Q3 2022 Sportsmans Warehouse Holdings Inc Earnings Call
Okay.
Greetings and welcome to the Sportsman's warehouse third quarter 2022 earnings call. At this time all participants are in a listen only mode. A brief 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 and as a reminder, this conference call is being recorded and it is now my pleasure to introduce to you Riley Timur VP of IR.
Thank you Riley you may begin.
Thank you operator with me on the call today is Jon 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 $19 95, which include statements regarding our expectations about our future results of operations.
<unk> 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 Companys other filings made with the SEC.
We will also disclose non-GAAP financial measures during today's call definitions of such non-GAAP 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, one to the <unk>.
Form 8-K, we furnished to the SEC today, which is also available on the Investor Relations section of our website at Sportsman's Dot com.
I would also like to note that today's materials, including earnings conference call Powerpoint presentation, which is also available at sports <unk> Dot com in the Investor Relations section of the website you can utilize this deck as a reference with today's prepared remarks.
I'll now turn the call over to John our CEO .
Thank you Riley good afternoon, everyone and thank you for joining us today I'll begin by reviewing the highlights of our third quarter performance comment on the current trends, we are seeing with our consumers and review key element of the growth strategy for our omni channel business model. Following my comments, Jeff will provide.
Additional details on our third quarter results as well as discuss our outlook for the fourth quarter and full year 2022. Finally, we will open up the call for questions.
Turning first to our performance.
We were pleased with our third quarter results with net sales in line with guidance and EPS above the high end of our estimate these.
These results reflect our disciplined efforts and efficient management of the business as we carefully navigate the challenging macroeconomic environment.
Similar to prior quarters on our call today, we will provide comparisons to our 2019 results highlight the strength of the business and market share gains achieved in.
In the third quarter same store sales performed in line with our guidance down 15% compared to the third quarter of 2021.
When comparing to the third quarter of 2019 same store sales were up 19, 5%.
Looking now at our key departments.
During the last couple of years event, driven cycles have elevated sales levels in our hunting and shooting sports department, especially in personal protection firearms.
While elevated over pre pandemic levels.
Personal protection firearms sales have softened greater than the overall business, putting pressure on the topline when compared with last year.
Offsetting the downward trend in personal protection firearms during the quarter, our hunting rifle category continued to perform well driven by seasonal demand and our geographic expansion into the eastern markets.
To enhance customer acquisition and retention and keep our competitive advantage, we carry an industry, leading assortment of firearms with a focus of expanding our exclusive partnerships and offerings the.
The customer response to these unique products continues to be positive proving our right to win with exclusive products.
To further leverage our extensive offering and leading industry position.
We maintained over 500 federal firearms license dealer partnerships across the U S.
Allowing us to serve over 95% of our country's population.
Comparing our hunting and shooting sports Department to 2019, it increased nearly 33%.
This increase reflects both increased participation and additional market share capture.
Ammunition sales remained strong during the quarter as we saw continued improvement with both our in stock position and assortment we.
We experienced positive trends on both rimfire and handgun ammo as supply and demand has stabilized in these two key areas.
On hunting rifle ammunition, and important element of Q3 seasonal demand inventory levels improved over the prior year, allowing us to service our customers significantly better than the prior year during.
During the back half of the quarter, we started to see improvements in shot shell supply, while the domestic manufacturing and supply shot shells has improved and the recent progress is encouraging there is still progress to be made before we reach healthy in stock levels.
Comparing ammunition sales to 2019, we were up 35% in the third quarter.
With industry, leading assortment and expertise we remain confident in our positioning within our hunting and shooting sports Department and look to capture additional market share given the shift over the last two years to greater outdoor participation, including 16 plus million first time firearm owners.
Moving on to other areas of the business, our apparel and footwear department continue to outperform in relation to the overall performance of the business.
Our improved in store and online assortment expanded vendor base and omnichannel capabilities provide customers greater opportunities to find the merchandise that are looking for this.
This quarter, we saw strong results in both women's and men's outerwear, while it's a small portion of the business. This is an emerging growth category in both branded and private label.
Comparing our results in 2019 apparel was up 21%.
Footwear was up 17%.
During the quarter, we launched a new technical camouflage pattern within our Killik premium hunting brand early.
