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Sturm, Ruger & CompanyTable of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K(Mark One) ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 3, 2018 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-36401SPORTSMAN’S WAREHOUSE HOLDINGS, INC.(Exact name of Registrant as specified in its Charter) Delaware 39-1975614(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 7035 South High Tech DriveMidvale, Utah 84047(Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (801) 566-6681Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $0.01 Per Share; Common stock traded on the Nasdaq stock market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒ Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒ Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐ Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuantto Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post suchfiles). YES ☒ NO ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See thedefinitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accountingstandards provided pursuant to Section 13(a) of the Exchange Act: ☒ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒ As of July 28, 2017, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The Nasdaq Stock Market on such date, was $172,997,516. Shares held by each executive officer,director and by each person who owns 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. The determination of affiliatestatus is not necessarily a conclusive determination for other purposes. The number of shares of Registrant’s Common Stock outstanding as of March 27, 2018 was 42,617,757. Portions of the Registrant’s Definitive Proxy Statement relating to the 2018 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within 120days after the end of the 2017 fiscal year, are incorporated by reference into Part III of this Report. Table of ContentsTable of Contents PagePART I Item 1. Business4Item 1A. Risk Factors20Item 1B. Unresolved Staff Comments34Item 2. Properties34Item 3. Legal Proceedings35Item 4. Mine Safety Disclosures35 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities36Item 6. Selected Financial Data37Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations41Item 7A. Quantitative and Qualitative Disclosures About Market Risk53Item 8. Financial Statements and Supplementary Data54Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure78Item 9A. Controls and Procedures78Item 9B. Other Information78 PART III Item 10. Directors, Executive Officers and Corporate Governance79Item 11. Executive Compensation79Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters79Item 13. Certain Relationships and Related Transactions, and Director Independence79Item 14. Principal Accountant Fees and Services79 PART IV Item 15. Exhibits and Financial Statement Schedules80Item 16. Form 10-K Summary83 ii Table of ContentsReferences throughout this document to “Sportsman’s Warehouse,” “we,” “us,” and “our” refer to Sportsman’sWarehouse Holdings, Inc. and its subsidiaries, and references to “Holdings” refer to Sportsman’s Warehouse Holdings,Inc. excluding its subsidiaries. STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (this “10-K”) contains statements that constitute forward-looking statements asthat term is defined by the Private Securities Litigation Reform Act of 1995. These statements concern our business,operations and financial performance and condition as well as our plans, objectives and expectations for our businessoperations and financial performance and condition, which are subject to risks and uncertainties. All statements other thanstatements of historical fact included in this 10-K are forward-looking statements. These statements may include words suchas “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,”“may,” “objective,” “plan,” “potential,” “positioned,” “predict,” “should,” “target,” “will,” “would” and other wordsand terms of similar meaning in connection with any discussion of the timing or nature of future operating or financialperformance or other events or trends. For example, all statements we make relating to our plans and objectives for futureoperations, growth or initiatives and strategies are forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about ourbusiness and the industry in which we operate and our management’s beliefs and assumptions. We derive many of ourforward-looking statements from our own operating budgets and forecasts, which are based upon many detailedassumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factorsis very difficult, and we cannot anticipate all factors that could affect our actual results. All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differmaterially from our expectations. Important factors that could cause actual results to differ materially from ourexpectations include, but are not limited to: ·our retail-based business model is impacted by general economic conditions and economic and financialuncertainties may cause a decline in consumer spending; ·current and future government regulations, in particular regulations relating to the sale of firearms andammunition, may impact the demand for our products and our ability to conduct our business; ·our concentration of stores in the Western United States makes us susceptible to adverse conditions in this region,which could affect our sales and cause our operating results to suffer; ·we operate in a highly fragmented and competitive industry and may face increased competition; ·we may not be able to anticipate, identify and respond to changes in consumer demands, including regionalpreferences, in a timely manner; and ·we may not be successful in operating our stores in any existing or new markets into which we expand The above is not a complete list of factors or events that could cause actual results to differ from our expectations, andwe cannot predict all of them. All written and oral forward-looking statements attributable to us, or persons acting on ourbehalf, are expressly qualified in their entirety by the cautionary statements disclosed under “Risk Factors,”“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this 10-K, assuch disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securitiesand Exchange Commission (the “SEC”), including subsequent Annual Reports on Form 10-K and Quarterly Reports onForm 10-Q, and public communications. You should evaluate all forward-looking statements made in this 10-K andotherwise in the context of these risks and uncertainties. Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-lookingstatements and are cautioned not to place undue reliance on any forward-looking statements we make. These forward-looking statements speak only as of the date of this 10-K and are not guarantees of future performance or developments andinvolve known and unknown risks, uncertainties and other factors that are in many cases beyond our control. Except asrequired by law, we undertake no obligation to update or revise any forward-looking statements publicly, whether as aresult of new information, future developments or otherwise. iii Table of Contents PART I Item 1. Business. Overview Sportsman’s Warehouse is a high-growth outdoor sporting goods retailer focused on meeting the everyday needs of theseasoned outdoor veteran, the first-time participant and every enthusiast in between. Our mission is to provide a one-stopshopping experience that equips our customers with the right quality hunting, shooting, fishing and camping gear tomaximize their enjoyment of the outdoors. We strive to accomplish this goal by tailoring our broad and deep merchandiseassortment to meet local conditions and demand, offering everyday low prices, providing friendly support from ourknowledgeable, highly trained staff and offering extensive in-store events and educational programming. These corestrategies help position Sportsman’s Warehouse as the “local outdoor experts” and the preferred place to both shop and shareoutdoor-based experiences in the communities we serve. As a result, we are expanding our loyal customer base in existingmarkets and increasing our store footprint in new markets, which we believe will further drive our growth and profitability. Sportsman’s Warehouse was founded in 1986 as a single retail store in Midvale, Utah and has grown to 87 stores across22 states. Today, we have the largest outdoor specialty store base in the Western United States and Alaska. Our stores rangefrom 15,000 to 65,000 gross square feet, with an average size of approximately 40,000 gross square feet. Our store layout isadaptable to both standalone locations and strip centers. Based on publicly available information, we believe it is lesscapital-intensive for us to open new stores compared to our principal competitors because our “no frills” store layout requiresless initial cash investment to build out and our stores generally require less square footage than the stores of ourcompetitors. Together, these features enable us to effectively serve markets of multiple sizes, from Metropolitan StatisticalAreas, or MSAs, with populations of less than 75,000 to major metropolitan areas with populations in excess of 1,000,000,while generating consistent four-wall Adjusted EBITDA margins and returns on invested capital across a range of store salesvolumes. We may post information that is important to investors on our website from time to time. The information providedon our website is not part of this report and is, therefore, not incorporated herein by reference. Our Competitive Strengths We believe the following competitive strengths allow us to capitalize on the growth opportunity within the outdooractivities and sporting goods market: Differentiated Shopping Experience for the Seasoned Outdoor Veteran, the First-Time Participant and EveryEnthusiast in Between. We place great emphasis on creating an inviting and engaging store experience for customers of allexperience levels. For the seasoned outdoor veteran, we offer a one-stop, convenient store layout that promotes “easy-in,easy-out” access to replenish supplies, learn about local conditions and test products. We also serve first-time participantsand casual users who are interested in enjoying the outdoors but enter our store without a clear sense for what equipment theyneed for their chosen activity. Our highly trained employees, who often are outdoor enthusiasts themselves and users of theproducts we sell, engage and interact with our customers in order to educate them and equip them with the right gear. Oursales associates draw upon both formal vendor sales training as well as first-hand experiences from using our products inlocal conditions. This selling approach allows us to offer a broad range of products and to deliver a shopping experiencecentered on the customer’s needs, which we believe results in increased customer loyalty, repeat visits and frequent referralsto other potential customers. A customer’s shopping experience in our stores is further enhanced by a variety of helpful in-store offerings andfeatures, including the issuance of hunting and fishing licenses, local fishing reports, availability of Sportsman’s News (ourproprietary in-store newspaper), access to the Braggin’ Board (where customers can post photos of their outdoor adventures),indoor test ranges for archery equipment and displays of customer-owned taxidermy. In addition, we host a variety of in-storeprograms (such as “ladies night”), contests (such as Bucks & Bulls, a free-to-enter, big-game trophy contest) and a wide rangeof instructional seminars, from turkey frying to firearm operation and safety. These programs are all designed to help ourcustomers connect with the outdoors and build the skill sets necessary to maximize enjoyment of their chosen activities. As aresult, we believe our stores often serve as gathering spots where local enthusiasts can share stories, product knowledge andadvice on outdoor recreation activities, which both drives traffic and fosters customer loyalty.4 Table of ContentsLocally Relevant Merchandise Serving the Comprehensive Needs of Outdoor Enthusiasts at a Compelling Value. Weoffer our customers an extensive and carefully selected assortment of branded, high-quality outdoor products at competitiveprices. We accomplish this in three principal ways: ·Locally Relevant Merchandise: We carry over 73,000 SKUs on average in each store, out of a pool ofapproximately 150,000 total SKUs. Each store’s merchandise is tailored to meet local conditions and consumerdemand, taking into account seasonal requirements, regional game and fishing species, geographic diversity,weather patterns and key demographic factors, so that our customers have the right product, at the right time, forthe right location. ·Breadth and Mix of Product Assortment: Our merchandise strategy is designed to serve a variety of purchasingoccasions, from big-ticket items to replenishment activity, as well as to meet the wide-ranging needs of customersfrom first-time participants to seasoned outdoor veterans. We pride ourselves on carrying an extensive selection ofbranded, “good, better and best” hard goods at everyday low prices, including a broad array of in-stockconsumable items. Approximately 35% of our unit sales and 19% of our dollar sales during fiscal year 2017 wereconsumable goods, such as ammunition, bait, cleaning supplies, food, some lures, propane and reloading supplies.We believe this pairing of product breadth and consumable goods appeals to a broad range of customers and drivesboth repeat traffic and increased average ticket value. ·Strong Vendor Relationships: We believe our vendors find our “brand-centric”, high-service store concept to beunique among national specialty outdoor retailers. Our attractive store locations, consistent presentation ofmerchandise and thorough product training present a compelling opportunity for our vendors to offer their brandsto local markets that historically have been served primarily by “mom & pop” retailers. As a result, we believe weare able to negotiate terms with our vendors that are similar to those offered to our principal competitors that arelarger in size. We share the benefits of these strategic vendor relationships with our customers through betterpricing and enhanced access to certain products that are limited in production. Flexible and Adaptable Real Estate Strategy. We believe that our store model, combined with our rigorous siteselection process, is uniquely customizable to address the needs of the different markets we serve. Our stores can vary in sizefrom approximately 15,000 to 65,000 gross square feet. We have had success with leasing existing sites as well asconstructing new build-to-suit sites. Our flexible store model permits us to serve both large metropolitan areas, like Phoenix,Arizona, and smaller MSAs, like Soldotna, Alaska, while generating consistent four-wall Adjusted EBITDA margins andreturns on invested capital across a range of store sales volumes. In small- to medium-sized markets, we are often able toestablish ourselves as a standalone destination for our customers; in larger markets, we have successfully leveraged existinginfrastructure to open stores in shopping plazas near complementary retailers, drawing upon existing foot traffic. We believeour low-cost, flexible model allows us to access both large and small markets more economically than many of our peers. We maintain a disciplined approach to new store development and perform comprehensive market research beforeselecting a new site, including partnering with specialized, third-party local real estate firms. We select sites based on criteriasuch as local demographics, traffic patterns, density of hunting and fishing license holders in the area, abundance of huntingand fishing game and outdoor recreation activities, store visibility and accessibility, purchase data from our existingcustomer database and availability of attractive lease terms. We have established productive relationships with well-regardedcommercial real estate firms and believe that we are a sought-after tenant, given the strength of the Sportsman’s Warehousebrand, the high volume of customers that visit our stores and our flexible approach to site locations. As a result, we continueto have access to desirable retail sites on attractive terms. Low Cost Operating Structure with Attractive and Replicable Store Economics. We strive to maintain a loweroperating cost structure than our principal competitors, which allows us to serve small- to medium-sized markets as well aslarger MSAs. We achieve this by exercising tight control over store-level expenses, real estate costs and corporate overhead.In addition, our growing store base, efficient, localized marketing spend and “no frills” warehouse store layout help usmaintain comparatively low operating costs and provide us with the opportunity to achieve four-wall Adjusted EBITDAmargins of 10% or more for stores in most new markets. Our typical new store requires an average net investment ofapproximately $2.0 million, which includes store build-out (net of contributions from landlords) and pre-opening cashexpenditures. In addition, we stock each new store with initial inventory at an average cost of approximately $2.3 million.We target a pre-tax return on invested capital within one year after opening of over 50% excluding initial inventory cost (orover 20% including initial inventory cost), although our historical returns have often5 Table of Contentsexceeded these thresholds. As of the end of fiscal year 2017, the majority of our stores that had been open for more thantwelve months were profitable and those stores had an average Adjusted EBITDA margin of 13.0%. We believe this low-cost,capital-efficient approach also allows us to successfully serve markets that are not well-suited for the more capital-intensivestore models of our principal competitors. Approximately 62% of our markets currently lack another nationally recognizedoutdoor specialty retailer, which we believe is a result of these dynamics. Significant New Store Growth Opportunity within Existing and New Markets. As of February 3, 2018, we operate 87stores across 22 states, primarily in the Western United States and Alaska, with a presence in these markets that is nearly threetimes that of the next largest outdoor retailer. We believe our leadership position in the Western United States, combinedwith our existing scalable infrastructure, provides a strong foundation for continued expansion within our core markets. Passionate and Experienced Management Team with Proven Track Record. We are focused on delivering anunsurpassed shopping experience to anyone who enjoys the excitement of the outdoors. This passion and commitment isshared by team members throughout our entire organization, from senior management to the employees in our stores. Oursenior management team has an average of 22 years of retail experience, with extensive capabilities across a broad range ofdisciplines, including merchandising, real estate, finance, compliance, store operations, supply chain management andinformation technology. We also pride ourselves on the long tenure of our more than 200 store managers and corporateemployees, who have been with us for an average of approximately eight years. Our Growth Strategy We are pursuing a number of strategies designed to continue our growth and strong financial performance, including: Expanding Our Store Base. We believe that our compelling new store economics and our track record of openingsuccessful new stores provide a strong foundation for continued growth through new store openings in existing, adjacent andnew markets. Over the last three fiscal years, we have opened an average of ten stores per year. We have opened one new storeto date in fiscal year 2018 and currently plan to open an additional four new stores in the remainder of fiscal year 2018. In2018, we expect we will grow our square footage approximately 3% as we shift some of our cash use to reducing our debtbalance. Over the long term, however, our target remains to grow our square footage at a rate of greater than 10% annually.Our longer-term plans include expanding our store base to serve the outdoor needs of enthusiasts in markets across theUnited States. We believe our existing infrastructure, including distribution, information technology, loss prevention andemployee training, is capable of sustaining 100 or more stores without significant additional capital investment. Increasing Same Store Sales Growth. We are committed to increasing same store sales through a number of ongoingand new initiatives, including: the expansion of our omni-channel capabilities across all categories, expanding our productassortment through drop ship capabilities with select partners, continuing to provide the ability to purchase firearms usingour website and pick up the firearm in the store, expanding our clothing offerings and private label program (such as ourproprietary Rustic Ridge TM and Killik TM clothing lines),continuing our loyalty program, and continuing our “store-within-a-store” programs with major brands such as Carhartt, Columbia Sportswear and Under Armour. Each of these ongoingand new initiatives is designed to foster additional shopping convenience, add deeper merchandise selection and providemore product information to the customer. We believe these initiatives have driven and will continue to drive additionaltraffic, improved conversion and increased average ticket value. Continuing to Enhance Our Operating Margins. We believe that our recent expansion of our store base and growth innet sales will result in improved Adjusted EBITDA margins as we take advantage of economies of scale in product sourcingand leverage our existing infrastructure, supply chain, corporate overhead and other fixed costs. Furthermore, we expect toincrease our gross profit margin by expanding product offerings in our private label program, including our proprietaryRustic Ridge and Killik clothing lines, and continuing marketing initiatives in our higher-margin clothing and footweardepartments. Growing the Sportsman’s Warehouse Brand. We are committed to supporting our stores, product offerings and brandthrough a variety of marketing programs, private label offerings and corporate partnerships. Our marketing and promotionalstrategy includes coordinated print, digital and social media platforms. In-store, we offer a wide range of6 TMTM Table of Contentsoutdoor-themed activities and seminars, from turkey frying to firearm operation and safety. In addition, we sponsorcommunity outreach and charity programs to more broadly connect with our local communities with the aim of promotingour brand and educating consumers. Finally, we are committed to local chapters of national, regional and local wildlifefederations and other outdoor-focused organizations, such as Ducks Unlimited and the Rocky Mountain Elk Foundation.Many of our store managers and employees serve in senior positions in these organizations, which further strengthens ourplace as leaders in the local outdoor community. We believe all of these programs promote our mission of engaging with ourcustomers and serving outdoor enthusiasts. Our Stores We operate 87 stores across 22 states as of February 3, 2018. Most of our stores are located in power, neighborhood andlifestyle centers. Power centers are large, unenclosed shopping centers that are usually anchored by three or more nationalsupercenters, such as Target, Wal-Mart and Costco. Neighborhood centers are shopping centers anchored by a supermarket ordrugstore that provide convenience goods and services to a neighborhood. Lifestyle centers are shopping centers thatcombine the traditional functions of a shopping mall with leisure amenities such as pedestrian friendly areas, open air seatingand inviting meeting spaces. We also operate several single-unit, stand-alone locations. Our stores average approximately40,000 gross square feet. The following table lists the location by state of our 87 stores open as of February 3, 2018: Number ofStores Number ofStoresWashington 11 New Mexico 3California 10 North Carolina 1Utah 9 Iowa 1Oregon 8 Kentucky 1Arizona 8 Louisiana 1Colorado 6 Mississippi 1Idaho 6 North Dakota 1Alaska 5 South Carolina 1Wyoming 4 Tennessee 1Nevada 4 Virginia 1Montana 3 West Virginia 1 Store Design and Layout We present our broad and deep array of products in a convenient and engaging atmosphere to meet the everyday needsof all outdoor enthusiasts, from the seasoned veteran to the first-time participant. We maintain a consistent floor layout acrossour store base that we believe promotes an “easy-in, easy-out” shopping experience. All of our stores feature wide aisles, highceilings, visible signage and central checkouts with multiple registers. Sportsman’s Warehouse stores, true to their name, aredesigned in a “no frills” warehouse format that welcomes customers directly from or on the way to an outdoor activity. All ofour stores also feature “store-within-a-store” concepts for certain popular brand partners, such as Carhartt, ColumbiaSportswear and Under Armour, through which we dedicate a portion of our floor7 Table of Contentsspace to these brands to help increase visibility and drive additional sales. The diagram below demonstrates our typical storelayout. Our stores include locally relevant features such as a large fishing board at the entrance that displays current fishingconditions in local lakes and rivers with coordinating gear in end-cap displays in the fishing aisles. We actively engage ourcustomers through in-store features such as the Braggin’ Board, various contests (such as Bucks & Bulls and Fish Alaska),and customer-owned taxidermy displays on the walls. We also host in-store programs such as “ladies night” and a wide rangeof instructional seminars, from Dutch oven cooking to choosing the right binocular. Annually, we organize approximately3,000 programs across our stores for the benefit of our customers. We believe these programs help us connect with thecommunities in which we operate and encourage first time participants to build the skills necessary to become outdoorenthusiasts and loyal customers. Expansion Opportunities and Site Selection We have developed a rigorous and flexible process for site selection. We select sites for new store openings based oncriteria such as local demographics, traffic patterns, density of hunting and fishing license holders in the area, abundance ofhunting and fishing game and outdoor recreation activities, store visibility and accessibility, purchase data from our existingcustomer database and availability of attractive lease terms. Our store model is adaptable to markets of multiple sizes, fromMSAs with populations of less than 75,000 to major metropolitan areas with populations in excess of 1,000,000. We havebeen