Sportsman’s Warehouse blames first quarter loss on gun sales

Sportsman’s Warehouse blamed a $3.8 million loss in its first quarter on weak gun and ammo sales, according to the company’s conference call with investors last week.

While company execs saw an “encouraging” sign this spring as the industry hangs in the shadow of last year’s record breaking performance, they had always expected sluggish gun sales to carry over from last fiscal year, said John Schaefer, Sportsman’s chief executive officer.

“As we said previously, the underlying demand in this department remains strong when compared to historical levels, partially driven by increased participation rates in outdoor shooting sports as more women and children participate, despite the year-over-year decline in hunting and shooting,” he said during a conference call with investors Thursday.

“We are also encouraged to see that a significant portion of our sales continued to be generated from the use category, especially in our rural markets which are typically more stable and consistent over time compared to protection purchases and skews toward the historical 5 percent to 8 percent annual growth rate.”

The company’s performance echoed trends in federal background check data, which show the industry still lags 10 percent behind 2016 — the busiest year on record — as it heads into its historically slow season.

The FBI’s National Instant Criminal Background Check System serves a proxy for gun sales nationwide. So far this year, 8.7 million applications have been processed through NICS, however Guns.com estimates only 51 percent of those resulted in a gun transfer.

Analysis of NICS data shows dealers sold an estimated 4.5 million guns through the first four months of 2017 — about half a million less than this time last year.

Although the industry’s performance trails last year, April eclipsed its 2016 numbers — the best on record — by more than 4,400 estimated sales, according to FBI data.

Total background checks declined 5 percent over last year, though adjusted totals — calculated by removing applications processed for concealed carry permits — came in at just 391 checks above 2016.

As the anniversary of the Pulse nightclub shooting approaches in June, Schaeffer said the company’s second quarter outlook remains “conservative.”

“We continue to expect year over year trends in the second half of 2017 to show improvement relative to year on year performance trends in the first half of the year, and are reiterating our full year guidance,” he said.

“Despite the recent slowdown in firearm demand across the industry, we believe we are the best positioned retailer in our niche to capture market share given our extensive offering of brand name products, everyday low pricing strategy and knowledgeable customer service, combined with our convenience as a neighborhood store in larger markets or big box appeal in smaller markets, and our growth plans of opening 12 stores in fiscal year 2017,” he said.

Sportsman’s Warehouse filed for Chapter 11 bankruptcy protection in March 2009, calling itself a “retailer victim of the worldwide global recession.” In the eight years since, the company reorganized and grew from just under two dozen locations to more than 80 stores in 22 states. Schaeffer said last week the company plans to open another five to nine stores next year as it works toward its goal of 300 locations nationwide.