Sportsman's Warehouse Holdings, Inc.

Greetings and welcome to Sportsman Warehouse fourth quarter and full year 2021 earnings call. At this time, all participants are in the listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Riley Timmer, Vice President of Investor Relations and Corporate Development. Thank you. You may begin.

Thank you, operator. With me on the call today is John Barker, Chief Executive Officer, and Jeff White, Chief Financial Officer of Sportsman's Warehouse. First, by way of introduction, I'm Riley Timmer, and I am the new Vice President of IR and Corporate Development. It's a pleasure to be on this call today, and I look forward to developing relationships with each of our analysts and our current and prospective shareholders. Going forward, I will be your primary point of contact for all investor-related inquiries. I will now remind everyone of the company's safe harbor language. The statements we make today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding our expectations about future results of operations, demand for our products, and growth of our industry. Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described under the caption risk factors in the company's most recent Form 10-K and the company's other filings made with the SEC. We will also disclose non-GAAP financial measures during today's call, definitions of such non-GAAP financial measures, as well as reconciliations to the most directly comparable GAAP financial measures are provided as supplemental financial information in our press release, included as Exhibit 99.1 to the Form 8K we furnished to the SEC today, which is also available on the Investor Relations section of our website at sportsmans.com. Finally, I would also like to note that today's materials include an earnings conference call PowerPoint presentation, which is available at sportsman.com in the investor relations section of the website. You can utilize this deck as a reference with today's prepared remarks. I will now turn the call over to John Barker, our chief executive officer.

