Sportsman's Warehouse Q3 2026: Contradictions Emerge on Inventory, Sales, Marketing, and Personal Protection Strategy

Date of Call: December 4, 2025

Financials Results

• Revenue: $331.3M, up 2.2% YOY
• EPS: $0.00 per diluted share GAAP, improved vs -$0.01 prior year; adjusted $0.08 per diluted share, up from $0.04 prior year
• Gross Margin: 32.8%, up 100 basis points vs Q3 last year

Guidance:

• Full-year net sales now expected to be flat to up slightly.
• Adjusted EBITDA guidance narrowed to $22M–$26M for the full year.
• Expect ending inventory to be less than $330M and capital expenditures to be under $25M.
• Expect to finish the year free-cash-flow positive with lower total debt; 2026 expected to see very modest top-line growth with focus on profitability.

Business Commentary:

* Sales and Same-Store Sales Growth: - Sportsman's Warehouse Holdings, Inc. reported same-store sales growth of 2.2% for Q3, marking their third consecutive quarter of positive comps. - The growth was driven by broad-based strength in core categories like hunting and shooting sports, as well as fishing, despite a tough consumer environment and government shutdown impact.

• Inventory Management and Efficiency:
• Total inventory at the end of Q3 was $424 million, a 3.2% decrease compared to the same period last year, with an approximate $20 million reduction from Q2.
• The reduction was a result of improved planning, forecasting, and allocation disciplines, as well as strategic inventory pulls to support peak seasonal demand and holiday selling season.

• Personal Protection Category Performance:
• The personal protection category, which includes lethal and nonlethal solutions like Byrna and TASER, has been a significant growth driver for the company.

• Expansion of live demos to more stores, with TASER now available in 116 of the 147 nationwide locations, has contributed to this success.

• Digital Marketing and Customer Acquisition:

• The company's digital marketing efforts have led to higher engagement and customer acquisition across all channels, with the Q3 marking a year-to-date engagement high.
• This success is attributed to the brand awareness campaign and digital-first go-to-market strategy focused on building customer retention and value through data-driven insights.

Sentiment Analysis:

Overall Tone: Neutral

• Management emphasized progress ("third consecutive quarter of same-store sales growth," "32.8% gross margin, +100 bps") while repeatedly noting caution: "taking a cautious view," revising full-year guidance, and increasing promotions and digital spend to manage a pressured consumer and government-shutdown headwinds.

Q&A:

• Question from Ryan Sigdahl (Craig-Hallum Capital Group LLC): Have you seen any improvement around Black Friday/Cyber Monday and have government-shutdown trends been persistent or improved?
  Response: No meaningful pickup after the government shutdown; the negative trajectory seen in late October persisted through November and is reflected in the revised guidance.

• Question from Ryan Sigdahl (Craig-Hallum Capital Group LLC): For Q4 gross margin, how much will you lean into promotions versus holding profitability?
  Response: We will use inventory and promotions to drive sales and foot traffic while managing seasonal exits to avoid carrying aged inventory and protect working capital.

• Question from Ryan Sigdahl (Craig-Hallum Capital Group LLC): Did Florida's Second Amendment sales tax holiday benefit the business and how will its removal affect you?
  Response: No significant impact; Florida is not a large market for us, so the holiday provided no material benefit.

• Question from Anna Glaessgen (B. Riley Securities, Inc.): With consumer headwinds, why elevate marketing in Q4 and what do you expect for marketing efficiency?
  Response: Competitive, highly promotional market requires spend; shifted from print to digital/email, will lean into firearms and ammo promotions to drive omni-channel traffic despite short-term marketing pressure on margins.

• Question from Anna Glaessgen (B. Riley Securities, Inc.): What was the comp for Camping this quarter and what needs to change for consistent performance?
  Response: Camping comp was down high single digits; inventory is down double digits—management will refine assortment and redeploy working capital to higher-performing categories to address the opportunity into 2026.

• Question from Mark Smith (Lake Street Capital Markets, LLC): On Black Friday you didn't use print/doorbusters—was that purposeful and how did it affect Q4 outlook?
  Response: We were promotional but used different tactics (in-store signage, longer-running deals); we'll reintroduce some doorbusters in December to drive traffic and have adjusted promotional cadence to respond to the market.

• Question from Mark Smith (Lake Street Capital Markets, LLC): Which categories will you lean on to move inventory in Q4—hunt/shoot only or more widespread?
  Response: Will lean primarily on hunt/shoot (and ammunition) where inventory is available to drive traffic; fishing remains strong; overall inventory levels are in good position to support promotions.

• Question from Mark Smith (Lake Street Capital Markets, LLC): How does the margin profile of nonlethal personal protection (Byrna/TASER) compare to traditional firearms?
  Response: Personal protection is accretive; nonlethal products are margin-accretive, expand the customer base, and Byrna demos rolled out to the majority of stores.

