Sportsman's Warehouse Holdings, Inc. Q3 FY2025 earnings call

• Third consecutive quarter of positive same-store sales growth (2.2%). • Strong performance in hunting, shooting sports, and fishing; firearms outperformed, ammo sales strong. • Reduced inventory from Q2 to Q3, paid down debt, focused on regionally relevant assortments. • Enhanced marketing efforts, including Adventure Like a Local campaign and digital-first strategy. • Opened a new store in Surprise, Arizona with a personal protection-focused format. • Faced challenges from the consumer environment and prolonged government shutdown impacting Q4 sales.

Same-store sales grew 2.2% in the third quarter. Key categories: Hunting and shooting sports increased 5%, fishing delivered 14% growth, apparel grew about 1%, camping declined, e-commerce grew 8%. Firearms outperformed adjusted NIC checks with market share gains. Ammunition sales grew nearly 2%. Personal protection category was strong with burn and taser growth.

• Revised full-year net sales range to flat to slightly up. • Adjusted EBITDA guidance revised to $22 million to $26 million. • Expect ending inventory to be less than $330 million. • Capital expenditures expected to be less than $25 million for the full year.

• Consumer environment challenges. • Prolonged government shutdown impact on sales. • Promotional retail landscape putting pressure on margins.

Q: Hey. Good afternoon. I want to start with what you're seeing in recent weeks, Black Friday, Cyber Monday, etcetera, and if you've seen any improvement. And then maybe separately to that, given the cut to the guidance, weak consumer, you mentioned government shutdown. Curious if those trends have been persistent or if you've seen any improvement now that the government shutdown is no longer.

A: Great. Hey, Ryan. This is Jennifer. Thanks for the question. Yes, I think as we spoke about in our guidance, what we saw in the end of October where our trajectory turned more negative. We started to see that through November as well. We didn't necessarily see a pickup from right after the government shutdown. So that's really reflected in our guidance for the quarter.

Q: Hey. Good afternoon, guys. I'd like to touch on the marketing spend commentary in Q4, you know, understanding the headwinds that you're seeing from the consumer and the government shutdown impacting sentiment. I guess, what are your thoughts on elevating marketing when the consumer seems to be responding to more external headwinds and, you know, what are you expecting in terms of that marketing efficiency in the quarter?

A: Hey, Anna. This is Jennifer. Thanks for the question. So the way we're really thinking about it is twofold. First off, you know, as we look across the competitive landscape, it is highly promotional and highly marketed out there. So it's really, you know, for us to be competitive in the marketplace, we feel we need to spend. We did go up against print last year in the month of November, which we did not have this year. We've turned more to digital marketing and email. But that's really what's been working for us. And so yeah, we have a lot of great deals out there right now, and we're just gonna start leaning in heavier into firearms and ammo. And so we need to tell our customer that's what they come to us for, so we need to communicate that to them.

Q: Hi, guys. First, I want to ask just about kind of the promotional environment, in particular around Black Friday. Jennifer, you just talked about how you guys didn't have print this year. It seems like and correct me if I'm wrong. That you weren't as promotional as we historically think about kind of doorbusters and print ads. Was this purposeful? And I'm curious your thoughts around kind of the impact on your outlook for Q4 purely around kind of Black Friday weekend?

A: Yeah. Great question. Hey, Mark. Thanks for the question. For Black Friday, we're definitely promotional, but you called it out. We didn't necessarily go out with doorbusters like a lot of our competitors were. You know, right now, during the month of December, we're reimplementing some of those doorbusters. Because it's still a high traffic area. So that's where we were a little bit different. But if you looked across our box, we were very promotional. A lot of it was in-store signage. In terms of what our big deals were. And we kept a lot of them on for maybe a couple of weeks versus churning them constantly like some of our competitors were. So you know, we're writing that and changing our strategy in the month of December to go after what our customer wants and to continue to drive foot traffic to the stores.

Q: Hey, guys. This is Joseph on for Matt. Just kind of hop into your response on driving traffic for promotions in hunt and shoot. Is that the only lever that we have here to pull in terms of returning back to positive comps here? It looks like 3Q was down about 8%. Just anything else that we can pull to return back to those positive comps in hunt and shoot?

A: Okay. Hey, Joseph. This is Jen. So our Q3 comp was a positive two. I'm not sure if I misunderstood your last comment. So we have been positive comping for three consecutive quarters. As we look forward into holiday, we're not leaning strictly on firearms ammo. That's more of a later on. I mean, holiday is a very promotional season anyway, so there'll be many promotions throughout the store. That's just something we are layering on that we didn't have as upfront in November or as in Q3.

Q: Hey, guys. This is Joseph on for Matt. Just if you guys could give us any preliminary thoughts on margin expansion, just going into fiscal twenty-six. I know this current tougher demand environment sustains. Can we still deliver any margin expansion in the next year?

A: We haven't quite given guidance on 2026, but what we'll be focused on really is efficiency and profitable growth. We will continue to look at our inventory and make sure that we are getting as much margin accretion out of that as possible. But, yeah, we're really focused on 2026 on our profitable sales growth and managing inventory and margins. And continue to look at our cost structure.