Sportsman’s Warehouse Holdings Stock Soared Today, Here’s Why

On Friday, August 18, shares of Sportsman’s Warehouse Holdings, Inc. (NASDAQ:$SPWH) were soaring. It all started after the Utah-based retailer surpassed low expectations in its quarter two report. As of 10:52 a.m. EDT, SPWH stock was up 27.6%.

The retailer’s strong profit helped overcome a drop in same-store sales due to a tough comparison with the quarter in 2016 as sales of firearms increased after the Orlando shooting last year.

What Happened?

In the quarter, Sportsman’s Warehouse comps dropped 9%, but overall revenue increased 0.9% to $191.5 million, which is marginally below estimates of $191.9 million as the company continues to open new stores. From 2016, retail square footage increased 12.2%.

In regards to the bottom line, EPS dropped $0.20 to $0.15, however that still surpassed estimates at $0.13.

“Our better than expected bottom-line results were driven by strong gross margins resulting primarily from the higher margin product mix shift that we experienced in the second quarter,” CEO John Schaefer said.

What Does the Future Look Like?

Elaborating further, Schaefer said that the company expected continued softness in regards to the firearms market until it laps the election.

In terms of management-guided full-year comparable sales, the company is down 5% to 6% with revenue in between the $825 million-$835 million range. Further, profit forecasts were much better as the company calls for earnings per share of $0.60 to $0.66, which is marginally better than expectations of $0.62.

Before today’s news, Sportsman’s Warehouse shares had declined by 65%, which set up the stock for a bounce, as shares appear cheap due to this year’s forecast earnings. But, with the current decline in sporting goods retail, there is very little doubt that this rally will be short-lived.

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About the author: Caroline Harris is a third-year student at Capilano University in North Vancouver, Canada. Having already completed an Associates Degree in Psychology, Caroline is now finishing her Bachelor's degree in Communications. In preparation for working in the advertisement sector, Caroline is writing financial content and analysis. On a daily basis, Caroline works on articles regarding the following topics: finance, cryptocurrency, technology, and politics.