Sportsman's (SPWH) Q1 2026 Earnings Transcript

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DATE

Tuesday, June 2, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Paul E. Stone
• Chief Financial Officer — Jennifer Fall Jung

TAKEAWAYS

• Net Sales -- $256.1 million, marking a 2.8% increase compared to $249.1 million in the prior-year quarter.
• Same Store Sales -- Grew 2.1%, continuing positive momentum from the previous year.
• Hunting and Shooting Department Sales -- Increased 6.3%, with firearms, ammunition, and personal protection cited as primary growth drivers.
• Fishing Department Sales -- Rose 6%; on a two-year comparative stack, up approximately 17%, despite a soft ice fishing season.
• Gross Margin -- 29.6%, down from 30.4%, attributed mainly to higher firearms and ammunition mix and reduced higher-margin category sales.
• SG&A Expenses -- $93.9 million, representing 36.7% of net sales, down from $95.3 million (38.2%) last year, reflecting lower payroll and depreciation, partly offset by bonus accruals.
• Net Loss -- $21.8 million, or ($0.56) per diluted share, nearly flat with the prior-year quarter's net loss of $21.3 million, ($0.56) per diluted share.
• Adjusted Net Loss -- $15.1 million, or ($0.39) per diluted share, compared to $15.6 million, or ($0.41) per diluted share a year ago.
• Adjusted EBITDA -- ($8.1 million), an improvement from ($9.0 million) in the previous year, cited as a $900 thousand benefit.
• Total Inventory -- $387.1 million, down $25.1 million or 6.1%, with management noting continued focus on “inventory efficiency strategy” and improved matching of receipt timing with seasonal demand.
• e-Commerce Sales -- Exceeded 6% growth in the quarter, emphasizing management’s confidence in omnichannel potential and investments in digital enhancements, especially for fishing and hunting.
• Liqudity and Net Debt -- Liquidity stood at $116.7 million; net debt was reported at $148.4 million.
• Fiscal Year Guidance -- Management reiterated net sales outlook between (1%) and 2% for the year, and adjusted EBITDA guidance between $30 million and $36 million, targeting improved gross margin and disciplined expense controls.
• Capital Expenditures -- Projected full-year spend of $20 million to $25 million, directed primarily to technology initiatives and store maintenance.
• Product Mix and Category Strategy -- Intentionally reduced camping and softline inventory last year to “eliminate slow moving and low gross margin...products,” enabling reallocation of capital toward hunting, fishing, shooting, and personal protection.
• Loyalty Program Initiative -- Announced a new partnership with Epsilon to redesign loyalty and personalization, aiming to “improve retention, increase customer lifetime value, and drive more efficient marketing.”
• Solution Bundling in Firearms -- Launched an online “full solution offering” including gun safes and protection accessories, designed to “expand gross margins in the hunting and shooting sports category.”
• Influencer Partnership -- Initiated collaboration with Build and String, a major hunting and fishing brand, leveraging influencers for content and new product marketing, with management describing “encouraging” early results.

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RISKS

• Gross margin declined 80 basis points due to increased sales mix of lower-margin firearms and ammunition, with additional “pressure in some of the other categories” as inventory marks were taken sooner than usual.
• Continued “pressure on the U.S. consumer,” specifically noted in “camping and softline departments” and arising from “elevated fuel prices,” which management states is “which is weighing on our camping and softline departments.”
• Management highlighted a “soft” start to camping sales, attributed to “cold to start the summer as well as wet in comparison to last year,” and ongoing inventory streamlining in that segment affecting year-over-year comparability.

SUMMARY

Management delivered top-line growth and positive same store sales amid a challenging consumer environment, highlighting targeted category strategies and improved inventory discipline. The first quarter showcased notable sales expansion in hunting, shooting, and fishing, coupled with explicit actions to elevate e-commerce and digital engagement. Management reaffirmed full-year guidance for sales and adjusted EBITDA, while maintaining a focus on strengthening liquidity and reducing net debt.

• SG&A leverage was achieved mainly by improved payroll efficiency and lower depreciation, though bonus accrual is expected as a headwind for the year.
• Enhanced omni-channel integration leveraged online firearm and fishing assortment improvements to drive store traffic and lift average basket size.
• Management articulated a disciplined capital allocation strategy with a strict emphasis on using free cash flow for debt reduction.
• Company stated, “We remain committed to generating positive free cash flow and using excess cash to reduce debt and strengthen the balance sheet with debt reduction as our top capital allocation priority.”

