Paul Stone, CEO of Sportsman’s Warehouse Holdings, Inc. (SPWH), said the hook & bullet and outdoor retailer delivered its third consecutive period of positive same-store sales growth in the fiscal third quarter ended November 1, driven by strong performance in the hunt, fish, firearms, and personal protection categories. Stone also noted that the company continues to gain market share in a highly promotional, challenging retail environment.

“We were also pleased in early November to open our new Surprise, Arizona location — our 11th store in the state — which marks our first personal protection-focused concept in a market where we have a proven track record of strong performance,” Stone said in a media release of Q3 results. “This strategically located store represents our only planned opening for both 2025 and 2026 and reflects our commitment to thoughtful capital management.”

The CEO said the new Arizona location will be the only new store opened in 2025 or 2026.

Stone noted that the retailer began to see a softening in consumer spending due to external disruptions, which is weighing on early fourth-quarter sales.

“Starting in mid-October, we started to see a slowdown in our positive sales trend, which we believe was partially driven by external disruptions from a prolonged government shutdown impacting consumer confidence,” Stone shared on a conference call with analysts. “This has made for a challenging start to Q4, and while still early in the quarter, we believe it’s prudent to take a conservative approach to the balance of the year. With the U.S. consumer under pressure and a very promotional retail landscape, we are navigating the environment carefully and maintaining disciplined control over variable cost and inventory productivity.

“Given these dynamics, we are taking a cautious view of the fourth quarter,” Stone continued. “So we remain confident that our strategic priorities and ability to adjust with speed will support modest sales growth for the full year. We remain confident in our ability to finish the year with lower inventory than last year, generate positive free cash flow and a lower debt balance.

Third Quarter Sales Summary
Net sales were $331.3 million for the third quarter; an increase of 2.2 percent compared to $324.3 million in the third quarter of fiscal year 2024. The increase in net sales was said to be primarily due to increased sales in the Hunting & Shooting, Fishing, and Apparel departments as SPWH continues to emphasize inventory in-stocks, and a focused strategy to win the seasons in hunting and fishing to ensure stores have the right inventory at the right location at the right time.

In addition, the sales growth was said to be driven by a strategic decision to lean into Personal Protection, including less-lethal alternatives. Stone said the Personal Protection category continued to resonate strongly with customers with strength across both lethal and nonlethal solutions. “Byrna and Taser remain strong growth drivers and the try before you buy model and our archery lanes and enclosed pods is differentiating our store experience in meaningful ways,” he detailed. “We added Byrna in additional stores during Q3 and now have live demos available in 116 of our 147 stores across the country. We are committed to building on this momentum as we further position Sportsman’s Warehouse as the authority in personal protection.”

Same-store sales increased 2.2 percent during the third quarter of fiscal year 2025, compared to the third quarter of fiscal year 2024, with broad-based strength in core categories of Hunting and Shooting Sports as well as Fishing, as well as new digital marketing efforts.

“Our Firearms business once again outperformed adjusted NICS checks, extended our market share gains for yet another quarter,” Stone said on the call with analysts. “While adjusting NICS checks declined, our Firearms unit sales increased, despite the election-driven headwinds from Q3 last year, underscoring the continued focus and improvements on a curated assortment with depth in key products, strong in-stocks and seasonal readiness with inventory, our enhanced marketing efforts and our outside are led in-store experience.”

In Ammunition, Stone said sales demand remained strong, growing nearly 2 percent in Q3.

“Our EDLP strategy on core calibers complemented by healthier in-stocks and bulk ammo strategy continue to resonate with customers, with average unit retail up in the low single digits. We are seeing sustained engagement from customers as we lean in further to drive the areas of our business,” he shared.

“We drove meaningful growth across several strategically important departments,” Stone outlined. “Hunting and Shooting Sports increased 5 percent, supported by strong inventory levels with relevant local assortments, heading into our peak fall season. Fishing delivered exceptional growth of 14 percent, reflecting broad participation in the category and strong execution from our teams. Apparel grew about 1.5 percent with particular strength in technical outdoor wear that supports our solution selling approach.”

However, Stone called out Camping as a continuing challenge area. He said sales declined versus last year, reflecting the highly discretionary nature of the category. “This is a category where we continue to refine and curate the assortment to complement the pursuits that drive customers into our stores,” the CEO noted. “In fact, inventory in this category was down more than sales, highlighting greater efficiency with our inventory and investments in our key sales and traffic-driving categories.”