Early indicators suggest a greater level of penetration from the sales of this new product, which carries a higher overall gross margin.
Also launched during Q3 was our first private brand hunting boot from rustic ridge. This new boot with an improved overall margin is seeing strong sell through both online and in stores and our private brands offer filling products such disease, which are resonating with our customers.
They also provide features and benefits that are similar to our core hunting brands, while at a lower price point.
These two examples support the strategic roadmap to reach our 2025 target of 7% to 9% private brand penetration.
Turning now to our Omnichannel development.
Our E Commerce, driven business continues to grow and outpace the overall company with strong performance again during the third quarter with total penetration now in the mid to high teens. Our E Commerce driven sales increased three 7% over Q3 of last year. This was primarily driven by strong sale.
From ammunition apparel, and scopes and optics the investments made in technology over the last few years allow us to leverage our existing store footprint and inventory to better service our customer.
We are utilizing more effective targeted marketing and digital AD campaigns to leverage our growing customer databases and maximize the lifetime value of these customers.
Our Omnichannel platform continues to provide increased leverage on our inventory the platform's ability to utilize existing store inventory as well as our rapidly growing drop ship network allows us to better service our customers with increased product assortment, while at the same time minimizing the capital investment required.
Wire during.
During the third quarter over 70% of our online sales were serviced with inventory from our stores or through Dropship partners.
These capabilities provide us with greater confidence in achieving our 2025 target.
Of 25% E com penetration.
Turning now to real estate.
During the third quarter, we opened three new stores.
We also opened our final two stores for the year during the month of November . This now brings the number of new stores opened in 2022 to nine total for a total of 131 stores in 30 states.
Our unique approach to new store development using our flexible store format provides us the opportunity to reach consumers in all markets.
The size of box for the nine new stores opened during 2022 ranges from approximately 9000 square feet to nearly 40000 square feet.
This is a strategic advantage that is unmatched by our competition I'm proud of the team for successfully managing supply chain constraint construction delays and other external factors to successfully opened nine new stores during this year.
As we look ahead, our funnel of real estate remains robust and we are moving with discipline and rigor to accelerate the growth of our store footprint.
Our funnel as we sit here today is well over 100 locations and we see a path to our target of 190 to 210 total stores in the fleet by the end of fiscal 2025.
We expect continued expansion into states, such as Florida, and California, with new stores planned in under penetrated areas of the Midwest, including.
The state of Wisconsin.
Regarding the fourth quarter, we are pleased with the underlying strength of the core Sportsman's business as we continue to make progress on our key growth strategies, while we continue to face tough macroeconomic consumer headwinds, we feel confident about our competitive positioning and the investments made over the last few years to success.
Fully serve our customers.
While we have a long way to go in the season early Q4 indicators are positive, including Black Friday being the single largest day in customer visits and sales in the history of the company, suggesting that the holiday selling season is off to a good start.
I will now turn the call over to Jeff to review, our third quarter results and discuss our Q4 and full year 2022 guidance.
Thank you John I'll begin my remarks today with a review of our third quarter fiscal 2022 financial results I will then review our outlook for the fourth quarter and full year 2022.
Net sales for the third quarter of fiscal 2022 were $359 7 million.
Compared to $401 million in the third quarter of 2021, a decrease of 10, 3% over the prior year period, but in line with our guidance range. This decrease was primarily driven by lower demand from consumer inflationary pressures and recession concern partially offset by the opening of 11 new stores since October 30.
Of 2021.
Same store sales decreased 15% in the quarter compared with the same quarter of the prior year, which was in the middle of our guided range. This decrease was primarily driven by lower sales demand across our product categories due to inflationary pressures and tough year over year comp.
Comparing our same store sales results for the third quarter of 2019, we saw an increase of 19, 5%.
We saw significant increases in most categories as compared to Q3 2019 with hunting up 32, 9% apparel up 21, 2% footwear up 17, 3% camping up six 7% and optics electronics and accessories up four 8% vs.
Positive pre pandemic same store sales trends provides us continued confidence in the health of our industry and of our business.
Third quarter 2022, gross profit was $128 million compared to $129 6 million in the third quarter of 2021 gross margin percentage was 33, 6% for the quarter, an improvement of 130 basis points versus the prior year comparable period this year over year.