Thank you. It's great to have you on the team, Riley. Good afternoon to everyone on the call, and thank you for taking the time to join us today. It's good to be back on our normal operating and communication routine with our analysts and investors. In my remarks today, I will provide a brief update since our last earnings call in December of 2020. In addition, we will provide an overview of our fourth quarter and full year 2021 performance highlighted by our beat to consensus on both top and bottom line results. Then I will review a few key elements of the growth strategy for our omnichannel business model. Following my comments, Jeff will provide additional details on our fourth quarter and full year results, as well as discuss our outlook for the first quarter of 2022. Finally, we will open up the call for questions. As a backdrop to our business growth, when we entered the pandemic in early 2020, we operated 102 stores with 2019 revenues of approximately $886 million. Our e-comm driven revenue exiting 2019 was less than 7% of sales. During the two-year period since then, we have opened an additional 20 stores, increasing our square footage by approximately 16%, as well as making significant capability enhancements to our omnichannel platform, which supported the growth of e-com sales driven penetration to approximately 15% of fiscal 2020 revenue of $1.5 billion. The increase in consumer participation and changes in the competitive landscape continue to be very favorable for Sportsman's Warehouse. Several of our closest competitors have either exited or dramatically reduced their firearms and ammunition categories over the past two years. In addition to the competitive shift, our omnichannel execution and the increase in outdoor participation has provided us with market share gains evidenced through our top-line sales growth and our consistent outperformance compared to the next data over the last two years. Not only has there been a significant increase in hunting and shooting sports participation across the industry, but the type of person who is buying firearms has become more diverse. Given our growing distribution reach through our expanded retail footprint, third-party FFL partnerships, and the growth of our e-com penetration, we believe we are well-positioned to take advantage of these growing trends. Turning to business performance. We are pleased with both our fourth quarter and full year 2021 results. We finished the year with the highest revenue recorded in the history of the company, with sales over $1.5 billion, an increase of nearly 4% over the prior year. I would like to highlight a few of the key factors that led to this success. First, expansion of our omnichannel capabilities and continued consumer shift to online drove our e-commerce business to now make up approximately 15% of total sales. Second, we added 10 new stores during fiscal 2021 and continue to expand our footprint across the U.S. And third, we experienced exceptional performance in sales in all of our key categories, with the exception of hunting and shooting sports, highlighted by double-digit year-over-year growth in our footwear and apparel categories. If you look at our compounded annual growth rate over the last two years, our same-store sales are up 43%. Overall, our business trends continue to remain strong, and we are experiencing market share gains in several of our key categories. We believe the major building blocks and foundational capabilities for continued omnichannel growth are securely in place and can be capitalized on to further grow sales and profitability. As we look to 2022, our strategic growth drivers to leverage our omnichannel platform are growing our store footprint, growing sales generated from sportsmans.com, leveraging our growing customer files, improving the customer shopping experience by remodeling our existing fleet. Starting with the continued expansion of our retail footprint, We will approach and execute this strategy by using our flexible store format. To provide a little color into our retail strategy, we target a 30,000 square foot box in underserved geographic locations. We will then look at specific market data using a variety of analytics and tools to adapt the size of the box based on the demand of the specific market. With the ability to open and effectively operate a store as small as 7,500 square feet or as large as 65,000 square feet, we have the flexibility to go to markets where others can't due to their financial constraints. This provides us with a significant competitive advantage in growing store square footage, all while staying disciplined around a store's financial requirements, which are targets of 10% four-wall EBITDA and 20% ROIC as our stores reach maturity in 18 to 24 months. I want to highlight two examples of how this flexibility provides us with opportunities to grow and gain market share as compared to our competitors. In both of these examples, the stores are operating well above expectations. In 2021, we opened a store in the underserved market of Grand Island, Nebraska, where there's a population of approximately 50,000 people. Our flexible store format allowed us to enter a market that we identified as underserved, where most of our big box competitors would not think of going due to the limited population. We also opened a store in Lady Lake, Florida, where the population explosion provided us with a new and growing market. Again, our flexible store format allowed us to find an attractive second generation box and quickly go to market to serve the growing population of this area. Based on the success of our Lady Lake store, today we are announcing two additional Florida stores planned to open in fiscal 2022. In the last 18 months, we also completed a test concept of a 7,500 square foot store in Laramie, Wyoming. Based on this successful test, This year, we are slated to open two of our newest Spike Camp concept stores. These stores are 10,000 square foot boxes that are ground up construction and value engineered. We will open both of these new stores in the first half of 2022, and they will be located in Riverton, Wyoming and Stansbury, Utah. We are excited about this new store format, allowing us to expand into smaller markets where there's an underserved consumer tailoring our immense assortment to reflect local needs. Today, we are announcing five additional locations, bringing our total planned store openings for fiscal 2022 to 10. Today's newly announced stores will be in the following states. One additional store in