Sportsman’s Warehouse Holdings, Inc. announced that John Barker, CEO, plans to retire as CEO and director, effective April 14, to spend time on personal interests. Joseph Schneider, the current Board chair, has been appointed interim CEO. The change comes as the retailer reported fourth-quarter earnings declined sharply against strong year-ago results and although EPS slightly exceeded Wall Street’s targets.

The company also warned that it expects a steep loss in the first quarter with same-store sales expected to decline in the range of 19 percent to 17 percent year-over-year.

Barker joined Sportsman’s Warehouse as president and chief operating officer in March 2017 and has been CEO since March 2018. Prior to joining Sportsman’s Warehouse, he was VP global officer for Walmart, holding dual roles including president and CEO of Hayneedle.com, an online home furnishings retailer, as well as group leader for Home and Outdoor furnishings categories for U.S. e-commerce across Walmart.com, Jet.com and Hayneedle.com.

Also as part of the leadership change, Martha Bejar, who joined the retailer’s board in January 2019, has been appointed as a lead independent director, also effective as of April 14. Schneider will continue in his role as chair of the Board.

Barker will be available to advise the company for 30 days after his retirement to aid in an effective and smooth transition. The Board has hired Egon Zehnder, a national executive search firm, to conduct a global search for Barker’s successor. The Board intends to consider all qualified internal and external candidates.

“On behalf of the Board of Directors, I would like to express my sincere gratitude to Jon for his years of commitment to Sportsman’s Warehouse,” said Schneider. “Jon played an integral role in implementing the company’s strategic vision including navigating the company through the pandemic and the unparalleled operational, financial and administrative hurdles that were caused by such unprecedented times. We wish Jon the best of luck.”

“The last six years have been an honor for me to work with such a talented team and be part of the incredible transformation and growth of our business,” said Barker. “Now is the right time for me to turn the page and focus my next chapter on personal interests. I look forward to watching the company continue to succeed.”

Schneider, 63, has served as a member of the Board of Directors since April 2014 and as the Chairman of the Board since April 2019. From 2000 until 2012, Schneider served as president and chief executive officer of LaCrosse Footwear Inc. until its acquisition by ABC-Mart in August 2012.

Fourth-Quarter Results
In the quarter ended January 28, net sales were $379.3 million, a decrease of 8.9 percent, compared to $416.3 million in the fourth quarter of fiscal year 2021. Wall Street’s consensus estimate had been $380 million.

The net sales decrease was primarily due to lower sales demand from consumer inflationary pressures and recession concerns, partially offset by the opening of 9 new stores over the last year. Compared to the fourth quarter of fiscal year 2019, net sales increased 46.9 percent from $258.2 million.

Same-store sales decreased 12.5 percent during the fourth quarter of 2022, compared to the fourth quarter of 2021. Compared to the same period of 2019, same-store sales increased 24.9 percent.

Gross profit was $122.8 million or 32.4 percent of net sales, compared to $136.6 million or 32.8 percent of net sales in the comparable prior year period. The 40 basis point decrease as a percentage of net sales can be attributed to lower overall product margins due to promotional activity, partially offset by lower overall transportation and freight costs.

SG&A expenses were $106.7 million or 28.1 percent of net sales, compared to $113.4 million or 27.2 percent of net sales in the fourth quarter of fiscal year 2021. The decrease in absolute dollars is primarily due to lower total payroll and bonus expenses, partially offset by higher rent and depreciation expenses from the addition of 9 new stores opened during 2022.

Net income was $11.0 million, compared to net income of $58.4 million in the fourth quarter of 2021. Adjusted net income was $12.7 million compared to adjusted net income of $22.0 million in the fourth quarter of 2021.

Adjusted EBITDA was $28.9 million, compared to $38.5 million in the comparable prior year period.

Diluted earnings per share were 29 cents compared to diluted earnings per share of $1.31 in the comparable prior year period. Adjusted diluted earnings per share were 33 cents a share compared to adjusted diluted earnings per share of 49 cents for the comparable prior year period. Earnings on an adjusted basis 33 topped Wall Street’s consensus estimate of 29 cents.

Full-Year Results
Net sales were $1.40 billion, compared with $1.51 billion, or a decrease of 7.1 percent compared to fiscal year 2021. The company’s net sales decreased primarily due to lower demand across most product categories as it anniversaried the increased demand during the first half of fiscal 2021 driven by the COVID-19 economic stimulus package and social unrest and were impacted by current year consumer inflationary pressures and recessionary concerns. These headwinds were partially offset by the company’s opening of nine new stores since January 29, 2022.

