | | Weighted-average remaining lease term | 6.17 years | 6.00 years | | Weighted-average discount rate | 7.34% | 7.63% | (7) Segments The company operates as a single reportable segment, Sportsman's Warehouse, assessing performance based on net income (loss) for resource allocation and competitive analysis - Operates as a single reportable segment: Sportsman's Warehouse[68] - Performance assessed based on net income (loss), used for resource allocation and competitive analysis[69][70] (8) Long-Term Debt Long-term debt, primarily a term loan, increased to $43.851 million net of discount as of August 2, 2025, due to a $20.0 million delayed draw, with an interest rate of 10.44% Long-Term Debt Highlights | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change | | :-------------------------- | :----------------------------- | :----------------------------- | :----- | | Term Loan, Net | $43,851 | $24,067 | +82.2% | | Outstanding Loans under Term Loan | $45,000 | $25,000 | +80.0% | - A $20.0 million delayed draw on the ABL term loan was made on July 30, 2025[76] - Interest rate on the Term Loan as of August 2, 2025, was 10.44%[78] (9) Revolving Line of Credit Outstanding revolving loans increased to $167.413 million as of August 2, 2025, with $107.741 million available for borrowing under the $350.0 million facility, which matures on May 27, 2027 Revolving Line of Credit Highlights | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change | | :-------------------------- | :----------------------------- | :----------------------------- | :----- | | Outstanding Revolving Loans | $167,413 | $88,260 | +89.7% | | Available for Borrowing | $107,741 | N/A | N/A | | Interest Rate (as of Aug 2, 2025) | 5.78% | 5.74% | +0.04 pp | - Revolving Line of Credit matures on May 27, 2027[92] - Gross borrowings under the Revolving Line of Credit for the 26 weeks ended August 2, 2025, were $691.412 million, up from $615.477 million in the prior year[95] (10) Income Taxes For the thirteen weeks ended August 2, 2025, the company recognized income tax expense of $0.097 million, a shift from a $2.057 million benefit in the prior year, resulting in an effective tax rate of -1.4% Income Tax Highlights (13 Weeks) | Metric (13 Weeks) | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Income Tax Expense (Benefit) | $97 | $(2,057) | N/A (shift from benefit to expense) | | Effective Tax Rate | -1.4% | 25.8% | -27.2 pp | Income Tax Highlights (26 Weeks) | Metric (26 Weeks) | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Income Tax Expense (Benefit) | $(1,233) | $(7,526) | -83.6% (decrease in benefit) | | Effective Tax Rate | 4.2% | 23.9% | -19.7 pp | (11) Stockholders' Equity Basic and diluted loss per share increased to $(0.18) for the 13 weeks and $(0.74) for the 26 weeks ended August 2, 2025, compared to $(0.16) and $(0.64) respectively in the prior year, with stock-based compensation expense decreasing Earnings Per Share and Stock-Based Compensation (13 Weeks) | Metric (13 Weeks) | August 2, 2025 | August 3, 2024 | Change (YoY) | | :-------------------------- | :------------- | :------------- | :----------- | | Basic Loss Per Share | $(0.18) | $(0.16) | +12.5% | | Diluted Loss Per Share | $(0.18) | $(0.16) | +12.5% | | Stock-Based Compensation Expense (in thousands) | $827 | $1,217 | -32.0% | Earnings Per Share and Stock-Based Compensation (26 Weeks) | Metric (26 Weeks) | August 2, 2025 | August 3, 2024 | Change (YoY) | | :-------------------------- | :------------- | :------------- | :----------- | | Basic Loss Per Share | $(0.74) | $(0.64) | +15.6% | | Diluted Loss Per Share | $(0.74) | $(0.64) | +15.6% | | Stock-Based Compensation Expense (in thousands) | $1,620 | $2,391 | -32.3% | - 1,653 shares available for awards under the Amended 2019 Performance Incentive Plan as of August 2, 2025[102] - Issued 1,149 nonvested stock units to employees and directors during the 26 weeks ended August 2, 2025, at a weighted average grant date fair value of $1.28 per share[108] (12) Stock-Based Compensation Total stock-based compensation expense decreased by approximately 32% for both the 13 and 26 weeks ended August 2, 2025, compared to the prior year, with 1,149 nonvested stock units issued during the 26-week period Stock-Based Compensation Expense | Metric | 13 Weeks Ended Aug 2, 2025 (in thousands) | 13 Weeks Ended Aug 3, 2024 (in thousands) | 26 Weeks Ended Aug 2, 2025 (in thousands) | 26 Weeks Ended Aug 3, 2024 (in thousands) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Total Stock-Based Compensation Expense | $827 | $1,217 | $1,620 | $2,391 | - 1,653 shares available for awards under the Amended and Restated 2019 Performance Incentive Plan as of August 2, 2025[102] - Issued 1,149 nonvested stock units to employees and directors during the 26 weeks ended August 2, 2025, at a weighted average grant date fair value of $1.28 per share[108] (13) Commitments and Contingencies The company is involved in various legal matters, including a putative class action lawsuit challenging advance notice bylaws, but management is not aware of any matters with a probable and material financial impact - Involved in a putative class action lawsuit (Kogut v. Bejar, et al.) challenging advance notice bylaws, currently stayed[114] - Management is not aware of any legal matters with a probable and material impact on financial condition[113] (14) Subsequent Events