California, bringing our total to 16 in that state. One new store in Colorado, bringing our total to nine within that state. Two new stores in Florida, bringing our total to three within that state. One new store in Indiana, bringing our total to three within that state. I'm proud of what the team has been able to accomplish in real estate given the timing of the termination of our merger as well as the ongoing nationwide construction and supply chain limitations. Based on the planned 10 new stores, we will end fiscal 2022 with a total of 132 stores in 30 states. As we look to the future, our team is actively reviewing over 100 different target markets, supporting the opportunity to reach 300-plus stores in the coming years. Turning to our e-commerce platform, for 2022, we see Sportsman.com as a way to increase our reach to consumers outside our geographic area utilizing digital marketing and our third party FFL partnership program. Over the past 24 months, we've experienced significant sales growth outside our traditional geographic areas, all while performing very little digital marketing. As we increase our investments in digital marketing and expand our third party FFL partnership program, we expect to continue to capture sales from areas that would be considered outside of our normal geographies. An important element in our efforts to acquire and retain customers outside of our normal geographies is our third-party FFL partnership program, which provides the largest assortment of firearms from any major retailer to consumers nationwide. This program was effectively turned off for over a year due to supply chain limitations. As we turn this program back on, the ability for us to ship firearms to any one of our 500-plus partner dealers will allow us to serve customers that are not located within a convenient drive time to a Sportsman's Warehouse location. Finally, as we look to increase traffic and sales on Sportsman's.com, we will continue to expand our online assortment, utilizing our large vendor base and improved dropship capabilities. These capabilities allow us to acquire and retain customers through increased assortment with limited investments in inventory. As we think about our customer file growth over the past 24 months, it is important to understand the dynamic change in our customer base that has occurred. Outdoor participation rates are the highest on record, with 53% of Americans participating in some form of outdoor activity. National park attendants and hunting and fishing license sales are all setting records. This overall increase in outdoor participation has led to a record 14 million first-time firearm buyers since the start of 2020 and has provided us with immense growth to our customer file. During this period, we've grown our customer databases in three ways. Our loyalty program has now surpassed 3.2 million members and drives over 45% of revenue. Our active email database has grown over 150% since the start of the pandemic. Our co-branded and in-store credit programs have doubled in a year and have proven to be the most valuable customer that we have in our database. As you may recall, a couple of years ago, we partnered with Comenity on a co-branded credit card and in-store credit program that provided industry-leading features and benefits for those that signed up. These programs have seen 200% growth over the last year, most of which has come through acquisition directly at the point of sale with minimal marketing efforts. As we do more this year to market and highlight the benefits to our customers, we expect these programs to grow further and become a larger portion of the overall business. Over the past two years, a large amount of new customers entered a sportsman's warehouse or shopped on sportsmans.com for the first time. As we serve their needs, our databases have grown significantly, and our capabilities have provided us with the opportunity to maximize engagement. For example, our data shows that over 20% of first-time firearm buyers have a propensity to buy a second firearm in the following 12 months. Our data also shows that a firearm customer drives four times more revenue than a non-firearm customer and conducts two times more transactions than a non-firearm customer. Leveraging the growth of our database through personalization technologies and the improvement in stocks across the board, including ammunition for the first time in 18 months, provides us with the opportunity to drive in-store traffic and reengage with new customers that we've gained over the last 24 months. As we look to the future, we have immense opportunities to grow these databases, increase retention, and maximize the lifetime value of our customers. Turning to our store operations, in 2021, we started making an investment to refurbishing our fleet with 19 stores remodeled and an additional seven planned for 2022. Our goal in these remodels is to keep the stores fresh through improving the presentation of merchandise to maximize basket size, optimize the flow of customer traffic to strengthen our convenience proposition, modernizing the lighting and sight lines for the user experience, and reducing our environmental impact through changes to our lighting, water, and refuse programs. While the purpose of these refreshes is not solely focused on return on investment, We are seeing encouraging customer trends and traffic patterns in stores that we completed in 2021. An area we continue to experience success and will grow in 2022 is the development of a store within a store concepts with some of our key vendor partners. These concepts include adding end caps to highlight specific brands or dedicating sections of the store to highlight a more robust offering from our vendor partners. By enhancing the visual appearance in stores, we've seen immense sales increases in the product that is being showcased in these concepts. Finally, before I turn the call over to Jeff, I want to highlight a couple of team members that we've added in the last few months. We are very excited to welcome Riley Timmer, VP of Investor Relations, and Tom Clement, our VP of Supply Chain to the company. These individuals are filling roles that we view as critical to the success and growth of our company. And you will see us continue to add individuals in positions that will complement our existing organization and support our plans for continued growth and expansion. With that said, I will turn the call over to Jeff to review our fourth quarter and full year fiscal 2021 results and discuss our Q1 2022 guidance.

