Q3 2024 Sportsman's Warehouse Holdings Inc Earnings Call
Speaker 1: However, the difficult microenvironment continues to pressure consumer discretionary spend creating a continued headwind for the business.
Called macro environment continues to pressure consumer discretionary spend creating a continued headwind for the business.
Speaker 1: While there were some bright spots in our hunting and fishing categories during the months of August and September , false cell trends persisted during these two months of Q3.
While there were some bright spots in our hunting and fishing categories. During the months of August and September saw sales trends persisted. During these two months of Q3.
Speaker 1: In early October , unfortunate world events resulted in self-improvement in our shooting sports category, which was a key contributor to our beat of expectations.
In early October unfortunate world events resulted in sales improvements in our shooting sports category, which was the key contributor to our beat of expectations.
Speaker 1: While we are no doubt faced with some short-term challenges, the careful execution on the key areas of the company has never been more important. It is critical that we carefully navigate and adjust the business to the current environment. Our objective is to further position the business for a successful future.
While we are no doubt faced with some short term challenges the careful execution on the key areas of the company has never been more important it is critical that we carefully navigate and adjust the business to the current environment.
Our objective is to further position the business for a successful future.
Speaker 1: To that end, during the third quarter, we made significant progress on our short-term initiative.
To that end during the third quarter, we made significant progress on our short term initiatives.
Speaker 1: The team did a great job executing at a high level of success at each of the key areas, which is reflected in our Q3 results.
The team did a great job executing at a high level of success in each of the key areas, which is reflected in our Q3 results.
I'm going to be focused along with the team on a successful closeout of the fiscal year. This includes providing customers with a positive holiday shopping experience and further execution on the following areas of the business.
Speaker 1: I'm going to be focused along with the team on a successful closeout of the fiscal year. This includes providing customers with a positive holiday shopping experience and further execution on the following areas of the business.
Speaker 1: Inventory management, specifically the reduction of our apparel and footwear inventory. Omni-channel and e-commerce.
Inventory management, specifically the reduction of our apparel and footwear inventory omni.
Omnichannel and e-commerce.
Speaker 1: cost reduction and control measures, and capital allocation priorities.
Cost reduction and control measures and capital allocation priorities.
Speaker 1: During the third quarter, the team took swift action to address each of these areas with meaningful results achieved.
During the third quarter. The team took swift action to address each of these areas with meaningful results achieved.
Speaker 1: First, in regards to inventory management, we made significant progress through a series of promotions and markdowns to reduce our apparel and footwear inventory.
First in regards to inventory management, we made significant progress through a series of promotions and markdowns to reduce our apparel and footwear inventory.
Starting in early Q3, the team laid out a solid plan to move through this inventory during the back half of the year and I'm pleased with the progress however, given the tough macro environment and a deep markdowns were seeing by competitors, we will be more aggressive in Q4 to move this inventory.
Speaker 1: Starting in early Q3, the team laid out a solid plan to move through this inventory during the back half of the year, and I'm pleased with the progress. However, given the tough micro environment and the deep markdowns we're seeing by competitors, we will be more aggressive in Q4 to move this inventory.
Speaker 1: These aggressive markdowns will put additional pressure on our Q4 gross margins. It is critical to end the year with healthy inventory so we can invest in the right merchandise that appeals to our core customer.
These aggressive markdowns will put additional pressure on our Q4 gross margin. It is critical to end the year with healthy inventory. So we can invest in the right merchandise that appeals to our core customer.
I am pleased that during the quarter, we reduced our total inventory and pay down our debt by approximately $20 million versus last quarter, improving our total liquidity.
Speaker 1: I am pleased that during the quarter we reduced our total inventory and paid down our debt by approximately $20 million versus last quarter, improving our total liquidity.
Speaker 1: We will continue our plans to refine how we manage inventory across our wide range of locations in order to leverage our strengths in omni-channel and keep our deep assortment of brands locally and seasonally relevant. Our goal is to continue refining our processes, invest in better tools, and build stronger partnerships with our key vendors to improve the overall customer experience and deepen brand loyalty.
We will continue our plans to refine how we manage inventory across a wide range of locations in order to leverage our strength in omnichannel and keep our deep assortment of brands locally and seasonally relevant.
Our goal is to continue refining our processes and invest in better tools and build stronger partnerships with our key vendors to improve the overall customer experience and deepen brand loyalty.