• Question from Joseph Schneider (on for Matt Koranda, ROTH Capital): Beyond promotions in hunt/shoot, what levers exist to return to positive comps and was Q3 actually negative?
  Response: Q3 was positive comps (3rd consecutive); promotions in hunt/shoot and ammo drive traffic and attachments (optics, accessories) to increase AOV—holiday promotions across the store will supplement these levers.

• Question from Joseph Schneider (on for Matt Koranda, ROTH Capital): If tougher demand persists, can you still deliver margin expansion next year?
  Response: No 2026 guidance yet; focus will be on profitable sales growth via inventory efficiency, margin accretion, and cost-structure management to drive improved profitability.

Contradiction Point 1

Inventory Management and Strategic Positioning

It highlights a shift in inventory management strategy and its impact on sales and promotional tactics, which can affect revenue and operational efficiency.

What portion of Q4's margin pressure is due to promotions versus inventory management? - Ryan Sigdahl(Craig-Hallum Capital)

2026Q3: We're managing inventory and seasonal demand, aiming to exit inventory when customers are shopping for it. Inventory is a tool to drive sales and foot traffic. - Jennifer Fall Jung(CFO)

What is the inventory purchased ahead of tariffs, and what is the current inventory level? - Mark Smith(Lake Street)

2025Q2: We filled up some of that with a little bit of hunting, some fishing, to bring some of that product in to align with those great selling seasons. - Jennifer Fall Jung(CFO)

Contradiction Point 2

Sales Performance and Consumer Confidence

It reflects differing perspectives on the impact of the government shutdown on consumer confidence and sales performance, which can impact revenue and market sentiment.

What trends have you observed during Black Friday and Cyber Monday, and how do these trends relate to consumer behavior and the government shutdown? - Ryan Sigdahl(Craig-Hallum Capital)

2026Q3: We started to see trends turn negative in mid-October, which continued through November. This is due to the prolonged government shutdown impacting consumer confidence. - Jennifer Fall Jung(CFO)

What is the comp guide for the second half of the year, and what were demand trends in August? - Matt Koranda(ROTH Capital)

2025Q2: August showed good acceleration in NICS performance, indicating positive momentum for Q3. - Paul Stone(CEO)

Contradiction Point 3

Marketing Strategy and Effectiveness

It reveals a change in marketing strategy and expectations, particularly regarding digital marketing and its impact on sales, which can affect customer engagement and market positioning.

How are you adjusting marketing spend in Q4 given headwinds, and what are your expectations for marketing efficiency? - Anna Glaessgen(B. Riley Securities)

2026Q3: We're increasing digital marketing to stay competitive in a promotional landscape. This includes leaning into firearms and ammo promotions. - Jennifer Fall Jung(CFO)

How are the accelerating performance in guns and non-lethal products related? - Ryan Sigdahl(Craig-Hallum Capital)

2025Q2: We're not [necessarily more promotional than we have been in previous years], but I think we are more targeted. We're more focused on the digital spend that we have. - Jennifer Fall Jung(CFO)

Contradiction Point 4

Inventory Management and Promotional Strategy

It highlights a shift in the company's approach to inventory management and promotional strategy, which directly impacts sales, foot traffic, and consumer engagement.

How much of Q4's margin pressure is due to promotions versus inventory management? - Ryan Sigdahl (Craig-Hallum Capital)

2026Q3: We're managing inventory and seasonal demand, aiming to exit inventory when customers are shopping for it. Inventory is a tool to drive sales and foot traffic. - Jennifer Fall Jung(CFO)

How have February and March trends in firearms and ammunition performed year-to-date? How is the comp setup for the year? - Matt Koranda (ROTH Capital)

2025Q4: We're maintaining normal levels of promotional activity, allowing us to drive traffic and loyalty into our stores. And as we've said, our promotional strategy has been key to our success both in Q4 and throughout the year. - Paul Stone(CEO)

Contradiction Point 5

Personal Protection Category and Market Opportunities

It showcases differing views on the potential market opportunities and strategic focus within the personal protection category, which can impact product development and revenue growth.

What are the profit margins for personal protection products and how do they compare to traditional firearms? - Mark Smith (Lake Street)

2026Q3: Personal protection is accretive to margins. Nonlethal solutions like Byrna are in more stores and attract new customer segments. - Jennifer Fall Jung(CFO)

Can a trade-down in firearms increase market share? What's your product mix in personal protection? - Anna Glaessgen (B. Riley Securities)

2025Q4: We're focused on hunting and shooting to drive sales, using our strong inventory position in firearms and ammo. - Jennifer Fall Jung(CFO)