successful both in remodeling existing buildings and in constructing new build-to-suit locations. Our store model is designed to be profitable in a variety of real estate venues, including power, neighborhood andlifestyle centers as well as single-unit, stand-alone locations. In small- to medium-sized markets, we generally seek anchorlocations within high-traffic, easily accessible shopping centers. In larger metropolitan areas, we generally seek locations inretail areas with major discount retailers (such as Wal-Mart), wholesale retailers (such as Costco), other specialty hardlineretailers (such as The Home Depot) or supermarkets. As we continue to expand our store base, we believe that small- tomedium-sized markets offer a significant opportunity. In these markets, we believe our store size, which is smaller than manyof our national competitors but larger than many independent retailers, enables us to find8 Table of Contentsconvenient, easily accessible store locations while still offering the broad and deep selection of merchandise that ourcustomers desire. In addition, our store format and size allow us to open multiple stores in local areas within major MSAs,which gives our customers convenient, easy access to our products without having to travel long distances. Members of our real estate team spend considerable time evaluating prospective sites before bringing a proposal to ourreal estate committee. Our real estate committee, which is comprised of senior management including our Chief ExecutiveOfficer, Chief Financial Officer, Vice President of Real Estate, and Senior Vice President of Stores, approves all prospectivelocations before a lease is signed. We opened twelve new stores in fiscal year 2017. We have opened one new store to date in fiscal year 2018 andcurrently plan to open an additional four new stores in the remainder of fiscal year 2018. In 2018, we expect we will grow oursquare footage approximately 3% as we shift some of our cash use to reducing our debt balance. Over the long term, however,our target remains to grow our square footage at a rate of greater than 10% annually. Our new store openings are planned inexisting, adjacent and new markets. Our new store growth plan is supported by our target new unit economics, which we believe to be compelling. Atypical store location ranges in size from 15,000 to 45,000 gross square feet. Our net investment to open a new store isapproximately $2.0 million, consisting of pre-opening expenses and capital investments, net of tenant allowances. Inaddition, we stock each new store with initial inventory at an average cost of approximately $2.3 million. For the first twelvemonth period after opening a new store, we target net sales of $8.0 million to $11.0 million, a four-wall Adjusted EBITDAmargin of more than 10% and a pre-tax return on invested capital of over 50% excluding initial inventory cost (or over 20%including initial inventory cost). Our new stores typically reach a mature sales growth rate within three to four years afteropening, with net sales increasing approximately 25% in the aggregate during this time period. For the 40 stores openedsince 2010 that have been open for a full twelve months (excluding our 10 acquired stores), we achieved an average four-wallAdjusted EBITDA margin of 13.1% and an average ROIC of 74.1% excluding initial inventory cost (and 27.9% includinginitial inventory cost) during the first twelve months of operations. In addition, we achieved an average pre-tax paybackperiod of less than one year (excluding initial inventory cost) and expect to achieve an average pre-tax payback period ofapproximately 2.5 years (including initial inventory cost). Omni-Channel Strategy We believe our website is an extension of our brand and our retail stores. Our website, www.sportsmanswarehouse.com,serves as both a sales channel and a platform for marketing and product education, and allows us to engage more fully withthe local outdoor community. Our website features a similar merchandise assortment as offered in our stores as well as certainproducts found exclusively online. Regulatory restrictions create certain structural barriers to the online sale ofapproximately 33% of our revenue, such as firearms, ammunition, certain cutlery, propane and reloading powder. As a result,this portion of our business is currently more protected from online-only retailers, such as Amazon. We also provide our online customers with convenient omni-channel services. To ensure that our customers haveaccess to our entire assortment of products available on the e-commerce website, our retail stores feature kiosks that allowcustomers to place orders for items that are available only on our website or that are out of stock or not regularly stocked. Weview our kiosk offering as an important complement to our larger format stores, as well as a key differentiator and extensionof our smaller format stores. Our in-store pickup offering allows customers to order products through our e-commerce websiteand pick up the products in our retail stores without incurring shipping costs. We believe our ship-to-store functionality is avaluable service offering to customers, as well as a means to generate additional foot traffic to our retail stores. Our website also features an online version of our Braggin’ Board, which complements our retail store Braggin’ Boardforum. In addition, our website features local area content, including fishing reports and event schedules, as well as onlineeducational resources, including tips, advice and links to video demonstrations on our dedicated YouTube channel. We havealso rolled out our social media strategy through our Facebook page and Instagram feed. These platforms allow us to reachour customers more directly with targeted postings of advertisements and in-store events. We believe our online educationalresources and community outreach drive traffic to our website and retail stores, while improving user engagement as shoppersmove from single-purchase users to loyal customers. We provide online customer service support and fulfill all orders in-house through our distribution center and through select partner drop ship integration. During fiscal year 2017, our e-commerce platform generated total sales of $11.9 million, or 1.5% of our9 Table of Contentstotal sales. Over the same period, our website received greater than 22.9 million visits, which we believe demonstrates ourposition as a leading resource for outdoor products and product education. Our Products and Services Merchandise Strategy We offer a broad range of products at a variety of price points and carry a deep selection of branded merchandise fromwell-known manufacturers, such as Browning, Carhartt, Coleman, Columbia Sportswear, Federal Premium Ammunition,Honda, Johnson Outdoors, Remington, Shakespeare, Shimano, Smith & Wesson and Under Armour. To reinforce ourconvenient shopping experience, we offer our products at competitive, everyday low prices. We believe our competitivepricing strategy supports our strong value proposition, instills price confidence in both our customers and our salesassociates and is a critical element of our competitive position. We believe we offer a wider selection of hard goods than many of our principal competitors. We employ a “good,better, and best” merchandise strategy, with an emphasis on “better” products that meet the needs of customers of allexperience levels. We strive to keep our merchandise mix fresh and exciting by continuously searching for new, innovativeproducts and introducing them to our customers. Our hunting and shooting department, which is strategically located at theback of the store, is a key driver of store traffic and one of the reasons for our high frequency of customer visits. We carry alarge array of consumable goods, which includes ammunition, bait, cleaning supplies, food, select lures, propane andreloading supplies. During fiscal year 2017, sales of consumable goods accounted for approximately 35.0% of our unit salesand 19.0% of our dollar sales. We believe the sale of consumables and replenishment items drives repeat traffic, withapproximately 65% of our customers visiting our stores seven or more times per year (according to our internal surveys).During such visits, our customers frequently browse and purchase other items, including additional gear and accessories. We also carry a variety of private label offerings under the Rustic Ridge, Killik, Vital Impact, Yukon Gold, LostCreek and Sportsman’s Warehouse brands. These products are designed and priced to complement our branded assortment,by offering our customers a quality alternative at all price points. We believe the clothing, footwear and camping categoriespresent a compelling near-term opportunity to expand our private label offering. In order to address these segments, weintroduced our proprietary Rustic Ridge and Killik clothing lines. During fiscal year 2017, private label offeringsaccounted for approximately 3.5% of our total sales, compared to more than 20% for many of our sporting goods retail peers.We believe our private label products are an important opportunity to drive sales and increase margins alongside our brandedmerchandise. In addition to outfitting our customers with the correct gear, we provide our customers with various in-store, value-added, technical support services. All of our stores offer full-service archery technician services, fishing-reel line winding,gun bore sighting and scope mounting, among other services. We also help first-time participants enjoy the outdoorsresponsibly by issuing hunting and fishing licenses. We believe the support services provided by our highly trained stafftechnicians differentiate us from our competitors and drive customer loyalty and repeat traffic to our stores. 10 TMTMTMTMTM Table of ContentsProducts Our stores are organized into six departments. The table below summarizes the key product lines and brands bydepartment: Department Product OfferingsCamping Backpacks, camp essentials, canoes and kayaks, coolers, outdoor cooking equipment,sleeping bags, tents and toolsClothing Camouflage, jackets, hats, outerwear, sportswear, technical gear and work wearFishing Bait, electronics, fishing rods, flotation items, fly fishing, lines, lures, reels, tackle andsmall boatsFootwear Hiking boots, socks, sport sandals, technical footwear, trail shoes, casual shoes,waders and work bootsHunting and Shooting Ammunition, archery items, ATV accessories, blinds and tree stands, decoys, firearms,firearms safety and storage, reloading equipment, and shooting gearOptics, Electronics and Accessories Gift items, GPS devices, knives, lighting, optics -e.g., binoculars and two-way radios Each department has buying and planning teams that are responsible for monitoring product availability from vendorsand sales volume within the department and across all stores. We actively monitor the profitability of each product categorywithin each department and adjust our assortment and selling space accordingly. This flexibility enables us to providecustomers with more preferred product choices and to enhance the profit potential of each store. Hunting and shooting has historically been the largest contributor to our sales. Hunting and shooting departmentproducts are generally sold at significantly higher price points than other merchandise but often have lower margins.Camping is our second largest department, and family-oriented camping equipment in particular continues to be a highgrowth product category. Clothing sales have grown as we have introduced new brands and styles, including our selectionsfor women and children. We view clothing sales as an important opportunity, given this department’s high gross margins andappeal to a broad, growing demographic. The following table shows our sales during the past three fiscal years presented by department: Fiscal Year Ended February3, January 28, January 30, Department 2018 2017 2016 Camping 15.1% 14.6% 14.6% Clothing 9.3% 8.7% 8.9% Hunting and Shooting 48.7% 50.9% 50.2% Fishing 10.7% 10.0% 9.9% Footwear 7.4% 7.1% 7.3% Optics, Electronics, and Accessories 9.1% 9.0% 9.6% Other (0.3%) (0.3%) (0.5%) Total 100.0% 100.0% 100.0% Camping. Camping represented approximately 15.1% of our net sales during fiscal year 2017. Our camping assortmentaddresses both the technical requirements of the heavy-use camper, including gear for long-duration or deep-woodsexcursions, as well as the needs of the casual camper. We offer a broad selection of tents and shelters for both multi-day backcountry use and weekend outings, sleeping bags for the most extreme conditions as well as the summer overnight trip,backpacks and backpacking gear, including camouflaged styles for hunting, generators for home and camp use, cooking andfood preparation equipment, including stoves and extended-use coolers, as well as dehydrated foods. Our campingdepartment also includes canoes, kayaks and a selection of recreational family camping equipment, including basicautomotive accessories, camp chairs and canopies. Our camping department includes brands such as Alps Mountaineering,Camp Chef, Coleman, Honda, Teton Sports, and Yeti Coolers. Clothing. Clothing represented approximately 9.3% of our net sales during fiscal year 2017 and includes camouflage,outerwear, sportswear, technical gear, work-wear, jackets and hats. We primarily offer well-known brands in our clothingdepartment, such as Carhartt, Columbia, Kings Mountain Shadow, Sitka, and Under Armour. We also intend to grow ourproprietary clothing lines, Rustic Ridgeand Killik. Our clothing selection offers technical performance capabilities for avariety of hunting activities, including upland game, waterfowl, archery, big game11 TM TM Table of Contentshunting, turkey hunting and shooting sports. Performance attributes include waterproofing, temperature control, scentcontrol features and visual capabilities, such as blaze orange and camouflage in a wide range of patterns. Outerwear,particularly performance rainwear, is an important product category for customers who are fishing, hiking, hunting or marineenthusiasts. We furthermore complement our technical clothing with an assortment of casual clothing that fits our customers’lifestyles, including a variety of branded graphic t-shirts, and private label motto t-shirts. Hunting and Shooting. Hunting and shooting is our largest merchandise department, representing approximately48.7% of our net sales during fiscal year 2017. Products such as ammunition, cleaning supplies, firearms, firearms safety andstorage, and reloading selections are typically key drivers of traffic in our stores. Our hunting and shooting merchandiseassortment provides equipment, accessories and consumable supplies for virtually every type of hunting and shooting sport.A backroom shop staffed with technicians allows us to support our hunting assortments for the benefit of the hunter, shooter,and archery enthusiast. Our merchandise selection includes a wide variety of firearms designed for hunting, shooting sportsand home and personal defense, including air guns, black powder muzzle loaders, handguns, rifles and shotguns. We carry awide selection of ammunition, archery equipment, dog training products, hunting equipment, reloading equipment andshooting accessories. Our hunting and shooting department includes brands such as Federal Premium Ammunition, Hornady,Remington Arms, Ruger, Smith & Wesson, and Winchester. Fishing. Fishing represented approximately 10.7% of our net sales during fiscal year 2017 and includes products forfresh-water fishing, salt-water fishing, fly-fishing, ice-fishing and boating. Our broad assortment appeals to the beginning andweekend angler, as well as avid and tournament anglers. In addition to lures, rods and reels, our fishing assortment features awide selection of products in tackle management and organization, electronics, fly-fishing, ice-fishing and marineaccessories sub-categories. We also provide fishing-reel line winding services in all of our stores and live bait in most of ourstores. We offer products for boat care and maintenance, as well as safety equipment and aquatic products such as float tubesand pontoons. All of our stores also sell fishing licenses. Our fishing department includes brands such as Johnson Outdoors,Normark, Plano, Pure Fishing, Rivers Wild Flies, and Shimano. Footwear. Footwear represented approximately 7.4% of our net sales during fiscal year 2017 and includes work boots,technical footwear, hiking boots, trail shoes, socks, sport sandals and waders. As with clothing, our footwear selection offers avariety of technical performance capabilities, such as different levels of support and types of tread, waterproofing,temperature control and visual attributes. Our footwear department includes brands such as Danner, Keen, Merrell, Red Wing,and Under Armour. Optics, Electronics and Accessories. Our optics, electronics and accessories department represented approximately9.1% of our net sales during fiscal year 2017. This department supplements our other equipment departments withcomplementary products, such as optics (including binoculars, spotting scopes and rangefinders), GPS devices and othernavigation gear, GoPro video cameras, two-way radios, specialized and basic cutlery and tools, including hunting and otherknives, lighting, bear spray and other accessories. Our optics, electronics and accessories department includes brands such asGarmin, Leica, Nikon, Swarovski Optik and Vortex Optics. Other. Our other department represented approximately (0.3)% of our net sales during fiscal year 2017 and includeshunting and fishing licenses and background check revenue, net of revenue discounts. Loyalty Programs We have a loyalty program through which our consumers are able to earn “points” towards Sportsman’s Warehouse giftcards on most of their purchases. The program is free to join and accepted through all channels for both purchases and the useof redemption cards. As of February 3, 2018, we had approximately 1.6 million participants in our loyalty program. Customers may obtain a loyalty program card when making a purchase in-store or online. After obtaining a card, thecustomer must register on our website in order to redeem loyalty rewards. Customers earn one point for each dollar spent,with the exception of certain items, such as gift cards and fish and game licenses. For every 100 points accumulated, thecustomer is entitled to a $1.00 credit in loyalty rewards, which may be redeemed by logging into our website to request aredemption card for any whole dollar amount (subject to the customer’s available point balance). The redemption card is thenmailed to the customer and operates as a gift card to be used for both in-store and online purchasing. The rewards pointsexpire after 18 months of dormancy. 12 Table of ContentsIn addition, we offer our customers the multi-use Sportsman’s Warehouse Rewards VISA Platinum credit card issued byUS Bank. US Bank extends credit directly to cardholders and provides all servicing for the credit card accounts, funds therewards and bears all credit and fraud losses. This card allows customers to earn points whenever and wherever they use theircard. Customers may redeem earned points for products and services just as they would redeem loyalty card points. Sourcing and Distribution Sourcing We maintain central purchasing, replenishment and distribution functions to manage inventory planning, allocatemerchandise to stores and oversee the replenishment of basic merchandise to the distribution center. We have no long-termpurchase commitments. During fiscal year 2017, we purchased merchandise from approximately 1,500 vendors with novendor accounting for more than approximately 6% of total merchandise purchased. We have established long-standing,continuous relationships with our largest vendors. Our sourcing organization is currently managed by our merchant team in our corporate headquarters. We also havefield merchants that coordinate certain merchandising functions at the store level to provide a more localized merchandisingmodel. To ensure that our product offerings are tailored to local market conditions and demand, our merchant teams regularlymeet one-on-one with our vendors, and attend trade shows, review trade periodicals and evaluate merchandise offered byother retail and online merchants. We also frequently gather feedback and new product reviews from our store managementand employees, as well as from reviews submitted by our customers. We believe this feedback is valuable to our vendor-partners and improves our access to new models and technologies. Distribution and Fulfillment We distribute all of our merchandise from our efficient 507,000 square foot distribution center in Salt Lake City, Utah.We opened this facility in July 2013, more than doubling the available space from our prior facility, in order to accommodateour growing store base and e-commerce platform. The distribution center supports replenishment for all 87 stores andmanages the fulfillment of direct-to-consumer e-commerce orders. We use preferred carriers for replenishment of our retailstores. We ship merchandise to our e-commerce customers via courier service. An experienced distribution management teamleads a staff of approximately 400 employees at peak inventory levels heading into the fourth quarter. The distribution center has dynamic systems and processes that we believe can accommodate continued new storegrowth for 100 or more stores. We use the HighJump warehouse management system, or WMS, to manage all activities. Thesystem is highly adaptable and can be easily changed to accommodate new business requirements. For example, our WMSenabled us to support full omni channel distribution under one roof by allowing us to comingle inventory to optimize spacerequirements and labor. Additionally, we have developed customized Radio Frequency and Voice Directed processes tohandle the specific requirements of our operations. We have the capability to both case pick and item pick, which is designedto ensure that our stores have sufficient quantities of product while also allowing us to maintain in inventory slow movingbut necessary items. This balance allows us to stock the right products at the necessary locations, all at the right time and inthe correct quantity. Marketing and Advertising We believe, based on internal surveys, that the majority of our customers are male, between the ages of 35 and 65, andhave an annual household income between $40,000 and $100,000. We also actively market to women and children and haveexpanded our product offerings of women’s and children’s outerwear, clothing and footwear to address rising participationrates in hunting and shooting sports, as well as overall outdoor activity. Our primary marketing efforts are focused on driving additional consumers to the stores and increasing the frequencyand profitability of visits by customers of all types. We employ a two-pronged marketing approach: ·regional advertising programs; and ·local grass roots efforts to build brand awareness and customer loyalty.13 Table of Contents Our regional advertising programs emphasize seasonal requirements for hunting, fishing and camping in our variousstore geographies. Our advertising medium is typically newspaper inserts (primarily multi-page color inserts during keyshopping periods such as the Christmas season and Father’s Day), supplemented with modest amounts of direct mail,seasonal use of local and national television ads and a variety of out-of-home media buys. We proactively modify the timingand content of our message to match local and regional preferences, changing seasons, weather patterns and topography of agiven region. In addition, the use of co-op funding with select vendors to supplement our out-of-pocket media expensesallows us to improve brand exposure through various advertising vehicles, while partnering with national brands in relevantmedia channels. This program also reinforces the general consumer’s impression of Sportsman’s Warehouse as a preferredretailer for those brands. Finally, we sponsor regional and national television programming, including sponsoring the,Angler’s Channel, Fishful Thinking, Hooked on Utah and Eastman’s Hunting TV. Our total marketing expenses for fiscalyear 2017 were approximately $10.2 million, excluding co-op reimbursement of $2.4 million. The second prong of our marketing effort is the time and resources devoted to fostering grass roots relationships in thelocal community. Each Sportsman’s Warehouse store employs a variety of outreach tools to build local awareness. One keycomponent to a successful store is hosting events throughout the year, targeting a variety of end user customer profiles (suchas hunters, campers, anglers, women and children). In total, our store base hosts or facilitates approximately 3,000 in-storeand offsite seminars and events per year, such as “ladies night,” Eastman’s Deer Tour, Waterfowl Weekend, ConservationDays contest and Bucks & Bulls. We are also active in supporting a variety of conservation groups, such as Ducks Unlimited,Rocky Mountain Elk Foundation, Mule Deer Foundation and the National Wild Turkey Federation, both at the corporatelevel and through store employee local memberships and participation. Company representatives attend more than 600events annually in the aggregate, both to provide support for these organizations and to solidify ties between their membersand the Sportsman’s brand. Furthermore, we believe that the Sportsman’s News newspaper, offered in-store, provides a uniquepoint of contact with our customers by offering outdoor stories, product reviews, how-to articles and new productintroductions to keep all of our customers up to date on the latest trends and technology. Finally, such grass roots campaignsenable us to reduce our initial marketing spend in connection with new store openings. We believe that these initiatives arehighly cost-effective tools to create brand awareness and engender a loyal community of local customers, as well as a keydifferentiator versus other national retailers. Hiring, Training and Motivating our Employees We believe that the recruitment, training and knowledge of our employees and the consistency and quality of theservice they deliver are central to our success. We emphasize deep product knowledge for store managers and sales associatesat both the hiring and training stages. We hire most of our sales associates for a specific department or product category. Aspart of the interview process, we test each prospective employee for knowledge specific to the department or category inwhich he or she is applying to work. All of our managers and sales associates undergo focused sales training, consisting ofboth sales techniques and specialized product instruction, both immediately upon hiring (approximately 20 hours) andcontinuing