Outdoor specialty retailer Sportsman’s Warehouse (NASDAQ:SPWH) fell short of analysts’ expectations in Q4 CY2023, with revenue down 2.3% year on year to $370.4 million. The company’s full-year revenue guidance of $1.19 billion at the midpoint also came in 6.7% below analysts’ estimates. It made a non-GAAP loss of $0.20 per share, down from its profit of $0.49 per share in the same quarter last year.
Is now the time to buy Sportsman’s Warehouse? Find out by accessing our full research report, it’s free.
Sportsman’s Warehouse (SPWH) Q4 CY2023 Highlights:
-
Revenue: $370.4 million vs analyst estimates of $372.6 million (0.6% miss)
-
EPS (non-GAAP): -$0.20 vs analyst estimates of -$0.30
-
Management’s revenue guidance for the upcoming financial year 2024 is $1.19 billion at the midpoint, missing analyst estimates by 6.7% and implying -7.6% growth (vs -8.3% in CY2023)
-
Gross Margin (GAAP): 26.8%, down from 32.4% in the same quarter last year
-
Free Cash Flow of $60.18 million, up from $7.25 million in the same quarter last year
-
Same-Store Sales were down 12.8% year on year
-
Market Capitalization: $107.4 million
“Despite lower than expected fourth quarter sales, we were successful in reducing our excess inventory and ended the fiscal year in a significantly healthier inventory position,” said Paul Stone, President and Chief Executive Officer of Sportsman’s Warehouse.
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 9.8% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was mediocre as it opened new stores and expanded its reach.
This quarter, Sportsman’s Warehouse missed Wall Street’s estimates and reported a rather uninspiring 2.3% year-on-year revenue decline, generating $370.4 million in revenue. Looking ahead, Wall Street expects revenue to decline 1% over the next 12 months.
Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
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 8.1% 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 12.8% year on year. This performance was more or less in line with the same quarter last year.
Key Takeaways from Sportsman’s Warehouse’s Q4 Results
We were impressed by how Sportsman’s Warehouse blew past analysts’ EPS expectations this quarter. We were also excited it reduced its excess inventory and outperformed Wall Street’s free cash flow estimates. On the other hand, its revenue missed as same-store sales decreased 12.8% (vs an estimated 8% decrease). That decline was slightly offset by 15 new store openings.
Looking ahead, Sportsman’s Warehouse expects its demand to remain troubled in 2024, but its forecasted EBITDA profitability was better than expected. Overall, this quarter’s results still seemed fairly positive and shareholders should feel optimistic. The stock is up 2.4% after reporting and currently trades at $3.2 per share.
Sportsman’s Warehouse may have had a good quarter, but does that mean you should 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.