Sportsman’s Warehouse Holdings Inc. has seen its stock price fall by 16.5% in premarket trades after the outdoor specialty retailer detailed concerns that it would fall short of analyst expectations in its coming quarter. The company also announced a change in management, with chairman Joseph P. Schneider being appointed as interim CEO after Jon Barker announced plans to retire this Friday. The West Jordan, Utah-based company projected first-quarter sales are estimated to be between $265 million to $270 million, well below the analyst estimates of $298.7 million, according to FactSet data.
Furthermore, the company said it expects an adjusted first-quarter loss of 35 to 40 cents a share, which is also below analysts’ target for a loss of 18 cents. The retailer is blaming the current global supply chain problems for its forecast of reduced revenues, citing shipping disruptions and increased delays in the delivery of its products, as well as increased customer demand that has put pressure on its inventory levels. With this increase in pressure, the firm has experienced a surge in costs for shipping and handling its merchandise.
Over the last two years, the growth of e-commerce has put considerable strain on international shipping, resulting in an increase in shipping costs and a decrease in available inventory. Ports around the world have been overwhelmed by the surge in demand, leading to delays and congestion that have caused significant disruptions in the global supply chain. But while these issues are affecting a plethora of industries, outdoor retailers like Sportsman’s Warehouse rely heavily on imported products, which means that the company is directly exposed to these problems.
Additional factors exacerbating the situation for Sportsman’s Warehouse and the outdoor retail sector as a whole include surges in raw material costs and geopolitical tensions. In the last few months, the price of oil has spiked dramatically, thereby increasing the cost of transport for these companies. Furthermore, tensions between the US and China have worsened, further exacerbating the situation by putting restrictions on imports and exports.
This perfect storm of challenges is putting pressure on companies like Sportsman’s Warehouse from multiple angles. However, it is important to note that the company remains confident in its fundamental business strategy and the long-term prospects for the outdoor retail sector. In a press release, Joseph Schneider stated, “We continue to believe that our strategic growth initiatives focused on growing market share, enhancing our merchandising and marketing, and improving our operating efficiency will drive long-term value creation for our customers, associates, and shareholders.”
In an effort to mitigate some of these issues, Sportsman’s Warehouse has implemented a series of proactive measures. These include:
1. Diversifying its supplier base: Sportsman’s Warehouse has been actively working to broaden its network of suppliers to reduce its reliance on any one particular company or region. This strategy should help the retailer source products more efficiently and reduce the impact of supply chain disruptions on its operations.
2. Expediting shipments: Given the increase in transit times and the growing backlog at global shipping ports, the company has been actively working to expedite shipments so that it can maintain inventory levels and meet customer demand.
3. Increasing prices: Sportsman’s Warehouse has also increased the prices of certain products to partially offset some of the rising costs that have been attributed to external factors. While this strategy will no doubt impact sales in the short term, the company hopes that it will help to boost profitability and maintain long-term stability.
4. Enhancing e-commerce capabilities: In response to the booming e-commerce market, Sportsman’s Warehouse has significantly invested in improving its online presence and making its distribution centers more efficient. This will not only help the company meet growing demand from online shoppers but should also help to offset the negative impact of supply chain disruptions on its brick-and-mortar stores.
In conclusion, the current state of the global supply chain has resulted in a challenging situation for Sportsman’s Warehouse and other outdoor specialty retailers. However, the company continues to take proactive measures to address these issues and remains confident in the long-term viability of its existing strategy. As investors continue to watch the status of the supply chain in the near term, it is vital that they also take note of the retailer’s efforts to navigate this rough patch and maintain its position in the industry.
