Sportsman’s Warehouse Inc. reported fourth-quarter earnings slid 7.5 percent to  $10.5 million, or 25 cents  a share.

For the thirteen weeks percent ended January 28, 2017:

  • Net sales increased by 6.2 percent to $221.4 million from $208.5 million in the fourth quarter of fiscal year 2015. Same store sales decreased by 5.2 percent over the same period.
  • Income from operations was $21.1 million compared to $22.1 million in the fourth quarter of fiscal year 2015.
  • Interest expense decreased to $3.3 million from $3.6 million in the fourth quarter of fiscal year 2015.
  • Net income was $10.5 million compared to $11.4 million in the fourth quarter of fiscal year 2015.
  • Diluted earnings per share were $0.25 compared to $0.27 in the fourth quarter of fiscal year 2015.
  • Adjusted EBITDA increased 0.8 percent to $26.4 million from $26.2 million in the fourth quarter of fiscal year 2015.

When the retailer reported earnings on November 17, the company said it expected net sales are expected to be in the range of $230.0 million to $235.0 million based on same store sales change in the range of negative 1 percent to positive 1 percent compared to the corresponding period of fiscal year 2015. Net income was expected to be in the range of $11.4 million to $12.6 million. Earnings per diluted share were expected to be 27 cents to 30 cents.

John Schaefer, chief executive officer, stated, “The retail environment remained challenging during the fourth quarter and we anniversaried both the San Bernardino tragedy and the executive orders from December and January which created a difficult comparison for our hunting and shooting category. For fiscal year 2016, we continued to strengthen our market share position with 11 new stores and a 10.4 percent revenue increase over the prior year, maintained flat gross margins in a promotional environment, and managed expenses, inventory and capital expenditures with discipline.”

Schaefer continued, “Looking at fiscal year 2017, we are taking a conservative approach when planning our hunting and shooting business, particularly for the first half of the year until we anniversary the unfortunate events that took place in Orlando in June 2016. That said, we will remain focused on our strategic initiatives of expanding our store base with 12 planned store openings, maximizing the potential of our loyalty program, enhancing our e-commerce platform, and investing in our store teams and leadership as evidenced by today’s announcement of Jon Barker’s appointment as president and chief operating officer. Despite the choppy environment that we are navigating, we believe there is significant market share opportunity in the outdoor goods space, and our differentiated concept that is resonating with our customers will provide us with key competitive advantages that will allow us to further strengthen our market position and deliver profitable growth.”

For the fifty two weeks ended January 28, 2017:

  • Net sales increased by 10.4 percent to $780.0 million from $706.8 million in fiscal year 2015. Same store sales decreased by 0.7 percent in fiscal year 2016 compared to fiscal year 2015.
  • Income from operations increased 2.3 percent to $60.7 million from $59.3 million in fiscal year 2015. Adjusted income from operations, which excludes expenses related to the Company’s secondary offerings in April 2016 and September 2015, as well as the reversal of an accrual related to a litigation matter in the second quarter of 2015, increased 8.6 percent to $60.8 million compared to $56.0 million in fiscal year 2015.
  • The Company opened 11 new stores in fiscal year 2016 ending the fiscal year with 75 stores in 20 states or retail square footage of 3.1 million. This represents a unit increase of 17.2 percent from the end of fiscal year 2015 and an increase in retail square footage of approximately 328,000 square feet or 11.6 percent.
  • Interest expense decreased 5.3 percent to $13.4 million from $14.2 million in fiscal year 2015.
  • Net income increased 6.8 percent to $29.7 million from $27.8 million in fiscal year 2015. Adjusted net income, which excludes expenses related to the Company’s secondary offerings in April 2016 and September 2015, as well as the reversal of an accrual related to a litigation matter in the second quarter of 2015, net of taxes, and prior-year tax credits, increased 13.4 percent to $29.2 million compared to adjusted net income of $25.8 million fiscal year 2015.
  • Diluted earnings per share increased 6.1 percent to $0.70 from diluted earnings per share of $0.66 in fiscal year 2015. Adjusted diluted earnings per share, increased 13.1 percent to $0.69 from adjusted diluted earnings per share of $0.61 in fiscal year 2015.
  • Adjusted EBITDA increased 12.6 percent to $82.3 million from $73.0 million in fiscal year 2015.

Balance sheet highlights as of January 28, 2017:

  • Total debt: $195.7 million consisting of $61.0 million outstanding under the company’s revolving credit facility and $134.7 million outstanding under the term loan, net of unamortized discount and debt issuance costs.
  • Total liquidity (cash plus $52.8 million of availability on revolving credit facility): $54.7 million

First Quarter and Fiscal Year 2017 Outlook:

For the first quarter of fiscal year 2017, net sales are expected to be in the range of $150.0 million to $155.0 million based on a same store sales decline in the range of 9.0 percent to 11.0 percent compared to the corresponding period of fiscal year 2016. Net loss is expected to be in the range of $2.6 million to $3.4 million with diluted loss per share of $0.06 to $0.08 on a weighted average of approximately 42.6 million estimated common shares outstanding.

For fiscal year 2017, net sales are expected to be in the range of $825.0 million to $845.0 million based on a same store sales decline in the range of 4.0 percent to 6.0 percent compared to fiscal year 2016. Net income is expected to be in the range of $25.5 million to $29.0 million with earnings per diluted share of $0.60 to $0.68 on a weighted average of approximately 42.8 million estimated common shares outstanding.

The company’s fiscal year 2017 will include 53 weeks, while fiscal year 2016 included 52 weeks. The estimated fiscal year 2017 impact of the additional week is roughly $10.0 to $12.0 million in revenue and approximately $0.01 on earnings per share. There is no impact on expected same store sales as those are presented on a 52 week comparative basis.

Photo courtesy Sportsman’s Warehouse