Thank you, John. I'll begin my remarks today with a review of our fourth quarter and full year fiscal 2021 results. I will then review our outlook for the first quarter of 2022. Net sales for the fourth quarter of fiscal 2021 were $416.3 million compared to $438.2 million in the fourth quarter of 2020, a decrease of 5% over the prior year period. The decrease was primarily driven by a tough comparable period as we anniversary the events of January 6th, 2021, which drove increased firearms and ammunition sales across the business. Same store sales decreased 10.8% in the quarter compared with the same quarter of the prior year. This decrease is primarily driven by a decrease in firearms and ammunition sales of 23.1% and 26% respectively. These decreases were partially offset by increases in our footwear and apparel categories of 17.2% and 2.7%, respectively, over the comparable quarter. Fourth quarter 2021 gross profit was $136.6 million compared to $142 million in the fourth quarter of 2020, a decrease of $5.4 million. Gross margin was 32.8% for the quarter, an improvement of 40 basis points versus the prior year fourth quarter period. Product margins and favorable mix contributed approximately 200 basis points to the gross margin improvement over the prior year period, which is partially offset by higher overall freight costs. SG&A expense of $113.4 million for the fourth quarter of 2021 was an increase of $10.8 million or 10.5% compared to the fourth quarter of the prior year. As a percentage of net sales, SG&A expense increased to 27.2% compared to the 23.4% in the fourth quarter of the prior year. This increase was primarily driven by retention bonuses paid to key employees of 2.5 million and costs associated with the terminated merger of $3.3 million, both of which are non-recurring expenses. SG&A also increased during the period as we returned to normal staffing levels within our stores when compared to the prior year period, as well as increasing spend on certain types of marketing when compared to the prior year. Income from operations was $23.2 million in the fourth quarter of 2021, compared to $39.4 million in the prior year period, a decrease of $16.2 million. Other income in the fourth quarter of this year was $55 million, relating to a one-time payment received in connection with the termination of the merger agreement with the Great Outdoors Group. Net income for the quarter was $58.4 million, or $1.31 per diluted share, as compared to net income of $29.6 million, or $0.66 per diluted share in the prior year period. This represents a year-over-year improvement of $0.65 per diluted share. Adjusted net income in the fourth quarter of 2021 was $22 million, or 49 cents per diluted share, compared to adjusted net income of $33.5 million, or 75 cents per diluted share, in the fourth quarter of the prior year. Adjusted EBITDA for the quarter of 2021 was $38.5 million, compared to $51.5 million in the prior year period. Turning to our full year results. For the full year of 2021, net sales were $1.51 billion compared to $1.45 billion for the full year 2020, an increase of $54.3 million, or 3.7%. These results were driven by the opening of 10 new stores during 2021 and strong growth in our e-commerce business. Full year 2021 same-store sales decreased by 2.2% compared to the prior year. This slight decline compared to 2020 was primarily driven by declines in our firearms and ammunition categories of 12.5% and 13.7% respectively. These declines were offset by increases in footwear of 21.2%, apparel of 12.7%, optics, electronics, and accessories of 7%, and camping of 2.6% when compared with 2020. These increases illustrate the fundamental strength in our overall business as each of these categories produce higher gross margins than our shooting sports category. Full year 2021 gross profit was $490.3 million compared to $476.5 million in 2020, an increase of $13.8 million. Full year 2021 gross margin was 32.6%, a decline of 20 basis points versus the prior year. Gross margins for the full year were pressured by higher freight and transportation costs, partially offset by higher overall product margins and favorable sales mix when compared to the prior year. We expect transportation costs to remain a headwind during 2022. Full year 2021 SG&A expense of $399.7 million was an increase of $46 million or 13% compared to the full year 2020. As a percentage of net sales, full-year SG&A increased to 26.5% compared to 24.4% for the full year 2020. The increase in absolute dollars and as a percentage of net sales can largely be attributed to higher payroll expenses for 2021. The higher payroll was due to the opening of 10 new stores during the year, minimum wage increases to many of our store employees, and a one-time retention bonus paid to certain employees. Additionally, we incurred $9.7 million in expenses relating to the terminated merger. We also incurred additional rent, depreciation, and other general administrative expenses for the 10 new stores open during the year. Full year 2021 income from operations was $90.6 million compared to $122.7 million in the prior year period. Full year interest expense decreased by $2.1 million to $1.4 million. This was the result of lower debt balances during 2021. Full year net income was $108.5 million, or $2.44 per diluted share, compared to net income of $91.4 million, or $2.06 per diluted share for the prior year. Full year 2021 adjusted net income was $76.8 million or $1.72 for diluted share compared to adjusted net income of $99.1 million or $2.23 for diluted share in 2020. Full year 2021 adjusted EBITDA was $136.6 million compared to $163.2 million in the prior year. Turning to our balance sheet and liquidity. Whole year 2021 ending inventory was $386.6 million compared to $243.4 million at the end of 2020, an increase of $143.2 million. Due to the significant increase in demand for our products and the global supply challenges, we ended fiscal 2020 with inventory levels much lower than we preferred. That said, we spent much of 2021 catching up and making significant investments in our inventory to bring it to a level where we believe we can best serve our customers. At this year-end level of inventory, we feel our stores are well positioned to handle our current sales demands and supply chain challenges. The 10 stores added in 2021, as well as the 10 planned stores for 2022, will increase our inventory on average by $2.4 million per store. For the full year 2021, we incurred approximately $54 million of net capital expenditures, primarily related to the construction of 10 new stores and the refurbishment of 19 existing stores during the year. Fiscal year 2021 cash used in operating activities was $21.6 million versus cash provided by operating activities of $238.8 million for fiscal year 2020. This difference is primarily due to the replenishment of inventory as noted earlier and reduction of our accounts payable versus prior year. Our liquidity continues to be a strength as we ended 2021 with $77 million on our line of credit, which was primarily related to the inventory catch-up needed to support the growth of the business. Our cash balance remains strong as well, ending the year with $57 million in cash. At the end of the full year 2021, we had approximately $146 million of availability on our revolving credit facility. Our total liquidity, including cash on hand at the end of 2021, was $203 million. We remain confident that our strong balance sheet, good liquidity, and ability to generate positive cash flow strategically positions us to expand our store reach and take advantage of opportunistic M&A opportunities. We are also pleased with the board's approval of a $75 million share buyback program and see it as a significant step in our capital allocation plan. We plan to execute this program through purchases made on the open market over the coming months. Turning now to our guidance. Given the current market conditions and the tremendous growth the company has seen over the last two years, we will only be providing quarterly guidance for the time being, starting with our net sales outlook. we estimate first quarter net sales to be in the range of $300 million to $310 million. Same store sales in the first quarter of 2022 are anticipated to be in the range of down 14% to down 11%. Adjusted EPS for the first quarter of 2021 is expected to be in the range of negative one cent to positive one cent. To give you some full perspectives on the full year, As John mentioned, we are planning to open 10 new stores in 2022, four of which are planned for the first half of the year, while the remaining six will fall in the second half of the year. Including the opening of our two SPI camp formats, we expect the average square footage of these new stores to be approximately 23,000 square feet. We anticipate our adjusted EBITDA margin to be in the high single digits. We anticipate our 2022 effective tax rate to be approximately 26%. Finally, we expect our 2022 capital expenditures to be approximately $48 to $55 million as we continue to expand our store footprint, refreshing our existing fleet, and invest in technology. That concludes our prepared remarks today. With that, I will now turn the call back over to the operator for questions.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Mark Smith with Lake Street Capital Markets. Please proceed.