E-commerce was said to be another bright spot, delivering growth of 8 percent in the quarter. “Both ship to home and buy online, pick up in store performed well, with BOPIS continuing to drive traffic and improved conversion in our stores,” Stone said. “Our digital-first marketing efforts are supporting higher engagement and customer acquisition across all channels. The improvements we’re seeing across the business remain tied to the strategic priorities guiding our transformation.”

Profitability and Expenses
Gross profit was $108.7 million, or 32.8 percent of net sales, compared to $103.1 million, or 31.8 percent of net sales, in the third quarter of fiscal year 2024. This 100 basis-point improvement was largely driven by stronger product margins from healthier inventory, improved shrink, and increased sales in the Fishing department, which has a higher overall margin profile. This increase was said to be partially offset by an outsized mix shift to Firearms and Ammo – which has lower gross margin – and a lower penetration in the Camping and Footwear departments which carry higher margin rates.

Selling, general, and administrative (SG&A) expenses increased to $104.5 million, or 31.5 percent of net sales, compared to $100.0 million, or 30.8 percent of net sales in the third quarter of fiscal year 2024, due to a reinvestment into customer facing and sales driving areas of the business including store and support area labor and digital marketing to drive sales and improve omni-channel traffic.

Net income was $0.0 million, compared to a net loss of $0.4 million in the third quarter of fiscal year 2024. Adjusted net income was $3.0 million, compared to adjusted net income of $1.4 million in the third quarter of fiscal year 2024.

Adjusted EBITDA was $18.6 million in Q3, compared to $16.4 million in the third quarter of fiscal year 2024.

Diluted earnings per share were $0.00, compared to diluted loss per share of 1 cent in the third quarter of fiscal year 2024. Adjusted diluted earnings per share were 8 cents, compared to adjusted diluted earnings per share of 4 cents for the third quarter of fiscal year 2024.

Balance Sheet and Capital Allocation Summary
The company ended the third quarter with net debt of $179.7 million, comprised of $137.9 million of borrowings outstanding under the company’s revolving credit facility, $44.0 million of net borrowings outstanding under the company’s term loan facility, and $2.2 million of cash and cash equivalents.

Inventory at the end of the third quarter was $424.0 million.

Total liquidity was $111.9 million as of the end of the third quarter of fiscal year 2025

In regards to liquidity, during the quarter, we paid down $13.2 million of debt and ended the quarter with a total debt balance of $181.9 million and total liquidity of $111.9 million, which was comprised of $109.7 million of availability under the company’s revolving credit facility and term loan facility and $2.2 million of cash and cash equivalents.

“Additionally, in November, we drew inventory down by $23 million and paid down an additional $9 million in debt,” offered comp-an CFO Jennifer Fall Jung. “As we move through the holiday selling season and end of the year, we expect to end the year both free cash flow positive and total debt to be lower than our ending balance last year. Inventory efficiency and tight control of variable expenses remain top priorities as we manage the business prudently through Q4 and into 2026.”

Fiscal Year 2025 Outlook
“During the third quarter, we remained focused on strengthening our balance sheet and improving working capital efficiency in a challenging operating environment,” said Fall Jung. “We reduced total inventory by $14.2 million year-over-year and by $19.5 million sequentially, while ensuring our stores were appropriately positioned for the fall hunting, fishing, and holiday selling seasons. Our inventory strategy continues to prioritize core, seasonally relevant, and higher-turning products, and we remain committed to reducing overall inventory levels as we drive improved efficiency in our operating model.”

Given this pressure, the CFO said the company has increased its promotional efforts to maintain inventory efficiency while driving sales, which is putting pressures on margins. “Additionally, we have increased our digital marketing spend to be more competitive in the marketplace to accelerate omni-channel traffic during this period of high shopper demand. Accordingly, as we recognize and navigate current market conditions, we are revising our full year guidance,” she said.

For the full fiscal year 2025, SPWH is adjusting its net sales range to be flat to up slightly. The company is also adjusting its full year EBITDA guidance due to margin pressure from the very promotional Q4 and lower-than-anticipated Q4 sales.

“We now expect adjusted EBITDA to be in the range of $22 million to $26 million,” Fall Jung advised. “As mentioned earlier, we expect ending inventory to be less than $330 million and we expect our capital expenditures to be less than $25 million for the full year.

SPWH shares were down more than 30 percent in midday trading on Friday, December 5.

Image courtesy Sportsman’s Warehouse Holdings, Inc.