Stock Story -
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.
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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
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 RetailerSome 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 GrowthSportsman'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.
Same-Store SalesSame-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.