What Happened:
Shares of outdoor specialty retailer Sportsman's Warehouse (NASDAQ:SPWH) jumped 22.8% in the morning session after the company reported fourth-quarter results, which blew past analysts' EPS expectations. The company also reduced its excess inventory and outperformed Wall Street's free cash flow estimates.
On the other hand, its revenue missed as same-store sales decreased 12.8% (vs an estimated 8% decrease). That decline was slightly offset by 15 new store openings. Looking ahead, Sportsman's Warehouse expects its demand to remain troubled in 2024, but its forecasted EBITDA profitability was better than expected. Overall, this quarter's results still seemed fairly positive, and shareholders should feel optimistic.
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What is the market telling us:
Sportsman's Warehouse's shares are a little volatile and over the last year have had 39 moves greater than 5%. Moves this big are very rare for Sportsman's Warehouse and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 4 months ago, when the stock dropped 14.5% on the news that the company reported third quarter results with EPS guidance for the next quarter well below expectations. It blamed "more aggressive promotional activities" and said that gross margins will contract meaningfully because of this.
On the other hand, same-store sales and revenue beat expectations, with both metrics declining in absolute terms. While the topline results were encouraging, management noted that "the difficult microenvironment continues to pressure consumer discretionary spending, creating a continued headwind for the business." Zooming out, the results could be better, with weak guidance likely raising concerns among investors.
Sportsman's Warehouse is down 12.7% since the beginning of the year, and at $3.91 per share it is trading 55.3% below its 52-week high of $8.74 from April 2023. Investors who bought $1,000 worth of Sportsman's Warehouse's shares 5 years ago would now be looking at an investment worth $751.93.
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