Shares of Sportsman’s Warehouse Holdings Inc. (SPWH) fell by more than 8% in the extended trading session on Wednesday after the retailer reported better-than-expected fourth-quarter earnings but also announced the retirement of Chief Executive and board member Jon Barker from his roles. The company’s stock has been experiencing severe volatility in recent months, with a slight recovery midway through last year when indoor restrictions eased, but is still down 40.1% over the past year.
The outdoor recreation retailer managed to turn a profit in the fourth quarter, with earnings per share coming in at 33 cents after adjustments for one-time items. This was significantly better than its performance in the year-ago period, which saw earnings per share at $1.31. Sales, however, dropped 9% to $379.3 million due to lower demand attributed to inflation and recession concerns. Analysts polled by FactSet expected adjusted earnings of 28 cents a share on sales of $369.9 million.
Barker’s retirement comes amid an increasingly tumultuous time at the helm of the company. SPWH has faced multiple lawsuits brought by shareholders over alleged securities violations and back in mid-2021 even saw its stock briefly halted on a circuit breaker for a short period. In the earnings release, Barker thanked the great team he’s had the privilege of working with for the past six years and expressed confidence in the company’s future.
With the retirement of Barker, the board of directors has appointed current Chief Operating Officer (COO) Phil Stevens as interim CEO while it conducts a search for a permanent replacement. Stevens has over 30 years of experience in retail operations, supply chain management, and merchandising, and will continue to serve as COO in addition to his new role as interim CEO.
Barker’s decision to retire comes amidst an increasingly uncertain environment for retailers. Inflation has been a significant catalyst for the decline in sales, while tightening monetary policy from the Federal Reserve has amplified market volatility. Investors are carefully monitoring stocks with high valuations and are being cautious with high-growth companies such as Sportsman’s Warehouse, which is likely driving some of the drastic stock price movements.
In the press release, the company also shared details on its progress towards executing on its growth strategies, including strategic category expansion and a focus on profitable growth. The company added 19% more square footage during fiscal year 2021, opening 12 new stores and relocating one of the largest and highest sales volume locations to a new, more accessible site. It also expanded its direct-to-consumer fulfillment network, building out supply chain distribution capacity to support the 53% increase in e-commerce sales over the past two years.
Sportsman’s Warehouse has been focusing on growing its market share and customer loyalty in recent years. It has continued to develop its e-commerce presence and improve supply chain operations to cater to shifting consumer buying preferences. The retailer has introduced new camping, fishing, and hunting products to better serve its customer base and broaden its reach. In addition, the company has invested in enhancing its marketing strategies, utilizing data-driven analytics to identify and target growth opportunities.
Despite the headwinds facing the retail industry, Sportsman’s Warehouse has navigated the challenges and continues to adapt to the ever-evolving market. Its strategies around category expansion,Store efficiency optimization, and e-commerce growth have positioned it well to deliver long-term value to shareholders. With Barker’s retirement, the company is entering another period of transition, and the appointment of Phil Stevens as interim CEO and the ongoing search for a permanent replacement suggests that the company is committed to continuing its positive momentum.
In conclusion, Sportsman’s Warehouse reported better-than-expected earnings for the fourth quarter, with adjusted earnings per share of 33 cents beating analysts’ projections of 28 cents a share. However, the retirement of its CEO, Jon Barker, seemed to be weighing on investor sentiment, as the company’s shares dropped more than 8% in extended trading. Going forward, SPWH will need strong leadership to continue navigating the uncertain environment for retailers and execute on its long-term growth strategies.
