SPWH Q2 Deep Dive: Mixed Traffic Gains Offset by Margin Pressures and Inventory Strategy

September 05, 2025 at 01:31 AM EDT

SPWH Cover Image

Outdoor specialty retailer Sportsman's Warehouse (NASDAQ: SPWH) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 1.8% year on year to $293.9 million. Its non-GAAP loss of $0.12 per share was in line with analysts’ consensus estimates.

Is now the time to buy SPWH? Find out in our full research report (it’s free).

Sportsman's Warehouse (SPWH) Q2 CY2025 Highlights:

Revenue: $293.9 million vs analyst estimates of $291.6 million (1.8% year-on-year growth, 0.8% beat)
Adjusted EPS: -$0.12 vs analyst estimates of -$0.12 (in line)
Adjusted EBITDA: $8.32 million vs analyst estimates of $7.66 million (2.8% margin, 8.6% beat)
EBITDA guidance for the full year is $39 million at the midpoint, above analyst estimates of $35.27 million
Operating Margin: -1.1%, in line with the same quarter last year
Same-Store Sales rose 2.1% year on year (-9.8% in the same quarter last year)
Market Capitalization: $115.3 million

StockStory’s Take

Sportsman's Warehouse reported its second straight quarter of same-store sales growth and improved inventory positioning. CEO Paul Stone pointed to targeted merchandising and localized marketing as key drivers, particularly in Alaska and the fishing and hunting categories. However, margin headwinds and category mix weighed on profitability, with Stone noting, “attachment remains strong as average order value continues to be at all-time highs,” even as average unit retail in firearms declined.

Looking ahead, management is focused on disciplined execution of its inventory and merchandising strategies to drive profitable growth, while remaining cautious about margin pressures from tariffs and a shift toward lower-margin categories. CFO Jennifer Paul Young emphasized ongoing efforts to manage variable costs and optimize working capital, stating, “We are reiterating our adjusted EBITDA guide... driven by modest gross margin improvement and disciplined expense management.” The company plans to leverage technology investments and new product introductions, though uncertainty around tariffs and promotional intensity may impact short-term performance.

Key Insights from Management’s Remarks

Management attributed Q2’s performance to strength in hunting, shooting sports, and fishing, while flagging ongoing margin pressures and mixed results across other departments.

Hunting and shooting categories: Firearms and ammunition outperformed broader industry trends, with unit sales growth and increased market share, but average selling prices declined, signaling increased customer price sensitivity and trade-down behaviors.
Fishing category momentum: Fishing sales rose nearly 11% year over year, marking 20% growth over two years, as management pointed to expanded local participation and targeted inventory investments—especially in late-season product—driving this success.
Personal protection growth: The company reported strong early results from expanding its personal protection assortment, including the Burna and TASER brands. Management believes this segment is bringing new customers into stores, representing an area for further growth.
Camping and margin mix: Camping sales declined 10% as the company eliminated slow-moving categories, which had previously tied up working capital. The shift resulted in a negative impact on overall gross margin mix, as higher-margin categories like camping shrank while lower-margin categories like firearms grew.
Omnichannel and BOPUS strength: E-commerce sales increased 3%, with over 70% of online transactions fulfilled via “Buy Online, Pick Up in Store” (BOPUS), highlighting the importance of omnichannel traffic and the digital strategy in supporting both online and brick-and-mortar business.

Drivers of Future Performance

Sportsman’s Warehouse expects its near-term performance to be shaped by inventory management, category mix, and ongoing macroeconomic uncertainty, especially around tariffs and consumer spending.

Margin pressure from mix and tariffs: Management expects continued margin headwinds in the back half of the year due to a higher mix of firearms and ammunition sales—both lower-margin categories—and the risk of additional tariffs, though ongoing negotiations with vendors and MAP (Minimum Advertised Price) policies may help offset some impacts.
Inventory and working capital discipline: The company is prioritizing inventory efficiency, aiming to enter and exit seasons earlier to reduce excess stock and improve cash flow. Management believes these initiatives will support profitability and debt reduction by year-end.
Growth in personal protection and new products: Expansion of personal protection offerings and new product partnerships are expected to attract incremental customers and drive higher basket attachment, though management notes these benefits may take time to fully materialize.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be monitoring (1) the effectiveness of inventory sell-through and ability to end the year with lower stock levels, (2) the impact of new personal protection products and expanded omnichannel initiatives on customer traffic and sales, and (3) how well the company manages margin pressures from tariffs and a shifting product mix. Execution on working capital discipline and growth in underpenetrated markets will also be key markers of strategic progress.

Sportsman's Warehouse currently trades at $2.80, down from $2.99 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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