Second E Commerce, which once again outpaced the performance of the overall business in the third quarter and continued to comp positive. This is an area, where we will continue to improve our capabilities evolve our programs and invest strategically.
Speaker 1: Second, e-commerce, which once again outpaced the performance of the overall business in the third quarter and continued to comp positive. This is an area where we will continue to improve our capabilities, evolve our programs, and invest strategically. These are all critical pieces to enable us to leverage our omni-channel platform to drive additional sales and serve more customers outside of our geographic areas.
These are all critical pieces to enable us to leverage our omnichannel platform to drive additional sales and serve more customers outside of our geographic areas.
Speaker 1: Third, in regards to our cost reduction effort, I am proud of the team for how swiftly they reacted to right size SG&A calls to our current business trend.
Third in regards to our cost reduction effort I am proud of the team for how swiftly day reacted to rightsize SG&A cost to our current business trends.
Speaker 1: We will continue to closely manage the business, look for areas where we can further reduce expenses, and invest only in areas that are value-add and provide a measurable return on investment. I am proud of our employees for how they reacted to these difficult changes and continue providing passionate service to our customers.
We will continue to closely manage the business look for areas, where we can further reduce expenses and invest only in areas that are value add and provide a measurable return on investment.
Proud of our employees for how they reacted to these difficult changes and continued providing passionate service to our customers.
And fourth capital allocation priorities on November 16th we opened our final store for 2023, and South Tucson, Arizona as we look forward all new stores, we reviewed our capital allocation priorities and considered the current microeconomic conditions and its impact on ourselves given these conditions, we have made the decision not.
Speaker 1: And fourth, capital allocation priorities. On November 16th, we opened our final store for 2023 in South Tucson, Arizona. As we look forward on new stores, we reviewed our capital allocation priorities and considered the current microeconomic conditions and its impact on ourselves. Given these conditions, we've made the decision not to open any new stores during fiscal 2024.
To open any new stores during fiscal 2024.
However, as I think about the future of our new store growth for Sportsman's warehouse, I do see meaningful opportunity and significant white space across the country.
Speaker 1: However, as I think about the future of our new store growth for Sportswear Health, I do see meaningful opportunity and significant white space across the country. I believe our unique store size flexibility, which allows us to open stores in areas that our competitors simply cannot, provides us with a distinct competitive advantage. This, coupled with the significant white space available, leaves new store openings as a significant piece of our in-development long-term growth plan.
I believe our unique store size flexibility, which allows us to open stores in areas that our competitors simply cannot provides us with a distinct competitive advantage.
This coupled with the significant white space available leaf new store openings is a significant piece of our in development long term growth plans.
Speaker 1: I am truly excited to be part of Sportsman's Warehouse as we carefully but swiftly adjust, adapt, and refine our business to the current demands of our passionate customers.
I am truly excited to be part of sports since warehouses, we carefully but swiftly adjust adapt and refine our business to the current demands of our passionate customer.
Speaker 1: As I continue my review of the business and the efficiency and effectiveness of our systems, people, and internal processes, it's critical that we have all the foundational pieces firmly in place to successfully support our stores and the customers we serve.
As I continue my review of the business and the efficiency and effectiveness of our systems people and internal processes. It's critical that we have all the foundational pieces firmly in place to successfully support our stores and the customers we serve.
<unk> spent nearly 28 years in stores and overseeing operations with a fortune one retailer spending time in our stores meeting with our associates and customers is critical.
We have a unique company and opportunity I firmly believe we will make the necessary improvements to grow this company and increase shareholder value.
On our year end earnings call in March I will provide an update to our shareholders and analysts on the short and long term strategy for Sportsman's warehouse. The foundation of this company is strong and I'm very excited to be here to lead us through our next evolution of growth.
With that I'll turn the call over to Jeff.
Thank you Paul I'll begin my remarks today with a review of our third quarter fiscal 2023 financial results then cover our outlook for the fourth quarter of 2023.
Net sales for the third quarter of fiscal 2023 were $340 6 million compared.
Compared to $359 7 million in the third quarter of 2022, a decline of five 3%.
Same store sales decreased 11, 4% compared to the third quarter of 2022.
And looking at comparable sales by Department, our hunting Department same store sales were down 10, 6% versus last year breaking it down further ammunition comp sales were down 10, 6% with firearms down five 2% in the quarter. While the first two months of Q3 saw pressure from the macroeconomic environment and consumer discretionary spending.
Sales in early October turned positive in these two categories due to the tragic events that took place in Israel, leading to war and social Andre <unk>.