Improvement as a percentage of net sales was due to improved trends in shipping freight and logistical expenses increased product margins and favorable product mix.
SG&A expense of $102 3 million for the third quarter of 2022 was an increase of $2 3 million or two 3% compared to the third quarter of the prior year as a percentage of net sales SG&A expense increased to 28, 4% compared to 24, 9% in the third quarter of the prior.
Year.
This increase was primarily driven by the resumption of our normal marketing and travel related activities during the quarter and higher rent and depreciation mostly related to our new stores opened during the year we.
We will stay disciplined and continue to closely manage our non fixed operating cost on a store by store basis to keep expenses in balance with our sale.
Income from operations was $18 5 million in the third quarter of 2022 compared to $29 6 million in the prior year period, a decrease of $11 1 million.
Net income for the third quarter was $12 9 million or <unk> 33 per diluted share as compared to net income of $21 9 million or <unk> 49 per diluted share in the prior year period.
Adjusted net income in the third quarter of 2022 was $13 1 million or <unk> 34 per adjusted diluted share compared to adjusted net income of $22 7 million or <unk> 51 per adjusted diluted share in the third quarter of the prior year.
Adjusted EBITDA for the third quarter of 2022 was $29 1 million or eight 1% of net sales compared to $39 3 million or nine 8% of net sales in the prior year period.
Turning to our balance sheet and liquidity third quarter 2022, ending inventory was $485 2 million compared to $437 4 million at the end of the second quarter of 2022.
This quarter over quarter increase was primarily due to the recent opening of five new stores and buildup for the holiday shopping season looking at our inventory on a per square foot basis compared to the third quarters of 2017 18 and 19, we are within the range of those periods with approximately $95 of inventory per square foot.
We will continue to closely manage our inventory levels to ensure we have the right mix of merchandise to better service the needs of our customers.
Looking at cash flow for the first nine months of 2022 cash provided by operating activities was $14 $5 million versus cash used in operating activities of $78 3 million for the first nine months of 2021.
This increase in our cash inflows was due to the normalization of our inventory levels versus the buildup needed during the prior year nine month period.
Our liquidity continues to be strong as we ended the third quarter of 2022 with $122 million outstanding on our line of credit we have approximately $193 million available for borrowing under our credit facility and we will continue to manage our borrowings to ensure we stay within our goal of less than one.
Five times leverage.
During the third quarter, we repurchased one 2 million shares in the open market. This was a return of $10 $4 million of capital to our shareholders year to date, we have repurchased a total of $6 5 million shares for a return of capital of $62 4 million.
At the end of the quarter, we had $12 6 million remaining under the authorized share repurchase program and will continue to opportunistically execute in the open market.
Turning now to our guidance starting with our net sales outlook, we estimate fourth quarter net sales to be in the range of $370 million to $385 million. This implies our full year 2022 sales will be in the range of $1 39 billion to $1 4 billion.
Same store sales in the fourth quarter of 2022 are anticipated to be in the range of down 13% to down 9% and earnings per share for the fourth quarter of 2022 is expected to be in the range of 25%.
To <unk> 35 per diluted share. This implies that our full year 2022, EPS will be in the range of 98 to $1 and <unk> <unk> per diluted share.
To give you some additional perspectives on the quarter and the full year given the ongoing global uncertainties. Our forecast for Q4 include continued inflationary pressure and difficult macroeconomic conditions, which is putting pressure on consumers. We will continue to control costs and carefully managed our variable operating expenses without <unk>.
Compromising our industry, leading customer service levels with a disciplined approach to spending we remain confident in our ability to achieve our target of high single digit adjusted EBITDA margins for the full year.
Looking now to 2023 as John mentioned in his remarks earlier, we see significant expansion opportunities in front of us and are accelerating our new store growth over the next three years. Our current view for 2023 is to open between 13 and 18 new stores during the year. This would be the highest number of new stores opened.
In any single year.
This concludes our prepared remarks today with that I will now turn the call back over to the operator to facilitate any questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that Youre line is in the queue. You May press star two if you would like to remove that question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
One moment, please when we poll for any questions.
