On September 1, Sportsman’s Warehouse Holdings (NASDAQ:SPWH) reported second-quarter results that read less like a growth story and more like a cleanup job finally paying off. Net sales inched up 0.6% to $295.6 million, but the real news sat further down the income statement, where a stretch of aggressive inventory cuts has started to show results. The company posted a narrower net loss of $4.4 million, down from $7.1 million a year earlier, while adjusted EBITDA climbed to $8.7 million from $8.3 million. The turnaround is uneven, but it is real.
The Balance Sheet Gets Lighter
Sportsman’s Warehouse spent the last couple of years quietly overhauling its inventory position, and that work now shows up in the numbers. Total inventory fell 10% year over year to $399 million, a $44.5 million reduction achieved while same-store sales still came in flat rather than negative. That discipline freed up cash. Net debt dropped $26 million to $169 million, and the company used the breathing room to amend its term loan and revolving credit facility, pushing both maturities out to June 2031, a long runway for a retailer this size.
The core of the business is also healthier than the headline numbers suggest. Hunting and shooting sports sales rose 6.7%, with firearms up 8% and ammunition growing nearly 11%. In-stock levels on core products have climbed from roughly 50% two years ago to more than 80% today, meaning shoppers looking for a specific rifle or reel are far more likely to find it on the shelf. E-commerce sales grew nearly 3%, marking the ninth straight quarter that online sales outgrew the total business, and more than 70% of those online orders get picked up in store, turning digital browsing into foot traffic.
Where The Pressure Still Shows
Not every part of the business is moving in the right direction. Same-store sales were flat in the quarter, weighed down by what management described as persistently elevated fuel prices squeezing the same core customer who drives hunting and fishing sales. Fishing sales fell about 2%, with drought conditions across Western states hitting regional demand hard enough that Western store sales dropped mid-single digits even as Eastern stores grew by a similar margin. Camping and softlines also declined as the company worked through the last of its inventory cleanup.
The bottom line has not turned the corner either. Sportsman’s Warehouse is still posting a net loss of $4.4 million this quarter, and its own full-year sales guidance spans a range that includes an outright 1% decline as easily as a 1% increase. The company also confirmed it will close one store on January 31, 2027, with two more closures currently under negotiation, a reminder that the store footprint is still being trimmed even as inventory and debt come down.
What The Smart Money Sees
12 hedge funds held Sportsman’s Warehouse heading into the most recent quarter, up from 11 the quarter before, a modest sign that institutional interest is building rather than fading. Short sellers have not piled in either. Just 1.32% of the float sits sold short, a level that points to little organized skepticism about the turnaround story. That combination suggests that the market is not actively betting against this comeback. Whether that confidence holds may depend on how the back half plays out.
The Story Still Being Written
Sportsman’s Warehouse enters the back half of the year with a lighter balance sheet, longer-dated debt and inventory that management calls the healthiest it has been in years. That gives the bull case a foundation it did not have two years ago. But the bear case has not disappeared: a customer still squeezed by high fuel costs, a Western drought that will not lift on command, and a sales guidance range that leaves room for another down year.
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