INDUSTRY GLOSSARY

• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for specific items to reflect core operating performance.
• Same Store Sales: Revenue growth metric measuring the performance of locations open for more than one year, excluding new stores and closures.
• SG&A: Selling, General, and Administrative expenses, representing overhead and operational costs beyond direct product costs.
• Solution Bundling: Strategy of selling a grouped set of complementary products or services together, often to increase average transaction value and customer satisfaction.

Full Conference Call Transcript

Paul E. Stone: Thank you, Riley, and good afternoon, everyone. Before we begin, I want to recognize our dedicated outfitters across the country Every day, they deliver on our promise of great gear, great service. Strengthening our connection with customers and supporting the progress to transform Sportsman's Warehouse. I am pleased with the same store sales from the first quarter were up just over 2% compared to last year, despite ongoing consumer macroeconomic pressure and higher fuel prices. This increase is on top of the 2% growth we achieved in Q1 of last year. We continue to refine our assortment to meet the current needs of the customer, with regionally specific product and brands that strategically align to our core pursuits.

First quarter sales in our Hunting and shooting sports department increased over 7% versus last year, During Q1, we executed a successful spring range days event. Showcasing pursuit led solutions for the shooting sports customer through curated products and accessories. While event driven demand further supported sales of firearms and ammunition during the quarter, we will continue to strategically build on our authority as a leader in both shooting sports and personal protection. Sales in our fishing department increased ~6% in Q1 and is up ~17% on a 2 year comp stack. Although a softer than expected ice fishing season pressure on the category in Q1.

We are confident in our assortment and position in the market to continue to capture share during the late spring and summer seasons. As we have discussed on prior calls, last year, we strategically reduced inventory and the assortment in our camping and softline departments. This decision was intentional to eliminate slow moving and low gross margin return on investment products from our assortment that did not align with our core pursuits causing a short term softening in sales. However, this allowed us to free up working capital dollars to buy into the product and brands these 2 departments that now align to our core pursuits of hunting, fishing, shooting, and personal protection.

Newness for the summer season is now landing in our stores. With a focus on quality and value with named brands that customers recognize. We will continue to build out these 2 complementary categories to provide a full solution for our passionate outdoor customers. Our e commerce business outperformed again. With e-com driven sales over 6% in the quarter This underscores the strength of our omnichannel model and the growth potential in our core pursuits. Because firearms and, in certain states ammunition require in store pickup, our e-com business naturally drives traffic into our stores. We continue to strategically leverage this advantage to support growth across both digital and store sales.

We once again saw improvements in both units per transaction and average order value driven by our merchandising strategy. Better in-stocks and our strategic shift to solution selling. Close management of inventory remains a key priority in our transformation strategy. I am pleased with how the team is timing our flow of merchandise to ensure we are regionally and seasonally relevant to meet shopper demand. This will continue to be a focus as we expect to improve turns, and inventory efficiency in 2026. On our call last quarter, we outlined the next phase of our business transformation, centering on strengthening our leadership position in our core pursuits of hunting, fishing, and shooting, and personal protection.

These are the core pursuits that make up the DNA of Sportsman's Warehouse. During the first quarter, we made meaningful improvements to our website to enhance the online fishing experience. Early results have been encouraging, contributing to strong e commerce sales growth in the quarter. We will continue to integrate content with commerce to help anglers more easily build their fishing solution. With participation rates continuing to grow each year, we believe this category represents significant growth upside for the business. Additionally, during the first quarter, we entered into a partnership with 1 of the top fishing and hunting lifestyle brands, Build and String.

Together, we are working with leading fishing influencers to create shareable content that enhances our brand exposure, showcases trending new products, and drives traffic to Sportsman's Warehouse. While we are in the early stages of this partnership, we are encouraged by the early results. Turning now to our Firearms solution bundling strategy. We made solid progress in Q1 on this initiative with the full solution offering now available online for top selling products. Many of our customers are first time firearm owners. So offering carefully selected pairings like gun safes, hearing and eye protection, and our firearm service plan helping first time buyers feel confident in their initial purchase decisions. That experience then carries into our stores.

