Sportsman’s Warehouse(US:SPWH)2023-12-07 00:37Financial Data and Key Metrics Changes - Net sales for Q3 2023 were $340.6 million, a decline of 5.3% compared to $359.7 million in Q3 2022 [47] - Same store sales decreased by 11.4% compared to Q3 2022, with hunting department sales down 10.6% and firearms down 5.2% [2][16] - Net loss for Q3 was $1.3 million or negative $0.04 per diluted share, compared to net income of $12.9 million or $0.33 per diluted share in the prior-year period [26] - Adjusted EBITDA for Q3 was $16.2 million or 4.8% of net sales, down from $27.7 million or 7.7% of net sales in the prior-year period [51] Business Line Data and Key Metrics Changes - Total apparel sales were down 2.1% year-over-year, while footwear sales were up 1.8% [48] - Fishing department sales were down 5.8% on a comparable store basis, but total fishing sales were up 2.7% compared to the prior year [24] - SG&A expense as a percentage of net sales was 29.4%, compared to 28.4% in the same quarter last year, although operating expenses were down $2.2 million [25] Market Data and Key Metrics Changes - The macroeconomic environment continues to pressure consumer discretionary spending, impacting overall sales [16][29] - The company anticipates same store sales in Q4 to be down between 11% to 6% [30] Company Strategy and Development Direction - The company will not open any new stores during fiscal 2024, focusing instead on paying down debt and improving inventory management [19][28] - The strategy includes aggressive markdowns to clear out non-go-forward inventory, particularly in apparel and footwear [41] - E-commerce performance outpaced overall business performance in Q3, indicating a focus on enhancing omni-channel capabilities [42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the current macroeconomic environment but expressed confidence in the company's foundational strength and future growth potential [40][21] - The company aims to end 2023 with a healthier inventory position, targeting a reduction to below $375 million [27][89] Other Important Information - The company reduced total inventory and paid down approximately $20 million in debt during Q3 [18] - The company plans to provide a strategic update on its long-term growth plans during the year-end earnings call in March [21] Q&A Session Summary Question: Did ammo and firearms remain positive in November? - Management indicated that while there was a lift in October due to external events, demand returned to normal consumer behavior in November [58] Question: What drives the decision to restart store openings in 2025? - The focus is on improving the balance sheet and ensuring that new store openings meet productivity thresholds [34][35] Question: How does the current promotional environment compare to last year? - The current promotional environment is driven by the need to clear inventory and attract customers, with significant discounts planned [83] Question: What is the strategy for inventory management moving forward? - The company is aggressively discounting to clear out inventory, with a focus on achieving a healthy inventory position by year-end [80][86] Question: How is the company managing payroll expenses? - Payroll expenses were down 8.4%, with significant reductions achieved while maintaining customer service quality [104][93]