These events led to the majority of our guidance beat on the top and bottom line basis for Q3 2023 compared to guidance.
Looking now at our other department.
On our last call, we highlighted the need to begin strategically promoting and marketing down portions of our apparel and footwear inventory as we move through the second half of this year.
I am pleased with our progress. However, we are executing a more aggressive strategy with our promotions during Q4 to ensure that we achieve our planned inventory goals and end the year in a much healthier position. It's important to note that this is a one time effort to quickly eliminate non go forward brand styles and slow moving inventory that does not.
Resonate with our customer.
This will however allow us to expand the breadth and depth of the products and brands that our customers are seeking when they shop, our stores and website.
When looking at total apparel sales, we were down slightly at two 1% versus last year with footwear up one 8% over the prior year. These were both significantly better than the run rate of the company given the promotional activity to clear out inventory, but what is the main contributor to the 330 basis point decline in gross margins over the prior year.
Year.
While our fishing department was down five 8% versus last year on a comparable store basis trends in this department outpaced our other department with total fishing sales up two 7% versus prior year. This is a department, where we see future opportunity to capture additional market share and will make strategic investments in inventory going forward.
Turning now to our other key items on the P&L.
<unk> margin was 33% for the third quarter versus 33, 6% in the prior year comparable period.
Gross margins for the quarter came in as we expected given the aggressive promotional activity in our apparel and footwear departments as we cleaned up inventory.
Lower margins on ammunition compared to last year also contributed to the decline in gross margin as ammo margins have normalized and category inventory is now readily in stock and available.
SG&A expense as a percentage of net sales was 29, 4% or $101 million.
Compared with 28, 4% or $102 3 million in the third quarter of last year.
While we increased as a percentage of net sales in absolute dollars operating expenses were down $2 2 million versus last year, which includes the expenses of 15 additional stores in our fleet.
Last quarter, we laid out a plan to reduce and streamline our operating costs. We made significant progress in our cost cutting effort with payroll and other opex down $8 $4 million versus Q3 of last year.
We will continue to execute on our planned expense cut and manage our other variable expenses very closely to keep costs align with the current trends in the business.
Net loss for the third quarter was $1 3 million or negative <unk> <unk> per diluted share compared to net income of $12 9 million or <unk> 33 per diluted share in the prior year period.
Adjusted net loss in the third quarter of 2023 was <unk> 2 million or negative <unk> <unk> per diluted share compared to adjusted net income of $13 1 million or <unk> 34 per diluted share in the third quarter of the prior year.
Adjusted EBITDA for the third quarter was $16 2 million or four 8% of net sales compared to $27 7 million or seven 7% of net sales in the prior year period.
Turning to our balance sheet and liquidity third quarter, ending inventory was $446 3 million compared to $485 2 million at the end of the third quarter of 2022.
On a per store basis inventory was down 8% versus last year's third quarter, and two 4% compared with Q2 2023.
We are pleased with the progress made to our inventory in Q3.
And we'll continue to reduce our inventory levels through the balance of the year. Our plan as we move through the end of the year is to reduce our on hand inventory to a level below $375 million.
Regarding liquidity, we ended the third quarter with $185 $4 million on our $350 million line of credit and $2 9 million of cash on hand.
We have approximately $111 million available under our credit facility for borrowing.
We expect the outstanding balance on our line of credit to end the year below $135 million as we continue to reduce inventory and closely manage expenses.
With over $45 million of capital invested in our new store and store refreshes. This year. Our primary focus in terms of capital allocation heading into 2024 will be the pay down on our line of credit we will continue to prioritize the best use of capital and we will provide more detail on this when we announced our strategic plan for.
<unk> 2024 on our year end earnings call in March.
Looking at cash flow for the first nine months of 2023 cash used in operating activities was $16 6 million versus cash provided by operating activities of $14 5 million for the first nine months of 2020 to the.
The increase in our cash outflows was primarily due to additional inventory for our 15, new stores and a net loss in the first nine months of this year compared to net income during the prior year nine month period.
Turning now to our guidance.
Underlying business continues to see pressure from the difficult macroeconomic environment weighing on consumer discretionary spend in our topline sales.
We will continue our efforts to drive both store and online traffic with additional promotional activities planned for the balance of the quarter.
I am pleased with how the team has executed thus far during call today, and we are seeing positive trends in our inventory reduction effort and debt pay down and we will end 2023, and a much healthier position.