Jennifer Fall Jung was appointed Chief Financial Officer and Secretary effective August 18, 2025, replacing Jeff White, who transitioned to a consulting role and will receive severance benefits - Jennifer Fall Jung appointed CFO and Secretary, effective August 18, 2025[115] - Jeff White ceased serving as CFO and Secretary on August 17, 2025, transitioning to a consulting role[115] - Mr. White's separation agreement includes 12 months of base salary, COBRA premiums for up to 12 months, and a pro-rated annual bonus[116] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results, highlighting macroeconomic impacts, key performance indicators, and detailed analysis of financial results Overview Sportsman's Warehouse is an outdoor sporting goods retailer operating as a single segment, committed to providing gear and service to inspire outdoor memories - Sportsman's Warehouse is an outdoor sporting goods retailer with 146 stores in 32 states and an e-commerce platform[124] - The business operates as one operating and reportable segment[125] - Mission: provide outstanding gear and exceptional service to inspire outdoor memories[123] Impact of Macroeconomic Conditions The company's financial results are influenced by macroeconomic uncertainties, including international trade policies, increased tariff rates, inflation, elevated interest rates, and recession risks - Financial results are impacted by macroeconomic uncertainties, including international trade policies, increased tariff rates, inflation, elevated interest rates, and recession risks[127] - Anticipates a material increase in inventory costs due to increased tariff rates, particularly in Hunting and Shooting and Optics, Electronics, Accessories and Other departments[128] - Implemented cost reduction measures and reduced investments in new store openings; plans to open one new store in fiscal year 2025[129] How We Assess the Performance of Our Business The company assesses performance using key measures such as net sales, same store sales, gross margin, and Adjusted EBITDA, while considering macroeconomic factors and regulatory changes - Key performance measures include net sales, same store sales, gross margin, selling, general and administrative expenses, income from operations, and Adjusted EBITDA[133] - Same store sales are influenced by macroeconomic factors, consumer preferences, regulatory changes, and competition[135] - The Oregon ballot measure (Senate Bill 243) on firearms and ammunition sales is delayed until March 15, 2026, pending Oregon Supreme Court review, which could significantly impact sales in Oregon stores if implemented[139][141] - Key drivers to increasing total net sales include improving same store sales, increasing customer visits, expanding omni-channel capabilities, building community connections, opening new stores, and growing loyalty and credit card programs[144] - Key drivers to improving gross margin are increasing the product mix to higher margin products (especially apparel and footwear), improving buying opportunities, coordinating pricing strategies, and effective inventory management[146] Results of Operations This section provides a detailed analysis of the company's financial results for the thirteen and twenty-six weeks ended August 2, 2025, compared to the prior year Thirteen Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Net Sales | $293,899 | $288,734 | +1.8% | | Same Store Sales | +2.1% | N/A | N/A | | E-commerce Sales (as % of total) | >19% | N/A | +3% (YoY growth) | | Hunting and Shooting Net Sales | +$5.5M | N/A | N/A | | Fishing Net Sales | +$5.3M | N/A | N/A | | Ammunition Sales | +$3.6M | N/A | +10.0% | | Gross Profit | $93,949 | $90,018 | +4.4% | | Gross Profit Margin | 32.0% | 31.2% | +0.8 pp | | SG&A Expenses | $97,166 | $94,341 | +3.0% | | SG&A as % of Net Sales | 33.1% | 32.7% | +0.4 pp | | Interest Expense | $3,769 | $3,183 | +18.8% | | Income Tax Expense (Benefit) | $97 | $(2,057) | N/A (shift from benefit to expense) | Twenty-Six Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------- | | Net Sales | $543,002 | $532,974 | +1.9% | | Same Store Sales | +2.0% | N/A | N/A | | E-commerce Sales (as % of total) | >19% | N/A | +4% (YoY growth) | | Fishing Net Sales | +$8.2M | N/A | N/A | | Hunting and Shooting Net Sales | +$7.9M | N/A | N/A | | Ammunition Sales | +$4.1M | N/A | +5.3% | | Gross Profit | $169,592 | $163,804 | +3.5% | | Gross Profit Margin | 31.2% | 30.7% | +0.5 pp | | SG&A Expenses | $192,422 | $188,754 | +1.9% | | SG&A as % of Net Sales | 35.4% | 35.4% | 0.0 pp | | Interest Expense | $6,664 | $6,091 | +9.8% | | Income Tax Benefit | $(1,233) | $(7,526) | -83.6% (decrease in benefit) | Seasonality Net sales are typically higher in the third and fourth fiscal quarters due to hunting seasons and consumer holiday buying patterns, with weather conditions also significantly impacting demand - Net sales are typically higher in the third and fourth fiscal quarters due to hunting seasons and consumer holiday buying patterns[177] - Over the last three fiscal years, Q3 and Q4 generated approximately 26.4% and 28.0% of net sales, respectively[179] - New retail store openings may result in a temporary decline in operating profit due to initial expenses and fixed costs[180] - Weather conditions significantly affect outdoor activities and the demand for related products, impacting net sales[181] Liquidity and Capital