Where customers can build on those pairings with support from our experienced outfitters. Tailored to local needs and pursuits. This experience supports responsible ownership while increasing the attachment and basket size. By combining curated ecommerce pairings with in store experience, we believe we can expand gross margins in the hunting and shooting sports category while reinforcing our leadership in these key pursuits. Reinventing our loyalty is a key step in Sportsman's Warehouse's effort to build a more durable, higher value customer model, and our partnership with Epsilon a leading loyalty and personalization consultancy marks an important move forward in that transformation. The initiative is designed to improve retention, increase customer lifetime value, and drive more efficient marketing.

While supporting stronger repeat purchase behavior and a more disciplined promotional strategy. Looking ahead, U.S. consumer remains under pressure with high fuel costs adding additional weight to discretionary spending. We feel optimistic about our position in the market. Our curated assortment of iconic American brands, and our summer readiness. Where we will celebrate and showcase red, white, and blue for America's 250th anniversary. Our focus remains on driving profitable growth, disciplined management of inventory, generating positive free cash flow to pay down debt and executing against our strategic priorities. With that, I will turn the call over to Jennifer.

Jennifer Fall Jung: Thank you, Paul, and good afternoon, everyone. Net sales for the first quarter were $256.1 million, a 2.8% increase from $249.1 million in the same period last year. Our same store sales in Q1 increased 2.1% versus last year. This represents a solid start to the year and reflects continued progress against our strategic and operational priorities. Our performance was driven by 6.3% same store sales growth in our hunting and shooting sports department, led by firearms, ammunition, and less lethal personal protection. Fishing also continues to perform, growing 6% in Q1. This is a key category where we see significant growth upside for the business. Our other categories declined in Q1, partially offset by overall growth.

Gross margin for the quarter was 29.6% compared to 30.4% in Q1 of last year. The decline was primarily driven by category mix with a higher penetration of firearms and ammunition and lower sales in our higher margin categories. SG&A expenses were $93.9 million or 36.7% of net sales, versus $95.3 million or 38.2% in Q1 of last year. The decrease in SG&A expense was driven by disciplined cost management, overall lower payroll expense and decreased depreciation. Net loss for the first quarter was $21.8 million or ($0.56) per diluted share. Compared with a net loss of $21.3 million or ($0.56) per diluted share in the first quarter of the prior year.

Adjusted net loss in the first quarter was $15.1 million ($0.39) per diluted share compared with adjusted net loss of $15.6 million ($0.41) per diluted share in the first quarter of last year. Adjusted EBITDA for the first quarter was ($8.1 million) compared with adjusted EBITDA of ($9.0 million) in the first quarter of 2025, an improvement of $900 thousand Turning now to the balance sheet. Total inventory at the end of Q1 was $387.1 million down $25.1 million or 6.1% versus Q1 of last year. The decrease in year over year inventory is part of our ongoing inventory efficiency strategy including the refinement of receipt timing to match seasonal demand.

We expect average inventory to be lower throughout the year as we improve seasonal inventory timing and eliminate slow moving inventory. Resulting in better overall turns. We continue to expect to end the year with less total inventory than 2025. In regards to liquidity, we ended the first quarter with a net debt balance of $148.4 million and a total liquidity of $116.7 million Our liquidity position remains strong, and we continue to actively manage working capital to ensure flexibility as we navigate through the year.

Tight manage of variable expenses and inventory efficiency remain a key We remain committed to generating positive free cash flow and using excess cash to reduce debt and strengthen the balance sheet with debt reduction as our top capital allocation priority. Finally, let me speak to our full year guidance. Despite the continued pressure on the U.S. consumer, which is weighing on our camping and softline departments and elevated fuel prices, we are reiterating our guidance for the full year. We continue to expect fiscal 2026 net sales to range between (1%) and 2% compared to last year.

Adjusted EBITDA to be between $30 million and $36 million driven by better gross margin performance ongoing expense management and improved inventory discipline. And capital expenditures between $20 million and $25 million primarily relating to technology investments to improve store service and merchandising productivity, as well as normal store maintenance. To reiterate, our priorities for 2026 are driving profitable comp store sales growth through the execution of our strategic initiatives managing our inventory efficiently, and using excess free cash flow to pay down our debt and strengthen our balance sheet. That concludes our prepared remarks for today. I will now turn the call back to the operator to facilitate questions.