Now focusing on our fourth quarter guidance we.
We expect net sales to be in the range of 365 million to $390 million we.
<unk> that are more aggressive promotional activities during the fourth quarter will reduce gross margins between 600 to 800 basis points versus the prior year.
Same store sales in the fourth quarter are anticipated to be in the range of down 11% to down 6% and adjusted EPS for the fourth quarter is expected to be in the range of negative <unk> 35 to negative <unk> 25 per diluted share driven primarily by the reduction in gross margin.
This reduction in gross margin will be partially offset as we continue to implement our cost saving initiatives throughout the quarter.
As a reminder, the fourth quarter of 2023 will include a 50 <unk> week, which we have included in our guidance.
We anticipate that this extra week will add between 14 and $17 million in additional topline sell and run at an EPS loss of between <unk> and <unk>.
That concludes our prepared remarks today 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 I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Press Star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the solid Q1 loan in place while the call for questions.
Thank you. Our first question is from Ryan <unk> with Craig Hallum close proceed with your question.
Hey, good afternoon guys.
Hey, Ryan.
Curious on you mentioned competitors are promoting as well Im curious how much of that is that I'm trying to reduce inventory ended the holiday season really a temporary kind of reset or do you think it's necessary based on the health of the consumer today.
I think it's twofold I do think that out in the industry out in retail we see retailers overstock.
And moving through inventory, but also if you look at the health of the consumer as we look at the patterns that we've seen from our customer coming into the stores. They are seeking the deals and they are buying the deals and then they're moving onto their next purchase. So I think all retailers are seeing that.
And the industry as we sit here today.
Quick one and then I have one more was ammo in firearms, where they did they remain positive in November.
Are you, saying so we saw a nice lift in October from via unfortunate events in Israel.
The event driven demand cycles as we see them today are much shorter lives. So I would say that that was a.
Short lived event driven demand cycle that we saw really benefit October then we've returned back to normal consumer behavior in November.
Last one from me just on the store openings, how much flexibility do you have with none plan in 2024, but did that trigger any onetime termination of leases and other costs and are you able to hold any of those locations basically deferring them until 2025 or later.
As we think about the no new store openings and 24, we didn't exit out of any leases that we were in for 2024, we just chose not to execute on signing leases for 2024. So our pipeline that we have is currently working on the 2025 opening schedule, we were able to keep the deals.
We had going working unable to extend them into 2025 timeline.
Great to hear thanks, Jeff welcome Paul Thanks.
Thank you. Our next question is from Eric Wold with B Riley Securities. Please proceed with your question.
Thanks.
Good afternoon everybody.
Yes.
First just kind of a couple of follow up questions on the.
New store openings or no new store opening guidance for 'twenty four yes.
Well the decision to kind of restart kind of development and can openings and 25 that is driven solely by.
Your comfort with the balance sheet.
Sometimes during 'twenty, four or do you actually need to see.
And margins improve from current trends of <unk> want to open.
Additional store is another way our store opening returns still attractive to you at a current.
Operating levels.
Hey, Eric It's Paul Thanks for the question I think as we looked at it and we've had discussions over the last 30 or 40 days and trying to build out with the 24 pipeline looks like I think we looked at it two fold one.
The opportunity to pay down debt as being a huge focus for the organization and to I think us really working on the fundamentals.
The details of retail as we.
Continue to move through the inventory and the distressed inventory and to really put focus on with our buying team in.
Being regional and aligning with what do we need to be so I think it gives is twofold the opportunity one to work on the fundamentals at the same time working behind the scenes on real estate for 25, because we truly think that it's a.
It is a competitive advantage we have is to be able to to be in these small markets and open stores, but I think for us it gives us the opportunity to sell down the distressed getting a much better position from an inventory level with new inventory and buying deep on the.
The kind of the 80 20 principle that we have here.
While we're working to be able to pay down debt.
Got it I guess I guess.
Last question.
As opening a store at the current levels still.
Mature and attractive or would you actually want to see things improve.
Yeah, Eric This is Jeff I'll tell you that as we look at the real estate market and the competitiveness in the market there.
There is a we are at an all time low in terms of retail space availability. So there are deals being done out there in the market where.
A few years ago, we would've been able to find an attractive location and those deals now are not hitting the hurdle that we expect out of our new stores in terms of productivity. So for me focusing on new store productivity hitting those minimum thresholds of 10% four wall EBITDA and 20% ROIC is key to our real estate.