throughout their career (approximately 16 hours annually). In addition, our sales associates receive lossprevention instruction and departmental training upon hiring. For example, in our hunting department, all employees receivean additional nine hours of training on ATF and company policies initially upon hire, with continuing education throughoutthe year. Our store managers complete two to six months of on-the-job training at another store with an existing districtmanager, as part of which they receive approximately 80 hours of dedicated managerial training and instruction. Ourdepartment heads receive extensive online training as well as on-site instruction, totaling approximately 40 hours. As a resultof these programs, our employees are highly trained to provide friendly and non-intimidating education, guidance andsupport to address our customers’ needs. Our employees are often outdoor enthusiasts themselves, participating in outdoor activities alongside our customers inthe local community. Our employees spend a portion of their gross wages in-store, underscoring their passion for both ourcompany and the outdoor lifestyle. We believe our level of employee store patronage is unique among our competitors inthis industry and enhances our differentiated shopping experience. One of our unique assets is a specially designed training room located at our headquarters. Our training room is usedfrequently for firm-wide training programs and by vendors to stage training demonstrations for new products. Training roomsessions are broadcast real-time in high definition to each store location and are recorded for future viewing. Vendor trainingis especially interactive, permitting vendor representatives to present a uniform message14 Table of Contentssimultaneously to all employees, while allowing managers and sales staff in individual stores to ask questions of the vendorsand provide real-time feedback on products. This system decreases the vendor’s promotion and education costs and providesmore meaningful training to our employees. Training room sessions are particularly important for technical products,especially those with numerous features and a high unit price, because they enable our sales associates to better educatecustomers and provide additional assurance that a given product fits the customer’s needs. Given its utility as a cost-effectivesales tool, our training room is reserved well in advance by vendors. Our training program has been a critical factor inincreasing conversion, which has led to average ticket growth of approximately 10% since the end of fiscal year 2010. Information Technology Business critical information technology, or IT, systems include our supply chain systems, merchandise system, point-of-sale (POS) system, warehouse management system, e-commerce system, loss prevention system and financial and payrollsystems. Our IT infrastructure is robustly designed to be able to access real-time data from any store or channel. The networkinfrastructure allows us to quickly and cost effectively add new stores to the wide area network, or WAN. The private WAN isbuilt on a CenturyLink backbone with all of its resources and support. Additionally, we have implemented a redundantwireless WAN on Verizon’s infrastructure. All key systems will continue to run in the event of a power or network outage. Alldata is backed up daily from one storage array to another storage array. We have implemented what we believe to be best-of-class software for all of our major business critical systems. Keyoperating systems include Oracle Applications for ERP, Oracle Commerce for our e-commerce channel, Salesforce’s (formallyTomax’s) Retail.net and JPOS for in-store functionality and HighJump for WMS. Our physical infrastructure is also built onproducts from best-in-class vendors Cisco, Dell, Oracle Sun and VMWare. Originally designed with the goal of being able torun a significantly larger retail business, our IT systems are scalable to support our growth. The retail stores and the distribution center have loss prevention employees who monitor an average of 60 cameras ateach store and 200 at the distribution center. These cameras are connected to digital video recorders (DVR) that record atleast 30 days of video. Cameras are monitored locally during store hours. In addition, all cameras are monitored centrally atour headquarters in our dedicated surveillance room, which has capacity to monitor over 120 stores. This room is staffedcontinuously and provides off-hours monitoring and backup for all stores. Digital recorded video can be searched by pixelmovement, which can quickly identify any loss prevention issue. Our sophisticated systems are a key factor in our shrinkrates of less than 1% and an important component of our comprehensive compliance program. We furthermore have incorporated enhanced reporting tools that have allowed for more comprehensive monitoring ofbusiness performance, which has been critical to management’s ability to drive strong store level performance. Managementhas access to a reporting dashboard that shows key performance indicators, or KPIs, on a company, store, department andcategory level. KPIs include sales, margin, budget, conversions, payroll, shrinkage and average order value all on a daily,weekly, monthly and yearly basis. All KPIs are compared to comparable prior year periods. District, store and departmentmanagers have access to the data relevant to their area of responsibility. Real-time, up to the second, sales data is availableon demand. The system allows for custom-created reports as required. Intellectual Property Sportsman’s Warehouse, Sportsman’s Warehouse America’s Premier Outfitter, Lost Creek, LC Lost Creek FishingGear and Accessories, Rustic Ridge, Killik, K Killik & Design, LC & Design, and Vital Impact are among our servicemarks or trademarks registered with the United States Patent and Trademark Office. In addition, we own several otherregistered and unregistered trademarks and service marks involving advertising slogans and other names and phrases used inour business. We also own numerous domain names, including www.sportsmanswarehouse.com, among others. Theinformation on, or that can be accessed through, our websites is not a part of this filing. We believe that our trademarks are valid and valuable and intend to maintain our trademarks and any relatedregistrations. We do not know of any material pending claims of infringement or other challenges to our right to use ourmarks in the United States or elsewhere. We have no franchises or other concessions that are material to our operations. 15 ®®®®TMTMTMTMTM Table of ContentsOur Market and Competition Our Market We compete in the large, growing and fragmented outdoor activities and sporting goods market, which we believe iscurrently underserved by full-line multi-activity retailers. We believe, based on reports by the Outdoor Industry Associationand other industry sources, that U.S. outdoor activities and sporting goods retail sales in our related product categoriestotaled over $70 billion in 2017. The U.S. outdoor activities and sporting goods sector is comprised of three primarycategories—equipment, clothing and footwear—with each category containing distinct product sets to support a variety ofactivities, including hunting, fishing, camping and shooting, as well as other sporting goods activities. We believe growth in the U.S. outdoor activities and sporting goods market is driven by several key trends, centeredaround enhancing performance and enjoyment while participating in sporting and outdoor activities, including new productintroductions, and the resilience of consumer demand for purchases in these categories versus other discretionary categories.We believe these factors will continue to foster growth in the outdoor activities and sporting goods market in the future. Within the retail sporting goods sector, we operate primarily in the outdoor equipment, clothing and footwear segment,which includes hunting and shooting, fishing, camping and boating. This segment is growing at a faster rate than thesporting goods industry at large. The 2016 U.S. Fish and Wildlife national survey, published once every five years, foundthat fishing participation increased 9% and participation in wildlife relation recreation increased 6%, for Americans aged 16and older from 2011 to 2016. A 2017 National Sporting Goods Association report indicated that, from 2013 to 2016, there was a 10% increase inhunting with firearms participation, a 3% increase in camping participation, and a 9% increase in hiking participation. Furthermore, we believe that specialty retailers have generated additional sales volume by expanding their presence,especially in smaller communities, which has increased customers’ access to products that formerly were less available. Thenature of the outdoor activities to which we cater requires recurring purchases throughout the year, resulting in high rates ofconversion among customers. For example, active anglers typically purchase various fishing tackle throughout the yearbased on seasons and changing conditions. Hunting with firearms typically is accompanied by recurring purchases ofammunition and cleaning supplies throughout the year and multiple firearm styles for different hunted game. Competition We believe that the principal competitive factors in our industry are breadth and depth of product selection, includinglocally relevant offerings, value pricing, convenient locations, technical services and customer service. A few of ourcompetitors have a larger number of stores, and some of them have a greater market presence, name recognition and financial,distribution, marketing and other resources than we have. We believe that we compete effectively with our competitors withour distinctive branded selection and superior customer service, as well as our commitment to understanding and providingmerchandise that is relevant to our targeted customer base. We cater to the outdoor enthusiast and believe that we have bothan in-depth knowledge of the technical outdoor customer and a “grab and go” store environment that is uniquely conduciveto their need for value and convenience. We believe that our flexible box size, combined with our low-cost, high-servicemodel, also allows us to enter into and serve smaller markets that our larger competitors cannot penetrate as effectively.Finally, certain barriers, including legal restrictions, exist on the sale of our product offerings that comprise approximately33% of our revenue, such as firearms, ammunition, certain cutlery, propane and reloading powder, create a structural barrierto competition from many online retailers, such as Amazon. Our principal competitors include the following: ·independent, local specialty stores, often referred to as “mom & pops”; ·other specialty retailers that compete with us across a significant portion of our merchandising categories throughretail store, catalog or e-commerce businesses, such as Bass Pro Shops and Cabela’s; ·large-format sporting goods stores and chains, such as Academy Sports + Outdoors and Dick’s Sporting Goods; and16 Table of Contents ·mass merchandisers, warehouse clubs, discount stores, department stores and online retailers, such as Amazon,Target and Wal-Mart. Independent, Local Specialty Stores. These stores generally range in size from approximately 2,000 to 10,000 squarefeet, and typically focus on one or two specific product categories, such as hunting, fishing or camping, and usually lack abroad selection of product. Other Specialty Retailers. Some of the other specialty retailers that compete with us across a significant portion of ourmerchandising categories are large-format retailers that generally range in size from 40,000 to 250,000 square feet. Theseretailers seek to offer a broad selection of merchandise focused on hunting, fishing, camping and other outdoor productcategories. Some of these stores combine the characteristics of an outdoor retailer with outdoor entertainment and themeattractions. We believe that the number of these stores that can be supported in any single market area is limited because oftheir large size and significant per-store cost. Other specialty retailers are smaller chains that typically focus on offering a broad selection of merchandise in one ormore of the following product categories—hunting, fishing, camping or other outdoor product categories. We believe thatthese other outdoor-focused chains generally do not offer a similar depth and breadth of merchandise or specialized servicesin all of our product categories. Large-Format Sporting Goods Stores And Chains. These stores generally range from 20,000 to 80,000 square feet andoffer a broad selection of sporting goods merchandise covering a variety of sporting goods categories, including baseball,basketball, football and home gyms, as well as hunting, fishing and camping. However, we believe that the amount of spaceat these stores devoted to our outdoor product categories limits the extent of their offerings in these areas. Mass Merchandisers, Warehouse Clubs, Discount Stores, Department Stores and Online Retailers. With respect toretailers in this category with physical stores, these stores generally range in size from approximately 50,000 to over 200,000square feet and are primarily located in shopping centers, free-standing sites or regional malls. Hunting, fishing and campingmerchandise and clothing represent a small portion of the stores’ assortment, and of their total sales. We believe that less than10% of our product offering, and less than 5% of our hunting and shooting product offering, overlap with these stores. Over the past decade, specialty retailers, such as us, have gained market share of equipment sales at the expense of massmerchants, discount stores and independent retailers, or “mom & pop” shops, which we believe comprise approximately 65%of the market. In addition, while there are over 60,000 Type 01 Federal Firearms Licenses, or FFLs, in the United States today,only 4,000 are currently held by national or regional specialty stores. Since FFLs are issued at the store level, these statisticsimply that the remaining 95% of the market is fragmented among mom & pop stores. We believe this fragmentation withinthe total addressable market presents an attractive opportunity for us to continue to expand our market share, as customersincreasingly prefer a broad and appealing selection of merchandise, competitive prices, high levels of service and one-stopshopping convenience. Seasonality We experience moderate seasonal fluctuations in our net sales and operating results as a result of holiday spending andthe opening of hunting seasons. While our sales are more level throughout the year than many retailers, our sales are stilltraditionally somewhat higher in the third and fourth fiscal quarters than in the other quarterly periods. On average over thelast three fiscal years, we have generated 27.3% and 29.3% of our net sales in the third and fourth fiscal quarters, respectively,which includes the holiday selling season as well as the opening of the fall hunting season. However, Spring hunting,Father’s Day and the availability of hunting and fishing throughout the year in many of our markets counterbalance thisseasonality to a certain degree. For additional information, see Part II, Item 7 “Management’s Discussion and Analysis ofFinancial Condition and Results of Operation." 17 Table of ContentsRegulation and Compliance Regulation and Legislation We operate in highly regulated industries. There are a number of federal, state and local laws and regulations that affectour business. In every state in which we operate, we must obtain various licenses or permits in order to operate our business. Because we sell firearms at all of our retail stores, we are subject to regulation by the Bureau of Alcohol, Tobacco,Firearms and Explosives, or the “ATF”. Each store has a federal firearms license permitting the sale of firearms, and ourdistribution center has obtained a federal firearms license to store and distribute firearms. Certain states require a state licenseto sell firearms, and we have obtained these licenses for the states in which we operate that have such a requirement. We must comply with federal, state and local laws and regulations, including the National Firearms Act of 1934, orNFA, the Gun Control Act of 1968, or GCA, the Arms Export Control Act of 1976 and Internal Revenue Code provisionsapplicable to the Firearms and Ammunition Excise Tax, all of which have been amended from time to time. The NFA and theGCA require our business to, among other things, maintain federal firearms licenses for our locations and perform a pre-transfer background check in connection with all firearms purchases. We perform this background check using either the FBI-managed National Instant Criminal Background Check System, or NICS, or a comparable state government-managed systemthat relies on NICS and any additional information collected by the state, a state point of contact. These background checksystems either confirm that a transfer can be made, deny the transfer or require that the transfer be delayed for further review,and provide us with a transaction number for the proposed transfer. We are required to record the transaction number on anATF Form 4473 and retain this form in our records for auditing purposes for 20 years for each approved transfer and five yearsfor each denied or delayed transaction. The federal categories of prohibited purchasers are the prevailing minimum for all states. States (and, in some cases,local governments) on occasion enact laws that further restrict permissible purchasers of firearms. We are also subject tonumerous other federal, state and local laws and regulations regarding firearm sale procedures, record keeping, inspectionand reporting, including adhering to minimum age restrictions regarding the purchase or possession of firearms orammunition, residency requirements, applicable waiting periods, importation regulations and regulations pertaining to theshipment and transportation of firearms. Over the past several years, bills have been introduced in the United States Congress that would restrict or prohibit themanufacture, transfer, importation or sale of certain calibers of handgun ammunition, impose a tax and import controls onbullets designed to penetrate bullet-proof vests, impose a special occupational tax and registration requirements onmanufacturers of handgun ammunition and increase the tax on handgun ammunition in certain calibers. In September 2004, Congress declined to renew the Assault Weapons Ban of 1994, or AWB, which prohibited themanufacture of certain firearms defined as “assault weapons”; restricted the sale or possession of “assault weapons,” exceptthose that were manufactured prior to the law’s enactment; and placed restrictions on the sale of new high capacityammunition feeding devices. Various states and local jurisdictions, including Colorado and California (states in which weoperate stores), have adopted their own versions of the AWB or high capacity ammunition feeding device restrictions, someof which restrictions apply to the products we sell in other states. If a statute similar to the AWB were to be enacted or re-enacted at the federal level, it would impact our ability to sell certain products. Additionally, state and local governmentshave proposed laws and regulations that, if enacted, would place additional restrictions on the manufacture, transfer, sale,purchase, possession and use of firearms, ammunition and shooting-related products. For example, several states, such asCalifornia, Colorado, Connecticut, Florida, Maryland, New Jersey, New York, and Washington have enacted laws andregulations that are more restrictive than federal laws and regulations that limit access to and sale of certain firearms andammunition. Connecticut and New York impose mandatory screening of ammunition purchases; California and the Districtof Columbia have requirements for microstamping (that is, engraving the handgun’s serial number on each cartridge) of newhandguns; Florida recently passed legislation that, among other things, raises the minimum age to purchase any firearm to 21from 18 and imposes a three-day waiting period on gun purchases; and some states prohibit the sale of guns without internalor external locking mechanisms. Other state or local governmental entities may also explore similar legislative or regulatoryinitiatives that may further restrict the manufacture, sale, purchase, possession or use of firearms, ammunition and shooting-related products. 18 Table of ContentsThe Protection of Lawful Commerce in Arms Act, which became effective in October 2005, prohibits civil liabilityactions from being brought or continued in any federal or state court against federally licensed manufacturers, distributors,dealers or importers of firearms or ammunition for damages, punitive damages, injunctive or declaratory relief, abatement,restitution, fines, penalties or other relief resulting from the criminal or unlawful misuse of a qualified product by thirdparties. The legislation does not preclude traditional product liability actions. We are also subject to a variety of federal, state and local laws and regulations relating to, among other things,protection of the environment, human health and safety, advertising, pricing, weights and measures, product safety, and othermatters. Some of these laws affect or restrict the manner in which we can sell certain items, such as handguns, smokelesspowder, black powder substitutes, ammunition, bows, knives and other products. State and local laws and regulationsgoverning hunting, fishing, boating, ATVs and other outdoor activities and equipment can also affect our business. Webelieve that we are in substantial compliance with the terms of such laws and that we have no liabilities under such laws thatwe expect could have a material adverse effect on our business, results of operations or financial condition. In addition, many of our imported products are subject to existing or potential duties, tariffs or quotas that may limitthe quantity of products that we may import into the United States and other countries or impact the cost of such products. Todate, quotas in the operation of our business have not restricted us, and customs duties have not comprised a material portionof the total cost of our products. Our e-commerce business is subject to the Mail or Telephone Order Merchandise Rule and related regulationspromulgated by the Federal Trade Commission, or FTC, which affect our catalog mail order operations. FTC regulations, ingeneral, govern the solicitation of orders, the information provided to prospective customers, and the timeliness of shipmentsand refunds. In addition, the FTC has established guidelines for advertising and labeling many of the products we sell. Compliance We are routinely inspected by the ATF and various state agencies to ensure compliance with federal and localregulations. While we view such inspections as a starting point, we employ more thorough internal compliance inspectionsto help ensure we are in compliance with all applicable laws. Our compliance department conducts at least one on-siteinspection of each store location biennially. With the IT infrastructure systems we have in place, certain components of recallinspections can be done remotely. We dedicate significant resources to ensure compliance with applicable federal, state and local regulations. Since webegan operations in 1986, none of our federal firearm licenses have been revoked, and none of our ATF complianceinspections within the last ten years have resulted in a major violation. We are also subject to a variety of state laws and regulations relating to, among other things, advertising and productrestrictions. Some of these laws prohibit or limit the sale, in certain states and locations, of certain items, such as blackpowder firearms, ammunition, bows, knives, and similar products. Our compliance department administers various restrictioncodes and other software tools to prevent the sale of such jurisdictionally restricted items. We have particular expertise in the California market and have passed several California Department of Justice, or CADOJ, firearm audits with zero violations or only minor violations. The CA DOJ communicates with us for policy discussion,recognizing the strength of our compliance infrastructure. Employees As of February 3, 2018, we had approximately 5,000 total employees. Of our total employees, approximately 200 werebased at our corporate headquarters in Midvale, Utah, approximately 300 were located at our distribution center, andapproximately 4,500 were store employees. We had approximately 2,100 full-time employees and approximately 2,900 part-time employees, who are primarily store employees. None of our employees are represented by a labor union or are party to acollective bargaining agreement, and we have had no labor-related work stoppages. Our relationship with our employees isone of the keys to our success, and we believe that relationship is good. 19 Table of ContentsAvailable Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments toreports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or theExchange Act, are available on our web site at www.sportsmanswarehouse.com, free of charge, as soon as reasonablypracticable after the electronic filing of these reports with, or furnishing of these reports to, the SEC. Any materials we filewith the SEC are available at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Additionalinformation about the operation of the Public Reference Room can also be obtained by calling the SEC at 1-800-SEC-0330.In addition, the SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements, and otherinformation regarding issuers that file electronically with the SEC, including us. ITEM 1A. RISK FACTORS Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect onour business prospects, financial condition and results of operations, and you should carefully consider them. Accordingly,in evaluating our business, we encourage you to consider the following discussion of risk factors, in its entirety, in additionto other information contained in or incorporated by reference into this 10-K and our other public filings with the SEC. Otherevents that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects,financial condition and results of operations. Risks Related to Our Business Current and future government regulations, in particular regulations relating to the sale of firearms and ammunition,may negatively impact the demand for our products and our ability to conduct our business. We operate in a complex regulatory and legal environment that could negatively impact the demand for our productsand expose us to compliance and litigation risks, which could materially affect our operations and financial results. Theselaws may change, sometimes significantly, as a result of political, economic or social events. For instance, Florida recentlypassed legislation that, among other things, raises the minimum age to purchase any firearm to 21 from 18 and imposes athree-day waiting period on gun purchases in response to the Marjory Stoneman Douglas High School shooting in Parkland,Florida. Some of the federal, state or local laws and regulations that affect our business and demand for our products include: ·federal, state or local laws and regulations or executive orders that prohibit or limit the sale of certain items weoffer, such as firearms, black powder firearms, ammunition, bows, knives and similar products; ·the ATF, regulations, audit and regulatory policies that impact the process by which we sell firearms andammunition and similar policies of state agencies that have concurrent jurisdiction, such as the CA DOJ; ·laws and regulations governing hunting and fishing; ·laws and regulations relating to the collecting and sharing of non-public customer information; ·laws and regulations relating to consumer products, product liability or consumer protection, including regulationby the Consumer Product Safety Commission and similar state regulatory agencies; ·laws and regulations relating to the manner in which we advertise, market or sell our products; ·labor and employment laws, including wage and hour laws; ·U.S. customs laws and regulations pertaining to proper item classification, quotas and the payment of duties andtariffs; and ·FTC regulations governing the manner in which orders may be solicited and prescribing other obligations infulfilling orders and consummating sales. 