Same-store sales decreased 12.2 percent during fiscal year 2022 compared to fiscal year 2021. This decrease was due to lower sales in all categories. Compared to fiscal year 2019, same-store sales increased 27.6 percent.

The company opened nine new stores in 2022 and ended the year with 131 total stores in operation.

Gross profit was $460.2 million or 32.9 percent of net sales, as compared to $490.3 million or 32.6 percent of net sales for fiscal year 2021. This year-over-year increase of 30-basis points in gross profit margin was due to lower transportation and freight costs.

SG&A expenses increased to $402.2 million or 28.7 percent of net sales, compared with $399.7 million or 26.5 percent of net sales for fiscal year 2021. This increase was primarily due to higher rent, depreciation and other SG&A expenses due to the addition of nine new stores, partially offset by lower total payroll expenses.

Net income was $40.5 million compared to net income of $108.5 million in fiscal year 2021. Adjusted net income was $43.0 million compared to adjusted net income of $76.8 million in fiscal year 2021.

Adjusted EBITDA was $101.6 million compared to $136.6 million in fiscal year 2021.

Diluted earnings per share were $1.00 for fiscal year 2022, compared to diluted earnings per share of $2.44 last year. Adjusted diluted earnings per share were $1.06 for fiscal year 2022 compared to adjusted diluted earnings per share of $1.72 last year.

Balance sheet and capital allocation highlights as of January 28, 2023
The company ended the year with net debt of $85.1 million, comprised of $2.4 million of cash on hand and $87.5 million of borrowings outstanding under the company’s revolving credit facility. Inventory was $399.1 million compared with $386.6 million at the end of the prior year.

Total liquidity was $161.5 million as of the end of fiscal 2022, comprised of $159.1 million of availability on the revolving credit facility and $2.4 million of cash on hand.

During the fourth quarter, the company repurchased approximately 0.3 million shares of its common stock in the open market, returning $2.3 million to shareholders. For the full year 2022, repurchases totaled 6.8 million shares of common stock, for a return of capital of $64.7 million. As of the end of the fourth quarter, the company had $10.3 million of remaining capacity under its authorized repurchase program.

First Quarter 2023 Outlook
For the first quarter of fiscal year 2023, net sales are expected to be in the range of $265 million to $270 million, anticipating that same-store sales will be down 19 percent to 17 percent year-over-year. Adjusted diluted earnings per share for the first quarter are expected to be in the range of ($0.40) to ($0.35)

Jeff White, Chief Financial Officer of Sportsman’s Warehouse said, “While we believe outdoor participation remains strong, the macroeconomic environment and inflationary pressures are weighing on the consumer and their discretionary spending. Additionally, the unusually wet and cold weather in the western U.S., where a large portion of our stores are located, is creating a later than normal start to the spring shooting, fishing and camping seasons, negatively impacting our current business.”

White continued, “As we look forward, we believe we are on track to open 15 new stores during 2023, the highest number of stores we’ve ever opened in a single year. We remain committed to further expanding our merchandising and omnichannel strategies and capabilities while maintaining financial discipline and rigor throughout the organization. Although we expect the first half of fiscal 2023 to be pressured, we anticipate improvements during the back half of the year.”

Store Opening Plans
Sportsman’s Warehouse said it’s on track to open 15 new stores during fiscal 2023. New openings planned for 2023 include Lynchburg, VA; Naples, FL; Parkersburg, WV; Racine, WI; Brownsburg, IN; Moreno, CA; Wausau, WI; Winchester, VA; Cape Coral, FL; N. Colorado Springs, CO; Sequim, WA; Tampa Highwoods, FL; Fredericksburg, VA; Hot Springs, AR; and South Tucson, AZ.

New Board Member
In addition to Barker’s transition, the Board also announced the appointment of Erica Fortune as a new Independent Director of the Board. Fortune has been appointed a Class II Director with a term expiring in 2025. Fortune, 41, has served as the senior vice president, e-commerce and digital marketing of Advance Auto Parts, Inc. since December 2022.

“We are excited to welcome Erica to the Sportsman’s Warehouse Board. Erica is an accomplished executive that brings a wealth of e-commerce and marketing experience to the Board. On behalf of the Board, we all look forward to working with Erica as we undergo a leadership transition and work to execute on our mission of providing outstanding gear and exceptional service to inspire outdoor memories,” concluded Schneider.

Photos courtesy Sportsman’s Warehouse