SPORTSMAN'S WAREHOUSE HOLDINGS, INC. Q3 FY2024 earnings call

• Merchandising and inventory refinement: Started with SKU rationalization, expanded inventory for hunting and holiday seasons, implemented targeted promotions and ad campaigns. Worked on reducing non-performing inventory in growth categories. • IT systems: Continued investment in IT systems and tools to improve in-stock, gross margin, and inventory productivity. • Store reset strategy: Enhanced product displays, provided additional training to staff, focusing on elevated customer experience to improve satisfaction and sales through better attachment. AOV from attachment and in-store service was at an all-time high. • Ecom: Ecom-driven sales were positive, with refinement of marketing and media mix model to drive incremental sales. • Omni-channel: Tested and learned through data-driven insights on marketing activities' impact on sales, customer acquisition, and brand awareness. Introduced a new Omnichannel marketing campaign for the holiday season highlighting great gear for gifting or self-treating.

In the third quarter, total sales were down 5%. The fishing and camping department, along with the gift bar category (including optics, electronics, and cutlery) were comp positive for the quarter, with fishing up 13% year-over-year. The firearms category saw a mix shift. Fishing and camping, and gift bar likely contributed positively to revenue, though specific revenue contribution percentages weren't explicitly stated in absolute terms beyond the mentioned growth in fishing.

• Full-year 2024 net sales expected to be in the range of $1.18 billion to $1.2 billion. • Adjusted EBITDA expected to be in the range of $23 million to $29 million. • Total inventory expected to be below $350 million. • Capital expenditures for 2024 expected to be in the range of $17 million to $20 million, primarily for fleet maintenance and technology investments relating to merchandising and store productivity.

• Consumer environment: Emphasis on value and promotion-driven shopping pressured gross margins. • Inventory markdowns: Price markdown cadence to end seasons clean impacted gross margins, with pressure expected to persist in Q4. • Calendar shifts: Impact of calendar changes (like the 53rd week) on year-over-year comps, creating nuance in sales comparisons.

Q: Could you cover the cadence of comps in Q3 by month, customer response to promotions, and Q4 tracking?

A: Jeff noted sequential improvement month-over-month in Q3, being more promotional to offset tough comps. For Q4, there's nuance with calendar shifts like the 53rd week affecting comps, but expecting continual sequential improvement in comp store sales.

Q: SG&A side, lapping cost-cutting initiatives and levers to drive SG&A lower?

A: Jeff said they'll always look for additional cost savings in back office functions but will invest back into service components. SG&A is steady stated moving forward.

Q: Gross margin in Q4, SG&A adjusted dollars, and Omnichannel marketing campaign focus?

A: Jeff said no anniversary of last year's liquidation clearancing, so expecting margin improvement. SG&A dollars around $98 million this quarter are steady stated. Paul said Omnichannel campaign is bottom funnel focused, with digital channels and affiliates used for more exposure.

Q: Hunting performance, NICS reconciliation, and Second Amendment ad impact?

A: Jeff said units outperformed NICS, with strong performance in firearms. Paul mentioned no election run-up impact, and pleased with Second Amendment and Veterans Day promotional activities.

Q: Consumer behavior, firearms margin, and new store timing?

A: Paul said ability to target consumers digitally. Jeff said good attachment rate on firearms offsets margin degradation. Jeff mentioned new store timing in late Q2, early Q3 2025, a standard 30,000 square foot box incorporating learned store layout improvements in Arizona.