Sportsman’s Warehouse Balances Turnaround Progress and Pressure
Sportsman’s Warehouse ((SPWH)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Sportsman’s Warehouse used its latest earnings call to balance cautious optimism with a sober view of near-term challenges. Management highlighted the first year of positive comparable sales since 2020, cleaner inventory and debt reduction, but also acknowledged weak fourth quarter trends, margin pressure and a still-fragile consumer backdrop.
First Positive Comps Since 2020
Full year 2025 net sales and comparable store sales each rose 1%, marking Sportsman’s Warehouse’s first year of positive comps since 2020 and signaling tangible progress in its turnaround efforts. Management framed this modest growth as a key proof point that operational changes are starting to gain traction despite a tough retail environment.
Adjusted EBITDA Beats Revamped Expectations
Adjusted EBITDA for the full year came in at $27.5 million, modestly below last year but ahead of the company’s revised internal expectations. Executives portrayed this outperformance as evidence that cost controls and mix management are working even as top-line trends remain uneven.
Inventory Discipline and Leaner Stock Levels
Year-end inventory fell by $29.1 million, or 8.5% year over year, to $312.9 million, underscoring a tighter and more disciplined approach to buying. Management stressed that improved SKU productivity, faster inventory turns and better seasonal alignment are central to the 2026 plan and should support margins and cash flow.
Balance Sheet and Liquidity Strengthen
Net debt ended the year at $90 million, a 6.1% reduction versus the prior year, while total liquidity stood at $107.8 million. The company generated $8.9 million of free cash flow and directed it toward debt reduction, signaling a continued focus on balance sheet resilience.
Fishing Category Leads Growth
Fishing was the standout category in 2025, rising 10.3% for the year and nearly 18% on a two-year stacked basis, with fourth quarter sales up 3.2% and over 11% excluding ice fishing. Management noted a double-digit start to the spring fishing season, reinforcing confidence that this business can be a multi-year growth engine.
Hunting and Shooting Sports Remain Strong
Hunting and Shooting Sports delivered 4.4% growth for the full year and 6.2% in the fourth quarter, powered by firearms, ammunition and expanded personal protection offerings. Firearm unit growth outpaced adjusted NICS checks, suggesting market share gains in a core, higher-velocity category.
E-commerce and Omnichannel Gain Momentum
E-commerce sales rose 8.3% in the quarter and 6.6% for the year, driven by better in-stock levels, more tailored regional assortments and stronger cross-category attachment. The company highlighted improvements in units per transaction and average order value, underscoring progress in building a more effective omnichannel platform.
Strategic Progress and 2026 Growth Plays
Management reported meaningful progress on four 2025 strategic priorities, including improving in-stocks on the top 20% of SKUs and sharpening local market positioning. For 2026, new initiatives include enhanced loyalty, online firearm solution bundles and a focused omnichannel fishing strategy designed to materially lift market share over the next three to four years.
Fourth Quarter Top-Line Weakness
Fourth quarter net sales slipped 1.6% to $334.9 million, with comparable store sales down 1.8% amid a highly promotional backdrop and soft holiday demand. Executives pointed to specific weakness around peak shopping periods as evidence of a still cautious consumer and intense competitive discounting.
Margin Compression Hits Profitability
Fourth quarter gross margin contracted to 28.4% from 30.4% a year earlier, a roughly 200 basis-point decline. The drop was driven by a heavier mix of firearms and ammunition, elevated promotional activity and weaker sales in higher-margin categories.
GAAP Net Loss Widens Sharply
The company’s GAAP net loss in the fourth quarter expanded to $21.7 million, or a loss of $0.56 per diluted share, versus a $8.7 million loss, or $0.23 per share, last year. Management acknowledged the disappointing bottom line but emphasized that many headwinds were seasonal or timing related.
Adjusted Earnings and EBITDA Under Pressure
On an adjusted basis, the fourth quarter swung to a net loss of $3.9 million, or negative $0.10 per diluted share, compared with adjusted net income of $1.6 million a year ago. Adjusted EBITDA fell to $9.6 million from $14.6 million, a roughly 34% decline, reflecting both margin pressure and softer sales.
Seasonal and Promotional Headwinds
Unseasonably warm weather depressed ice fishing sales, leading to a double-digit decline that masked underlying strength in the broader fishing category. Early-quarter softness, including weak traffic around key events, forced heavier promotions to clear seasonal goods, weighing on gross margin.
Store Fleet Rationalization and Impairments
The company plans to close roughly five underperforming stores over the next 12 months, following prior impairments on 10 locations. These stores are losing adjusted EBITDA and carry long-term leases, so management sees closures as necessary to improve the portfolio, even as they pose execution and cash flow considerations.
Guidance and Outlook Reflect Cautious Tone
For 2026, Sportsman’s Warehouse guided same-store sales in a range of down 1% to up 2% and adjusted EBITDA of $30 million to $36 million, alongside capital spending of $20 million to $25 million. The company expects to run with lower average inventory than in 2025, continue using excess free cash flow to pay down debt and close about five stores, while citing consumer, macro and industry regulatory risks.
Sportsman’s Warehouse portrayed its turnaround as firmly underway, backed by improving comps, category momentum and a cleaner balance sheet, yet far from complete. Investors are left with a mixed picture of operational progress versus earnings and margin volatility, with 2026 set up as a proving year for the company’s strategic bets and disciplined capital deployment.
