Sportsman's Warehouse Holdings, Inc.

Greetings. Welcome to the Sportsman's Warehouse first quarter 2022 earnings call. At this time, all participants are in a 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'll now turn the conference over to your host, Riley Timmer, Vice President of Investor Relations. 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. 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 our 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 with the SEC today, which is also available on the Investor Relations section of our website at sportsmans.com. 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 CEO.

Thank you, Riley. Good afternoon to everyone on the call, and thank you for taking the time to join us today. In my remarks today, I will provide an update on our first quarter performance, comment on the current trends we are seeing with our consumers, and review a few key elements of the growth strategy for our omnichannel business model. Following my comments, Jeff will provide additional details on our first quarter, as well as discuss our outlook for the second quarter of 2022. Finally, we will open the call up for questions. First, regarding our Q1 business performance, we are pleased with our first quarter 2022 results and finished the quarter at the high end of our sales guidance while significantly exceeding the top end of our earnings per share guidance. I believe that these successes illustrate the fundamental strength of the business underscored by the strategic initiatives and omnichannel capabilities we've implemented over the last couple of years. As many of you know, the first quarter comparison versus the prior year is difficult given the large inflow of government-funded stimulus money in 2021 relating to the pandemic. That said, same-store sales in the quarter performed slightly better than we expected, down 11.6% compared to the first quarter of 2021. Comparing same-store sales to pre-pandemic in Q1 2019, we were up 38.2 in the first quarter of this year. As we continue to execute on our 2022 strategic growth drivers and leveraging our omnichannel platform, we will maintain focus on the following, growing our store footprint, growing sales generated from sportsmans.com, leveraging our growing customer data and improving the customer shopping experience by modernizing certain stores in our fleet. Starting with continued expansion of our retail store footprint, during the first quarter we successfully opened three new stores to our fleet, and just last week added our fourth store this year in Riverton, Wyoming, bringing our total store count to 126. We remain committed to executing on growing our store footprint and believe we have developed a strategically unique formula for expanding our geographic reach through our flexible store format. Both the Riverton, Wyoming and Stansbury Park, Utah stores that we've opened this year are our new 10,000 square foot or less spike camp format. By leveraging this new format, we were able to enter these smaller markets where there's an underserved consumer. tailoring our immense assortment of products to reflect local needs. It's important to note that although early, the Stansberry Park store has performed better than our initial expectations, giving us additional confidence to take the smaller store concept to carefully considered markets across the U.S. As communicated prior, we are on track to open 10 new stores this year, ending fiscal 2022 with a total of 132 stores in 30 states. As we look to the future, our real estate team continues to actively review over 100 different target markets, supporting the opportunity to reach 300 plus stores in the coming years. Now turning to growing sales generated from sportsmans.com. We continue to leverage sportsmans.com as a way to increase our reach consumers outside our geographic area, utilizing both our digital marketing efforts and our third-party FFL partnership program. During the first quarter, our e-commerce business increased approximately 2.5% as compared to Q1 2021. This increase was driven by strong sales from our apparel, footwear, and ammunition categories. Respective to the ammunition category, we continue to see improved in-stock position within certain ammunition types. This improvement has allowed us to leverage our omnichannel capabilities to serve customers online for specific ammunition SKUs for the first time since mid-2020. As the industry improves supply in all ammunition categories over time, we will be prepared to capitalize on the demand through the broad reach of our stores and online at sportsmans.com. As a key area of focus, we look to further increase traffic and sales on sportsmans.com, and 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. Over the past two years, we've invested in the omni-channel inventory capabilities, allowing us to leverage the inventory of all stores, our distribution center, and dropship partners. During Q1, we set new levels of performance in this initiative, with over 70% of all ecom-driven revenue being sourced from forward-deployed store inventory and through our dropship partners. In addition, approximately two-thirds of all e-com revenue was picked up in-store, providing us with the opportunity to further engage with our consumers. Turning to leveraging our customer-growing database. Our databases, including our loyalty program, co-branded credit card, and email database continue to grow. We continue to evolve existing and implement new targeted marketing strategies in an effort to maximize retention and increase market share. A great example of this is in the ammunition category, which I mentioned earlier. By utilizing targeted marketing campaigns, we can update specific consumer profiles within our database of 3.3 million loyal to consumers in near real time as inventory becomes available. As we look to the future, we have immense opportunities to leverage these databases, increase retention, and maximize the lifetime value of our customers. Turning to our store operations, our refresh and remodel plan for fiscal 2022 is now nine stores. This provides us with store improvement opportunities that strengthen our brand and overall in-store experience. An area we continue to experience success and are developing further throughout this year is the store within a store concept with some of our key vendor partners. These concepts include adding end caps to highlight specific brands or dedicating sections of the stores to highlight a more robust offering from our vendor partners. This quarter we further expanded this concept with an additional ammunition partner. As we strategically partner with our vendors, we see improved sales results at these stores and with the selected merchandise highlighted. Turning to the leadership team, I'm pleased to welcome two new executives to the leadership team. Earlier this month, Shruti Patnaik joined as our new Chief Information Officer to lead our technology function. She brings a high degree of skill and knowledge to sportsmen and is joining us from a long tenure in the retail industry. And most recently, we added Sherry Jane Love to the executive team as the Senior Vice President of Merchandising. With nearly 30 years of experience in retail industry, we look forward to her leading our omnichannel merchandising strategies. Now I want to take a moment to address the larger macroeconomic environment and its impact on the health of the consumer. During the most recent weeks, we've seen indications that a high rate of inflation may be influencing consumer shopping habits. As an example, in camping, we've seen a softening in demand for higher consideration product, such as pellet grills, which we believe is directly correlated to the current inflationary pressures on the consumer. Although there is inflationary pressure impacting the consumer, we believe that our positioning as a value price leader will allow us to capture additional market share of those people seeking to enjoy the benefits of the outdoors. In closing, as we look towards the long-term opportunities to capture additional market share within the estimated $70 billion outdoor industry, we will continue to invest in our geographic retail expansion and leverage our omnichannel capabilities and grow our customer databases. With that said, I will turn the call over to Jeff to review our first quarter 2022 results and discuss our Q2 2022 guidance.