Sportsman's Warehouse (SPWH) Q3 Loss Narrows, Sales Beat
Sportsman's Warehouse Holdings, Inc. SPWH reported third-quarter fiscal 2023 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line posted a narrower-than-expected loss. However, both metrics declined year over year. The company’s results reflected the impacts of the ongoing inflationary pressures on consumer spending, particularly on discretionary products.
Despite facing various macroeconomic challenges, Sportsman's Warehouse has been focused on managing inventory, specifically in clearing through excess apparel and footwear. In terms of cost management, the company has realized substantial financial benefits from a cost reduction plan, particularly in reducing selling, general and administrative expenses.
This plan, outlined in the previous quarter, has contributed to Sportsman's Warehouse's improved financial standing in the fiscal third quarter. Looking forward, the company intends to continue these strategies with an aim to lower debt levels, positioning it for a strong start in fiscal 2024.
Sportsman's Warehouse Holdings, Inc. Price, Consensus and EPS Surprise
Sportsman's Warehouse Holdings, Inc. price-consensus-eps-surprise-chart | Sportsman's Warehouse Holdings, Inc. Quote
Let’s Delve Deeper
Sportsman's Warehouse posted an adjusted loss of 1 cent per share in the fiscal third quarter, which was narrower than the Zacks Consensus Estimate of an adjusted loss of 11 cents. The bottom line declined from adjusted earnings of 34 cents per share in the year-ago period.
Net sales of $340.6 million slipped 5.3% year over year but surpassed the Zacks Consensus Estimate of $316 million. Same-store sales decreased 11.4%. The Zacks Consensus Estimate for same-store sales was pegged to decline 18% in third-quarter fiscal 2023.
The decrease in net sales and same-store sales was mainly caused by ongoing consumer inflationary pressures and recessionary concerns, which led to a reduction in discretionary spending. However, the decline was somewhat balanced by the launch of 15 stores since Oct 29, 2022, and a rise in demand for certain categories as an outcome of social unrest.
Gross profit of $103.2 million declined 14.6% from $120.8 million in the year-ago quarter. Also, the gross margin contracted 330 bps year over year to 30.3%, primarily driven by a lower product margin in the ammunition category, coupled with heightened promotional activities aimed at boosting in-store and online traffic.
Selling, general and administrative expenses declined 2.2% year over year to $100.1 million. As a percentage of net revenues, SG&A expenses increased 100 bps to 29.4% in third-quarter fiscal 2023.
The decline primarily resulted from reduced payroll, other operating costs, and store pre-opening expenses, which collectively amounted to $8.8 million. However, this was partly negated by a rise in depreciation, rent, and professional fees.
Adjusted EBITDA of $16.2 million declined 41.5% year over year. The adjusted EBITDA margin contracted 290 bps year over year to 4.8%.
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Other Financial Details
Sportsman's Warehouse ended the quarter with a net debt of $182.5 million, which includes $185.4 million of borrowings outstanding under its revolving credit facility, balanced by $2.9 million of cash and cash equivalents. Total stockholders' equity was $272.3 million at the end of the quarter under review.
Guidance
For fourth-quarter fiscal 2023, Sportsman's Warehouse anticipates net sales of $365-$390 million, with same-store sales down 6-11% year over year. The company estimates an adjusted loss per share of 25-35 cents for the fiscal fourth quarter.
The company expects a gross margin contraction of 600-800 bps for the fiscal fourth quarter. The contraction is expected to result from more aggressive promotional activities.
Shares of this Zacks Rank #3 (Hold) company have gained 58.8% in the past three months compared with the industry's growth of 11.5%.
Stocks to Consider
A few better-ranked stocks are Abercrombie & Fitch Co. ANF, Deckers Outdoor Corporation DECK and Skechers U.S.A., Inc. SKX.
Abercrombie operates as a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank #1 (Strong Buy). The company reported an EPS surprise of 60.5% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie’s current fiscal-year sales suggests growth of 12.8% from the year-ago reported number. ANF has a trailing four-quarter earnings surprise of 713%, on average.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. It has a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Deckers’ current fiscal-year sales and earnings suggests growth of 11.4% and 20.9%, respectively, from the year-ago reported numbers. DECK has a trailing four-quarter earnings surprise of 26.3%, on average.
Skechers U.S.A. designs, develops, markets and distributes footwear. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Skechers’ current financial-year earnings and sales indicates growth of 44.5% and 8.2%, respectively, from the previous year’s reported numbers. SKX has a trailing four-quarter average earnings surprise of 50.3%.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
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Sportsman's Warehouse Holdings, Inc. (SPWH) : Free Stock Analysis Report
