Sportsman’s Warehouse (NASDAQ:SPWH) reported second-quarter net sales of $295.6 million, up 0.6% from the prior-year period, as gains in hunting and shooting sports offset continued pressure in several discretionary categories. Same-store sales were essentially flat, matching management’s expectations.
Chief Executive Officer Paul Stone said the retailer’s core customer remained constrained by macroeconomic conditions, particularly elevated fuel prices. In response, the company increased promotions beyond its original plan to reinforce its value proposition and support key outdoor pursuits.
Hunting and Shooting Strength Offsets Category Pressure
Hunting and shooting sports same-store sales rose 6.7%, led by firearms and ammunition. Stone said firearms sales increased 8% and ammunition sales rose nearly 11% in the quarter, with demand partly influenced by event-driven activity. The company also reported a 1% increase in optics, electronics, accessories and other departments.
Fishing sales declined roughly 2% in the second quarter, although the category was up nearly double digits on a two-year comparable-sales basis. Management attributed the quarterly decline in part to drought conditions in key Western markets. Western stores posted mid-single-digit declines, while Eastern stores generated mid-single-digit growth.
Camping, clothing and footwear declined during the quarter. However, executives said inventory clean-up efforts in those categories are largely complete and that fresher merchandise is arriving for the fall season. Stone said August trends improved in camping and apparel, though the categories had not yet returned to positive sales growth.
During the question-and-answer session, Chief Financial Officer Jennifer Fall Jung said the company expects camping to recover sooner than apparel, with camping improvement anticipated in the third quarter and apparel expected to follow in the fourth quarter. Stone said the company’s objective is for those categories to become “flattish to positive” as new assortments reach stores.
Margins Improve Despite More Promotions
Gross margin increased 50 basis points to 32.5% in the second quarter from 32.0% a year earlier. Fall Jung said the company faced pressure from a higher mix of lower-margin hunting and shooting merchandise and a more promotional selling environment. Those pressures were offset by inventory discipline, lower freight costs and a one-time tariff benefit.
The company used the tariff refund to provide additional value to customers, Fall Jung said. She characterized the benefit as nominal because private-label goods account for about 3% of the non-firearm assortment.
Selling, general and administrative expenses were $97.1 million, or 32.9% of sales, compared with $97.2 million, or 33.1% of sales, a year earlier. The decline reflected lower depreciation expense and ongoing cost controls.
Sportsman’s Warehouse posted a net loss of $4.4 million, or 11 cents per diluted share, improving from a net loss of $7.1 million, or 18 cents per diluted share, in the prior-year quarter. Adjusted EBITDA rose to $8.7 million from $8.3 million.
Inventory and Debt Decline
Total inventory ended the quarter at $399 million, down $44.5 million, or 10%, from a year earlier. Management said lower inventory reflects efforts to reduce slow-moving merchandise, narrow assortments and better align receipts with seasonal demand.
Stone said core-product in-stock levels have improved from about 50% two years ago to more than 80% currently. He added that the company has redirected inventory investment toward core products and new merchandise after working through aged goods in camping, apparel, footwear and firearms.
Net debt was $169 million at quarter-end, down $26 million from the prior-year period, while total liquidity stood at $105 million. The company also amended its $45 million asset-based lending term loan and revolving credit facility, extending both maturities to June 2031. The revolver’s commitment was aligned to operating needs at $315 million.
Fall Jung said debt reduction remains the company’s top capital-allocation priority, with excess cash intended for paying down borrowings and strengthening the balance sheet.
Guidance Reiterated for Fiscal 2026
The company reiterated its full-year outlook despite expecting consumer and fuel-price pressures to persist. Sportsman’s Warehouse continues to forecast:
- Net sales ranging from a 1% decline to a 2% increase versus the prior year;
- Adjusted EBITDA of $30 million to $36 million; and
- Capital expenditures of $20 million to $25 million, largely for technology, store service, merchandising productivity and maintenance.
Management said the second half is especially important because the third quarter centers on hunting demand and the fourth quarter includes the holiday selling season. Stone said the company has localized assortments across its 147-store fleet and is emphasizing holiday merchandise with price points aimed at customers who are spending carefully.
E-commerce sales grew nearly 3% during the quarter, led by 10% growth in fishing and 6% growth in hunting. Stone said online sales have outpaced total company sales for nine consecutive quarters, and more than 70% of online orders are picked up in stores, supporting store traffic and the retailer’s omnichannel strategy.
About Sportsman’s Warehouse (NASDAQ:SPWH)
Sportsman’s Warehouse, Inc (NASDAQ: SPWH) operates as a specialty retailer of hunting, shooting, fishing, camping and related outdoor sports equipment in the United States. The company’s brick-and-mortar footprint comprises over 100 retail locations across more than 20 states, complemented by an e-commerce platform that serves anglers and outdoorsmen nationwide. By focusing on core outdoor activities, Sportsman’s Warehouse delivers a comprehensive shopping experience for enthusiasts of all skill levels.
The retailer’s product assortment includes firearms and ammunition, archery gear, fishing tackle and boats, camping supplies, outdoor apparel and footwear, water sports equipment and pet supplies.