And our first question comes from the line of Ryan <unk>.
<unk> with Craig Hallum. Please proceed with your question.
Hi, guys. This is will on for Ryan Thanks for taking our questions.
First I wanted to touch on Black Friday.
It was pretty good for you guys, how does that compare to your expectations were there any segments that stood out and how would you compare it for brick and mortar and E com.
Hey will it's John Thanks for the question as we referenced in my script Black Friday was the single largest day in the history of the company when you think about.
Visitors to our website store combined as well as gross sales from the two combined actually saw a nice lift across the board in the business.
I will tell you that the consumer during this holiday season appears to be promotional item driven up to this point.
So while we've seen our competitors.
Promote in a more normal cadence as compared to more of a 2018 2019 timeframe.
The basket of the consumer.
<unk> tends to be a little more focused on promotional items.
So we're keeping close track on that and we believe that's contributed by the fact that the consumer continues to see inflationary pressures on disposable income.
Okay.
Oh, that's great. Thanks for the color maybe a quick follow up on that how did sort of promotions and discounting looked like during the quarter and I think.
That's going to trend as we go into 'twenty three here.
Yeah again, as we think about this.
End of Q3, and the holiday season, we expected the market to return to a more normal cadence on promotion.
Referring back to pre Covid and Thats, what we experienced our primary competitors in the outdoor sporting goods industry are returned to their normal.
<unk> cadence there was some key items to drive traffic that we saw this year, we hadn't seen in the last couple of years, we were prepared in a similar manner.
With our planning and we expect that to continue and again, a more normal cadence through the end of Q4.
Provided some insights into inventory.
We don't see a high pressure as we sit here today for us to promote to drive inventory through the system. So we will maintain rigor in our promotional cadence to ensure that we.
Acquire and retain our consumers is priority one while maintaining the margin profile that we believe is important for running this business in the long term.
Great and then one last one if I might.
I wanted to ask on private label. It sounds like you guys are doing pretty well with that how do you think about brand assortment and mix as we head into 'twenty three here.
Specific well is it specific to our private label brands is that was that your question will make sure I get clarity yet.
Yes so.
Then as we think about evolving the strategy on a private label with a path to high single digit penetration by the end of 2025, the apparel and footwear categories are the two areas that we're most focused on and serving our consumers with features and benefits at a value they can't find in some of the brands.
In the market today does not mean, we will displace the key brands that our customers come to Sportsman's warehouse looking for but we will complement those brands on the good better best strategy and a broader assortment speaking specifically into the hunting camouflage category, our rustic ridge brand.
Which is an entry level value based product.
Connect extremely well with the first time consumer that is on a more of a budget.
<unk> camouflage, whereas the <unk> brand is on the <unk>.
Best side.
<unk> camouflage higher price point, but also provides the technical fabrics and the key features and benefits that someone needs when theyre spending multiple days on the mountain. So we feel like those two brands are good indicator of what's possible in areas, where we can continue to evolve and develop new products and <unk>.
Gained market share both in private label, but also against the overall market.
Alright, Thanks, guys. Good luck.
Thanks, well thanks, Rob.
And our next question comes from the line of Eric Wold with B Riley Securities. Please proceed with your question.
Thanks, Good afternoon guys.
Two questions I guess two questions. They are a couple of parts each.
On the inventory.
You noted it's relatively in line is where you were in 17 18 19 on a per square foot basis kind of more generally any areas of the store, we failure, a little light or a little heavy.
Then.
How would you characterize your restocking patterns with Oems right now or are you still more on the cautious side or generally restocking along with sales.
Yes, Eric this is Jeff Thanks for the question with inventory as we look at the total inventory.
If you compare it to where we were year over year versus Q3 of last year as we walked into the holiday.
I think the numbers are we're really only up 13% and total inventory dollars.
Roughly 6% more square feet than we did at this time last year not taking into account the inflationary impacts on inventory as I think about the totality of those numbers are our inventory is very healthy are there pockets here and there where we have issues that bubble up absolutely every retailer does but as we.
Take a step back and look at the entire inventory, we're very pleased with what the team has done in managing that much like we spoke to earlier in the year as we see pockets, where there are softness we made strategic moves to pull back in those areas. An example of that would have been pellet grills early in the year, we called the softness in that some.