20 Table of ContentsOver the past several years, bills have been introduced in the United States Congress that would restrict or prohibit themanufacture, transfer, importation or sale of certain calibers of handgun ammunition, impose a tax and import controls onbullets designed to penetrate bullet-proof vests, impose a special occupational tax and registration requirements onmanufacturers of handgun ammunition and increase the tax on handgun ammunition in certain calibers. Because we carrythese products, such legislation could, depending on its scope, materially harm our sales. Additionally, state and local governments have proposed laws and regulations that, if enacted, would place additionalrestrictions on the manufacture, transfer, sale, purchase, possession and use of firearms, ammunition and shooting-relatedproducts. For example, in response to the Sandy Hook Elementary shooting in Newtown, Connecticut and other incidents inthe United States, several states, such as Colorado, Connecticut, Maryland, New Jersey, and New York, have enacted laws andregulations that limit access to and sale of certain firearms in ways more restrictive than federal laws. Other state or localgovernmental entities may continue to explore similar legislative or regulatory restrictions that could prohibit themanufacture, sale, purchase, possession or use of firearms and ammunition. In New York and Connecticut, mandatoryscreening of ammunition purchases is now required. In addition, California and the District of Columbia have adoptedrequirements for micro-stamping (that is, engraving the handgun’s serial number on the firing pin of new handguns), and atleast seven other states and the United States Congress have introduced microstamping legislation for certain firearms.Lastly, some states prohibit the sale of firearms without internal or external locking mechanisms, and several states areconsidering mandating certain design features on safety grounds, most of which would be applicable only to handguns.Other state or local governmental entities may also explore similar legislative or regulatory initiatives that may furtherrestrict the manufacture, sale, purchase, possession or use of firearms, ammunition and shooting-related products. The regulation of firearms, ammunition and shooting-related products may become more restrictive in the future.Changes in these laws and regulations or additional regulation, particularly new laws or increased regulations regarding salesand ownership of firearms and ammunition, could cause the demand for and sales of our products to decrease and couldmaterially adversely impact our net sales and profitability. Sales of firearms represent a significant percentage of our net salesand are critical in drawing customers to our stores. A substantial reduction in our sales or margins on sales of firearms andfirearm related products due to the establishment of new regulations could harm our operating results. Moreover, complyingwith increased or changed regulations could cause our operating expenses to increase. Our retail-based business model is impacted by general economic conditions in our markets, and ongoing economic andfinancial uncertainties may cause a decline in consumer spending that may adversely affect our business, operations,liquidity, financial results and stock price. As a retail business that depends on consumer discretionary spending, we may be adversely affected if our customersreduce, delay or forego their purchases of our products as a result of continued job losses, bankruptcies, higher consumer debtand interest rates, increases in inflation, higher energy and fuel costs, reduced access to credit, falling home prices and otheradverse conditions in the mortgage and housing markets, lower consumer confidence, uncertainty or changes in tax policiesand tax rates, uncertainty due to potential national or international security concerns and adverse or unseasonal weatherconditions. Decreases in same store sales, customer traffic or average ticket sales negatively affect our financial performance,and a prolonged period of depressed consumer spending could have a material adverse effect on our business. Promotionalactivities, vendor incentives, and decreased demand for consumer products could affect profitability and margins. Inaddition, adverse economic conditions may result in an increase in our operating expenses due to, among other things,higher costs of labor, energy, equipment and facilities. Due to recent fluctuations in the U.S. economy, our sales, operatingand financial results for a particular period are difficult to predict, making it difficult to forecast results to be expected infuture periods. Any of the foregoing factors could have a material adverse effect on our business, results of operations andfinancial condition and could adversely affect our stock price. Our concentration of stores in the Western United States makes us susceptible to adverse conditions in this region. The majority of our stores are currently located in the Western United States, comprising Alaska, Arizona, California,Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming. As a result, our operations aremore susceptible to regional factors than the operations of more geographically diversified competitors. These factorsinclude regional economic and weather conditions, natural disasters, demographic and population changes andgovernmental regulations in the states in which we operate. Environmental changes and disease epidemics affecting21 Table of Contentsfish or game populations in any concentrated region may also affect our sales. If a region with a concentration of our storeswere to suffer an economic downturn or other adverse event, our operating results could suffer. Competition in the outdoor activities and sporting goods market could reduce our net sales and profitability. The outdoor activities and sporting goods market is highly fragmented and competitive. We compete directly orindirectly with the following types of companies: ·independent, local specialty stores, often referred to as “mom & pops”; ·other specialty retailers that compete with us across a significant portion of our merchandising categories throughretail store, catalog or e-commerce businesses, such as Bass Pro Shops, Cabela’s and Gander Outdoors; ·large-format sporting goods stores and chains, such as Academy Sports + Outdoors and Dick’s Sporting Goods; and ·mass merchandisers, warehouse clubs, discount stores, department stores and online retailers, such as Amazon,Target and Wal-Mart. A few of our competitors have a larger number of stores, and some of them have a greater market presence, namerecognition and financial, distribution, marketing and other resources than we have. In addition, if our competitors reducetheir prices, we may have to reduce our prices in order to compete, which could harm our margins. Furthermore, some of ourcompetitors may build new stores in or near our existing locations or in locations with high concentrations of our e-commerce business customers. As a result of this competition, we may need to spend more on advertising and promotion.Some of our mass merchandising competitors, such as Wal-Mart, do not currently compete in many of the product lines weoffer. However, if these competitors were to begin offering a broader array of competing products, or if any of the other factorslisted above occurred, our net sales could be reduced or our costs could be increased, resulting in reduced profitability. If we fail to anticipate changes in consumer demands, including regional preferences, in a timely manner, our operatingresults could suffer. Our products appeal to consumers who regularly hunt, camp, fish and participate in various shooting sports. Thepreferences of these consumers cannot be predicted with certainty and are subject to change. In addition, due to differentgame and fishing species and varied weather conditions found in different markets, it is critical that our stores stock productsappropriate for their markets. Our success depends on our ability to identify product trends in a variety of markets as well asto anticipate, gauge and quickly react to changing consumer demands in these markets. We usually must order merchandisewell in advance of the applicable selling season. The extended lead times for many of our purchases may make it difficult forus to respond rapidly to new or changing product trends or changes in prices. If we misjudge either the market for ourproducts or our customers’ purchasing habits, our net sales may decline significantly and we may not have sufficientquantities of merchandise to satisfy customer demand or we may be required to mark down excess inventory, either of whichwould result in lower profit margins and harm our operating results. Our expansion into new, unfamiliar markets presents increased risks that may prevent us from being profitable in thesenew markets. We intend to expand by opening stores in new markets, which may include small- to medium-sized markets and whichmay not have existing national outdoor sports retailers. As a result, we may have less familiarity with local customerpreferences and encounter difficulties in attracting customers due to a reduced level of customer familiarity with our brand.Other factors that may impact our ability to open stores in new markets and operate them profitably, many of which arebeyond our control, include: ·our ability to identify suitable locations, including our ability to gather and assess demographic and marketingdata to determine consumer demand for our products in the locations we select; ·our ability to obtain financing on favorable terms or negotiate favorable lease agreements;22 Table of Contents ·our ability to properly assess the profitability of potential new retail store locations; ·our ability to secure required governmental permits and approvals; ·our ability to hire and train skilled store operating personnel, especially management personnel; ·the availability of construction materials and labor and the absence of significant construction delays or costoverruns; ·our ability to provide a satisfactory mix of merchandise that is responsive to the needs of our customers living inthe areas where new retail stores are built; ·our ability to supply new retail stores with inventory in a timely manner; ·our competitors building or leasing stores near our retail stores or in locations we have identified as targets for anew retail store; ·consumer demand for our products, particularly firearms and ammunition, which drives traffic to our retail stores; ·regional economic and other factors in the geographies in which we expand; and ·general economic, political, and business conditions affecting consumer confidence and spending and the overallstrength of our business. Once we decide on a new market and find a suitable location, any delays in opening new stores could impact ourfinancial results. It is possible that events, such as delays in the entitlements process or construction delays caused bypermitting or licensing issues, material shortages, labor issues, weather delays or other acts of god, discovery ofcontaminants, accidents, deaths or injunctions, could delay planned new store openings beyond their expected dates or forceus to abandon planned openings altogether. In addition, new retail stores typically generate lower operating margins becausepre-opening expenses are expensed as they are incurred and because fixed costs, as a percentage of net sales, are higher.Furthermore, the substantial management time and resources which our retail store expansion strategy requires may result indisruption to our existing business operations, which may decrease our profitability. As a result of the above factors, we cannot assure you that we will be successful in operating our stores in new marketson a profitable basis. Our planned growth may strain our business infrastructure, which could adversely affect our operations and financialcondition. Over time, we expect to expand the size of our retail store network in new and existing markets. As we grow, we willface the risk that our existing resources and systems, including management resources, accounting and finance personnel andoperating systems, may be inadequate to support our growth. We cannot assure you that we will be able to retain thepersonnel or make the changes in our systems that may be required to support our growth. Failure to secure these resourcesand implement these systems on a timely basis could have a material adverse effect on our operating results. In addition,hiring additional personnel and implementing changes and enhancements to our systems will require capital expendituresand other increased costs that could also have a material adverse impact on our operating results. Our expansion in new markets may also create new distribution and merchandising challenges, including strain on ourdistribution facility, an increase in information to be processed by our management information systems and diversion ofmanagement attention from existing operations towards the opening of new stores and markets. To the extent that we are notable to meet these additional challenges, our sales could decrease and our operating expenses could increase. 23 Table of ContentsOur ability to operate and expand our business and to respond to changing business and economic conditions will dependon the availability of adequate capital. The operation of our business, the rate of our expansion and our ability to respond to changing business and economicconditions depend on the availability of adequate capital, which in turn depends on cash flow generated by our business and,if necessary, the availability of equity or debt capital. We will also need sufficient cash flow to meet our obligations underour existing debt agreements. We paid total cash interest on our credit facilities of $13.7 million, $12.0 million, and $12.8million, in fiscal years 2017, 2016 and 2015, respectively, and our term loans require us to make quarterly principalpayments of $0.4 million. We are required to make mandatory prepayments based on any excess cash flows as defined in the term loan agreement.We will not be required to make a mandatory prepayment in fiscal year 2018 for excess cash flows. The amount that we are able to borrow and have outstanding under our revolving credit facility at any given time issubject to a borrowing base calculation, which is a contractual calculation equal to roughly [90%] of the net orderlyliquidation value of our eligible inventory, multiplied by (2) 90% of the eligible accounts receivable, less certain reservesagainst outstanding gift cards, layaway deposits and amounts outstanding under commercial letters of credit, each term asdefined in the credit agreement for the revolving credit facility. As a result, our ability to borrow is subject to certain risksand uncertainties, such as a deterioration in the quality of our inventory (which is the largest asset in our borrowing base), adecline in sales activity and the collection of our receivables, which could reduce the funds available to us under ourrevolving credit facility. We cannot assure you that our cash flow from operations or cash available under our revolving credit facility will besufficient to meet our needs. If we are unable to generate sufficient cash flows from operations in the future, and if availabilityunder our revolving credit facility is not sufficient, we may have to obtain additional financing. If we obtain additionalcapital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, thatindebtedness may contain significant financial and other covenants that may significantly restrict our operations, and ourability to fund expansion or take advantage of future opportunities. We cannot assure you that we could obtain refinancingor additional financing on favorable terms or at all. Our revolving credit facility and term loans contain restrictive covenants that may impair our ability to access sufficientcapital and operate our business. Our revolving credit facility and term loans contain various provisions that limit our ability to, among other things: ·incur, create or assume certain indebtedness; ·create, incur or assume certain liens; ·make certain investments; ·make sales, transfers and dispositions of certain property; ·undergo certain fundamental changes, including certain mergers, liquidations and consolidations; ·purchase, hold or acquire certain investments; and ·declare or make certain dividends and distributions. These covenants may affect our ability to operate and finance our business as we deem appropriate. If we are unable tomeet our obligations as they become due or to comply with various financial covenants contained in the instrumentsgoverning our current or future indebtedness, this could constitute an event of default under the instruments governing ourindebtedness. If there were an event of default under the instruments governing our indebtedness, the holders of the affectedindebtedness could declare all of that indebtedness immediately due and payable, which, in turn, could cause theacceleration of the maturity of all of our other indebtedness. We may not have sufficient funds available, or we may not24 Table of Contentshave access to sufficient capital from other sources, to repay any accelerated debt. Even if we could obtain additionalfinancing, the terms of the financing may not be favorable to us. In addition, substantially all of our assets are subject to lienssecuring our revolving credit facility and term loans. If amounts outstanding under the revolving credit facility or term loanswere accelerated, our lenders could foreclose on these liens and we could lose substantially all of our assets. Any event ofdefault under the instruments governing our indebtedness could have a material adverse effect on our business, financialcondition and results of operations. Our same store sales may fluctuate and may not be a meaningful indicator of future performance. Our same store sales may vary from quarter to quarter, and an unanticipated decline in net sales or same store sales maycause the price of our common stock to fluctuate significantly. A number of factors have historically affected, and willcontinue to affect, our same store sales results, including: ·changes or anticipated changes to regulations related to some of the products we sell; ·consumer preferences, buying trends, including a shift of consumer spending from brick-and-mortar to online, andoverall economic trends; ·our ability to identify and respond effectively to local and regional trends and customer preferences; ·our ability to provide quality customer service that will increase our conversion of shoppers into payingcustomers; ·competition in the regional market of a store; ·atypical weather; ·new product introductions and changes in our product mix; and ·changes in pricing and average ticket sales. Our operating results are subject to seasonal fluctuations. We experience moderate seasonal fluctuations in our net sales and operating results. On average over the last threefiscal years, we have generated 27.3% and 29.3% of our annual net sales in the third and fourth fiscal quarters, respectively,which includes the holiday selling season as well as the opening of the fall hunting season. We incur additional expenses inthe third and fourth fiscal quarters due to higher purchase volumes and increased staffing in our stores. If, for any reason, wemiscalculate the demand for our products or our product mix during the third or fourth fiscal quarters, our sales in thesequarters could decline, resulting in higher labor costs as a percentage of sales, lower margins and excess inventory, whichcould cause our annual operating results to suffer and our stock price to decline. Due to our seasonality, the possible adverseimpact from other risks associated with our business, including atypical weather, consumer spending levels and generaleconomic and business conditions, is potentially greater if any such risks occur during our peak sales seasons. We rely on a single distribution center for our business, and if there is a natural disaster or other serious disruption atsuch facility, we may be unable to deliver merchandise effectively to our stores or customers. We rely on a single distribution center in Salt Lake City, Utah for our business. Any natural disaster or other seriousdisruption at such facility due to fire, tornado, earthquake, flood or any other cause could damage our on-site inventory orimpair our ability to use such distribution center. While we maintain business interruption insurance, as well as generalproperty insurance, the amount of insurance coverage may not be sufficient to cover our losses in such an event. Any of theseoccurrences could impair our ability to adequately stock our stores or fulfill customer orders and harm our operating results. 25 Table of ContentsAny delar or disruption of the supply of products from our vendors could have an adverse impact on our net sales andprofitability. We cannot predict when, or the extent to which, we will experience any delay or disruption in the supply of productsfrom our vendors. Any such delay or disruption could negatively impact our ability to market and sell our products and serveour customers, which could adversely impact our net sales and profitability. If any of our significant vendors were to becomesubject to bankruptcy, receivership or similar proceedings, we may be unable to arrange for alternate or replacementproducts, transactions or business relationships on terms as favorable terms, or at all, which could adverse affect our sales andoperating results. For instance, in March 2018, Remington, one of our largest vendors, filed for Chapter 11 relief under theUnited States Bankruptcy Code. Remington’s bankruptcy may impact our ability to get products to our customers, result indisruptions to our operations, increase our costs and decrease our profitability. We depend on merchandise purchased from our vendors to obtain products for our stores. We have no contractualarrangements providing for continued supply from our key vendors, and our vendors may discontinue selling to us at anytime. Changes in commercial practices of our key vendors or manufacturers, such as changes in vendor support andincentives or changes in credit or payment terms, could also negatively impact our results. If we lose one or more key vendorsor are unable to promptly replace a vendor that is unwilling or unable to satisfy our requirements with a vendor providingequally appealing products at comparable prices, we may not be able to offer products that are important to our merchandiseassortment. We also are subject to risks, such as the price and availability of raw materials and fabrics, labor disputes, unionorganizing activity, strikes, inclement weather, natural disasters, war and terrorism and adverse general economic andpolitical conditions, that might limit our vendors’ ability to provide us with quality merchandise on a timely and cost-efficient basis. We may not be able to develop relationships with new vendors, and products from alternative sources, if any,may be of a lesser quality and more expensive than those we currently purchase. Any delay or failure in offering products toour customers could have a material adverse impact on our net sales and profitability. Political and economic uncertainty and unrest in foreign countries where our merchandise vendors are located andtrade restrictions upon imports from these foreign countries could adversely affect our ability to source merchandiseand operating results. In fiscal year 2017, approximately 2.6% of our merchandise was imported directly from vendors located in foreigncountries, with a substantial portion of the imported merchandise being obtained directly from vendors in China and ElSalvador. In addition, we believe that a significant portion of our domestic vendors obtain their products from foreigncountries that may also be subject to political and economic uncertainty. We are subject to risks and uncertainties associatedwith changing economic, political and other conditions in foreign countries where our vendors are located, such as: ·increased import duties, tariffs, border-adjusted taxes, trade restrictions and quotas; ·work stoppages; ·economic uncertainties; ·adverse foreign government regulations; ·wars, fears of war and terrorist attacks and organizing activities; ·adverse fluctuations of foreign currencies; ·natural disasters; and ·political unrest. We cannot predict when, or the extent to which, the countries in which our products are manufactured will experienceany of the above events. Any event causing a disruption or delay of imports from foreign locations would26 Table of Contentslikely increase the cost or reduce the supply of merchandise available to us and would adversely affect our operating results. In addition, trade restrictions, including increased tariffs or quotas, embargoes, safeguards and customs restrictionsagainst clothing items, as well as U.S. or foreign labor strikes, work stoppages or boycotts could increase the cost