Operator: Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone. To remove yourself from the queue, you may press 11 again. Our first question comes from the line of Anna Glaessgen of B. Riley Securities. Your line is open, Anna.

Analyst (Anna Glaessgen): Hi, good afternoon. Thanks for taking my questions. I would love to take a little-- hey, I would love to dig a little deeper into the trends you are seeing. Obviously, you called out there is some event driven demand that is helping the category. But with the data you have in front of you, could you maybe share to what extent is underlying strengthening of the category, maybe you guys gaining share versus maybe the event driven benefit? Thanks.

Jennifer Fall Jung: Yeah, Anna, this is Jennifer. So what we saw in Q1 as we talked about a little bit on our previous call about February, we did see strength across the quarter in this category. February in and of itself, we actually walked away from 1 of our events to really focus on strategic profitable growth. So February was not as strong as March and April combined. For March and April, we do look at them combined simply because of the Easter shift, so they did outperform prior year in April and March combined. As we are looking towards May, what we are seeing is a little bit more of the stabilization.

I think, as we have talked about before, sometimes you see the event driven or external driven demand that we do see a little bit of a stabilization post that, and we are experiencing that right now. But feel really good about where the category is, how it performed in Q1, and what it will do in Q2. Got it. That makes sense. I guess that leads into the next question. Can you share, put a little bit more of a finer point on the trends you are seeing overall in May? Yeah. We are seeing, you know, we still have a very healthy business. You know, hunt and shoot were really driving our Q1 business.

We have a big month of June ahead of us. You could look at our quarters, that is 1 of our largest months of the quarter. So with Father's Day playing into that, that is who our customer is, and that is where we have a lot of advertising and promotional events to really make sure we deliver on June as well.

Analyst (Anna Glaessgen): Great. Thanks. I will hop back in the queue.

Operator: Thank you. Our next question comes from the line of Mark Smith of Lake Street. Please go ahead, Mark.

Analyst (Mark Smith): Hi, guys. I wanted to dig into gross profit margin a little bit more here. It was down 80 bps, Can you just talk about maybe how much of that was driven by mix and then any other pressures that you are seeing?

Jennifer Fall Jung: Yeah. The majority of it was driven by mix. There is a little bit of pressure in some of the other categories. As we look across the board, as we are starting to take our marks a lot sooner, than we have historically. So across the other categories, we saw a little bit of pressure, but really it was mixed having so much penetrated in hunt and shoot.

Analyst (Mark Smith): Okay. And then I also wanted to ask about ecommerce. You know, trends there look really solid. Just curious if you can give us maybe any more insight about how that is, continuing to trend, how you feel about the progression and maybe where you think it can go over time.

Jennifer Fall Jung: Yeah. So we have been really putting our elbow against our ecommerce business. We feel it is really well-positioned. The team did a lot of work from a experiential perspective on the fish business. And we are seeing great results from that. We are also focused on our search engine. We think there is work to do there, but we have, you know, some great plans in place to continue to drive that. I will let Paul speak a little bit more to it, but we do have a lot of confidence in our e-com business, but we do think that some of the that we have put into place are what is helping drive that business.

Paul E. Stone: Yeah. I think overall, Mark, we know that we need to invest in it. And really in a couple different areas. 1 is fish, and we know we have a lot of upside there from a penetration and what it looks like. And the ease of shopping for the consumer, we have made some significant changes over the last quarter and then even really digging into the fly component, which is extremely it is a big part of our business due to our location where we have the majority of our stores and the team over the last 3 weeks really went back and refined what that shopping experience can look like for the consumer.

So we continue to lean into it. We have under invested in the past in our e comm business. We are both I think, looking at it from a fish and then from a solution standpoint, on how we attach. And as we get into the hunt season this year, we expect to have a much better product on our ecommerce platform to allow us to have solution based selling for the first time to really take pressure off of our outfitters in the stores. Those consumers flow to the stores and will allow for a solution based selling online versus transactional selling that we have done in the past. So we will continue to lean into it.

We think the beauty of our business is that 70-75% of that consumer flows to the store to create traffic and it starts online. And the work's been done in the stores and them in a better position and allowing our outfitters to be able to serve the customers better. We need to do a better job on the initial experience. And I think what we have seen already from overall fish and then in particular fly with the adjustments we have made and then on schedule by the time we get into season to have a solution based for our firearm and our hunt business as well.