Timing Q1, Q2, and we right size the inventory and got out of the areas that we're seeing softness in demand and as we sit here today, we're very comfortable with that.
<unk> of inventory that type of mentality and rigor is spread across our entire.
Book of inventory, we are looking at everything so as we think about throughput from the vendors and suppliers, we're going to continue to manage the areas, where we're seeing softness we're going to reduce the flow of inventory in those areas, but on the other side of that in areas that were.
Continuing to see strength consumables would be a highlight there we can't run out of the product that the consumer is still using as they participate in outdoor activities.
Yes.
Perfect and then last question.
More on ammo as you've seen inventory in the various calibers improve them have you seen traffic and demand kind of go lockstep with.
Certain calibers, you've got an inventory back into the store are you becoming over inventory in many areas. We know obviously, where you are.
Under inventory coming maybe a little concerned on any certain areas and then.
I know you have a lot of data on your on your consumer purchase behavior. So youll see those that ammo attract the buyer of the consumer back into the store are they coming in just for ammo or are they coming in and kind of filling up the basket.
One other item that you can talk about their purchase behavior.
Okay.
Eric It's Jon Thanks for the question regarding <unk> I'll, just give you the highlights.
Target ammo for pistol and Nate Arounds has been exceptional.
Dave when I think about supply and demand dynamics, we continue to be in stock every day on those products and consumers are returning to more normal cadence of demand cycle.
Versus what we've seen in the last year or two when theres been such a shortage.
Premium hunting ammunition for the most part returned to very good shape.
Mid Q3, and as I sit here today is in solid shape overall.
As we exit actually the big game hunting season across the country.
Within rifle ammo there are a couple of components on what I'll consider the ultra premium long range shooting calibers.
We're still light on some specific calibers there that I believe we have some opportunity and then shot shell has improved greatly over the last eight weeks.
Still have some pockets.
That are short and I don't believe we will see shot shell in stock across the board until spring of next year based on.
Supplier feedback they think about what the customer is buying.
The baskets are about the same.
We are haven't promoted materially on ammo and we have no intent promote material on ammo our inventories in good shape, and we can actually flow that product.
A very balanced way given that.
Nearly all of the ammunition, we buy is domestic and it's manufactured here. So that provides us with greater flexibility on supply and demand dynamics on the ammunition side.
Perfect. Thank you.
Thank you.
And our next question comes from the line of Justin clever with Baird. Please proceed with your question.
Hey, good evening guys. It's Justin Klaver is to follow up on the <unk> outlook, you mentioned, the strong Black Friday and John Your comment on early positive indicators. So can you help me reconcile those comments with the comp guidance.
Down, 9% to 13, what category or categories or still.
The most pressure.
Hi, Justin this is Jeff while we saw a very good trend on Black Friday to the point that John made what were seeing out of the consumer is still very cautious behavior when it becomes to their disposable income where in a normal.
Holiday period, we would see a focus on not just the promotional items, but also other items going into their basket. It is very apparent that this holiday.
Holiday season, the consumer is focused on the deals that are out there to be had given the recessionary and inflationary pressures that are on their pocketbooks. So as we think about the guidance and what's incorporated there.
The consumer behavior is going to be some of the largest pressure that youre seeing on those topline numbers.
Got it thanks, Jeff maybe a follow up there.
Anything you can.
The color I guess on how we should think about gross margins then in the fourth quarter you guys have obviously shown nice expansion.
Over the first half of this year and even more so in three Q, but given your comments on <unk>.
Consumer being price sensitive and promotions.
Do you think you can expand gross margins again in the fourth quarter should we not be assuming that.
Given the environment that we're operating in I do think it's going to be a headwind for us in the gross margin area. Given just what the consumer is out there buying in the margin profile that accompanies those promotional items that they are grabbing more into their basket rather than some of the other items in the store.
Okay got it thanks for that last one just nice to see the acceleration of store growth for next year.
Obviously, I know youre, not providing 23 guidance, but can you give us a sense for how much SG&A you expect related.
Yes to new store growth I mean at a minimum I assume we would anticipate SG&A dollars.
Accelerate in 'twenty three versus 22.