<unk> and as I look at the space and our plan going forward focusing on those return metrics is going to be key into our real estate strategy.
Thank you that's helpful and then with that.
The new stores next year.
Excluding <unk>.
If you start building toward the end of year for store to open 25, excluding that just what is kind of the capex plans for next year, you're still doing any remodels upgrades, what kind of maintenance.
Yes, we will have to do normal maintenance and if you look into the script I gave.
The range of what we spent on new stores. This year, we've invested more than $45 million in new stores and refreshes. This year and then you bumped that up against the Capex guidance that I've given that I'll give you kind of an understanding of what normal maintenance Capex look like in a year, we're going to have to maintain the fleet next year, but in terms of.
Big amounts invested in refreshes and new stores I don't think youll see that coming through the pipeline.
I do think there'll BNP to think there'll be a piece from a technology standpoint, as we look at us being able to invest.
And continue our investment as far as merchandising plan O grams.
How we operate the stores and then just for ease for the customer that these are things that we will have to invest in.
But I would just add that to the everyday day in and day out.
Capex that you would typically have.
Okay final question, if I may.
I know you mentioned <unk>.
The aggressive discounting you'll be doing the fourth quarter is playing into that 600 to 800 basis point reduction in margins year over year, how much of that.
Just kind of one time from these actions versus maybe structural that needs to continue into next year.
Eric that's a good question I want to emphasize all of that degradation in margin is relating to this onetime event of us clearing through this inventory we are hitting get very aggressive in the fourth quarter to ensure that we're clean of it by year end and we start 2024 and a much better position. So we can position Sportsman's warehouse first.
Success.
Perfect. Thank you guys appreciate it.
Thank you. Our next question is from Mark Smith with Lake Street Capital Markets. Please proceed with your question.
Hi, guys just want to follow up a little more in depth on that last question.
As we think about the 600 to 800 basis point decline here in Q.
Q4 versus.
300, plus in Q3 is it really is it purely just clearing out and find it getting rid of this excess inventory in apparel and footwear or how do you compare Canada.
Holiday Black Friday promotional environment this year versus last year.
And Mark this is Jeff it's a good question if we look at just the overall holiday environment.
I think most retailers are coming out in Sportsman's included with the issue of driving traffic. So an order an effort for us to drive traffic, we're really focusing on heavily discounting the apparel and footwear, making it known.
<unk> subscribed to our advertising campaigns, you'll see that we're going to hit it heavily over the next three weeks before Christmas. So we're using that as a traffic driver to get people in the stores and shopping the other products. So I'll frame up again, the six to 800 basis points is driven primarily by the reduction in margin in the apparel.
<unk> footwear that we're moving through towards through the end of the year.
Okay.
And if you could.
Maybe tell us what percent or how you feel about as of today that you can move through that inventory and maybe how much is moves.
At the end of Q3.
I will effectively in that as we've.
We have done by the end of the year.
We moved through a very good portion of the inventory in Q3, what we have left to move through in Q4 is is items that we have to take deeper discounts on which makes the margin impact more significant than it did in Q3 I was very happy with the team's execution in Q3 on moving through the clearance apparel and footwear.
Where I am very pleased with the progress, but the items that we have leftover are going to need much deeper discounting in order to move through the remainder of it by the end of the year.
Okay.
And then I think you guys called out a little bit within the ammunition category some margin.
Pressure can you walk us through maybe anything thats going on just as we look specifically at that is that just.
Inventory being back fully stocked and need to move some of that or any additional insights into the <unk>.
Ammo space would be great.
Yes, I think the big driver on the margin degradation. There is just the supply being fully back in stock we saw a little bump in ammo during October with some of the demand driven events, but that was really focused on very specific types of ammunition holistically at cost across the ammo category.
We are in a well in stock position the manufacturers are pumping it out and the industry is very well in stock. So we're seeing the pressures from that across the board.
Okay.
And then Jeff I think.
I think you quantified kind of an inventory goal at the end of the year at 375, correct me if I'm wrong, and then talk about kind of your comfort level of getting there.
Yes, you are correct market was 375 somewhere below 375, if we get specific I am very comfortable without hitting that target and achieving that target.
There is.
Nothing more important as we think about our year end strategy, then moving through inventory getting it into a healthy position and getting productivity out of that inventory as we move into 2024. So as we sit here today I am very confident in hitting that target.
Okay and the last one for me just as we think about cost cutting SG&A you guys have done a good job thus far maybe just talked about.
