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

Executive Summary & Business Highlights Sportsman's Warehouse achieved its second consecutive quarter of positive same-store sales growth in Q2 FY2025, driven by effective transformation strategies and improved gross margins, leading to a raised full-year outlook Second Quarter 2025 Performance Highlights Sportsman's Warehouse reported a 2.1% increase in same-store sales for Q2 FY2025, marking its second consecutive quarter of positive comparable sales, with gross margin improving by 80 basis points and a raised full-year 2025 outlook - Same store sales increased 2.1% over last year, outperforming the Q2 Adjusted NICS data[1] - Gross margin improved by 80 basis points compared to last year[1] - The company has improved its full year 2025 Outlook[1] Management Commentary CEO Paul Stone highlighted the effectiveness of their transformation strategy, driven by localized assortments and digital-first marketing, leading to positive same-store sales growth and outperformance in the firearms business, with a focus on seasonal merchandising and working capital efficiencies to support debt reduction - The company achieved 2.1% same store sales growth, marking the second consecutive quarter of positive comps, despite consumer headwinds[2] - Focus on localizing assortments and shifting to digital-first marketing is driving results, with specific markets like Alaska showing high single-digit growth[2] - The firearms business outperformed the industry, indicating continued market share gains[2] - Management is focused on executing seasonal merchandising plans to drive working capital efficiencies and support further debt reduction[2] Financial Performance Overview For Q2 and YTD FY2025, Sportsman's Warehouse reported increased net sales and improved gross margins, primarily from Fishing and Hunting & Shooting Sports, despite widening net losses, while Adjusted EBITDA showed improvement Second Quarter 2025 Financial Results For the thirteen weeks ended August 2, 2025, Sportsman's Warehouse reported a 1.8% increase in net sales, driven by strong performance in Fishing and Hunting & Shooting Sports, with gross margin improving to 32.0%, but net loss widened to $(7.1) million and diluted loss per share increased to $(0.18), while Adjusted EBITDA saw an improvement Q2 FY2025 vs. Q2 FY2024 Key Financials (Thirteen Weeks Ended) | Metric | Q2 FY2025 (in thousands) | Q2 FY2024 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :--------------------------------- | :----------------------- | :----------------------- | :------------------------ | :------------- | | Net sales | $293,899 | $288,734 | $5,165 | 1.8% | | Same store sales growth | 2.1% | N/A | N/A | N/A | | Gross profit | $93,949 | $90,018 | $3,931 | 4.4% | | Gross margin | 32.0% | 31.2% | 0.8 pp | N/A | | SG&A expenses | $97,166 | $94,341 | $2,825 | 3.0% | | SG&A as % of net sales | 33.1% | 32.7% | 0.4 pp | N/A | | Net loss | $(7,083) | $(5,906) | $(1,177) | -19.9% | | Adjusted net loss | $(4,653) | $(5,304) | $651 | 12.3% | | Diluted loss per share | $(0.18) | $(0.16) | $(0.02) | -12.5% | | Adjusted diluted loss per share | $(0.12) | $(0.14) | $0.02 | 14.3% | | Adjusted EBITDA | $8,315 | $7,409 | $906 | 12.2% | - Net sales increase was primarily due to increased sales in Fishing and Hunting and Shooting Sports departments, eCommerce channel growth, and improved in-stocks, partially offset by softer sales in other departments[3] - Gross margin improvement was largely driven by improved overall product margins from healthier inventory and increased sales from the fishing department, which carries a relatively higher gross margin[3] - SG&A expenses increased due to reinvestment in customer-facing areas, including store labor and digital marketing, to drive sales and omnichannel traffic[3] Year-to-Date (Twenty-Six Weeks) Financial Results For the twenty-six weeks ended August 2, 2025, net sales increased by 1.9%, with same-store sales up 2.0%, and gross profit as a percentage of net sales improved to 31.2%, however, the net loss for the period widened to $(28.3) million and diluted loss per share increased to $(0.74), while Adjusted EBITDA remained negative but improved compared