Justin just to clarify are you yes.
Are you referencing the preopening dollars going into those new stores or in totality, what those stores will add to overall SG&A.
Yes, I just you guys are doing a very nice job managing SG&A dollars I only up a few percentage points year on year, Despite adding 11 stores over the last 12 months now youre accelerating store growth right.
Rent comes with that payroll, so just trying to understand in totality how much SG&A.
Builds just from new stores.
No Youre, obviously, managing labor and payroll within existing stores, but just trying to get a sense for as you ramp up store growth how much SG&A associated with that in 2003 or just any way to think about that I think it would be helpful.
Yes, I think I think the best way to think about that from a preopening perspective, those stores that we open are going to incur roughly 350 to $400000 of Preopening. That's before the grand opening of the store that will hit SG&A, but ultimately is added back to your adjusted EBITDA calculation as we think about.
The rest of the expenses as the store gets operational all of the stores that we have in the pipeline or that we look at for the pipeline and we opened our health at the same requirements of the 10% EBITDA and 20% ROIC threshold upon maturity, which is 18 to 24 months.
As we ramp up those stores when you take into account Grand opening activities getting traffic flowing in those are going to be heavier weighted upfront. Those metrics again are going to be any store that we open are going to be held to those same metrics that all of our previous stores have been.
Okay. Thanks for all that color Jeff appreciate it.
Youre welcome holiday guys.
Thanks, Justin.
And our next question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.
Hi, guys just wanted to jump back to Black Friday, just a little bit as we look at the mix data.
This Friday being kind of a top 10 firearm sales day do you guys feel like you've got your share and you had the right mix and promotions.
Firearm counter.
<unk> product.
Hey, Mark its John and I'm going to ask one.
Word absolutely.
I was so proud of what the team pulled.
Pulled together for this year's Black Friday on the firearms demand when I look at the number of units that.
That we sold on Black Friday compared to the total numbers.
That were shared from NSF and mix, it's clear we continue to take significant market share in the firearms category in this country.
So we absolutely executed in a way that I couldnt be any prouder of the <unk>.
This black Friday.
Perfect and then just as we look at new stores can you talk about looking rearview mirror first kind of the performance of your new stores and would love to hear any breakdown that you have on some despite camp versus kind of full size stores.
And then it's.
This performance is what really gives you the confidence.
And accelerates the growth here in 2023.
Yes, Mark this is Jeff. Thanks for the question. If you look at what we published in our Investor Day back in September the new stores that we opened I think it showed 19 2020. One we are very happy with the performance of those from a both an EBITDA and an ROIC those stores far exceed our expectations that we put out.
Publicly so we're very happy with what we have done from the new storefront to your point that gives us confidence in putting a number of 13% to 18 stores out there for next year as well as putting a number of 190 to 210 stores out there for the end of fiscal year 2025, I think we have proven.
<unk>.
With a very successful track record that we can open very profitable stores, we know how to pick the market and we still see a lot of opportunity out there as we sit here today, Hey, Mark It's John I'll add that we opened stores in brand new geographies, this year, which stretched our regional assortment quite a bit.
But the team did a fantastic job of preparing for those new markets and executing on the assortment and the southern Florida market of Seminole was new for US. This year team did a fantastic job on that store.
It's performing very very nicely, we just opened Jacksonville, Florida.
A few weeks ago and the assortment adjustments, we made for Seminole, we were able to take some of those more in Jacksonville that stores again really really proud of the team and then going all the way to San Diego and Southern California is our first endeavor with the S&P store. This year I think the team again hit it out of the park.
Real estate choice.
Choice, but also on the assortment to meet the needs. So again a lot of preparation goes in to each of those new markets boots on the ground a lot of data being analyzed to ensure that we open we've hit that assortment correctly for the regional differences in how people participate in the outdoor activities.
And then last one for me any update just as we think about loyalty programs credit cards and in particular I'd love to hear.
Trends that youre seeing in some of these new geographies does it take time to kind of build up this loyalty program or do you see people kind of adopting an opt in then.
Beyond and new geographies.
Yes, it's interesting Mark we've always had.
Really really strong.
Databases on our loyalty program with almost 50% of sales coming through that customer base and that continues today at roughly 50%. What we're seeing is the response to our credit card.
