Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) Q2 2023 Earnings Call Transcript

Jeff White: Yes, Eric, that’s a great question. This is Jeff. Long-term strategy for Sportsman’s we still see immense amounts of light space and expansion opportunities for Sportsman’s to continue to take market share. We continue to see refraction from our competition in our core categories. So as we look at the 2024 real estate plan, I would frame it up that this is a short-term pause on what we’re doing in terms of making sure our balance sheet is healthy as we then start to focus more on long-term growth objectives.

Eric Wold: Got it. Thank you. Appreciate it.

Operator: Our next question is from Mark Smith with Lake Street Capital Market. Please proceed.

Mark Smith: Hi guys. First off from me, just want to clarify and ask up stores open during the quarter, maybe what’s open since the quarter ended, and kind of where the store count is. And I think Jeff, you said you’ve got two more to go, but any additional numbers you can go on that.

Jeff White: Yes, Mark great question. So as we sit here today, we have opened 13 of the 15 that we had planned for the year. So we have two more stores remaining to open. One of them will open in mid-September. The other one will open more towards mid-November.

Mark Smith: Perfect. And then, I wanted to dig in just to the ammo [Ph] space a little bit. I think you said that it was down 30% on a comp basis. What are your thoughts around that segment? I know in the past you guys have talked about, ammo being kind of like the milk at the grocery store. As there’s things you can do to drive additional sales there as we’ve seen inventory come back up or is there a hesitancy to get, you don’t want to get overly promotional, maybe walk through your thoughts on that segment.

Jeff White: And Mark, that’s a great question. I think it’s a fine balance. We have to make sure we stay competitive in the market and look at the pricing, that we’re seeing across our competitive landscape. And to your point, we also need to use it to drive traffic into our store. So, as we think about the go-forward, I expect that we’re going to continue to see pressure similar to what we saw during Q2. We highlighted that that was the number one cause of margin degradation in Q2 as we looked at the comp sales on a year-over-year basis. So, I don’t think that that’s going to stop, especially in the consumer environment where we’re in today, where people are really stretching every single dollar that they have.

Mark Smith: Okay. And then as we think about the larger hunt shoot kind of category, we’re still early in to kind of fall in some early hunting seasons. But, but any additional thoughts around demand, what you’re seeing from these consumers, even licensed data, kind of anything’s you can give us for outlook as you guys think about this really important fall hunting seasons and then moving into the holidays.

Joe Schneider: Yes, as we looked at the Q3 guidance, I’ll tell you one thing we consider this is the while there’s still people participating in hunting and buying hunting licenses, where we’re seeing hesitation is the upgrading of their equipment or purchasing new equipment. So, the individual that’s going out to hunt is making their rifle last another year. They’re extending the life of their hunting boots. They’re not buying a new backpack to go in the backcountry. So, while the consumer is pressured, I think that trend continues. Once the consumer gets healthier, I think we start seeing the refresh or the upgrade cycle start again. But when that happens, I think it’s anyone’s best guess.

Mark Smith: And then maybe last question for me is, is we think about getting more promotional here over the next quarter or two and a lot of this has been focused within apparel and footwear. Can you talk about using being promotional around your private label brands versus kind of national brands?