to the prior year YTD FY2025 vs. YTD FY2024 Key Financials (Twenty-Six Weeks Ended) | Metric | YTD FY2025 (in thousands) | YTD FY2024 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :--------------------------------- | :------------------------ | :------------------------ | :------------------------ | :------------- | | Net sales | $543,002 | $532,974 | $10,028 | 1.9% | | Same store sales growth | 2.0% | N/A | N/A | N/A | | Gross profit | $169,592 | $163,804 | $5,788 | 3.5% | | Gross margin | 31.2% | 30.7% | 0.5 pp | N/A | | SG&A expenses | $192,422 | $188,754 | $3,668 | 1.9% | | SG&A as % of net sales | 35.4% | 35.4% | 0.0 pp | N/A | | Net loss | $(28,337) | $(23,972) | $(4,365) | -18.2% | | Adjusted net loss | $(20,261) | $(23,107) | $2,846 | 12.3% | | Diluted loss per share | $(0.74) | $(0.64) | $(0.10) | -15.6% | | Adjusted diluted loss per share | $(0.53) | $(0.61) | $0.08 | 13.1% | | Adjusted EBITDA | $(721) | $(1,328) | $607 | 45.7% | - Net sales increase was primarily due to increased sales in Fishing and Hunting and Shooting Sports departments driven by improved core product in-stocks, and eCommerce channel growth, partially offset by softer sales in other departments[6] - Gross profit as a percentage of net sales increased primarily due to favorable mix and rate improvements from the fishing business and improved overall margins from healthier inventory[6] - SG&A expenses increased due to reinvestment into customer-facing and sales-driving areas, including store payroll, partially offset by leverage gained from higher sales[6] Balance Sheet and Capital Allocation As of August 2, 2025, the company reported $195.1 million in net debt and $109.5 million in total liquidity, with inventory strategically increased for key hunting seasons and a deferred draw feature exercised on the term loan Balance Sheet Highlights As of August 2, 2025, the company reported net debt of $195.1 million and total inventory of $443.5 million, which was intentionally pulled forward for key hunting seasons, with total assets increasing to $948.8 million and total liabilities also rising to $739.9 million Balance Sheet Highlights (as of August 2, 2025 vs. February 1, 2025) | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change (in thousands) | | :-------------------------- | :---------------------------- | :------------------------------ | :-------------------- | | Cash and cash equivalents | $1,804 | $2,832 | $(1,028) | | Merchandise inventories | $443,499 | $341,958 | $101,541 | | Total current assets | $468,308 | $366,002 | $102,306 | | Total assets | $948,853 | $852,102 | $96,751 | | Revolving line of credit | $151,215 | $74,654 | $76,561 | | Term loan, net | $43,851 | $24,067 | $19,784 | | Total current liabilities | $392,831 | $283,963 | $108,868 | | Total liabilities | $739,966 | $616,398 | $123,568 | | Total stockholders' equity | $208,887 | $235,704 | $(26,817) | - Net debt stood at $195.1 million, comprising $151.2 million from the revolving credit facility and $43.9 million from the term loan, offset by $1.8 million in cash[5] - Inventory increased by $80.1 million compared to the same period in FY2024, intentionally pulled forward for key late summer and fall hunting seasons, representing peak inventory for the year[5] Capital Allocation and Liquidity The company's total liquidity was $109.5 million at the end of Q2 FY2025, supported by $107.7 million availability on the revolving credit facility and $1.8 million in cash, and they also strengthened the balance sheet by exercising a $20 million deferred draw feature on the term loan Liquidity as of August 2, 2025 | Metric | Amount (in millions) | | :-------------------------------- | :------------------- | | Total liquidity | $109.5 | | Availability on revolving credit facility | $107.7 | | Cash and cash equivalents | $1.8 | - The Company exercised its $20 million deferred draw feature on the term loan, further strengthening the balance sheet[11] Cash Flow Statement For the twenty-six weeks ended August 2, 2025, net cash used in operating activities significantly increased due to higher inventories, while financing activities provided substantial cash through borrowings Cash Flow Statement Highlights For the twenty-six