By Eric Smith

The resignation of its CFO might have taken a toll on Sportsman’s Warehouse Holdings Inc.’s shares after Thursday morning’s release of fourth-quarter results, but the company is uniquely positioned for growth thanks to one category in particular—firearms.

The Midvale, UT-based retailer this week reported earnings on an adjusted basis rose 26.2 percent in the fourth quarter as same-store sales gained 3.1 percent. EPS of 25 cents met Wall Street’s target.

Net sales of $242.7 million narrowly beat expectations but were down 0.2 percent from $243.2 million in the fourth quarter of fiscal year 2017, due to the 53rd week of operations in the fourth quarter of fiscal 2017. (Click here for the earnings report recap.)

Meanwhile, CFO Kevan Talbot announced he is resigning after 10 years in that position to “spend more time with his family before pursuing other interests,” CEO Jon Barker said on Thursday’s earnings conference call.

Though Sportsman’s Warehouse shares tumbled in the high single digits on Thursday—and were down in the low single digits at market close Friday—the company appears unfazed by the latest blip.

As competitors shy away from the firearms business, Sportsman’s Warehouse sees plenty of opportunity for taking market share.

“Because of the policy changes and everything else that’s going on there and our increased assortment, we continue to pick up market share in the firearms space,” Talbot said on Thursday’s earnings call with analysts. “One of the things that we’re really focused on this year is our ability to gain and pick up that market share.”

Sportsman’s Warehouse’s Q4 firearm units increased 0.3 percent, compared to a 5.1 percent decline in the adjusted mix data in the states the company serves, Barker noted. Ammunition sales decreased 5.1 percent, primarily due to the company’s decision to run fewer promotions around ammunition compared to the prior-year period.

“Firearm units across the company were again better than the adjusted mix data within our states as we continued to capitalize on market share opportunities through our positioning as the leader in the category combined with the investments we have made across the business to further strengthen our capabilities within the industry,” Barker said.

Other sportsman’s categories were upbeat for the company in Q4. In non-hunting categories, fishing was up 4.5 percent and camping increased 7.5 percent. Barker said favorable weather contributed to positive growth across Sportsman’s Warehouse’s soft good categories of footwear and clothing, which increased 9.2 percent and 2 percent, respectively.

But firearms is where Sportsman’s is hitting the mark, and the company is doubling down on the category as big-box stores back off. One way Sportsman’s Warehouse is going all in on firearms is through a new service it unveiled last week—a firearms gunsmith service called Gunsmith Center at Sportsman’s Warehouse in Salt Lake City.

According to the press release Sportsman’s Warehouse issued announcing the opening, the center “offers the full-machine services of mills and lathes, plus complete refinishing, threading, metal, and stock work. Services also include trigger and sight options, full customization and other work available in three simple ways.”

Customers can drop off and pick up firearms at any Sportsman’s Warehouse store, visit the Gunsmith Center in Salt Lake or ship firearms to the center for smithing.

The new center was designed to build “customer acquisition and engagement” and “engage with our very loyal customer base and further strengthen their relationship with Sportsman’s Warehouse,” Barker said.

“Our research shows there are over 300 million firearms in our country with very limited options for quality repair and personalization services,” he said. “This void creates an ideal opportunity for greater customer engagement both within our current store base as well as a new nationwide opportunity to build the Sportsman’s Warehouse brand.

“Deployment of these value-added services are aimed at increasing our customers’ confidence in the purchase cycle while maximizing lifetime value of the customer relationship.”

Not only is Sportsman’s Warehouse launching the Gunsmith Center, but the retailer is making other key investments for the “long-term success of our organization,” Talbot said. The company is planning on minimum wage increases and $5 million in increased resources for new hires and employee benefits.

“This investment will make Sportsman’s Warehouse a more competitive retailer as we continue to execute our growth plans,” Talbot said, adding that the company invested $3 million in a new e-commerce platform plans to spend another $1 million in “the platform and the modernization of our systems.”

For the first quarter of fiscal year 2019, Sportsman’s Warehouse expects net sales to be in the range of $174 million to $180 million based on a change in same-store sales in the range of (2 percent) to (5 percent) compared to the corresponding period of fiscal year 2018. Net loss is expected to be in the range of ($3.5) million to ($4.8) million with diluted loss per share of (8) cents to (11) cents on a weighted average of approximately 43 million estimated common shares outstanding.

For fiscal year 2019, net sales are expected to be in the range of $860 million to $890 million based on a change in same-store sales in the range of (1 percent) to 2 percent compared to fiscal year 2018. Net income is expected to be in the range of $22.5 million to $27.5 million with earnings per diluted share of 52 cents to 64 cents on a weighted average of approximately 43.2 million estimated common shares outstanding.

“In terms of our outlook for 2019 … we will make investments that continue to differentiate Sportsman’s Warehouse and better enable us to both strengthen our relationship with our existing customers as well as capitalize on market share opportunities as we acquire new customers,” Barker said.

Photo courtesy Sportsman’s Warehouse


Eric Smith is Senior Business Editor at SGB Media. Reach him at or 303-578-7008. Follow on Twitter or connect on LinkedIn.