Hi, guys. Good to talk again here. First question for me, can you just give us your thoughts on gross profit margin? You know, big picture as we shift back to maybe a more normal sales mix of firearms and ammunition, you know, the impact that might have on gross profit.

Yeah, Mark, this is Jeff. Thanks for the question. As we looked at Q4, I would tell you that we saw a very healthy return to a normalized sales mix, evidenced by the increase in absolute gross margin percentage that we saw. As we think about, you know, going into the future, we see a very healthy trend in that sales mix, to your point, going with less centered on firearms and ammo and more centered on our other categories, reverting back to our historical trends of business.

Perfect. And then you guys had called out some obvious labor pressure. Any other places that you're seeing maybe inflationary pressure, whether it be on gross profit margin or on SG&A?

We're still seeing pressures from a freight perspective. As we think about 2022, those pressures we expect to continue through Q2, call it, and then we get into a much easier comp in the back half of the year. Other than that, as you look at SG&A, I would call out that last year we did not have certain types of marketing turned on. So as we think about 2022 and we go back into a normal promotionary environment, those types of marketing will be turning back on throughout the year.

Perfect. And then I just wanted to ask about current sales trends as we're seeing consumers with inflationary pressure, some inventory come back in certain categories. Anything you guys can call out, even as we look at the last two months so far in this quarter, on changes in consumer behavior with gas prices or anything else that are worth calling out?

Hey, Mark. It's John. Good to talk to you again. As I think about the components driving consumer behavior today, Certainly the largest one that all retail is experienced right now is the comp of the nearly $2 trillion for the stimulus last year. It's really hard for me to parse out how much inflationary pressures, including cost of fuel, are contributing to those pressures in the consumer. The way I like to think about it is for our business and the industry we're in, the stimulus checks are short-term. impactor from last year. And while fuel costs and inflation will certainly have an impact on disposable income for our consumer, we actually believe and are confident that our industry is able to weather those changes better than most. As folks have more limited available income, they're more likely to stay close to home, camp, fish, hike, hunt, and participate in the shooting sports then they may be traveling to a destination for a week vacation at the beach.

Great. Thank you. I'll jump back in the queue. Thank you.

Our next question is from Ryan with Craig Capital Group. Please proceed.

Good afternoon, guys. Congrats on the business success over the last year or two here. John, I want to piggyback off that last question. So I agree that you guys are better positioned than much of retail in this inflationary and the various macro conditions going on right now. But can you also talk just relative to your specific competitors in your categories, how your everyday value focus could potentially also position you better?

Absolutely, Ryan. Good to talk to you. You know, our business is always been based on a value proposition of convenience and everyday low pricing. You've never seen Sportsman's Warehouse drive demand through significant promotion. We certainly have a cadence of promotion around the holidays. So as our customers think about how far their dollar will go in supporting activities with their family and friends, Sportsman's Warehouse is always on the top of mind. As you think about the changes in consumer behavior and everybody's desire to spend more time in the outdoors and less time in a mall or a destination shopping experience, the Sportsman's Warehouse layout and store components certainly provide a greater opportunity for those customers to save money and get in and get out to the outdoors versus spending hours shopping in a large destination.

Then just moving over to e-commerce, how much was, maybe I missed it if you gave it, but how much was shipped from your DC and Salt Lake versus your local stores of your e-commerce sales? And then secondly, any plans to build out a new distribution center potentially in the eastern part of the US or other part?

