Sportsman’s Warehouse saw a continued decrease in firearm sales after the first quarter ended April 29, 2017. The company reported a net sales increase of 3.5 percent to $156.9 million, up from $151.6 million in the first quarter of fiscal year 2016. Same store sales decreased by 6.9 percent over the same period.
“While we saw a continued softness in firearm demand as we anniversary-ed difficult compares, post the San Bernardino shooting and executive orders that were issued at the beginning of 2016, net sales and same-store sales were better than our expectations as the demand for firearms and ammunition improved in the back half of the quarter,” said CEO John Schaefer on a conference call with analysts.
Schaefer said the 6.9 percent decline in same store sales was the result of several factors including NICS data that showed a continuation of slowed firearm demand, post election and the company’s hunting and shooting department, which includes firearms and ammunition as well as related gear and equipment, contributed 4.5 percent of the 6.9 percent comp decline in Q1.
Income from operations was $3.8 million compared to $2.4 million in the first quarter of fiscal year 2016. Adjusted income from operations, which excludes professional and other fees incurred in connection with the evaluation of a strategic acquisition was $2.0 million, compared to adjusted income from operations of $2.5 million in the first quarter of fiscal year 2016.
Schaefer said the company continues to see significant whitespace opportunity for their stores. With the opening of four stores in the first quarter, the company is on track to open the 12 stores announced for fiscal 2017 resulting in square footage growth of approximately 350,000 square-feet or an increase of approximately 11 percent year-over-year.
Net income was $4.5 million compared to $300,000 in the first quarter of fiscal year 2016.
Diluted earnings per share were 11 cents compared to 1 cent in the first quarter of fiscal year 2016. Adjusted earnings per share were 8 cents compared to 0 in the first quarter of fiscal year 2016.
Adjusted EBITDA decreased to $4.2 million from $7.4 million in the first quarter of fiscal year 2016.
“Looking ahead to fiscal 2018, while we continue to believe in the 300-store potential that exists for Sportsman’s Warehouse nationally, given current industry conditions and continued market consolidation amongst the national players, we are moderating our store opening plans and expect to open between 5 and 9 stores in fiscal year 2018,” Schaefer said. “We believe this moderation is prudent, and will also allow us to allocate more free cash flow to debt pay down next year.”
“We continue to enhance our e-commerce platform and increase our digital presence through continued investments. E-commerce, while still a small segment for us, grew to $1.8 million in the first quarter, from $1.4 million in the prior year period, an increase of 28.1 percent,” Schaefer said. “We are pleased with increased traffic to our site as customers use our product as a research tool in addition to making certain purchases. Our 5,500 gun assortment online continues to drive traffic to our site as well as in-store sales within the firearm category, as customers need to complete the final purchase in-store. Approximately 30 percent of our guns sold online and picked up in store are special makeups, which expands our already substantial online firearm offering even more, and provides our customer with one of the most extensive online selections available.”
Schaefer continued, “the softness in the firearm and ammunition category continued into the first quarter, though began to improve, particularly in the second half of the quarter, combined with a heightened promotional environment, resulting in better-than-expected top line and adjusted EPS within our guided range for the quarter. We are encouraged by the progress we continue to make against all of our strategic growth priorities in the first quarter.”
For the remainder of the year, the company plans to maintain a conservative approach for the second quarter, until they have anniversary-ed the events that took place in Orlando in June 2016 and the pre-election runoff that caused increased demand in firearm and ammunition categories.
Photo courtesy Sportsman’s Warehouse