or reducethe supply of merchandise available to us or may require us to modify our current business practices, any of which could hurtour profitability. Finally, potential changes in federal restrictions on the importation of firearms and ammunition products could affectour ability to acquire certain popular brands of firearms and ammunition products from importers and wholesalers, whichcould negatively impact our net sales until replacements in the United States can be obtained, if at all. We rely on information technology in our operations and any material failure, inadequacy, interruption or securitybreach or failure of that technology could disrupt our business and lead to reputational damage. We rely on information technology networks and systems, including the Internet, to process, transmit and storeelectronic information, and to manage or support a variety of business processes, including financial transactions andrecords, and maintaining personal identifying information and customer data. We rely on commercially available systems,software, tools and monitoring to provide security for the processing, transmission and storage of confidential tenant andcustomer data, including individually identifiable information relating to financial accounts. We have taken steps to protectthe security of our information systems and the data maintained in those systems. It is possible, however, that our safety andsecurity measures will not prevent the systems’ improper functioning or damage, or the improper access or disclosure ofpersonally identifiable information such as in the event of cyber-attacks. Security breaches, including those caused byphysical or electronic break-ins, computer viruses, malware, worms, attacks by hackers or foreign governments, disruptionsfrom unauthorized access and tampering (including through social engineering such as phishing attacks), coordinateddenial-of-service attacks and similar breaches. These events could create system disruptions, shutdowns or unauthorizeddisclosure of confidential information. The risk of security breaches has generally increased as the number, intensity andsophistication of attacks and intrusions from around the world have increased. In some cases, it may be difficult to anticipateor immediately detect such incidents and the damage they cause. In addition, due to the fast pace and unpredictability ofcyber threats, long-term implementation plans designed to address cybersecurity risks become obsolete quickly. Any failureto maintain proper function, security and availability of our information systems and the data maintained in those systemscould interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have amaterially adverse effect on our business, financial condition and results of operations. If we are unable to successfully develop and maintain our omni-channel strategy, we may not be able to competeeffectively and our sales and profitability may be adversely affected. Our e-commerce business is an important element of our brand and relationship with our customers, and we expect it tocontinue to grow. If we are unable to successfully develop and maintain our omni-channel platform, we may not be able tocompete effectively and our sales and profitability may be adversely affected. Online shopping is rapidly evolving, and weexpect competition in the e-commerce market to intensify in the future as the Internet facilitates competitive entry andcomparison shopping. Consumers are increasingly embracing shopping online and through mobile commerce applications.As a result, a growing portion of total consumer expenditures with retailers is occurring online and through mobile commerceapplications. Our future success could be adversely affected if we are unable to identify and capitalize on retail tends,including technology, e-commerce and other process efficiencies to gain market share and better service our customers. Inaddition, many of our competitors already have e-commerce businesses that are substantially larger and more developed thanours, which places us at a competitive disadvantage. There are also regulatory restrictions on the sale of approximately 33%of our product offerings, such as ammunition, certain cutlery, firearms, propane and reloading powder. If we are unable toexpand our e-commerce business, our growth plans will suffer and the price of our common stock could decline. We are also vulnerable to additional risks and uncertainties associated with e-commerce sales, including rapid changesin technology, website downtime and other technical failures, security breaches, cyber-attacks, consumer privacy concerns,changes in state tax regimes and government regulation of internet activities. Our failure to27 Table of Contentssuccessfully respond to these risks and uncertainties could reduce our e-commerce sales, increase our costs, diminish ourgrowth prospects and damage our brand, which could negatively impact our results of operations and stock price. We do not collect sales taxes in some jurisdictions, which could result in substantial tax liabilities and cause our future e-commerce sales to decrease. An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations onout-of-state retailers. We believe that these initiatives are inconsistent with the United States Supreme Court’s holding thatstates, absent congressional legislation, may not impose tax collection obligations on out-of-state e-commerce businessesunless the out-of-state e-commerce business has nexus with the state. A successful assertion by one or more states requiring usto collect taxes where we do not do so could result in substantial tax liabilities, including for past sales, as well as penaltiesand interest. The imposition by state governments of sales tax collection obligations on out-of-state e-commerce businesseswho participate in e-commerce could also create additional administrative burdens for us, put us at a competitivedisadvantage if they do not impose similar obligations on our competitors and decrease our future e-commerce sales, whichcould have a material adverse impact on our business and results of operations. We may incur costs from litigation relating to products that we sell, particularly firearms and ammunition, which couldadversely affect our net sales and profitability. We may incur damages due to lawsuits relating to products we sell, including lawsuits relating to firearms, ammunition,tree stands and archery equipment. We may incur losses due to lawsuits, including potential class actions, relating to ourperformance of background checks on firearms purchases and compliance with other sales laws as mandated by state andfederal law. We may also incur losses from lawsuits relating to the improper use of firearms or ammunition sold by us,including lawsuits by municipalities or other organizations attempting to recover costs from manufacturers and retailers offirearms and ammunition. Our insurance coverage and the insurance provided by our vendors for certain products they sell tous may be inadequate to cover claims and liabilities related to products that we sell. In addition, claims or lawsuits related toproducts that we sell, or the unavailability of insurance for product liability claims, could result in the elimination of theseproducts from our product line, thereby reducing net sales. If one or more successful claims against us are not covered by orexceed our insurance coverage, or if insurance coverage is no longer available, our available working capital may beimpaired and our operating results could be materially adversely affected. Even unsuccessful claims could result in theexpenditure of funds and management time and could have a negative impact on our profitability and on future premiums wewould be required to pay on our insurance policies. Our net sales and profitability could be impacted if the strength of our brand is not maintained, and our sales of firearm-related products could present reputational risks and negative publicity. Our success depends on the value and strength of the Sportsman’s Warehouse brand. The Sportsman’s Warehouse nameis integral to our business as well as to the implementation of our strategies for expanding our business. Maintaining,promoting and positioning our brand will depend largely on the success of our marketing and merchandising efforts and ourability to provide high quality merchandise and a consistent, high quality customer experience. Our brand could beadversely affected if we fail to achieve these objectives or if our public image or reputation were to be tarnished by negativepublicity, any of which could result in decreases in net sales. In addition, the sale of firearm-related products also may presentreputational risks and negative publicity that could affect consumers’ perception of us or willingness to shop with us, whichcould harm our results of operations and financial condition Our inability or failure to protect our intellectual property could have a negative impact on our operating results. Our trademarks, service marks, copyrights, patents, trade secrets, domain names and other intellectual property arevaluable assets that are critical to our success. The unauthorized reproduction or other misappropriation of our intellectualproperty could diminish the value of our brands or goodwill and cause a decline in our net sales. Any infringement or otherintellectual property claim made against us, whether or not it has merit, could be time-consuming, result in costly litigation,cause product delays or require us to enter into royalty or licensing agreements. As a result, any such claim could have amaterial adverse effect on our operating results. 28 Table of ContentsUnauthorized disclosure of sensitive or confidential customer information could harm our business and standing withour customers. The protection of our customer, employee and company data is critical to us. We rely on commercially availablesystems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customerinformation, such as payment card and personally identifiable information. Despite the security measures we have in place,our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts ofvandalism, computer viruses, misplaced or lost data, programming or human errors or other similar events. Any securitybreach involving the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us orour vendors, could damage our reputation, expose us to risk of litigation and liability, disrupt our operations and harm ourbusiness. Our computer hardware and software systems are vulnerable to damage that could harm our business. Our success, in particular our ability to successfully manage inventory levels, largely depends upon the efficientoperation of our computer hardware and software systems. We use management information systems to track inventoryinformation at the store level, communicate customer information and aggregate daily sales, margin and promotionalinformation. These systems are vulnerable to damage or interruption from: ·fire, flood, tornado and other natural disasters; ·power loss, computer system failures, internet and telecommunications or data network failures, operatornegligence, improper operation by or supervision of employees, physical and electronic loss of data or securitybreaches, misappropriation and similar events; ·hacking by third parties and computer viruses; and ·upgrades, installations of major software releases and integration with new systems. Any failure that causes an interruption in our systems processing could disrupt our operations and result in reducedsales. We have centralized the majority of our computer systems in our corporate office. It is possible that an event or disasterat our corporate office could materially and adversely affect the performance of our company and the ability of each of ourstores to operate efficiently. Our private brand offerings expose us to various risks. We expect to continue to grow our exclusive private brand offerings through a combination of brands that we own andbrands that we license from third parties. We have invested in our development and procurement resources and marketingefforts relating to these private brand offerings. Although we believe that our private brand products offer value to ourcustomers at each price point and provide us with higher gross margins than comparable third-party branded products we sell,the expansion of our private brand offerings also subjects us to certain specific risks in addition to those discussed elsewherein this section, such as: ·potential mandatory or voluntary product recalls; ·our ability to successfully protect our proprietary rights (including defending against counterfeit, knock offs, grey-market, infringing or otherwise unauthorized goods); ·our ability to successfully navigate and avoid claims related to the proprietary rights of third parties; ·our ability to successfully administer and comply with obligations under license agreements that we have with thelicensors of brands, including, in some instances, certain minimum sales requirements that, if not met, could causeus to lose the licensing rights or pay damages; and ·other risks generally encountered by entities that source, sell and market exclusive branded offerings for retail. 29 Table of ContentsAn increase in sales of our private brands may also adversely affect sales of our vendors’ products, which may, in turn,adversely affect our relationship with our vendors. Our failure to adequately address some or all of these risks could have amaterial adverse effect on our business, results of operations and financial condition. Our Chief Executive Officer recently retired and we transitioned his role to our President and Chief OperatingOfficer. The transition of our Chief Executive Officer role and maintaining other key management is critical to oursuccess. If we lose key management or are unable to attract and retain the talent required for our business, our operatingresults and financial condition could suffer. On March 13, 2018, John Schaefer retired as our Chief Executive Officer and our board of directors appointed JonBarker, our President and Chief Operating Officer, as our new Chief Executive Officer. The transition of the Chief ExecutiveOfficer role to Jon Barker and retaining other key management is critical to our success. Our performance depends largely onthe leadership efforts and abilities of our executive officers and other key employees. We have entered into employmentagreements with Jon Barker, our President and Chief Executive Officer, and Kevan P. Talbot, our Chief Financial Officer andSecretary. None of our other employees have an employment agreement with us. The loss of one or more of our keyemployees or our inability to attract, integrate, train and retain qualified personnel in a timely manner, including members ofmanagement, could harm our business and negatively impact our ability to successfully manage our business or achieve ourgrowth objectives. Our business depends on our ability to meet our labor needs. Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified employees,including district managers, store managers, department managers and sales associates, who understand and appreciate ouroutdoor culture and are able to adequately represent this culture to our customers. Qualified individuals of the requisitecaliber and number needed to fill these positions may be in short supply in some areas, and the turnover rate in the retailindustry is high. If we are unable to hire and retain sales associates capable of consistently providing a high level of customerservice, as demonstrated by their enthusiasm for our culture and knowledge of our merchandise, our business could bematerially adversely affected. Although none of our employees are currently covered by collective bargaining agreements,our employees may elect to be represented by labor unions in the future, which could increase our labor costs. Additionally,competition for qualified employees could require us to pay higher wages to attract a sufficient number of employees. Aninability to recruit and retain a sufficient number of qualified individuals in the future may delay the planned openings ofnew stores. Any such delays, any material increases in employee turnover rates at existing stores or any increases in laborcosts could have a material adverse effect on our business, financial condition or operating results. Increases in the minimum wage could adversely affect our financial results. Recently, legislative proposals have sought to increase the federal minimum wage in the United States, as well as theminimum wage in a number of individual states. Base wage rates for some of our employees are at or slightly above theminimum wage. As federal or state minimum wage rates increase, we may need to increase not only the wage rates of ourminimum wage employees, but also the wages paid to our other hourly employees as well. Further, should we fail to increaseour wages competitively in response to increasing wage rates, the quality of our workforce could decline, causing ourcustomer service to suffer. Any increase in the cost of our labor could have an adverse effect on our operating costs, financialcondition and results of operations. We may pursue strategic acquisitions or investments, and the failure of an acquisition or investment to produce theanticipated results or the inability to fully integrate the acquired companies could have an adverse impact on ourbusiness. We may from time to time acquire or invest in complementary companies, businesses or assets. The success of suchacquisitions or investments will be based on our ability to make accurate assumptions regarding the valuation, operations,growth potential, integration and other factors relating to the respective business or assets. Our acquisitions or investmentsmay not produce the results that we expect at the time we enter into or complete the transaction. For example, we may not beable to capitalize on previously anticipated synergies. Furthermore, acquisitions may result in dilutive issuances of ourequity securities, the incurrence of debt, contingent liabilities, amortization expenses or write-offs of goodwill or otherintangibles, any of which could harm our financial condition or results of operations. We also may not be able to successfullyintegrate operations that we acquire, including their personnel, financial systems, supply30 Table of Contentschain and other operations, which could adversely affect our business. Acquisitions may also result in the diversion of ourcapital and our management’s attention from other business issues and opportunities. A new standard for lease accounting may significantly impact the timing and amount in which we report our leaseexpense. In February 2016, the Financial Accounting Standards Board, or FASB, and the International Accounting StandardsBoard, or IASB, issued an accounting pronouncement with substantial changes to existing lease accounting that affects alllease arrangements. The new standard is effective beginning in the first quarter of 2019 and early adoption is permitted.Under the new accounting model, lessees are required to record an asset representing the right-to-use the leased item for thelease term, or right-of-use asset, and a corresponding liability to make lease payments. The right-of-use asset and liabilityincorporate the rights arising under the lease and are based on the lessee’s assessment of expected payments to be made overthe lease term. The model requires measuring these amounts at the present value of the future expected payments. Once we adopt this new standard, we expect that, for the majority of our leases, the lease expense would include theamortization of the right-of-use asset and the recognition of interest expense based upon the lessee’s incremental borrowingrate (or the rate implicit in the lease, if known) on the repayment of the lease obligation. Currently, management is stillassessing the impact the adoption of the new final lease standard will have on our financial statements. We currently expectthis adoption will result in a material increase in the assets and liabilities on our consolidated balance sheets. While webelieve the presentation of our financial statements will likely change, including the pattern of lease expense recognition, wedo not believe the accounting pronouncement will change the fundamental economic reasons for which we lease our stores. We may not achieve projected goals and objectives in the time periods that we anticipate or announce publicly, whichcould harm our business and cause the price of our common stock to decline. We set targets and timing to accomplish certain objectives regarding our business. We have included some of thesetargets in this filing and may make similar future public statements. For example, we state in this filing that: ·we currently plan to open four additional new stores in fiscal year 2018 and, for the next several years thereafter,intend to grow our square footage at a rate greater than 10% annually; and ·we target a minimum 10% four-wall Adjusted EBITDA margin and a minimum return on invested capital of 50%excluding initial inventory cost (or 20% including initial inventory cost) in the first twelve months of operationfor a new store. This filing also includes other forecasts and targets. These forecasts and targets are based on our current expectations.We may not achieve these forecasts and targets, and the actual achievement and timing of these events can vary due to anumber of factors, including currently unforeseen matters and matters beyond our control. You should not unduly rely onthese forecasts or targets in deciding whether to invest in our common stock. Risks Related to Our Common Stock Our bylaws, our certificate of incorporation and Delaware law contain provisions that could discourage anothercompany from acquiring us and may prevent attempts by our stockholders to replace or remove our currentmanagement. Provisions of our bylaws, our certificate of incorporation and Delaware law may discourage, delay or prevent a mergeror acquisition that stockholders may consider favorable, including transactions in which our stockholders might otherwisereceive a premium for their shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders toreplace or remove our current management by making it more difficult for stockholders to replace or remove our board ofdirectors. These provisions include: ·establishing a classified board of directors;31 Table of Contents ·providing that directors may be removed only for cause; ·not providing for cumulative voting in the election of directors; ·requiring at least a supermajority vote of our stockholders to amend our bylaws or certain provisions of ourcertificate of incorporation; ·eliminating the ability of stockholders to call special meetings of stockholders; ·establishing advance notice requirements for nominations for election to the board of directors or for proposingmatters that can be acted on by stockholders at stockholder meetings; ·authorizing the issuance of “blank check” preferred stock without any need for action by stockholders. In addition, we are subject to Section 203 of the Delaware General Corporation Law. In general, subject to someexceptions, Section 203 prohibits a Delaware corporation from engaging in any “business combination” with any “interestedstockholder” (which is generally defined as an entity or person who, together with the person’s affiliates and associates,beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% ormore of the outstanding voting stock of the corporation), for a three-year period following the date that the stockholderbecame an interested stockholder. Section 203 could have the effect of delaying, deferring or preventing a change in controlthat our stockholders might consider to be in their best interests. Further, our certificate of incorporation provides that, subject to limited exceptions, the Court of Chancery of the Stateof Delaware will be, to the fullest extent permitted by law, the exclusive forum for any derivative action or proceedingbrought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arisingpursuant to the Delaware General Corporation Law; or any action asserting a claim against us that is governed by the internalaffairs doctrine. This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that itfinds favorable for disputes with us or our directors, officers or other employees and agents, which may discourage suchlawsuits against us and our directors, officers, employees and agents. Together, these charter and statutory provisions could make the removal of management more difficult and maydiscourage transactions that otherwise could involve payment of a premium over prevailing market prices for our commonstock. The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might bewilling to pay in the future for shares of our common stock. They could also deter potential acquirers of our company,thereby potentially reducing the likelihood that our stockholders could receive a premium for their common stock in anacquisition. We expect that the price of our common stock will fluctuate. The price of our common stock is volatile and may fluctuate significantly. During our fiscal year ended February 3,2018, the closing price of our stock ranged from a high of $7.78 per share to a low of $3.46 per share. Volatility in the marketprice of our common stock may prevent our stockholders from being able to sell their common stock at or above the pricesthey paid for their common stock. The market price for our common stock could fluctuate significantly for various reasons,including: ·our operating and financial performance and prospects, including seasonal fluctuations in our financialperformance; ·conditions that impact demand for our products; ·the public’s reaction to our press releases, other public announcements and filings with the SEC; ·changes in earnings estimates or recommendations by securities analysts who track our common stock; ·market and industry perception of our success, or lack thereof, in pursuing our growth strategy; 32 Table of Contents·strategic actions by us or our competitors, such as acquisitions, store closures, or restructurings; ·actual or anticipated changes in federal and state government regulation, including regulations related to the saleof firearms and ammunition; ·changes in accounting standards, policies, guidance, interpretations or principles; ·arrival or departure of key personnel; ·sales of common stock by us or members of our management team; and ·changes in general market, economic and political conditions in the United States and global economies orfinancial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses tosuch events. In addition, if the market for stocks in our industry, or the stock market in general, experiences a loss of investorconfidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition orresults of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that,even if unsuccessful, could be costly to defend and distract our management. We are an emerging growth company (“EGC”) within the meaning of The Jumpstart our Business Startups Act (“JOBSAct”), and the reduced reporting requirements applicable to EGCs may make our common stock less attractive toinvestors. Because we qualify as an EGC under the JOBS Act, we have elected to comply with some of the reduced disclosure andother reporting requirements available to us as an EGC for a period of up to five years following our initial public offering ifwe remain an EGC. For example, for as long as we remain an EGC, we are not subject to certain governance requirements,such as holding a “say-on-pay” and “say-on-golden-parachute” advisory votes, we are not required to include a“Compensation Discussion and Analysis” section in our proxy statements and reports filed under the Exchange Act, and wedo not need to obtain an annual attestation report on our internal control over financial reporting from a registered publicaccounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). We could be anEGC for a period up to the end of the fifth fiscal year after our initial public offering (the end of fiscal year 2019), althoughwe will cease to be an EGC earlier than this five-year period if our total annual gross revenues equal or exceed $1 billion in afiscal year, if we issue more than $1 billion in non-convertible debt over a three-year period or if we become a “largeaccelerated filer” (which requires, among other things, the market value of our common stock held by non-affiliates to be atleast $700 million as of the last business day of our second fiscal quarter of any fiscal year). Accordingly, for up to five fiscal years after our initial public offering, our stockholders may not receive the same levelof disclosure that is afforded to stockholders of a non-EGC. It is possible that investors will find our common stock to be lessattractive because we have elected to comply with the reduced disclosure and other reporting requirements available to us asan EGC, which could adversely affect the trading market for our common stock and the prices at which stockholders may beable to sell their common stock. The requirements of being a public company may strain our resources and divert management’s attention. As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, theDodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and other applicable securities rules and regulations.Compliance with these rules and regulations have increased our legal and financial compliance costs, make some activitiesmore difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Act requires,among other things, that we file annual, quarterly and current reports with respect to our business and results of operationsand proxy or information statements in connection with matters upon which our stockholders may vote. As a result of ourpublic disclosure of information in filings required of a public company, our business and financial condition have becomemore visible, which could result in threatened or actual litigation, or other adverse actions taken by competitors and otherthird parties. The time and resources necessary to comply with the requirements of being a public company and contend withany action that might be brought against us as a result of publicly available33 Table of Contentsinformation could divert our resources and the attention of our management and adversely affect our business, financialcondition and results of operations. If we are unable to implement and maintain effective internal control over financial reporting, investors may loseconfidence in the accuracy and completeness of our financial reports, and the market price of our common stock may beadversely affected. As a public company, we are required to implement and maintain effective internal control over financial reporting andto disclose any material weaknesses identified in our internal controls. Our management is required to furnish an annualreport regarding the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”). We have refined, implemented, and tested the internal controls required to comply withSection 404. If we identify material weaknesses in our internal control over financial reporting, if we fail to comply with therequirements of Section 404 in a timely manner or if we are unable to assert that our internal control over financial reportingis effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price ofour common stock could be adversely affected. We could also become subject to investigations by The NASDAQ StockMarket, the SEC or other regulatory authorities, which could require additional financial and management resources. We do not expect to pay any cash dividends for the foreseeable future. We currently expect to retain all available funds and future earnings, if any, for use in the operation and growth of ourbusiness and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to paydividends will be at the discretion of our board of directors, subject to compliance with applicable law and any contractualprovisions, including under the credit agreements governing our term loans and revolving credit facility and agreementsgoverning any additional indebtedness we may incur in the future, that restrict or limit our ability to pay dividends, and willdepend upon, among other factors, our results of operations, financial condition, earnings, capital requirements and otherfactors that our board of directors deems relevant. Further, because we are a holding company, our ability to pay dividendsdepends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to paydividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under ourexisting or future indebtedness. All of our business operations are conducted through our wholly owned subsidiaries,Sportsman’s Warehouse, Inc. and Minnesota Merchandising Corporation and their subsidiaries. The ability of Sportsman’sWarehouse, Inc. and Minnesota Merchandising Corporation to pay dividends to us, and our ability to pay dividends on ourcapital stock, is limited by our term loans. Our revolving credit facility also limits our ability to pay dividends on our capitalstock. Our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt orpreferred equity securities of ours or of our subsidiaries. If securities or industry analysts publish inaccurate or unfavorable research about us, our stock price and tradingvolume could decline. The trading market for our common stock will depend in part on the research reports that securities or industry analystspublish about us, our business and our industry. Assuming we obtain securities or industry analyst coverage, if one or more ofthe analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about us, our business or ourindustry, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail topublish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volumeto decline. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES We do not plan to own any material real property, but rather intend to lease all of our store locations. From time to timewe will self-develop one of our properties with the intention to enter into a sale-leaseback transaction with a third party.Depending upon where we are in the process of completing the sale-leaseback transaction, we may legally own real propertyat any particular balance sheet date. Our corporate headquarters is located in an approximately 60,000 square foot buildingin Midvale, Utah. The building is leased under an agreement expiring on December 31, 2018.34 Table of Contents Our distribution center is located in a 507,000 square foot facility in Salt Lake City, Utah. The building is leased underan agreement expiring on December 31, 2023, with three options that each allow us to extend for an additional five years. Webelieve that our distribution center is of sufficient scale to support a network of 100 or more stores. We currently operate 88 retail stores in 22 states. In total we have approximately 3.5 million gross square feet across allof our stores. All of our stores are leased from third parties with lease terms typically ranging from five to fifteen years, andmany of our lease agreements have additional five-year renewal options. All of our leases provide for additional paymentsassociated with common area maintenance, real estate, taxes and insurance. In addition, many of our lease agreements havedefined escalating rent provisions over the initial term and extensions. ITEM 3. LEGAL PROCEEDINGS On March 12, 2014, we were added as a defendant to a pending consolidated action filed in the United StatesDistrict Court, Western District of Washington, captioned as Lacey Market Place Associates II, LLC, et al. v. United Farmersof Alberta Co-Operative Limited, et al., Case No. 2:13-cv-00383-JLR against United Farmers of Alberta Co-OperativeLimited (the seller of Wholesale Sports), Wholesale Sports, Alamo Group, LLC and Donald F. Gaube and spouse. Theamended complaint was filed by the landlords of two stores that we did not assume in our purchase of assets from WholesaleSports. Such stores were formerly operated by Wholesale Sports in Skagit and Thurston Counties in Washington. Theamended complaint alleged breach of lease, breach of collateral assignment, misrepresentation, intentional interference withcontract, piercing the corporate veil and violation of Washington’s Fraudulent Transfer Act. We were named as a co-defendant with respect to the intentional interference with contract and fraudulent conveyanceclaims. The amended complaint sought against us and all defendants unspecified money damages, declaratory relief andattorneys’ fees and costs. On January 28, 2015, the court in the Lacey Marketplace action granted in part and denied in partour motion for summary judgment and dismissed the intentional interference claim against us, but declined to dismiss thefraudulent transfer claim. Trial in the Lacey Marketplace action began March 2, 2015 and concluded March 6, 2015. On March 9, 2015, the juryin the trial assessed $11.89 million against the defendants to the action, including us. We reviewed the decision and accrued$4.0 million in our results for the fiscal year ended January 31, 2015 related to this matter. We strongly disagreed with thejury’s verdict and filed post-trial motions seeking to have the verdict set aside. On July 30, 2015, the court granted ourmotion for judgment as a matter of law. Based on the court’s most recent judgment in our favor on July 30, 2015, wedetermined that the likelihood of loss in this case is not probable, and, as such, we reversed the previous accrual of $4.0million in our results for the fiscal year ended January 30, 2016. Both United Farmers of Alberta Co-Operative Limited, a co-defendant, and the plaintiff appealed the court’s summary judgment ruling against the tortious interference claim, and theJuly 30, 2015 ruling setting aside the jury verdict, to the appellate court. The oral argument for the appeal was conducted onDecember 5, 2017 and on December 21, 2017 the appeals court ruled there to be no judgment against us. When we become aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If a losscontingency is probable and the amount of the loss can be reasonably estimated, we record an accrual for the loss. In suchcases, there may be an exposure to potential loss in excess of the amount accrued. Where a loss is not probable but isreasonably possible or where a loss in excess of the amount accrued is reasonably possible, we disclose an estimate of theamount of the loss or range of possible losses for the claim if a reasonable estimate can be made, unless the amount of suchreasonably possible losses is not material to our financial position, results of operations or cash flows. The ability to predictthe ultimate outcome of such matter involves judgments and inherent uncertainties. The actual outcome could differ. We are subject to various legal proceedings and claims, including employment claims, wage and hour claims,intellectual property claims, contractual and commercial disputes and other matters that arise in the ordinary course of ourbusiness. While the outcome of these and other claims cannot be predicted with certainty, we do not believe that the outcomeof these matters individually or in the aggregate will have a material adverse effect on our business, results of operations orfinancial condition. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable.35 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIES Market for Registrant’s Common Equity The common stock of Sportsman’s Warehouse Holdings Incorporated is listed for trading on the Nasdaq under thesymbol “SPWH." As of February 3, 2018, there were 128 holders of record of our common stock. This number does notinclude persons who hold our common stock in nominee or “street name” accounts through brokers or banks. The following table sets forth, for the fiscal quarters indicated, the high and low sales prices per share of our commonstock as reported on the Nasdaq: 2017 High LowFirst Quarter 7.80 3.86Second Quarter 4.83 3.40Third Quarter 4.83 3.40Fourth Quarter 6.99 3.72 2016 High LowFirst Quarter 13.97 11.15Second Quarter 11.50 7.77Third Quarter 11.14 9.09Fourth Quarter 9.83 7.89 Dividend Policy We did not pay any dividends in fiscal year 2017 or fiscal year 2016. We currently expect to retain all available funds and future earnings, if any, for use in the operation and growth of ourbusiness and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to paydividends will be at the discretion of our board of directors, subject to compliance with applicable law and any contractualprovisions, including under the credit agreements governing our term loans and revolving credit facility and agreementsgoverning any additional indebtedness we may incur in the future, that restrict or limit our ability to pay dividends, and willdepend upon, among other factors, our results of operations, financial condition, earnings, capital requirements and otherfactors that our board of directors deems relevant. Because we are a holding company, our ability to pay dividends dependson our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as aresult of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under our existing orfuture indebtedness. All of our business operations are conducted through our wholly owned subsidiaries, Sportsman’sWarehouse, Inc. and Minnesota Merchandising Corporation and their subsidiaries. The ability of Sportsman’s Warehouse,Inc. and Minnesota Merchandising Corporation to pay dividends to us, and our ability to pay dividends on our capital stock,is limited by our term loans. Our revolving credit facility also limits our ability to pay dividends on our capital stock. Ourability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferredequity securities of ours or of our subsidiaries. Stock Performance Graph The stock price performance graph below shall not be deemed soliciting material or to be filed with the SEC orsubject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, nor shall itbe incorporated by reference into any past or future filing under the Securities Act of 1933, as amended, or the SecuritiesAct or the Exchange Act, except to the extent we specifically request that it be treated as soliciting material or specificallyincorporate it by reference into a filing under the Securities Act or the Exchange Act.36 Table of Contents The following graph shows the cumulative total stockholder return of an investment of $100 in cash at market close onApril 17, 2014 (the first day of trading of our Common Stock), through February 3, 2018 for (i) our Common Stock(“SPWH”), (ii) the S&P 500 Retailing Industry Group Index (“S&P Retail”) and (iii) the Russell 2000 Index (“Russell 2000”).Pursuant to applicable SEC rules, all values assume reinvestment of the full amount of all dividends. The stockholder returnshown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictionsas to future stockholder returns. 1/30/2015 5/1/2015 7/31/2015 10/30/2015 1/29/2016 4/29/2016 7/29/2016 10/28/2016 1/27/2017 4/29/2017 7/29/2017 10/28/2017 2/3/2018 SPWH $73.13 $96.51 $119.90 $110.36 $134.46 $ 116.72 $ 104.41 $ 93.23 $ 80.92 $ 41.95 $ 43.38 $ 41.95 $ 50.36S&P Retail 118.76 130.94 141.46 148.43 137.24 147.81 157.60 151.98 160.97 172.96 175.10 185.00 225.17Russell2000 102.42 107.93 108.86 102.11 90.99 99.38 107.21 104.37 120.46 123.07 125.61 132.55 135.98 ITEM 6. SELECTED FINANCIAL DATA. Fiscal Year Ended February 3, January 28, January 30, January 31, February 1, 2018 2017 2016 2015 2014 (in thousands, except per share amounts)Consolidated Statements of Income Data: Net sales (1) $809,671 $779,956 $706,764 $639,869 $624,848Cost of goods sold (1) 535,811 516,726 468,234 424,662 417,618Gross profit 273,860 263,230 238,530 215,207 207,230Selling, general and administrative expenses 227,292 202,543 179,218 170,315 147,140Bankruptcy related expenses (benefit) (2) — — — — 55Income from operations 46,568 60,687 59,312 44,892 60,035Interest expense (13,738) (13,402) (14,156) (22,480) (25,447)Income before income taxes 32,830 47,285 45,156 22,412 34,588Income tax expense 15,088 17,616 17,385 8,628 12,838Net income $17,742 $29,669 $27,771 $13,784 $21,750 Earnings per share: Basic $ 0.42 $0.70 $0.66 $0.34 $0.66Diluted $ 0.42 $0.70 $0.66 $0.34 $0.66 Weighted average shares outstanding: Basic shares 42,496 42,187 41,966 39,961 33,170Diluted shares 42,522 42,485 42,334 40,141 33,185 37 Table of Contents Fiscal Year Ended February3, January28, January30, January31, February 1, 2018 2017 2016 2015 2014 (in thousands, except number of stores and per share amounts)Consolidated Balance Sheet Data: Total current assets $280,755 $255,924 $232,710 $203,339 $175,627Total assets 379,661 346,248 301,328 268,784 220,708Long-term debt (including current portion), net of discount 133,339 134,704 155,016 156,107 227,611Total liabilities 329,863 316,247 303,387 300,116 341,804Total stockholders’ equity/(deficit) 49,798 30,001 (2,059) (31,332) (121,096)Total liabilities and stockholders’ equity 379,661 346,248 301,328 268,784 220,708 Other Data: Adjusted EBITDA (3) $72,799 $82,254 $73,024 $66,252 $70,716Adjusted EBITDA margin (3) 9.0% 11.0% 10.0% 10.0% 10.9%Number of stores open at end of period 87 75 64 55 47Same store sales growth/(decline) for period excluding e-Commerce (4) (6.9)% (0.8)% 1.1% (8.4)% (3.7)%Same store sales growth/(decline) for period including e-Commerce (5) (6.5)% — — — —(1)Prior to fiscal year 2016, we presented our sales and costs of state fish and game licenses, duck stamps, and stategovernment-mandated firearm background checks in net sales and cost of goods sold under the gross method. In fiscalyear 2016, our management determined that the revenue from these transactions should have been presented under thenet method, thereby recognizing only the commission received in net sales for acting as the agent under the principalversus agent model. Net sales and cost of goods sold for fiscal years 2013, 2014 and 2015 shown above have beenrevised to reflect this revision. This revision did not have any impact upon gross profit, net income or earnings pershare. (2)On March 21, 2009, Sportsman’s Warehouse Holdings, Inc. and its subsidiaries filed voluntary petitions for relief underChapter 11 of the United States Bankruptcy Code, seeking to reorganize the business under the provisions of theBankruptcy Code. The plan of reorganization under the Bankruptcy Code was confirmed by the United StatesBankruptcy Court for the District of Delaware on July 30, 2009 and became effective when all material conditions of theplan of reorganization were satisfied on August 14, 2009. We incurred certain costs related to our restructuring andemergence from Chapter 11 bankruptcy and included a liability as part of the reorganization value at August 14, 2009,the date of emergence from bankruptcy. Bankruptcy-related expenses are those amounts that are greater than the initialestimated restructuring costs. They are expensed as incurred. (3)Adjusted EBITDA has been presented in this filing as a supplemental measure of financial performance that is notrequired by, or presented in accordance with, generally accepted accounting principles, or GAAP. We define AdjustedEBITDA as net income plus interest expense, income tax expense, depreciation and amortization, stock-basedcompensation expense, pre-opening expenses, and other gains, losses, and expenses that we do not believe areindicative of our ongoing expenses. In addition, Adjusted EBITDA excludes pre-opening expenses because we do notbelieve these expenses are indicative of the underlying operating performance of our stores. The amount and timing ofpre-opening expenses are dependent on, among other things, the size of the new stores opened and the number of newstores opened during any given period. Adjusted EBITDA margin means, for any period, the Adjusted EBITDA for thatperiod divided by the net sales for that period. Adjusted EBITDA and Adjusted EBITDA margin are included in this filing because they are key metrics used bymanagement and our board of directors to assess our financial performance. Adjusted EBITDA and Adjusted EBITDAmargin are frequently used by analysts, investors and other interested parties in the evaluation of companies in ourindustry. In addition to assessing our financial performance, we use Adjusted EBITDA and Adjusted EBITDA margin asadditional measurement tools for purposes of business decision-making, including evaluating store performance,developing budgets and managing expenditures. Adjusted EBITDA is not a GAAP measure of our financial performance or liquidity and should not be considered as analternative to net income as a measure of financial performance or cash flows from operations as a measure of liquidity,or any other performance measure derived in accordance with GAAP, and it should not be construed as an inference thatour future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted EBITDA is not intendedto be a measure of free cash flow for management’s discretionary use, as it does not reflect38 Table of Contentscertain cash requirements such as tax payments, debt service requirements, capital expenditures, store openings andcertain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including thefailure to reflect our cash expenditures or future requirements for capital expenditures or contractual commitments. Inevaluating Adjusted EBITDA, you should be aware that, in the future, we will incur expenses that are the same as orsimilar to some of the adjustments reflected in this presentation, such as income tax expense (benefit), interest expense,depreciation and amortization and pre-opening expenses. Our presentation of Adjusted EBITDA should not be construedto imply that our future results will be unaffected by any such adjustments. Management compensates for theselimitations by relying on our GAAP results in addition to using Adjusted EBITDA supplementally. Our measures ofAdjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to differentmethods of calculation. See below for a reconciliation of net income to Adjusted EBITDA. A reconciliation of net income to Adjusted EBITDA is set forth below: Fiscal Year Ended February 3, January 28, January 30, January31, February1, 2018 2017 2016 2015 2014 (in thousands)Net income $17,742 $29,669 $27,771 $13,784 $21,750Plus: Interest expense 13,738 13,402 14,156 22,480 25,447Income tax expense 15,088 17,616 17,385 8,628 12,838Depreciation and amortization 17,706 13,974 11,569 9,150 6,277Stock-based compensation expense (a) 2,294 3,186 2,257 3,293 365Pre-opening expenses (b) 3,971 4,264 3,159 2,717 1,653IPO bonus (c) — — — 2,200 —Litigation accrual (reversal) (d) — — (4,000) 4,000 —Secondary offering expenses (e) — 143 727 — —Bankruptcy related expenses (f) — — — — 55Acquisition expenses (g) 1,744 — — — 2,331Asset Write-off (h) 516 — — — —Adjusted EBITDA $72,799 $ 82,254 $73,024 $66,252 $70,716(a)Stock-based compensation expense represents non-cash expenses related to equity instruments granted toemployees under our 2013 Performance Incentive Plan and Employee Stock Purchase Plan. (b)Pre-opening expenses include expenses incurred in the preparation and opening of a new store location, such aspayroll, travel and supplies, but do not include the cost of the initial inventory or capital expenditures required toopen a location. (c)As a result of the completion of our initial public offering and pursuant to the terms of the employment agreementswith our executive officers, we paid $2.2 million in bonuses to our executive officers. (d)In fiscal year 2014, we accrued $4.0 million for a pending litigation matter in which a jury trial assessed damagesagainst us. In fiscal year 2015, a court reversed the damages assessed against us and granted a motion for judgmentas a matter of law in our favor. As a result of that judgment, in fiscal year 2015, we reversed our previous accrual of$4.0 million. On December 21, 2017, after appeal of the judgment in our favor, the appeals court ruled there to beno judgment against us. (e)We incurred certain costs related to secondary offerings of our common stock by affiliates of Seidler Equity PartnersIII, L.P. on September 15, 2015 and April 18, 2016. These costs were expensed as incurred. (f)We incurred certain costs related to our restructuring and emergence from Chapter 11 bankruptcy and included aliability as part of the reorganization value at August 14, 2009, the date of emergence from bankruptcy.Bankruptcy-related expenses are those amounts that are greater than the initial estimated restructuring costs. Theyare expensed as incurred.39 Table of Contents (g)Acquisition expense for fiscal year 2017 relate to fees incurred in connection with the evaluation of a strategicacquisition. Acquisition expenses for fiscal year 2013 relate to the costs associated with the acquisition of our 10previously operated stores in Montana, Oregon and Washington. (h)We identified certain assets relating to our e-commerce platform that were no longer planned to be placed intoservice. These assets were expensed through selling, general, and administrative expenses during fiscal year 2017. (4)Net sales from a store are included in same store sales on the first day of the 13th full month following the store’sopening or acquisition by us. For fiscal years consisting of 53 weeks, we exclude net sales during the 53rd week from ourcalculation of same store sales. We have historically excluded e-Commerce from our calculation of same store sales. However, beginning with fiscal year 2017 and for future periods, same store sales results will include our e-Commercesales. The e-Commerce sales for the fiscal years ended January 28, 2017, January 30, 2016, January 31, 2015,and February 1, 2014 were $3.8 million, $3.1 million, $2.8 million, and $2.5 million, respectively. (5)We have historically presented our sales and costs of state fish and game licenses, duck stamps, and state government-mandated firearm background checks in net sales and cost of goods sold under the gross method. Subsequent to filingour Annual Report on Form 10-K for fiscal year 2015, our management determined that the revenue from thesetransactions should have been presented under the net method, thereby recognizing only the commission received in netsales for acting as the agent under the principal versus agent model. This revision does not have any impact upon grossprofit, net income or earnings per share. The following table provides a reconciliation of the revision for the year ended February 1, 2014, January 31, 2015, andJanuary 30, 2016 as reported on form 10-K (in thousands): As Previously For the fiscal year ended February 1, 2014 Reported Revision As Revised Net sales $643,163 $(18,315) $624,848 Cost of goods sold 435,933 (18,315) 417,618 Gross profit 207,230 — 207,230 As Previously For the fiscal year ended January 31, 2015 Reported Revision As Revised Net sales $660,003 $(20,134) $639,869 Cost of goods sold 444,796 (20,134) 424,662 Gross profit 215,207 — 215,207 As Previously For the fiscal year ended January 30, 2016 Reported Revision As Revised Net sales $729,912 $(23,148) $706,764 Cost of goods sold 491,382 (23,148) 468,234 Gross profit 238,530 — 238,530 40 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS The discussion below contains forward-looking statements that involve risks and uncertainties. Our actual resultscould differ materially from those anticipated in these forward-looking statements as a result of various factors, includingthose which are discussed in the “Risk Factors” section in Part I, Item 1A of this 10-K. Also see “Statement RegardingForward-Looking Statements” preceding Part I. The following discussion and analysis should be read in conjunction with the consolidated financial statements andthe notes thereto included in this 10-K. Overview We are a high-growth outdoor sporting goods retailer focused on meeting the everyday needs of the seasoned outdoorveteran, the first-time participant and every enthusiast in between. Our mission is to provide a one-stop shopping experiencethat equips our customers with the right quality, brand name hunting, shooting, fishing and camping gear to maximize theirenjoyment of the outdoors. Our business was founded in 1986 as a single retail store in Midvale, Utah. Today, we operate 87 stores in 22 states,totaling approximately 3.5 million gross square feet. During fiscal year 2017, we increased our gross square footage by11.3% through the opening of twelve stores in the following locations: —Cedar City, Utah on February 16, 2017—Moses Lake, Washington on February 23, 2017—Wilmington, North Carolina on April 6, 2017—Morgantown, West Virginia on April 27, 2017—Yuma, Arizona on May 11, 2017—Henderson, Nevada on May 20, 2017—Everett, Washington on June 8, 2017—Eureka, California on June 22, 2017—Spokane Valley, Washington on August 3, 2017—Stockton, California on August 17, 2017—Visalia, California on September 21, 2017—Pueblo, Colorado on November 9, 2017 Individual stores are aggregated into one operating and reportable segment. Fiscal Year We operate using a 52/53 week fiscal year ending on the Saturday closest to January 31. Fiscal years 2017, 2016 and2015 ended on February 3, 2018, January 28, 2017, and January 30, 2016, respectively. Fiscal year 2017 contained 53 weeksof operations. Fiscal years 2016 and 2015, each contained 52 weeks of operations. How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures. The keymeasures for determining how our business is performing are net sales, same store sales, gross margin, selling, general andadministrative expenses, income from operations and Adjusted EBITDA. 