Where you're at in this total program, where we kind of middle innings or are we still early or have you worked through a lot of us this cost cutting so far.
Hey, Mark it's Paul I'll take that as we kind of made this assessment and the work that's been done early on as far as.
Efficiency and productivity gains.
We'll continue to push to simplify the business and I think as we continue to simplify the business both for the for the employees whether they be in the stores distribution centers here corporate that.
We have an opportunity clearly to continue the momentum that we have from an SG&A, but I think as our message is really around simplification of the business. So we're going to continue to work at that so.
I would just kind of sum it up by saying we are not.
We think we have.
A lot of room to go here.
And the fact of the matter is that we just want to simplify the business both from the employee and the customer.
Okay. Thank you.
Thank you. Our next question is from Mark Harmon Our final capital. Please proceed with your question.
Hey, guys. Thanks for taking my question.
Just to dig a little deeper on the on the promo situation in Q4.
And kind of looking back at what happened already would you say that the activity that you've had has been more successful in actually driving new traffic or more at driving attachments for firearms customers were already coming in the store if you can break that down.
Yes, Hey, Mark it's Paul I think as we look at it.
Kind of a mixture of both but we don't look at it and say exclusively that.
It was driving traffic to the store, but I think the opportunity. We had is once we had them in the store with the attractive discounts it was there.
But it was able to help on the attachment but.
I wouldn't lean if I believe more one way would be helping us overall from attachments and what it looks like for the items in the basket versus the traffic to the store.
Okay, great. Thanks, and then I'm kind of looking forward is there any can you can you breakdown the thought process into is it geared more towards private label or branded <unk> is it more higher end versus lower end.
<unk>.
Okay.
And is it limited to apparel and footwear are you going to go outside of those areas for the promos.
Yes, I think it's when the team line this up and really started at the beginning of Q3 into Q2 and they started this process of cleaning up.
It just wasn't only apparel and footwear I mean, there was a lot of work done behind the scenes around a lot of different.
Departments from a cleanup and they moved a lot lot more.
But as we get down to the end here we have.
That's primarily what we have left and the reason for going deeper to be able to clean up in Q4 and get us to the position we need to be to start to fiscal year clean I think Jeff said earlier.
This is.
An opportunity we've seen some small wins out there with subcategories, where we've had really good work from SKU optimization being able to pullback skus condensed where we're at and get more productivity from less skus and we really like what that looks like but I think as we look at.
This.
But in most cases, we're looking at it and saying it's mostly.
<unk>.
It is not private label that we'd be looking at it its more name.
Driven as we think about it.
Okay. Good.
Thank you and then just.
At the same kind of marks question.
Another detail.
I think you said payroll was down eight 4%.
Representative of kind of in store labor. If you look at that only and then how do you think about how much further that could go before you really start impacting the.
The customer experience that you talked about at the initial part of your presentation today.
Yes, Mark that's a good question <unk> I just wanted to clarify I think on a per store for you to break down our payroll expense for the quarter on a per store basis, we were down almost 22% versus prior year. So we made significant headway in the payroll reduction right sizing that line item for what we're seeing in current business trends.
<unk> and I will say that that's where if we look at the expense cuts as the majority of them were executed on during Q3 as we think about go forward go forward opportunities continuing to simplify the business as Paul stated I think is front and center in our mind, whether that be looking at the contracts that we have outstanding.
Looking at some of our partners in terms of business operations, and then continuing to look at our staffing levels across the organization not just in the stores not just the distribution center, but everywhere to make sure that we're running as efficiently as we can.
And I think to your earlier point.
We want to get yourself in a position I think the uniqueness of our brand.
And really what attracted me to sportsmen was the.
The employee base itself and the outfitter that connect with the consumer that we have there and I look at that as a huge opportunity for us to be able to enhance what that experience looks like because we simplified the business. So I don't want to put ourself in a position where we are.
Like you said, we are a critical mass or you're in a position, where you're hurting yourself more than being able to drive sales, but I think there's a fine balance there as you look at this and.
We're not <unk> site after the customer that I think that it's going to be the core of all of the decisions, we make as an organizations around the customer.
Great. Thank you.
Thank you there are no further questions at this time I'd like to hand, the floor back over to management for any closing comments.
And thank you for joining the call today and thank you to all the dedicated employees around the country.
For their commitment to Sportsman's warehouse together, we look forward to providing our customers with the best experience and customer service in the outdoor industry. Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.