Resources The company's liquidity is supported by cash, working capital, and available borrowing under its revolving credit facility, with primary cash requirements for seasonal working capital and capital expenditures Liquidity and Capital Resources Highlights (as of August 2, 2025) | Metric | Amount (in millions) | | :---------------------------------------- | :------------------- | | Cash and Cash Equivalents | $1.8 | | Working Capital | $75.5 | | Available Borrowing under Revolving Credit Facility | $107.7 | | Revolving Credit Facility Outstanding | $167.4 | | Term Loan Facility Outstanding | $45.0 | | Weighted Average Interest Rate on Debt | 6.77% | - Primary cash requirements are for seasonal working capital needs and capital expenditures related to ongoing operational needs and new system investments[184] - Expected capital expenditures for fiscal year 2025 are between $20 million and $25 million, primarily for strategic technological investments and general store maintenance[187] - Intends to prioritize the repayment of outstanding debt with any excess cash flow[184] - Net cash used in operating activities increased by approximately $70.7 million to $86.8 million for the 26 weeks ended August 2, 2025, primarily due to increased inventory purchases[191] - Net cash provided by financing activities increased by approximately $73.7 million to $96.9 million for the 26 weeks ended August 2, 2025, primarily due to increased borrowings under the revolving line of credit and term loan facilities[193] - The company was in compliance with all covenants under its credit agreements as of August 2, 2025[200] Critical Accounting Estimates There have been no significant changes to the company's critical accounting estimates as described in its Fiscal 2024 Form 10-K - There have been no significant changes to the company's critical accounting estimates as described in its Fiscal 2024 Form 10-K[203] Non-GAAP Financial Measures This section presents Adjusted EBITDA and Adjusted EBITDA margin, which management uses for business decision-making, evaluating store performance, and managing expenditures Adjusted EBITDA and Margin | Metric | 13 Weeks Ended Aug 2, 2025 (in thousands) | 13 Weeks Ended Aug 3, 2024 (in thousands) | 26 Weeks Ended Aug 2, 2025 (in thousands) | 26 Weeks Ended Aug 3, 2024 (in thousands) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Adjusted EBITDA | $8,315 | $7,409 | $(721) | $(1,328) | | Adjusted EBITDA Margin | 2.8% | 2.6% | -0.1% | -0.2% | - Adjusted EBITDA is defined as net loss plus interest expense, income tax benefit, depreciation and amortization, stock-based compensation expense, transition and severance costs, and other non-indicative expenses[206] - Management uses Adjusted EBITDA and Adjusted EBITDA margin for business decision-making, evaluating store performance, developing budgets, and managing expenditures[206] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Sportsman's Warehouse is not required to provide detailed quantitative and qualitative disclosures about market risk - Not required to provide market risk disclosures as a smaller reporting company[213] Item 4. Controls and Procedures The company's management concluded that disclosure controls and procedures were effective as of August 2, 2025, acknowledging the inherent limitations of control systems and reporting no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of August 2, 2025[214] - No material changes in internal control over financial reporting during the 13 weeks ended August 2, 2025[216] - Management acknowledges inherent limitations in control systems, providing reasonable, not absolute, assurance[215] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 13 of the financial statements for details on legal proceedings, emphasizing that such matters are subject to inherent uncertainties and may involve significant defense and disposition costs - Refers to Note 13 for additional information on legal proceedings[219] - Legal outcomes are uncertain and may involve significant defense and disposition costs[220] Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended February 1, 2025 - No material changes in risk factors from the Fiscal 2024 Form 10-K[221] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports that there were no unregistered sales of equity securities or use of proceeds to disclose for the period - No unregistered sales of equity securities and use of proceeds to report[223] Item 3. Defaults Upon Senior Securities The company reports that there were no defaults upon senior securities during the period - No defaults upon senior securities to report[224] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[225] Item 5. Other Information The company reports that there is no other information to disclose under this item - No other information to report[226] Item 6. Exhibits This section lists the exhibits filed with the 10-Q, including corporate governance documents, employment agreements, certifications, and XBRL documents - Lists various exhibits, including corporate governance documents, employment agreements, and certifications[228] Signatures The report is signed by Paul Stone, President and Chief Executive Officer, and Jennifer Fall Jung, Chief Financial Officer, on September 4, 2025, certifying its accuracy - Signed by Paul Stone (President and CEO) and Jennifer Fall Jung (CFO) on September 4, 2025[234]