Sportsman’s Warehouse(US:SPWH)2024-06-04 23:02Financial Data and Key Metrics Changes - Net sales for the first quarter were $244 million, down from $267 million in the prior year, with same-store sales decreasing by 13.5% [22][31] - Gross margin improved to 30.2% from 29.9% in the prior year, primarily driven by better performance in the fishing department [14] - Net loss for the first quarter was $18.1 million, or negative $0.48 per diluted share, compared to a net loss of $15.6 million, or negative $0.42 per diluted share in the prior year [15] - Adjusted EBITDA for the first quarter was negative $8.7 million, compared to negative $7.8 million in the first quarter of 2023 [15] Business Line Data and Key Metrics Changes - Hunting department sales were down about 7% year-over-year, with fewer customers purchasing firearms and ammunition [5] - Camping sales decreased approximately 6%, apparel sales were down about 26%, and footwear sales fell about 28% [23] - The fishing category saw positive comp sales growth in Q1, attributed to improved inventory and merchandising strategies [24] Market Data and Key Metrics Changes - Total inventory at the end of the first quarter was $391.7 million, down from $469.5 million a year earlier, representing a decrease of approximately 22% on a per store basis [57] - The company ended the first quarter with a debt balance of $164 million and total liquidity of $80.8 million [16] Company Strategy and Development Direction - The company is focused on resetting and rebuilding retail fundamentals, emphasizing great gear and exceptional service [4][22] - A strategic emphasis on inventory management and the introduction of value-add service programs to enhance customer experience and margins [11][12] - Plans to relaunch stores in early fall to prepare for the key selling seasons [29] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the challenging macroeconomic environment and consumer discretionary spending pressures [22][31] - Despite current challenges, the management remains optimistic about 2024, viewing it as a reset phase with expectations for progress [29] - The company is focused on expense management, having reduced overall costs by $4.6 million year-over-year [27] Other Important Information - The company is implementing more aggressive promotional activities during Q2 to drive traffic, particularly around key holidays [53] - The company expects fiscal 2024 net sales to be in the range of $1.15 billion to $1.23 billion, with adjusted EBITDA projected between $45 million and $65 million [58] Q&A Session Summary Question: Given the slightly weaker Q1, what gives confidence to reiterate the guidance for the year? - Management noted that despite Q1 softness, there is significant opportunity in the back half of the year to improve profitability and drive sales [36] Question: Have there been any changes due to recent political and regulatory chatter? - Management indicated no significant changes in trends due to political or regulatory chatter [38] Question: What categories are showing early signs of improved trends? - The fishing category is currently the only one showing positive trends, with improvements expected in camping as well [39][40] Question: Can you discuss the progression of comps during Q1? - Comp store sales were tough at the beginning of Q1 due to low inventory, but improved as new merchandise was introduced [43][44] Question: How are you managing inventory in apparel and footwear? - The company has narrowed its supplier base significantly, allowing for better inventory management and strategic markdowns [76][88] Question: What is the status of private label assortment? - The company is seeing early successes with private label products, which are expected to insulate the business during market fluctuations [78]