It has a greater return for the company and lifetime value at programs a few years old a couple of years now and is making great trend and that continues to be our focus is trading those customers are existing loyalty customers into the credit card and new customers coming into the store starting with the <unk>.
Card and then offering the loyalty program if the credit card doesn't meet the need so I'm really proud of what the team has done there our databases on loyalty firearm consumers and overall E. Mail database has continued to grow at a very very nice trajectory, providing us the opportunity.
<unk> to expand our reach segment, our communication, our assortment and really personalized retention elements within the tools. We have today to ensure that we're serving the consumer in the season in which they're in but also in which the categories. They've shown indicators are being interested in.
Okay.
Maybe I'll sneak in one more just.
As we look at maybe or again and what's happening there was some firearm legislation or are you seeing anything geographically that's kind of driving sales for your stores primarily at the firearm counter.
Yes, certainly mark as you are aware in our industry.
Critical rhetoric events regulatory changes can drive short term demand as we think about how we forecast the business. We do not include those elements in our forecast.
<unk> guidance because there are just so hard to predict so as we navigate the Oregon measure $1 14, which I believe we will have feedback from the court systems as early as tomorrow today today or tomorrow.
We believe that the courts will side on what's right on a constitutional right.
Two <unk>.
Firearms under the second amendment and the state of Oregon, If for some reason in Oregon or any other state there becomes new regulations.
We feel like that can be a long term advantage for us.
Our compliance and regulatory team the technology, we've invested in over the years has provided us with the opportunity that when changes happen.
In local state or federal requirements, we can adjust quickly where our competition, sometimes can't or doesn't decide to do so so while we are certainly disappointed with measure 114, we believe that through the court system. We have a good outcome that will happen.
And if not we are certainly prepared with technology and compliance to meet the legal requirements of any state local or federal law changes.
Great. Thank you guys.
Thanks Mark.
And our next question is a follow up from Eric Wold with B Riley Securities. Please proceed with your question.
Thanks for letting me back on a couple of follow ups, but relates to <unk>.
The 13 to 18 store.
For next year I'm, just wondering what is the biggest delta between.
The 13% to 18 is only do it the old.
OLED.
<unk> 13 next year is the five stores that just shifts into 'twenty four or is it more than just a timing issue or are you still in the Delaware No go decision process on all of those stores so that they.
They may not open at all or that merely how much you can actually get opened into next year and then.
If we do assume just the low end of that in our model and the normal cadence you would have in any given year, assuming you did normal cadence. If you go anywhere above that 13 is it only in kind of Q4 or is there chance you actually be heavier earlier in the year.
Yeah, Great question, Eric I'll take the first the first question and that was.
The timing.
So clearly we have a funnel of in excess of 100 locations that we're looking at it today.
Our flexible store format. The regional growth, we've seen new states like Wisconsin, and Florida provide us with greater confidence to hit our long term or short term 2025 goals of $1 90 to $2 10, but also long term a clear path to 300 plus stores in the out years.
So as I sit here and provide a range.
Basically timing based.
I've got dozens of properties right now.
<unk> are in LOI review I've got quite a few properties in negotiations and whether we had $13 $14 15, 16, 17 or 18 next year is the timing of those lease negotiation in some cases the lease negotiations will not come to fruition in some cases the lease negotiations will come to fruition.
In 2024 opening just depending on the timing of lease <unk>.
Architecture permanent and construction. So that's the reason you're getting a range from us at this point.
Today.
On the your second part of your question I'm sorry.
Timing.
This is one of the most exciting things for me and the first time in four years.
We are ahead of our real estate funnel plans and we'll be able to open stores in a more balanced sequence across Q1, two and three <unk>.
First as such as in 2022, where we opened most of our stores in the back half of the year. So provides us with a much better opportunity to be well prepared for those stores balance of davita out the year, Dr. Grand openings on time and serve our customers better.
Does not mean, we couldnt have stores in late Q3 or late Q4, and early Q4 of 2023, but it will be the most balanced opening of stores at least since I've been with the company.
Perfect very helpful. Thank you guys.
There are no further questions at this time I would like to turn the floor back over to John for any closing comments.
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.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.
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