Sportsman's Warehouse (NASDAQ:SPWH) Exceeds Q2 Expectations But Full-Year Sales Guidance Misses Expectations
Outdoor specialty retailer Sportsman's Warehouse (NASDAQ:SPWH) reported Q2 CY2024 results beating Wall Street analysts’ expectations, with revenue down 6.7% year on year to $288.7 million. On the other hand, the company’s full-year revenue guidance of $1.15 billion at the midpoint came in 2.7% below analysts’ estimates. It made a non-GAAP loss of $0.14 per share, down from its loss of $0.04 per share in the same quarter last year.
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Sportsman's Warehouse (SPWH) Q2 CY2024 Highlights:
- Revenue: $288.7 million vs analyst estimates of $285 million (1.3% beat)
- EPS (non-GAAP): -$0.14 vs analyst estimates of -$0.08
- The company dropped its revenue guidance for the full year to $1.15 billion at the midpoint from $1.19 billion, a 3.4% decrease
- EBITDA guidance for the full year is $27.5 million at the midpoint, below analyst estimates of $45.19 million
- Gross Margin (GAAP): 31.2%, down from 32.6% in the same quarter last year
- EBITDA Margin: 2.6%, down from 4.2% in the same quarter last year
- Free Cash Flow was $14.14 million, up from -$50.56 million in the same quarter last year
- Same-Store Sales fell 9.8% year on year (-16.1% in the same quarter last year)
- Market Capitalization: $79.27 million
“While we were more aggressive with our promotional activities during the quarter, our core customer remains firmly under pressure due to the difficult macroenvironment and pullback in discretionary spending. We will continue to carefully manage the business and find ways to take non-customer facing costs out of the business,” said Paul Stone, Chief Executive Officer and President.
A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ:SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.
Sports & Outdoor Equipment Retailer
Some of us spend our leisure time vegging out, but many others take to the courts, fields, beaches, and campsites; sports equipment retailers cater to the avid sportsman as well as the weekend warrior. Shoppers can find everything from tents to lawn games to baseball bats to satisfy their athletic and leisure needs along with competitive prices and helpful store associates that can talk through brands, sizing, and product quality. This is a category that has moved rapidly online over the last few decades, so these sports and outdoor equipment retailers have needed to be nimble and aggressive with their e-commerce and omnichannel presences.
Sales Growth
Sportsman's Warehouse is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale.
As you can see below, the company’s annualized revenue growth rate of 7.9% over the last five years was mediocre as it opened new stores and expanded its reach.
This quarter, Sportsman's Warehouse’s revenue fell 6.7% year on year to $288.7 million but beat Wall Street’s estimates by 1.3%. Looking ahead, Wall Street expects revenue to decline 5.1% over the next 12 months.
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Same-Store Sales
Same-store sales growth is a key performance indicator used to measure organic growth and demand for retailers.
Sportsman's Warehouse’s demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 13.6% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.
In the latest quarter, Sportsman's Warehouse’s same-store sales fell 9.8% year on year. This decrease was a further deceleration from the 16.1% year-on-year decline it posted 12 months ago. We hope the business can get back on track.
Key Takeaways from Sportsman's Warehouse’s Q2 Results
It was good to see Sportsman's Warehouse beat analysts’ revenue expectations this quarter. On the other hand, its EPS missed Wall Street’s estimates and its full-year revenue and EBITDA guidance was lowered. Overall, this quarter could have been better. The stock traded down 2.4% to $2.05 immediately following the results.
Sportsman's Warehouse may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
