Sportsman's Warehouse Holdings, Inc. has successfully navigated a complex retail landscape to report encouraging results for the second quarter of 2025. The outdoor goods retailer achieved its second consecutive quarter of positive comparable store sales, a testament to its ongoing strategic initiatives. The company's focus on key categories such as hunting, shooting sports, and fishing has been instrumental in driving this growth. Despite prevailing macroeconomic headwinds, the disciplined execution of localized merchandising, inventory optimization, and expansion into personal protection products has contributed to a stronger financial footing. Leadership is optimistic about the remainder of the fiscal year, anticipating continued profitable sales and improved financial metrics through strategic inventory management and a commitment to reducing debt.
During the second quarter, which concluded on September 4, 2025, Sportsman's Warehouse Holdings, Inc. reported net sales of $393.9 million, an increase of 1.8% compared to the previous year. Comparable store sales saw a 2.1% rise, with consistent positive trends throughout the quarter. This growth was particularly notable given a challenging comparison to the prior year, especially in June due to a pull-forward of sales in California before new firearm and ammunition taxes were implemented in July 2024.
Key performance indicators highlighted several areas of success. Gross margin improved by 80 basis points year-over-year, reaching 32%, primarily due to healthier inventory levels and a higher penetration of fishing sales. However, this was partially offset by a shift in mix towards lower-margin firearms and ammunition, as well as increased freight costs associated with a strategic inventory pull-forward. Selling, General, and Administrative (SG&A) expenses stood at $97.2 million, representing 33.1% of net sales, an increase from 32.7% last year, reflecting investments in store labor and digital marketing to boost sales and omnichannel traffic. The reported GAAP net loss widened slightly to $7.1 million, or $0.18 per diluted share, compared to a $5.9 million loss, or $0.16 per diluted share, in the same period last year. Adjusted EBITDA, however, showed a positive trend, increasing by 12.2% to $8.3 million.
Inventory management was a central theme, with total inventory at $443.5 million at the quarter's end, up from $363.4 million in the prior year. This increase was a deliberate move to ensure adequate stock for the crucial hunting and fishing seasons, representing the company's peak inventory position for the year. Despite the higher inventory, the company emphasized its quality and confidence in selling through it, expecting to end the year with total inventory below 2024 levels. Debt and liquidity remained a focus, with total debt at $195.1 million and liquidity at $109.5 million. The company expects the second quarter to mark the peak of its debt balance, aiming for reduction through improved EBITDA and inventory sell-downs.
Operational highlights included strong growth in ammunition sales, up 10%, supported by an everyday low price (EDLP) strategy and improved stock of core calibers. Firearms unit sales increased by over 4%, outperforming the industry's 4.9% decline in adjusted NICS checks, indicating market share gains. The hunting and shooting sports department collectively grew 4%, driven by firearms, ammunition, and personal protection items. Fishing sales surged by 10.9% year-over-year and 20% on a two-year basis, reflecting increased participation and strategic focus. While camping sales declined by 10% due to the elimination of slow-moving categories, new EDLP strategies and expanded assortments are expected to strengthen this segment. E-commerce also grew 3%, with over 70% of online transactions fulfilled through the buy online pick up in store (BOPUS) program, driving significant traffic to physical locations.
The company reiterated its full-year net sales guidance, raising the lower end to reflect flat growth while maintaining the upper end at a 3.5% increase. Adjusted EBITDA guidance was reaffirmed between $33 million and $45 million, supported by modest gross margin improvement and diligent expense management. Capital expenditures are projected to be between $20 million and $25 million, mainly for technology enhancements and store maintenance. The leadership team remains committed to profitably growing sales, generating positive free cash flow, reducing debt, and enhancing shareholder value.
In summary, Sportsman's Warehouse Holdings, Inc. is executing a robust transformation strategy that is delivering tangible results. By focusing on core product categories, optimizing inventory, and leveraging omnichannel capabilities, the company is demonstrating resilience and an ability to gain market share even in a competitive environment. The company's clear vision and disciplined financial management position it for continued operational improvements and enhanced financial performance in the coming quarters, laying a strong foundation for sustained long-term growth.
