Sportsman’s Warehouse Holdings, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended January 29, 2022 (52 weeks). The request metadata says “2020 Q4,” but this filing reports FY2021 and compares it primarily with FY2020. The company operates outdoor sporting goods stores and e-commerce as one reportable segment; it had 122 stores in 29 states at year-end.
Financial results
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Net sales | $1,506.1 million | $1,451.8 million | Up 3.7%; same-store sales down 2.2% |
| Gross profit / margin | $490.3 million / 32.6% | $476.5 million / 32.8% | Profit up 2.9%; margin down 0.2 percentage points, mainly from freight costs |
| SG&A | $399.7 million | $353.7 million | Up 13.0%; new stores, payroll, retention pay, marketing and merger costs contributed |
| Operating income / margin | $90.6 million / 6.0% | $122.7 million / 8.5% | Lower despite higher sales |
| Net income / diluted EPS | $108.5 million / $2.44 | $91.4 million / $2.06 | Includes a $55.0 million merger termination payment in FY2021 |
| Adjusted EBITDA / margin | $136.6 million / 9.1% | $163.2 million / 11.2% | Down from FY2020; non-GAAP measure |
| Operating cash flow | $(21.6) million | $238.8 million | Turned negative, primarily due to inventory buildup and lower accounts payable |
| Capital expenditures | $53.5 million | $19.8 million | Primarily new stores and store refurbishments |
Liquidity, debt and balance sheet
- Cash and cash equivalents were $57.0 million, versus $65.5 million a year earlier. Merchandise inventory increased to $386.6 million from $243.4 million.
- The $250 million revolving credit facility had $77.0 million gross borrowings outstanding and $146.1 million available, subject to borrowing-base restrictions; $2.0 million of standby letters of credit were outstanding. The balance sheet reports $66.1 million after the lockbox offset. The facility matures May 23, 2023; the company reported compliance with its covenants.
- Total liabilities were $526.4 million, including $277.2 million of operating lease liabilities. Undiscounted committed lease payments totaled $384.3 million. The company said cash on hand, operating cash flows and revolver availability should fund operations for at least the next 12 months and beyond.
Changes, outlook and notable items
- FY2021 sales growth reflected 10 store openings and e-commerce growth; same-store sales eased after the exceptional pandemic-driven FY2020. Hunting and shooting sales fell 2.3%, while footwear, apparel, camping and other departments grew. Hunting and shooting remained the largest category at 54.2% of sales.
- Gross margin remained pressured by lower-margin firearms and ammunition mix and rising freight. Management expected elevated transportation and logistics costs to continue into FY2022 and beyond; supply disruptions and ammunition demand exceeding supply were expected to persist into the first half of FY2022.
- The proposed Great Outdoors Group merger was terminated December 2, 2021 after FTC feedback indicated clearance was unlikely. The company received a $55.0 million termination fee; FY2021 also included $9.7 million of merger-related costs and $2.5 million of retention pay. Net income therefore benefited from a nonrecurring payment, while operating income excludes it.
- Management planned 10 store openings in FY2022, $48–$55 million of FY2022 capital expenditures, and a longer-term target of 5%–10% annual square-footage growth. It also planned two small-format “spike camp” stores. These are plans, not a formal sales or earnings forecast.
- On March 24, 2022, the board authorized a share repurchase program of up to $75 million, beginning March 31, 2022 and lasting one year. Repurchases are discretionary and may use cash or revolver borrowings.
- Key risks include firearms regulation and litigation, normalization of pandemic-era demand, supply-chain and freight costs, labor availability and wage inflation, competition, regional concentration in the West, and reliance on a single distribution center. A Route 91-related case was dismissed with prejudice in March 2022; a separate lease dispute remained unresolved, with losses not reasonably estimable.
Facts investors should verify
- How much FY2021 earnings depended on the $55 million termination fee and whether recurring profitability and margins stabilize.
- Whether inventory levels convert to sales and cash; operating cash flow was negative after the substantial inventory build.
- FY2022 freight, supply availability, ammunition demand, labor costs and comparable-store sales trends.
- Revolver borrowing-base availability, refinancing plans ahead of the May 2023 maturity, and the potential effect of floating rates and the LIBOR transition.
- Execution and funding of planned store openings, refurbishment spending and the authorized buyback, alongside substantial lease commitments.