weeks ended August 2, 2025, net cash used in operating activities significantly increased to $(86.8) million, primarily due to a substantial increase in merchandise inventories, with net cash used in investing activities also increasing, while net cash provided by financing activities saw a large increase due to net borrowings on the line of credit and term loan Cash Flow Highlights (Twenty-Six Weeks Ended) | Metric | YTD FY2025 (in thousands) | YTD FY2024 (in thousands) | Change (in thousands) | | :-------------------------------------- | :------------------------ | :------------------------ | :-------------------- | | Net cash used in operating activities | $(86,799) | $(16,132) | $(70,667) | | Net cash used in investing activities | $(11,169) | $(7,631) | $(3,538) | | Net cash provided by financing activities | $96,940 | $23,182 | $73,758 | | Net change in cash and cash equivalents | $(1,028) | $(581) | $(447) | | Cash and cash equivalents at end of period | $1,804 | $2,560 | $(756) | - A significant change in operating assets and liabilities was driven by a $(101.5) million increase in merchandise inventories in YTD FY2025, compared to a $(8.7) million increase in YTD FY2024[26] - Net cash provided by financing activities was primarily driven by $76.6 million in net borrowings on the line of credit and $20.0 million in borrowings on the term loan[26] Fiscal Year 2025 Outlook Sportsman's Warehouse is improving its sales guidance for fiscal year 2025, expecting flat to 3.5% net sales growth, reaffirming Adjusted EBITDA, and planning capital expenditures for technology and store maintenance Fiscal Year 2025 Outlook Details Sportsman's Warehouse is improving its sales guidance for fiscal year 2025, expecting net sales to be flat to up 3.5%, reaffirming its adjusted EBITDA guidance, and anticipating capital expenditures between $20 million and $25 million, primarily for technology investments and general store maintenance, with one new store planned for November 2025 - Net sales are expected to be in the range of flat to up 3.5% for fiscal year 2025[7] - Adjusted EBITDA is reaffirmed to be in the range of $33 million to $45 million[7] - Capital expenditures for 2025 are expected to be in the range of $20 million to $25 million, primarily for technology investments and store maintenance[7] - The company anticipates opening one new store in November 2025 in Surprise, Arizona[7] - The company expects to exit 2025 with total inventory below last year's level, demonstrating improved inventory productivity[7] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures like adjusted net loss and adjusted EBITDA, providing a clearer view of core operating performance by excluding non-recurring or non-indicative expenses Definition and Rationale This section defines non-GAAP financial measures such as adjusted net loss, adjusted diluted loss per share, and adjusted EBITDA, which are used by management and investors to evaluate ongoing operations and compare performance consistently, excluding certain non-recurring or non-indicative expenses to provide a clearer view of core operating performance - Adjusted net (loss) income is defined as net (loss) income plus expenses related to director and officer transition costs, estimated tax benefit from deferred tax asset valuation allowance, and expenses not indicative of ongoing operations[10] - Adjusted EBITDA is defined as net (loss) income plus interest expense, income tax expense (benefit), depreciation and amortization, stock-based compensation expense, director and officer transition costs, and other non-indicative expenses[10][12] - These non-GAAP measures provide comparable financial data for internal analysis and supplemental information for investors, facilitating a more meaningful comparison of performance on a period-over-period basis by excluding unusual or non-recurring items[13] Reconciliations The report provides detailed reconciliations of GAAP net loss to adjusted net loss, GAAP diluted loss per share to adjusted diluted loss per share, and GAAP net loss to adjusted EBITDA for both the thirteen and twenty-six-week periods, highlighting the specific adjustments made for non-GAAP reporting Adjusted Net Loss and Adjusted