Brian, we haven't provided the percentage of sales by source. What I can tell you, over the last year, we've dramatically increased the percentage of of e-com sales that are coming from store inventory versus our distribution center. And as we think about the future, our dropship capabilities, expanding on those dropship capabilities, as well as leveraging the store inventory from our 122 stores, can help to move and turn our inventory faster and also expand the availability for the consumer online. As we think about distribution space requirements, We will not open a permanent distribution center in 2022, but I'm currently evaluating the modeling around a permanent distribution center that would open at some point in 2023. As we finalize that modeling, we will be able to provide additional details around the sizing and the timing, as well as estimated capital for that new distribution center.

Great. One last one for me. I know you're not giving full year guidance, but reasonably directionally to say that comps get easier throughout the year, that Q1 is the high watermark, potentially from a tough year over year comp standpoint?

Yeah, you're correct in your thinking. Q1 is the toughest comp that we have for the full year, just due to the stimulus that we're anniversarying as of March 15th. To John's point, that was $2 trillion that entered the market. The consumer last year was given a huge influx of expendable income. While we're seeing promising trends thus far this year, that is not as significant as we expected, which is evidenced in the guidance given. The comps do get much easier as we progress throughout the year and the impact of the stimulus lessen.

Great. Thanks, John. Jeff, good luck, guys. Thanks, Ryan.

As a reminder to star one on your telephone keypad, if you would like to ask a question, we will just pause for a brief moment to pull for final questions. And we do have a follow-up question from Mark Smith with Lake Street Capital Markets. Please proceed.

Hey, guys. I just wanted to ask, and John, you talked about it on the call a little bit, you know, just these refurbished stores, You know, you said the emphasis really isn't ROI, but can you talk a little bit about ROI, what kind of returns you're getting, maybe what kind of traffic trends you're seeing at these refurbished stores?

Yeah, Mark, as we think about refurbishing stores, our primary focus is ensuring that our stores stay up to date. And what I mean by that is, you know, some of these stores that we have in our fleet have been around 20 plus years and they perform extremely well. and sales and profit. But over time, they start to lose a little bit of their luster just as they've aged. So last year, we set out on a path to start refurbing the oldest stores first. We completed 19. And the ROI, while I can't give you the exact numbers, we are seeing encouraging trends in customer traffic within those stores and basket size. Part of that is a change in layout in how we are displaying some merchandise, changing sight lines within those stores, how we're thinking about checkout, the use of technology in those stores, both social and merchandise-based, and it is starting to show a nice trend in returning an investment on those upgrades. As we think about 2022, we currently have plans to do seven additional stores, and our expectation would be to do some number of stores each and every year going forward.

Perfect. And then a similar question, can you give any similar metrics just as we think about new stores? You know, obviously it sounds like the kind of smaller format is doing well with your plans to move forward with more of those. But as we think about, you know, new stores, how they've been performing and maybe what kind of return metrics you're seeing out of the gate on new stores.

Yeah, Mark, we've maintained our discipline consistently. on the financial expectations to be returned from each new store. That's a 10% four-wall EBITDA and 20% ROIC, including inventory at maturity, which has been about 18 to 24 months. We've also said in the past, and we continue to say and be very proud of, we don't have a single store in our entire fleet today that isn't hitting those hurdles upon maturity. The new stores that opened last year, Mark, are performing ahead of plan, and we're very, very pleased with the performance. I referenced in my remarks the Lady Lake, Florida store, and that was a little bit outside of our geographic area. As you know, our plan is historically to stay about 100 miles from an existing store to leverage supply chain and marketing capabilities. As we entered into that market, being a very fast-growing market, we immediately saw significant response from the local community as it being underserved. And we set out on a path to look at the entire state of Florida. And within a couple of months, we've already signed two more leases to enter Florida during 2022. And we will continue to evaluate other locations in that area as we see not only participation in the outdoor, but a move in population to the state of Florida.

Excellent. Thank you, guys. Thanks, Mark.

We have reached the end of our question and answer session. I would like to turn the call back over to management for closing comments.

Thank you. I want to thank you for joining the conversation today, and thank you to all of our dedicated employees around the country for their commitment to making Sportsman's Warehouse the leading company in the outdoor industry. Together, we look forward to continuing to serve our customers. Thank you very much.

Thank you. This does conclude today's conference. You may disconnect at this time, and thank you for your participation.