2. Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) has fallen 7.98% as of 12:53 PM ET after the West Jordan, Utah-based online and offline retailer of camping, fishing, outdoor, and recreational shooting gear provided weak guidance for Q2 2022. The company revealed that it was experiencing “lower demand across multiple categories.” Sportsman’s Warehouse Holdings, Inc.’s management (NASDAQ:SPWH) stated that the company was not able to make up the numbers from the prior period as, during this time last year, the consumers had received the stimulus cheque from the federal government. The management also highlighted that the uncertain macroeconomic environment would surely impact the business, but it is confident about its pricing and inventory management.
Merion Road Capital Management shared its stance on Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) in its Q1 2022 investor letter:
“During the quarter I added to Sportsman’s Warehouse (“SPWH”). SPWH is an outdoor sporting goods retailer with about half of their revenue coming from hunting & shooting products (guns, ammo). I initiated our position back in December following their failed merger with Great Outdoors on the grounds of anti‐trust concerns. It appeared that the stock was being sold off indiscriminately by merger arbitrageurs and valuation seemed attractive, particularly after adjusting for the receipt of a $55mm termination payment and unwind of excess inventory.
While the dust has largely settled from an investor base perspective, SPWH remains attractively priced with a few upcoming catalysts. Fundamentally the company is well positioned. Following the tragic Parkland school shooting two large competitors to SPWH, Dicks Sporting Goods and Walmart, made the decision to exit the category; their absence makes the competitive landscape for SPWH a lot more favorable than in prior years. Furthermore, it is no surprise that gun and ammo sales during covid experienced tremendous growth. Unlike prior cycles, however, this wave saw an increase in new gun buyers rather than purchases by existing owners. SPWH estimates that over the past 18 months the industry created 12mm new firearm owners; using a prior base of 100mm, thisimplies an increase to their addressable market of 12%. The company is executing on many other internal initiatives including store expansion, omni‐channel growth (e‐comm up to 15% of revenues), loyalty programs (at 3mm members) and new co‐branded credit cards…” (Click here to see the full text)
Out of the 912 hedge funds in Insider Monkey’s database, 19 funds held a stake in Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) at the end of Q1 2022.
