Sportsman’s Warehouse’s chief executive officer said last week a competitor’s nationwide liquidation hasn’t impacted the company’s bottom line.
“We don’t have the issues that some people have, where they have to promote because of Gander closing,” said CEO John Schaefer, during a conference call with investors Thursday. “We only have three stores that were impacted by Gander and frankly all three of those stores are just fine. We’re not in the Midwest, where other competitors are probably seeing a larger impact from those liquidation sales and are being forced to promote their way down to compete with that.”
One of those competitors — Nebraska-based Cabela’s — blamed Gander specifically for its weak second quarter sales.
“Merchandise sales were challenging in the second quarter,” said Tommy Millner, Cabela’s chief executive officer, in a press release earlier this month. “Since the fall election, we have continued to see a slowdown in firearms and shooting related categories. This slowdown was even more pronounced in the second quarter due to the impact of inventory liquidation by a major competitor who has filed for bankruptcy as well as the anniversary of a number of events from a year ago, including the Orlando tragedy in June of 2016.”
Gander Mountain filed for Chapter 11 bankruptcy protections in Minnesota court on March 10. Camping World, the nation’s largest recreational vehicle dealer, led the investor group that bought out $390 million worth of Gander Mountain assets, including its Overtons boating business, during an April 28 auction. CEO Marcus Lemonis said a separate liquidation company bought the store inventory currently on sale across the country.
Lemonis will close more than half of the chain’s 162 locations and rename the surviving stores Gander Outdoors as he attempts to fix years of “undisciplined inventory buying,” including $100 million wasted on a “bad assortment of guns.”
Estimated gun sales plunged 26 percent in July compared to last year, following a 12 percent decline in June. The summer slowdown tailed an unanticipated busy spring for federal background checks, the industry’s best available proxy for sales.
Firearms promotions took the brunt of blame from retailers and gun makers who said the rock bottom prices ate into quarterly earnings. Some suggest the overstock — left behind after the election — could hang around until 2018, artificially propping up gun sales and keeping prices low.
For now, Sportsman’s Warehouse appears indifferent toward the promotion-heavy sales environment across the gun industry, with Schaefer teasing possible ammo deals in the future, though he told investors firearms likely won’t go on sale at his stores.
“In terms of pricing promotion and playing this race to the bottom that some others appear to be accepting, it’s not in our DNA,” he said. “I think if we do any promotions, it may be in the ammunition side because it is clear that while changes in firearms are usually matched after a period of time by changes in ammunition, that change has not occurred yet. It’s simply because the customer is saying the price is too high.”
“And to cut prices on firearms to try to stimulate artificial growth in a period of time that both is not a high-purchase time of year — and is just before a high-purchase time of year in the September, October timeframe with hunting — simply doesn’t make sense,” he continued. “People don’t want to buy, they’re not going to buy.”