Outdoor specialty retailer Sportsman's Warehouse (NASDAQ: SPWH) reported revenue ahead of Wall Street’s expectations in Q4 CY2024, but sales fell by 8.1% year on year to $340.4 million. Its non-GAAP profit of $0.04 per share was significantly above analysts’ consensus estimates.
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Sportsman's Warehouse (SPWH) Q4 CY2024 Highlights:
- Revenue: $340.4 million vs analyst estimates of $328.7 million (8.1% year-on-year decline, 3.6% beat)
- Adjusted EPS: $0.04 vs analyst estimates of -$0.06 (significant beat)
- Adjusted EBITDA: $14.57 million vs analyst estimates of $10.7 million (4.3% margin, 36.2% beat)
- EBITDA guidance for the upcoming financial year 2025 is $39 million at the midpoint, above analyst estimates of $35.63 million
- Operating Margin: 1.1%, up from -1.7% in the same quarter last year
- Free Cash Flow Margin: 14.6%, down from 16.2% in the same quarter last year
- Same-Store Sales were flat year on year (-12.8% in the same quarter last year)
- Market Capitalization: $37.73 million
“We were pleased that our quarterly trends continued to improve, with same store sales down slightly at 0.5% in the fourth quarter on a year-over-year comparable 13-week basis,” said Paul Stone, President and Chief Executive Officer of Sportsman’s Warehouse.
Company Overview
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
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $1.20 billion in revenue over the past 12 months, Sportsman's Warehouse is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Sportsman's Warehouse grew its sales at a tepid 6.2% compounded annual growth rate over the last five years (we compare to 2019 to normalize for COVID-19 impacts). This shows it failed to generate demand in any major way and is a rough starting point for our analysis.
This quarter, Sportsman's Warehouse’s revenue fell by 8.1% year on year to $340.4 million but beat Wall Street’s estimates by 3.6%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last five years. This projection doesn't excite us and suggests its products will see some demand headwinds.
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Same-Store Sales
Same-store sales show the change in sales for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year. This is a key performance indicator because it measures organic growth.
Sportsman's Warehouse’s demand has been shrinking over the last two years as its same-store sales have averaged 11% annual declines.
In the latest quarter, Sportsman's Warehouse’s year on year same-store sales were flat. This performance was a well-appreciated turnaround from its historical levels, showing the business is improving.
Key Takeaways from Sportsman's Warehouse’s Q4 Results
We were impressed by how significantly Sportsman's Warehouse blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. We were also excited its full-year EBITDA guidance outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 60.6% to $1.55 immediately after reporting (we note the stock was down 62% year-to-date going into the print).
Indeed, Sportsman's Warehouse had a rock-solid quarterly earnings result, but is this stock a good investment here? 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.