Diluted Loss Per Share This section presents the reconciliation of GAAP net loss to adjusted net loss and diluted loss per share, detailing specific adjustments for non-GAAP reporting Reconciliation of GAAP Net Loss to Adjusted Net Loss and EPS (in thousands, except per share data) | Metric | Q2 FY2025 (13 Weeks) | Q2 FY2024 (13 Weeks) | YTD FY2025 (26 Weeks) | YTD FY2024 (26 Weeks) | | :-------------------------------------- | :------------------- | :------------------- | :-------------------- | :-------------------- | | Net loss (GAAP) | $(7,083) | $(5,906) | $(28,337) | $(23,972) | | Director and officer transition costs | $500 | $106 | $500 | $430 | | Valuation allowance | $1,843 | $- | $7,489 | $- | | Cancelled contract | $- | $706 | $- | $706 | | Legal accrual | $283 | $- | $283 | $- | | Less tax benefit | $(196) | $(210) | $(196) | $(271) | | Adjusted net loss | $(4,653) | $(5,304) | $(20,261) | $(23,107) | | Diluted loss per share (GAAP) | $(0.18) | $(0.16) | $(0.74) | $(0.64) | | Adjusted diluted loss per share | $(0.12) | $(0.14) | $(0.53) | $(0.61) | Adjusted EBITDA This section provides a reconciliation of GAAP net loss to Adjusted EBITDA, outlining adjustments for interest, taxes, depreciation, amortization, and other non-operating expenses Reconciliation of GAAP Net Loss to Adjusted EBITDA (in thousands) | Metric | Q2 FY2025 (13 Weeks) | Q2 FY2024 (13 Weeks) | YTD FY2025 (26 Weeks) | YTD FY2024 (26 Weeks) | | :-------------------------------------- | :------------------- | :------------------- | :-------------------- | :-------------------- | | Net loss (GAAP) | $(7,083) | $(5,906) | $(28,337) | $(23,972) | | Interest expense | $3,769 | $3,183 | $6,664 | $6,091 | | Income tax benefit | $97 | $(2,057) | $(1,233) | $(7,526) | | Depreciation and amortization | $9,922 | $10,160 | $19,782 | $20,552 | | Stock-based compensation expense | $827 | $1,217 | $1,620 | $2,391 | | Director and officer transition costs | $500 | $106 | $500 | $430 | | Cancelled contract | $- | $706 | $- | $706 | | Legal accrual | $283 | $- | $283 | $- | | Adjusted EBITDA | $8,315 | $7,409 | $(721) | $(1,328) | Additional Company Information This section provides essential company details, including forward-looking statements with associated risk factors, an overview of Sportsman's Warehouse, and investor contact information Forward-Looking Statements This section contains forward-looking statements regarding future debt reduction, inventory levels, sales guidance, Adjusted EBITDA, capital expenditures, and new store openings, including a cautionary note about various risk factors that could cause actual results to differ materially from projections, such as government regulations, economic conditions, competition, and consumer demands - Forward-looking statements include plans to reduce debt levels and exit 2025 with total inventory below last year's level[14] - Key risk factors include government regulations (especially firearms), general economic and market conditions, concentration of stores in the Western U.S., intense industry competition, changes in consumer demands, and macroeconomic conditions like inflation and interest rates[14][15] About Sportsman's Warehouse Sportsman's Warehouse Holdings, Inc. is an outdoor specialty retailer dedicated to serving a wide range of outdoor enthusiasts by providing gear and exceptional service to inspire outdoor memories - Sportsman's Warehouse is an outdoor specialty retailer focused on meeting the needs of seasoned outdoor veterans, first-time participants, and everyone in between[16] Conference Call Information A conference call to discuss the second quarter 2025 financial results was scheduled for September 4, 2025, at 5:00 PM Eastern Time, accessible via webcast on the company's investor relations website - A conference call for Q2 2025 financial results was scheduled for September 4, 2025, at 5:00 PM ET, accessible via webcast on www.sportsmans.com[9](index=9&type=chunk) Investor Contact For investor inquiries, Riley Timmer, Vice President of Investor Relations, can be contacted at (801) 566-6681 or investors@sportsmans.com - Investor Contact: Riley Timmer, Vice President, Investor Relations, (801) 566-6681, investors@sportsmans.com[17]