41 Table of ContentsNet Sales and Same Store Sales Our net sales are primarily received from revenue generated in our stores and also include sales generated through oure-commerce platform. When measuring revenue generated from our stores, we review our same store sales as well as theperformance of our stores that have not operated for a sufficient amount of time to be included in same store sales. Weinclude net sales from a store in same store sales on the first day of the 13th full fiscal month following the store’s opening oracquisition by us. We have historically excluded e-Commerce from our calculation of same store sales. However, beginningwith fiscal year 2017 and for subsequent periods, same store sales results will include our e-Commerce sales. For fiscal yearsconsisting of 53 weeks, such as fiscal year 2017, we exclude net sales during the 53rd week from our calculation of samestore sales. Some of our competitors and other retailers may calculate same store sales differently than we do. As a result, dataregarding our same store sales may not be comparable to similar data made available by other retailers. Measuring the change in year-over-year same store sales allows us to evaluate how our retail store base is performing.Various factors affect same store sales, including: ·changes or anticipated changes to regulations related to some of the products we sell; ·consumer preferences, buying trends and overall economic trends; ·our ability to identify and respond effectively to local and regional trends and customer preferences; ·our ability to provide quality customer service that will increase our conversion of shoppers into payingcustomers; ·competition in the regional market of a store; ·atypical weather; ·changes in our product mix; and ·changes in pricing and average ticket sales. Opening new stores is also an important part of our growth strategy. For fiscal year 2017 we opened 12 stores and as ofthe date of this filing we have opened one new store for fiscal year 2018 and announced 4 additional locations that will beopened in fiscal year 2018. While our target remains to grow square footage at a rate of greater than 10% annually, we expectwe will grow our square footage approximately 3% for fiscal year 2018 as we shift some of our cash use to reducing our debtbalance. For our new locations, we measure our investment by reviewing the new store’s four-wall Adjusted EBITDA margin andpre-tax return on invested capital (“ROIC”). We target a minimum 10% four-wall Adjusted EBITDA margin and a minimumROIC of 50% excluding initial inventory costs (or 20% including initial inventory cost) for the first full twelve months ofoperation for a new store. The 40 new stores that we have opened since 2010 and that have been open for a full twelvemonths (excluding the 10 acquired stores) have achieved an average four-wall Adjusted EBITDA margin of 13.1% and anaverage ROIC of 74.1% excluding initial inventory cost (and 27.9% including initial inventory cost) during their first fulltwelve months of operations. Four-wall Adjusted EBITDA means, for any period, a particular store’s Adjusted EBITDA,excluding any allocations of corporate selling, general and administrative expenses allocated to that store. Four-wallAdjusted EBITDA margin means, for any period, a store’s four-wall Adjusted EBITDA divided by that store’s net sales. For adefinition of Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of net income to Adjusted EBITDA, see“—Non-GAAP Measures.” ROIC means a store’s four-wall Adjusted EBITDA for a given period divided by our initial cashinvestment in the store. We calculate ROIC both including and excluding the initial inventory cost. We also have been scaling our e-commerce platform and increasing sales through our website,www.sportsmanswarehouse.com. 42 Table of ContentsWe believe the key drivers to increasing our total net sales will be: ·increasing our total gross square footage by opening new stores; ·continuing to increase and improve same store sales in our existing markets; ·increasing customer visits to our stores and improving our conversion rate through focused marketing efforts andcontinually high standards of customer service; ·increasing the average ticket sale per customer; and ·expanding our e-commerce platform. Gross Profit Gross profit is our net sales less cost of goods sold. Gross margin measures our gross profit as a percentage of net sales.Our cost of goods sold primarily consists of merchandise acquisition costs, including freight-in costs, shipping costs,payment term discounts received from the vendor and vendor allowances and rebates associated directly with merchandiseand shipping costs related to e-commerce sales. We believe the key drivers to improving our gross margin are increasing the product mix to higher margin products,particularly clothing and footwear, improving buying opportunities with our vendor partners and coordinating pricingstrategies among our stores and buying group. Our ability to properly manage our inventory can also impact our gross profit.Successful inventory management ensures we have sufficient high margin products in stock at all times to meet customerdemand, while overstocking of items could lead to markdowns in order to help a product sell. We believe that the overallgrowth of our business will allow us to generally maintain or increase our gross margins, because increased merchandisevolumes will enable us to maintain our strong relationships with our vendors. Selling, General and Administrative Expenses We closely manage our selling, general and administrative expenses. Our selling, general and administrative expensesare comprised of payroll, rent and occupancy, depreciation and amortization, acquisition expenses, pre-opening expensesand other operating expenses, including share-based compensation expense and litigation accrual. Pre-opening expensesinclude expenses incurred in the preparation and opening of a new store location, such as payroll, travel and supplies, but donot include the cost of the initial inventory or capital expenditures required to open a location. Our selling, general and administrative expenses are primarily influenced by the volume of net sales of our locations,except for our corporate payroll, rent and occupancy and depreciation and amortization, which are generally fixed in nature.We control our selling, general and administrative expenses through a budgeting and reporting process that allows ourpersonnel to adjust our expenses as trends in net sales activity are identified. We expect that our selling, general and administrative expenses will increase in future periods due to our continuinggrowth. In 2017, 56 of our stores were impacted by minimum wage increases that increased our selling, general andadministrative expenses during fiscal 2017. Income from Operations Income from operations is gross profit less selling, general and administrative expenses. We use income fromoperations as an indicator of the productivity of our business and our ability to manage selling, general and administrativeexpenses. Adjusted EBITDA We define Adjusted EBITDA as net income plus interest expense, income tax expense, depreciation and amortization,stock-based compensation expense, pre-opening expenses, and other gains, losses, and expenses that we do not believe areindicative of our ongoing expenses. In evaluating our business, we use Adjusted EBITDA and Adjusted43 Table of ContentsEBITDA margin as an additional measurement tool for purposes of business decision-making, including evaluating storeperformance, developing budgets and managing expenditures. See “—Non-GAAP Measures.” Results of Operations The following table summarizes key components of our results of operations as a percentage of net sales for the periodsindicated (prior year numbers have been revised): Fiscal Year Ended February 3, January 28, January 30, 2018 2017 2016 Percentage of net sales: Net sales (1) 100.00%100.00%100.00%Cost of goods sold (1) 66.2 66.3 66.3 Gross profit 33.8 33.7 33.7 Selling, general and administrative expenses 28.1 26.0 25.4 Income from operations 5.7 7.7 8.3 Interest expense 1.7 1.7 2.0 Income before income taxes 4.0 6.0 6.3 Income tax expense 1.9 2.3 2.5 Net income 2.2 3.7 3.8 Adjusted EBITDA 9.0% 11.0% 10.0% (1)Prior to fiscal year 2016, we presented our sales and costs of state fish and game licenses, duck stamps, and stategovernment-mandated firearm background checks in net sales and cost of goods sold under the gross method. Infiscal year 2016, our management determined that the revenue from these transactions should have been presentedunder the net method, thereby recognizing only the commission received in net sales for acting as the agent underthe principal versus agent model. Net sales and cost of goods sold for fiscal year 2015 shown above have beenrevised to reflect this revision. This revision did not have any impact upon gross profit, net income or earnings pershare. The following table shows our sales during the periods presented by department: Fiscal Year Ended February3, January 28, January 30, Department 2018 2017 2016 Camping 15.1% 14.6% 14.6% Clothing 9.3% 8.7% 8.9% Hunting and Shooting 48.7% 50.9% 50.2% Fishing 10.7% 10.0% 9.9% Footwear 7.4% 7.1% 7.3% Optics, Electronics, and Accessories 9.1% 9.0% 9.6% Other (0.3%) (0.3%) (0.5%) Total 100.0% 100.0% 100.0% Fiscal Year 2017 Compared to Fiscal Year 2016 Net Sales. Net sales increased by $29.7 million, or 3.8%, to $809.7 million in fiscal year 2017 compared to $780.0million in fiscal year 2016. Net sales increased due to $72.1 million in incremental sales from our new stores and stores notyet included in same store sales and $10.6 million in sales from an additional week in fiscal year 2017. Our increase in netsales was partially offset by a 6.9% decrease in same store sales excluding e-commerce, and a 6.5% decrease including e-commerce sales, including an 11.5% decrease in same store sales for our hunting department, including e-commerce. Ourtwelve new stores opened in fiscal 2017 generated net sales of $48.6 million during this period. Existing stores that were notincluded in same store sales generated $23.6 million in additional net sales in fiscal year 2017 over fiscal year 2016. 44 Table of ContentsWith respect to same store sales, our clothing department realized an increase in same store sales of 1.4%, including e-commerce. Our other 5 departments (camping, fishing, hunting, footwear, and optics, electronics, and accessories) incurreddecreases in same store sales, including e-commerce. In particular, we saw decreases of 2.5%, 0.6%, 11.5%, 0.2% and 4.7%,respectively in these departments, including e-commerce. The main contributing factor to the decrease in these departmentswas a decrease in foot traffic in our stores, which was a result of a decreased demand in firearms and ammunition. Firearmsand ammunitions decreased by 9.4% and 15.8%, respectively, during fiscal year 2017 compared to fiscal year 2016. Weexperienced a decrease in demand for firearms and ammunition due in part to the change in the U.S. governmentadministration and anticipated less regulation being put forward to tighten restrictions on gun ownership. As of February 3,2018, we had 75 stores included in our same store sales calculation. As fiscal year 2017 contained 53 weeks of operations, weexclude net sales during the 53 week from our calculation of same store sales. Net sales from our e-commerce business increased by $2.5 million, or 27.1%, to $11.9 million in fiscal year 2017compared to $9.3 million in fiscal year 2016. Gross Profit. Gross profit increased by $10.6 million, or 4.0%, to $273.9 million for fiscal year 2017 from $263.2million for fiscal year 2016. As a percentage of net sales, gross profit increased to 33.8% compared to gross profit of 33.7% inthe prior year. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $24.8million, or 12.2%, to $227.3 million for fiscal year 2017 from $202.5 million for fiscal year 2016. Selling, general andadministrative expenses were 28.1% of net sales in fiscal year 2017 compared to 26.0% of net sales in fiscal year 2016.Specifically, we incurred additional payroll, rent, depreciation and amortization and other operating expenses of $8.9million, $5.5 million, $3.7 million and $5.3 million, respectively, during fiscal year 2017 compared to fiscal year 2016,which were caused by the increase in the number of stores open during the year as compared to the prior year. We alsoincurred an additional $1.7 million of professional fees incurred in connection with our bid for certain inventory and otherassets of Gander Mountain Company. Gander Mountain filed for Chapter 11 bankruptcy protection and we participated in abankruptcy auction for the assets, but we ultimately chose not to continue in the auction. We also incurred $0.5 million inrelation to the write-off of IT related assets. Additionally, we incurred $0.9 million in a one time bonus expense paid to non-executive employees in connection with the Tax Cuts and Jobs Act. These increases were offset slightly by a reduction inpreopening expenses of $0.3 million during fiscal year 2017 compared to fiscal year 2016. Overall selling, general, andadministrative expenses were lower on a per-store basis when compared to 2016. Interest Expense. Interest expense increased by $0.3 million, or 2.5%, to $13.7 million in fiscal year 2017 from $13.4million for fiscal year 2016. Interest expense increased primarily as a result of rate increases by the Federal Reserve thatimpacted the rate of interest paid on our line of credit and term loan facilities. Income Taxes. We recorded an income tax expense of $15.1 million for fiscal year 2017 compared to income taxexpense of $17.6 million for fiscal year 2016. Our effective tax rate changed from fiscal year 2016 of 37.3% to 46.0% in 2017due to the Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017. We recognized an additional $2.6 millionin tax expense associated with U.S. tax reform. The 2017 effective tax rate before U.S. tax reform adjustments would havebeen 39.2%. The increase compared with 2016 is primarily due to tax shortfalls relating to the vesting of restricted stockunits during 2017. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidanceon accounting for the tax effects of the Tax Act. SAB 118 provides for a measurement period that may not extend beyond oneyear from the Tax Act enactment date for companies to complete the required accounting under ASC 740. In accordance withSAB 118, a company must reflect, as of the end of the accounting period that includes the date of enactment of the Tax Act,only those income tax effects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that thecompany's accounting for certain income tax effects of the Tax Act is incomplete, but the company is able to determine areasonable estimate, the company must record a provisional estimate in the financial statements. If the company cannotdetermine a provisional estimate, it must continue to apply ASC 740 on the basis of the provisions of the tax law that were ineffect immediately before the enactment of the Tax Act. Pursuant to SAB 118, the Company is allowed a measurement period of up to one year after the enactment date of theTax Act to finalize the recording of the related tax impacts. However, the Company does not have any provisional45 rd Table of Contentsestimates associated with the Tax Act and has recorded a tax expense related to the net change in deferred tax assets of$2,600 for 2017. Additional information pertaining to the Tax Act can be found in Note 14 to the Consolidated Financial Statementsincluded in this report. Fiscal Year 2016 Compared to Fiscal Year 2015 Net Sales. Net sales increased by $73.2 million, or 10.4%, to $780.0 million in fiscal year 2016 compared to $706.8million in fiscal year 2015. Net sales increased due to net sales generated from our eleven new store openings during fiscalyear 2016 and a full year of the nine stores opened during fiscal year 2015 for the period of time prior to inclusion in oursame store sales. These new stores generated $84.2 million in additional net sales in the fiscal year 2016 compared to fiscalyear 2015. This increase in sales from our new store openings was partially offset by a decrease in our same stores sales for theperiod of 0.8%, excluding e-commerce. With respect to same store sales, our fishing department realized an increase in same store sales of 1.1%, excluding e-commerce. Our other 5 departments (camping, clothing, hunting, footwear, and optics, electronics, and accessories) incurreddecreases in same store sales. In particular, we saw decreases of 1.2%, 1.9%, 4.9%, 0.4% and 6.9%, respectively in thesedepartments, excluding e-commerce. The main contributing factor to the decrease in these departments was a decrease in foottraffic in our stores, which was a result of a decreased demand in firearms and ammunition. As of January 28, 2017, we had 64stores included in our same store sales calculation. During fiscal year 2016, we opened eleven new stores. These eleven stores generated net sales of $54.5 million duringthis period. Existing stores that were not included in same store sales generated $29.7 million in additional net sales in fiscalyear 2016 over fiscal year 2015. Net sales from our e-commerce business increased by $1.6 million, or 20.8%, to $9.3 million in fiscal year 2016compared to $7.7 million in fiscal year 2015. Gross Profit. Gross profit increased by $24.7 million, or 10.4%, to $263.2 million for fiscal year 2016 from $238.5million for fiscal year 2015. As a percentage of net sales, gross profit remained flat at 33.7% when compared to gross profit of33.7% in the prior year. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $23.3million, or 13%, to $202.5 million for fiscal year 2016 from $179.2 million for fiscal year 2015. Selling, general andadministrative expenses were 26.0% of net sales in fiscal year 2016 compared to 25.4% of net sales in fiscal year 2015.Specifically, we incurred additional payroll, rent, depreciation and amortization and other operating expenses of $10.0million, $3.8 million, $2.4 million and $6.0 million, respectively, during fiscal year 2016 compared to fiscal year 2015,which were caused by the increase in the number of stores open during the year as compared to the prior year. Overall theseexpenses were lower on a per-store basis when compared to 2015. In fiscal year 2016 we incurred $0.1 million in costs relatedto a secondary offering. Also, in fiscal year 2015, we reversed the $4.0 million accrual taken in fiscal year 2014 related to theLacey Marketplace litigation matter because the court granted our motion for judgment as a matter of law. The increase inselling, general and administrative expenses were partially offset by a $0.5 million decrease in costs related to secondaryofferings. Interest Expense. Interest expense decreased by $0.8 million, or 5.3%, to $13.4 million in fiscal year 2016 from $14.2million for fiscal year 2015. Interest expense decreased primarily as a result of the shift in debt balance from our term loan toour revolving line of credit, which carries a lower interest rate. Income Taxes. We recorded an income tax expense of $17.6 million for fiscal year 2016 compared to income taxexpense of $17.4 million for fiscal year 2015. Our effective tax rate changed from fiscal year 2015 of 38.5% to 37.3% in 2016due to changes in various state rates as well as discrete items recognized in 2016 relating to prior year tax credits and stockbased compensation deductions. 