Analyst (Mark Smith): Perfect. And the last category I wanted to ask about was just camping. You know, curious if you can kind of rank or talk about the moving parts there. You know, from weather and pressure on the consumer, maybe your planned, drawdown on the inventory and competition, kind of what is happening there in any focus or work that you think you could do to drive, camping?

Paul E. Stone: Yeah. Inventory is in a good position. I think I mentioned it last quarter, the way the team has bought, I think we are positioned well. it is been soft for weather, it is been cold to start the summer as well as wet in comparison to last year in a historical data that you see there. So it is been a little soft to start. And I think as we went and moved out of some of our low-margin subcategories, in particular in camp, to where we could reinvest those back into our pursuits around hunting, fishing, and personal protection shooting. We have invested those dollars into the categories that resonate with the customers.

So as you are getting out of some of the subcats, it just did not work that we tied up. You know, if you are coming up against that, you are comping against that. But we feel really good with what the inventory position looks like for summer. And with little to no risk as we get out of that product like we have had in the last 2-3 years in the past, or we just continue to work to try to get out of these categories. I feel really good with what the team's done to position ourselves well for the future. Perfect. Thank you.

Operator: Thank you. Our next question comes from the line of Matt Koranda of ROTH Capital Partners. Your line is open, Matt.

Analyst (Matt Koranda): Good afternoon. it is Joseph on for Matt. I just want to see if you guys could talk about just SG&A here. it is nice to see the continued leverage on this line. I want to see how the team's thinking about further savings on this line item. It sounds like payroll efficiency was a driver. Just wanted to know if there is any other labor efficiencies we should be thinking about.

Jennifer Fall Jung: Hey, thanks for the question. Yes, we are continuing always focused on leveraging our SG&A. What you saw in this quarter was really the favorability in the payroll as we have gotten more efficient with our inventory as well as we continue to focus on our store labor. We saw a nice benefit there. That was partially offset by some bonus accrual that we did this quarter that we did not have last quarter. And that will be the 1 headwind as we move through the year from an SG&A perspective will be the bonus accrual just year over year assuming we continue to perform Yeah. That was really payroll is the biggest component of the savings there.

You know, it is not an SG&A, but I will just go ahead and speak to it. it is it is more in the margin component. We did see we are seeing some headwinds in fuel, but we are able to offset those in some of our inventory efficiency. So just to kind of keep it straight, that is in margin, not in SG&A. But you know, expense management is all 1 bucket. So just thought I would kind of key on that 1 too.

Paul E. Stone: You know, I think anytime the thing I would add to it is, you know, the efficiency of the flow of inventory and whether it is through distribution center or whether it be in the stores, and kind of the ups and downs that we have had or front loading or back loading as we come into to different seasons, the smoothing of that. Has allowed us to look at labor a lot differently than we have in the operations team in the field did a great job as far as being able to align from sales per labor hour to what they seeing in the business. So feel good.

And I think the core of that is how we are managing inventory and the efficiency we are getting from inventory.

Analyst (Matt Koranda): Got it. And then if we could just hop on to inventory then, in your prepared remarks, you mentioned that expecting a year over year decline on the full year in inventory just wanted to see where is that coming from. Should we be thinking about it as a quicker seasonal clearance as a factor, or is there anything else driving that tighter inventory management?

Jennifer Fall Jung: Yes. I would not say it is 1 silver bullet. it is things that are really helping us here. it is getting the right inventory into the right stores to the right place that really helps our turns. It is, you know, a benefit of us making sure that we are taking our seasonal marks when we should be taking our seasonal marks, which I do not think historically we have been as great at doing so. And then it is also just looking at our SKUs, which SKUs are not moving quickly and how do we look at the tails and not actually go deep into those, but go deep into the quicker churning categories?

So all those things kind of add up to really where we are getting efficiency. So, again, it is not 1 thing. it is just we are constantly looking at it, and we just you know, we know that takes up working capital. So we wanna be as efficient with it as possible.

Analyst (Matt Koranda): Got it. We will go ahead and take the rest offline. Thank you.

Operator: Thanks. Thank you. I would now like to turn the conference back to Paul E. Stone for closing remarks. Sir?

Paul E. Stone: Thank you for joining the call today, and thank you to all the passionate outfitters around the country for their commitment to Sportsman's Warehouse. Together, we look forward to providing our customers with great gear and exceptional service. Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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