What happened
Shares of Sportsman's Warehouse (SPWH 3.79%) were drifting lower this week after the sporting goods retailer offered disappointing guidance in its fourth-quarter earnings report last week.
The stock tumbled 13% on April 13 in response to the report and has declined in every session since then except one.
According to data from S&P Global Market Intelligence, the stock has lost 14.6% for the week.
NASDAQ: SPWH
Key Data Points
So what
Sportsman's Warehouse was a big winner during the pandemic because demand for sporting goods spiked due to lockdown orders and social distancing, but the recent earnings report shows that boom is starting to unwind.
Revenue in the quarter fell 8.9% to $379.3 million, which was slightly below estimates for $380 million, and same-store sales slumped 12.5%. Compared to the fourth quarter of 2019, same-store sales were up 24.9%.
The company blamed the macroeconomic environment and inflationary pressure for the weak results, saying they were weighing on consumer discretionary spending. It also said that unusually cold weather in the U.S. has delayed the start to the spring hunting, fishing, and camping seasons, leading to weaker-than-expected guidance.
On the bottom line, Sportsman's Warehouse reported adjusted earnings per share of $0.33, which was down from $0.49 in the quarter a year ago, but better than estimates for $0.29.
Guidance seemed to be what really spooked the market. The company said it expects same-store sales to fall 17%-19% in the first quarter, with revenue coming in between $265 million and $270 million, which was well below the analyst consensus of $316.7 million. Management also forecast an adjusted loss per share of $0.35-$0.40, which compared unfavorably to the analyst consensus for a per-share profit of $0.03.
Separately, the company also said that CEO Jon Barker, 53, was retiring as CEO and member of the board of directors in order to spend time on his personal interests.
Current Board Chair Joseph Schneider was named interim CEO, and Barker will remain with the company for 30 days after his retirement to assist with a smooth transition.
The company has retained an executive search firm to help find its next CEO.
Now what
There was little news out on the sporting goods stock this week, but the combination of disappointing guidance and the abrupt retirement of a relatively young CEO that had mostly led the company successfully is causing jitters, especially as the economy continues to show signs of weakening.
Analysts expect the business to stabilize later in the year, potentially making the sell-off a buying opportunity, though a recession is likely to weigh on the stock if it happens.
