Sportsman’s Warehouse(US:SPWH)2023-05-30 22:51Financial Data and Key Metrics Changes - In Q1 2023, net sales were $267.5 million, down from $309.5 million in Q1 2022, primarily due to adverse weather and inflationary pressures [18][44] - Selling, general and administrative expenses increased to $99 million, up from $96.1 million in Q1 2022, with SG&A as a percentage of net sales rising to 37% from 31% [19] - Gross margin for the quarter was 29.9%, a decrease of 210 basis points year-over-year, attributed to a reduction in sales mix in higher-margin categories [43][84] - The company reported a loss of $0.39 per share for the quarter, impacted by reduced sales and increased expenses [44] Business Line Data and Key Metrics Changes - The hunting department outperformed other categories, driven by strong firearm sales, while camping and fishing categories saw reduced demand due to weather conditions [14][15] - The company opened five new stores in Q1 and plans to open 15 new stores in total for 2023, indicating a commitment to expanding its footprint despite current challenges [16][41] Market Data and Key Metrics Changes - Same-store sales decreased by 17.8% compared to Q1 2022, reflecting the impact of weather and inflation on consumer behavior [43] - The company anticipates second quarter net sales to be between $310 million and $340 million, with same-store sales expected to decline by 9% to 17% [21] Company Strategy and Development Direction - The company is focused on growing its store footprint, enhancing omnichannel capabilities, and leveraging customer databases to drive sales [6][10] - Management emphasizes the importance of maintaining financial discipline and achieving specific financial hurdles for new store openings [41][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of weather-related challenges and macroeconomic pressures on sales, particularly in spring-related categories [14][39] - The company is closely managing inventory and merchandising efforts to ensure seasonal relevance and healthy in-stock levels [39] - Management expressed confidence in the competitive position within the hunting and shooting sports categories, despite current market challenges [36] Other Important Information - The company ended Q1 with $150.3 million available on its line of credit, indicating strong liquidity [45] - A company-wide cost reduction effort is being implemented to align expenses with current sales trends [46] Q&A Session Summary Question: Did the firearms business comp positive in Q1? - The firearms business did not comp positive but outperformed the rest of the company [52] Question: What does the guidance imply regarding demand recovery? - The guidance reflects current trends, with some areas showing signs of recovery but not at expected rates [50] Question: Can you elaborate on the gross margin decline? - The decline was primarily due to lower ammunition margins and a shift in sales mix away from higher-margin categories [30][72] Question: How is the inventory position? - The company is comfortable with its inventory position and does not anticipate needing to conduct fire sales [58] Question: What is the outlook for store growth? - The company is focused on finding suitable locations that meet financial metrics and will not open stores just to meet growth targets [79][80]