46 Table of ContentsSeasonality Due to holiday buying patterns and the openings of hunting season across the country, net sales are typically higher inthe third and fourth fiscal quarters than in the first and second fiscal quarters. We also incur additional expenses in the thirdand fourth fiscal quarters due to higher volume and increased staffing in our stores. We anticipate our net sales will continueto reflect this seasonal pattern. The timing of our new retail store openings also may have an impact on our quarterly results. First, we incur certainone-time expenses related to opening each new retail store, all of which are expensed as they are incurred. Second, most storeexpenses generally vary proportionately with net sales, but there is also a fixed cost component, which includes occupancycosts. These fixed costs typically result in lower store profitability during the initial period after a new retail store opens. Dueto both of these factors, new retail store openings may result in a temporary decline in operating profit, in dollars and/or as apercentage of net sales. Weather conditions affect outdoor activities and the demand for related clothing and equipment. Customers’ demandfor our products, and, therefore, our net sales, can be significantly impacted by weather patterns on a local, regional andnational basis. Quarterly Results of Operations The following table sets forth unaudited financial and operating data for each fiscal quarter of fiscal years 2017 and2016. This quarterly information has been prepared on a basis consistent with our audited financial statements and includesall normal recurring adjustments that we consider necessary for a fair presentation of the information shown. This informationshould be read in conjunction with “Part II, Item 6. Selected Financial Data” and “Part II, Item 8. Financial Statements andSupplementary Data” of this 10-K. Our quarterly operating results may fluctuate significantly as a result of the factorsdescribed above and a variety of other factors, and operating results for any fiscal quarter are not necessarily indicative ofresults for a full fiscal year. Fiscal Year 2017 Fiscal Year 2016 FourthQuarter ThirdQuarter SecondQuarter FirstQuarter FourthQuarter ThirdQuarter SecondQuarter FirstQuarter (unaudited) (in thousands, except per share data, percentages and number of stores) Net sales $243,165 $218,115 $191,493 $156,898 $221,376 $217,161 $189,804 $151,615 Gross profit 79,664 76,963 68,618 48,615 74,308 74,265 66,185 48,472 Income fromoperations (1) 16,581 19,520 14,235 (3,769) 21,114 20,546 16,671 2,356 Net income (loss)(1) 5,888 9,808 6,554 (4,508) 10,540 10,514 8,304 311 Diluted earnings(loss) per share 0.14 0.23 0.15 (0.11) 0.25 0.25 0.20 0.01 As a percentageof full yearresults: Net sales 30.0% 26.9% 23.7% 19.4% 28.4% 27.8% 24.3% 19.4% Gross profit 9.8% 9.5% 8.5% 6.0% 9.5% 9.5% 8.5% 6.2% Income (loss) fromoperations 2.0% 2.4% 1.8% -0.5% 2.7% 2.6% 2.1% 0.3% Net income (loss) 0.7% 1.2% 0.8% -0.6% 1.4% 1.3% 1.1% 0.0% Operating data: Number of storesopen at end ofperiod 87 86 83 79 75 75 70 67 (1)This line includes, for the first quarter of 2016, $0.1 million, in expenses paid by us in connection with a secondary offering of ourcommon stock by affiliates of Seidler Equity Partners III, L.P. and one of our executive officers; for the first quarter of 2017, $1.7 million,of professional fees incurred in connection with our bid for certain inventory and other assets of Gander Mountain Company. GanderMountain filed for Chapter 11 bankruptcy protection and we participated in a bankruptcy auction for the assets, but we ultimately chosenot to continue in the auction. Liquidity and Capital Resources Our primary capital requirements are for seasonal working capital needs and capital expenditures related to openingnew stores. Our sources of liquidity to meet these needs have primarily been borrowings under our revolving credit facility,operating cash flows and short and long-term debt financings from banks and financial institutions. We believe that our cashon hand, cash generated by operating activities and funds available under our revolving credit facility will be sufficient tofinance our operating activities for at least the next twelve months.47 Table of Contents For fiscal year 2017, we incurred approximately $41.2 million in gross capital expenditures. We also received $9.0million from sale-leaseback transactions. We expect gross capital expenditures between $20.0 million and $26.0 million forfiscal year 2018. We intend to fund these initiatives with our operating cash flows and funds available under our revolvingcredit facility. Other investment opportunities, such as potential strategic acquisitions or store expansion rates in excess ofthose presently planned, may require additional funding. Cash flows from operating, investing and financing activities are shown in the following table: Fiscal Year Ended February 3, January 28, 2018 2017 (in thousands) Cash flows provided by operating activities $30,775 $15,482 Cash flows (used in) investing activities (32,136) (27,494) Cash flows provided by financing activities 1,219 11,814 Cash at end of period 1,769 1,911 Net cash provided by operating activities was $30.8 million for fiscal year 2017, compared to $15.5 million for fiscalyear 2016. Our net cash provided by operating activities increased primarily due to decreased inventory purchases as wecontinue to manage our in-store inventory more efficiently as well as an increase in accounts payable, partially offset by adecrease in net income. Net cash used in investing activities was $32.1 million for fiscal year 2017 compared to $27.5 million for fiscal year2016. The increase in cash used in investing activities was primarily a result of decreased proceeds from sale leasebacktransactions of $9.0 million in fiscal year 2017 compared to $11.9 million in fiscal year 2016. Capital expendituresincreased to $41.2 million for fiscal year 2017 compared to $39.4 million for fiscal year 2016 due to one additional storebeing opened in 2017 when compared to our new store openings in 2016. Net cash provided by financing activities was $1.2 million for fiscal year 2017 compared to net cash provided byfinancing activities of $11.8 million for fiscal year 2016. In fiscal year 2017, we reduced net borrowings of $1.0 million fromour line of credit and reduced the balance on our term loan by $1.6 million. These payments were offset by an increase in ourbook overdraft of $4.6 million in fiscal year 2017. Senior Secured Revolving Credit Facility. We have a senior secured revolving credit facility with Wells Fargo Bank,National Association. On July 24, 2017, we amended the credit agreement governing the revolving credit facility to increasethe amount available to borrow under our senior secured revolving credit facility by $15.0 million to $150.0 million, subjectto a borrowing base calculation. As of February 3, 2018, we had $66.6 million outstanding under the revolving creditfacility, with $66.9 million available for borrowing. The revolving credit facility matures on the earlier to occur of (x) thedate that is 90 days prior to the maturity date of our senior secured term loan, which maturity date is currently December 3,2020, unless the term loan has been repaid to the extent permitted under the credit agreement or the term loan maturity hasbeen extended to October 23, 2022 or later and (y) July 24, 2022. Each of the subsidiaries of Holdings is a borrower under the revolving credit facility, and all obligations under therevolving credit facility are guaranteed by Holdings. All of our obligations under the revolving credit facility are secured bya lien on substantially all of Holdings’ tangible and intangible assets and the tangible and intangible assets of all of oursubsidiaries, including a pledge of all capital stock of each of our subsidiaries. The lien securing the obligations under therevolving credit facility is a first priority lien as to certain liquid assets, including cash, accounts receivable, deposit accountsand inventory. In addition, the credit agreement contains provisions that enable Wells Fargo to require us to maintain a lock-box for the collection of all receipts. Borrowings under the revolving credit facility bear interest based on either, at our option, the base rate or LIBOR, ineach case plus an applicable margin. The base rate is the higher of (1) Wells Fargo’s prime rate, (2) the federal funds rate (asdefined in the credit agreement) plus 0.50% and (3) the one-month LIBOR (as defined in the credit agreement) plus 1.00%.The applicable margin for loans under the revolving credit facility, which varies based on the average daily availability,ranges from 0.25% to 0.75% per year for base rate loans and from 1.25% to 1.75% per year for LIBOR48 Table of Contentsloans. The weighted average interest rate on the amount outstanding under the revolving credit facility as of February 3,2018 was 3.26%. Interest on base rate loans is payable monthly in arrears and interest on LIBOR loans is payable based on the LIBORinterest period selected by us, which can be 30, 60 or 90 days. All amounts that are not paid when due under our revolvingcredit facility will accrue interest at the rate otherwise applicable plus 2.00% until such amounts are paid in full. We may be required to make mandatory prepayments under the revolving credit facility in the event of a disposition ofcertain property or assets, in the event of receipt of certain insurance or condemnation proceeds, upon the issuance of certaindebt or equity securities, upon the incurrence of certain indebtedness for borrowed money or upon the receipt of certainpayments not received in the ordinary course of business. The revolving credit facility contains customary affirmative and negative covenants, including covenants that limitour ability to incur, create or assume certain indebtedness, to create, incur or assume certain liens, to make certaininvestments, to make sales, transfers and dispositions of certain property and to undergo certain fundamental changes,including certain mergers, liquidations and consolidations. The revolving credit facility also requires us to maintain aminimum availability at all times of not less than 10% of the gross borrowing base, and in any event, not less than $5.0million. The revolving credit facility also contains customary events of default. As of February 3, 2018, we were incompliance with all covenants under the revolving credit facility. Senior Secured Term Loan. We have a $160.0 million senior secured term loan facility with a financial institution. Theterm loan was issued at a price of 99% of the aggregate principal amount and has a maturity date of December 3, 2020. Theterm loan requires quarterly principal payments of $0.4 million payable on the last business day of each fiscal quartercontinuing up to and including October 30, 2020. A final installment payment consisting of the remaining unpaid balance isdue on December 3, 2020. As of February 3, 2018, there was $135.1 million outstanding under the term loan. As of February 3, 2018, the term loan bore interest at a rate per annum equal to the one-, two-, three-, or six-monthLIBOR (or, the nine- or 12-month LIBOR), as defined in the term loan agreement, at our election, which could not be lessthan 1.25%, plus an applicable margin of 6.25%. During 2017, LIBOR exceeded the floor rate of 1.25%. At February 3, 2018,the rate of our borrowings under our term loan was 7.63%. All of Sportsman’s Warehouse, Inc.’s obligations under the term loan are guaranteed by Holdings, MinnesotaMerchandising Corporation, a wholly owned subsidiary of Holdings, and each of Sportsman’s Warehouse, Inc.’s subsidiaries. The term loan is secured by a lien on substantially all of the tangible and intangible assets of Sportsman’s Warehouse,Inc. The lien securing the obligations under the term loan is a first priority lien as to certain non-liquid assets, includingequipment, intellectual property, proceeds of assets sales and other personal property. Sportsman’s Warehouse, Inc. may be required to make mandatory prepayments on the term loan in the event of, amongother things, certain asset sales, the receipt of payment in respect of certain insurance claims or upon the issuance orincurrence of certain indebtedness. Sportsman’s Warehouse, Inc. may also be required to make mandatory prepayments basedon any excess cash flows as defined in the term loan agreement. The term loan contains customary affirmative and negative covenants, including covenants that limit our ability toincur, create or assume certain indebtedness, to incur or assume certain liens, to purchase, hold or acquire certain investments,to declare or make certain dividends and distributions and to engage in certain mergers, consolidations and asset sales. Theterm loan also requires us to comply with specified financial covenants, including a minimum interest coverage ratio and amaximum total net leverage ratio. The term loan also contains customary events of default. As of February 3, 2018, we werein compliance with all covenants under the term loan. On May 18, 2017, Sportsman’s Warehouse, Inc. entered into an amendment to its term loan. The amendment increasedthe maximum leverage ratio in each of the remaining quarters by amounts ranging from 0.2x to 1.3x, with an49 Table of Contentsaverage quarterly increase of 0.75x. As a result of the amendment, the interest rate on the term loan increased 25 basis pointsto LIBOR plus 6.25% with a 1.25% LIBOR floor. Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with GAAP. In connection with the preparation of the financialstatements, we are required to make assumptions, make estimates and apply judgment that affect the reported amounts ofassets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments onhistorical experience, current trends and other factors that we believe to be relevant at the time the consolidated financialstatements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments toensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events andtheir effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and suchdifferences could be material. Our significant accounting policies are discussed in Note 2 of the Notes to our consolidated financial statements. Webelieve that the following accounting policies are the most critical to aid in fully understanding and evaluating our reportedfinancial results. Revenue Recognition We recognize revenue on our retail sales at the time of the sale in the store. We record a reserve for estimated productreturns in each reporting period based on our historical experience. Had our estimate of product returns been lower or higherby 10% as of February 3, 2018, our operating income would have been correspondingly higher or lower by approximately$0.1 million. Our policy regarding gift cards sold is to record revenue as the gift cards are redeemed for merchandise. Prior to theirredemption, the gift cards are recorded as a liability. Gift card breakage income is recognized based upon historicalredemption patterns and represents the balance of gift cards for which we believe the likelihood of redemption by thecustomer is remote. During the fiscal years ended February 3, 2018 and January 28, 2017, we recognized $1.3 million and$0.4 million, respectively, in gift card breakage income. We include gift card breakage income as a reduction in selling,general and administrative expenses, if applicable. Had our estimate of breakage on our recorded liability for gift cards beenlower or higher by 10% of the recorded liability as of February 3, 2018, our selling, general and administrative expenseswould have been correspondingly higher or lower by approximately $1.0 million. Loyalty breakage income is recognized based upon the balance of loyalty points that have expired after a dormancyperiod of 18 months. During the fiscal year ended February 3, 2018 and January 28, 2017, we recognized $1.0 and $0.6million of loyalty breakage income, respectively. This income is included in the accompanying consolidated statements ofincome as an increase in net sales. Had our estimate of breakage for loyalty been lower or higher by 10% of the recordedliability as of February 3, 2018, the amount recognized in revenue relating to this breakage would have been higher or lowerby approximately $0.1 million. We will adopt new revenue recognition standards in the first quarter of fiscal year 2018. See Note 2 to ourconsolidated financial statements included elsewhere in this Form 10-K. Management expects these new standards willimpact the timing of revenue recognition for gift card and loyalty program rewards breakage. Revenue related to theunredeemed portion of our gift cards and loyalty program rewards will be recognized over the expected redemption period,rather than waiting until the likelihood of redemption becomes remote or the rewards expire. This change is not expected tochange the total amount of revenue recognized, but would accelerate the timing of when revenue is recognized. We havecompleted our analysis over the acceleration of revenue relating to the gift card and loyalty program rewards breakage anddetermined the amount to be approximately $3.4 million that will be recorded to beginning retained earnings in the firstquarter of fiscal year 2018. 50 Table of ContentsInventory Valuation We adopted ASU 2015-11 “Simplifying the Measurement of Inventory” in the first quarter of fiscal year 2017 and hasmeasured our inventory at the lower of cost or net realizable value. This adoption had no impact on the value of inventorypresented on the consolidated balance sheet for the fiscal year 2017. Cost is determined using the weighted average cost method. We estimate a provision for inventory shrinkage based onour historical inventory accuracy rates as determined by periodic cycle counts. The allowance for damaged goods fromreturns is based upon our historical experience. We also adjust inventory for obsolete or slow moving inventory based oninventory productivity reports and by specific identification of obsolete or slow moving inventory. Had our estimatedinventory reserves been lower or higher by 10% as of February 3, 2018, our cost of sales would have been correspondinglylower or higher by approximately $0.6 million. Valuation of Long-Lived Assets We review our long-lived assets with definite lives for impairment whenever events or changes in circumstances mayindicate that the carrying value of an asset may not be recoverable. We use an estimate of the future undiscounted net cashflows of the related asset or group of assets over their remaining useful lives in measuring whether the assets are recoverable.If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amountby which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets is assessed at thelowest levels for which there are identifiable cash flows that are independent of other groups of assets. Assets to be disposedof are reported at the lower of the carrying amount or fair value, less the estimated costs to sell. No impairment charge tolong-lived assets was recorded during the fiscal year ended February 3, 2018 or January 28, 2017. Off Balance Sheet Arrangements We are not party to any off balance sheet arrangements. Contractual Obligations The following table summarizes our contractual obligations as of February 3, 2018 and the effect such obligations areexpected to have on our liquidity and cash flows in future periods. Payments Due by Period Total Less than 1year 1-3 years 3-5 years More than 5years (in thousands) Long-term debt obligations (1) $165,615 $12,482 $22,406 $130,727 $ — Operating lease obligations (2) 303,486 45,128 86,414 73,214 98,730 Standby letters of credit 1,505 1,505 — — — Purchase/Construction obligations (3) 3,370 3,370 — — — (1)Long-term debt obligations do not reflect the amounts outstanding under our revolving credit facility, because thoseamounts are considered current liabilities, and do not reflect any mandatory prepayments of our term loans that may berequired upon the occurrence of certain events, which are described above under “—Liquidity and Capital Resources.”Long-term obligations include interest to be paid until maturity. For loans that have variable rate interest, we havecalculated future interest obligations based on the interest rate for that loan as of February 3, 2018. (2)Operating lease obligations in the table above do not include additional payments associated with common areamaintenance, real estate, taxes and insurance. Such payments were $8.0 million, $7.6 million, and $7.3 million in fiscalyears 2017, 2016, and 2015, respectively. (3)In the ordinary course of business, we enter into arrangements with vendors to purchase merchandise in advance ofexpected delivery. Because these purchase orders do not contain any termination payments or other penalties ifcancelled, they are not included in this table of contractual obligations. In accordance with GAAP, these obligations arenot recorded in our financial statements. 51 Table of ContentsNon-GAAP Measures In evaluating our business, we use Adjusted EBITDA and Adjusted EBITDA margin as supplemental measures of ouroperating performance. We define Adjusted EBITDA as net income plus interest expense, income tax expense, depreciationand amortization, stock-based compensation expense, pre-opening expenses, and other gains/losses, and expenses that we donot believe are indicative of our ongoing expenses. Adjusted EBITDA excludes pre-opening expenses because we do notbelieve these expenses are indicative of the underlying operating performance of our stores. The amount and timing of pre-opening expenses are dependent on, among other things, the size of new stores opened and the number of new stores openedduring any given period. Adjusted EBITDA margin means, for any period, the Adjusted EBITDA for that period divided bythe net sales for that period. We consider Adjusted EBITDA and Adjusted EBITDA margin important supplemental measuresof our operating performance and believe they are frequently used by analysts, investors and other interested parties in theevaluation of companies in our industry. Other companies in our industry, however, may calculate Adjusted EBITDA andAdjusted EBITDA margin differently than we do. Management also uses Adjusted EBITDA and Adjusted EBITDA margin asadditional measurement tools for purposes of business decision-making, including evaluating store performance, developingbudgets and managing expenditures. Management believes Adjusted EBITDA and Adjusted EBITDA margin allow investorsto evaluate our operating performance and compare our results of operations from period to period on a consistent basis byexcluding items that management does not believe are indicative of our core operating performance. Adjusted EBITDA is not defined under GAAP and is not a measure of operating income, operating performance orliquidity presented in accordance with GAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessingour operating performance, you should not consider Adjusted EBITDA in isolation or as a substitute for net income or otherconsolidated income statement data prepared in accordance with GAAP. Some of these limitations include, but are notlimited to: ·Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures orcontractual commitments; ·Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; ·Adjusted EBITDA may be defined differently by other companies, and, therefore, it may not be directlycomparable to the results of other companies in our industry; ·Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest orprincipal payments, on our debt; and ·Adjusted EBITDA does not reflect income taxes or the cash requirements for any tax payments. For a reconciliation of net income, the most directly comparable financial measure presented in accordance with GAAP,to Adjusted EBITDA, see “Item 6. Selected Financial Data” included elsewhere in this 10-K. Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 to our consolidated financial statements includedelsewhere in this 10-K. Under the Jumpstart Our Business Startup Act, “emerging growth companies” (“EGCs”) can delayadopting new or revised accounting standards until such time as those standards apply to private companies. We haveirrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, we willbe subject to the same new or revised accounting standards as other public companies that are not EGCs. We will continue to be an EGC for a period up to the end of the fifth fiscal year after our initial public offering. Wecould cease to be an EGC earlier than this five-year period if our total annual gross revenues equal or exceed $1 billion in afiscal year, if we issue more than $1 billion in non-convertible debt over a three-year period or if we become a “largeaccelerated filer” (which requires, among other things, the market value of our common stock held by non-affiliates to be atleast $700 million as of the last business day of our second fiscal quarter of any fiscal year). For further information, see Part I,Item 1A. “Risk Factors—We are an EGC within the meaning of the JOBS Act and we cannot be52 Table of Contentscertain if the reduced reporting requirements applicable to EGCs will make our common stock less attractive to investors.” ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our principal exposure to market risk relates to changes in interest rates. Our revolving credit facility and term loanscarry floating interest rates that are tied to LIBOR, the federal funds rate and the prime rate, and, therefore, our income andcash flows will be exposed to changes in interest rates to the extent that we do not have effective hedging arrangements inplace. We historically have not used interest rate swap agreements to hedge the variable cash flows associated with theinterest on our credit facilities. At February 3, 2018, the weighted average interest rate on our borrowings under our revolvingcredit facility was 3.26%. Based on a sensitivity analysis at February 3, 2018, assuming the amount outstanding under ourrevolving credit facility would be outstanding for a full year, a 100 basis point increase in interest rates would increase ourannual interest expense by approximately $0.5 million. As long as LIBOR is less than 1.25%, the interest rate on our $160.0million term loan will be fixed at 7.25%. During 2017, LIBOR exceeded the floor rate of 1.25% causing the interest rate onour term loan to become variable depending on the LIBOR rate. At February 3, 2018, the rate of our borrowings under ourterm loan was 7.63%. We do not use derivative financial instruments for speculative or trading purposes. However, this doesnot preclude our adoption of specific hedging strategies in the future.53 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TABLE OF CONTENTS PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 55 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets 56 Consolidated Statements of Income 57 Consolidated Statements of Stockholders’ Equity (Deficit)58 Consolidated Statements of Cash Flows 59 Notes to Consolidated Financial Statements 60 54 Table of ContentsReport of Independent Registered Public Accounting Firm To the Stockholders and Board of DirectorsSportsman’s Warehouse Holdings, Inc.:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Sportsman’s Warehouse Holdings, Inc. (and subsidiaries)(the Company) as of February 3, 2018 and January 28, 2017, the related consolidated statements of income, stockholders’equity (deficit), and cash flows for each of the years in the three‑year period ended February 3, 2018, and the related notes(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, inall material respects, the financial position of the Company as of February 3, 2018 and January 28, 2017, and the results of itsoperations and its cash flows for each of the years in the three‑year period ended February 3, 2018, in conformity withU.S. generally accepted accounting principles.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these consolidated financial statements based on our audits. We are a public accounting firmregistered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to beindependent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free of materialmisstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an auditof its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internalcontrol over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’sinternal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures includedexamining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Ouraudits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonablebasis for our opinion.. /s/ KPMG LLP We have served as the Company’s auditor since 2002 Salt Lake City, UtahMarch 29, 201855 Table of ContentsSPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Amounts in Thousands, Except Per Share Data February 3, January 28, 2018 2017 Assets Current assets: Cash $1,769 $1,911 Accounts receivable, net 319 411 Merchandise inventories 270,594 246,289 Prepaid expenses and other 8,073 7,313 Total current assets 280,755 255,924 Property and equipment, net 94,035 83,109 Deferred income taxes 4,595 5,097 Definite lived intangibles, net 276 2,118 Total assets $379,661 $346,248 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $36,788 $31,549 Accrued expenses 50,602 49,586 Income taxes payable 2,586 979 Revolving line of credit 59,992 60,972 Current portion of long-term debt, net of discount and debt issuance costs 990 983 Current portion of deferred rent 4,593 3,150 Total current liabilities 155,551 147,219 Long-term liabilities: Long-term debt, net of discount, debt issuance costs, and current portion 132,349 133,721 Deferred rent, noncurrent 41,963 35,307 Total long-term liabilities 174,312 169,028 Total liabilities 329,863 316,247 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; 20,000 shares authorized; 0 shares issued andoutstanding — — Common stock, $.01 par value; 100,000 shares authorized; 42,617 and 42,269shares issued and outstanding, respectively 426 422 Additional paid-in capital 82,197 80,146 Accumulated deficit (32,825) (50,567) Total stockholders' equity 49,798 30,001 Total liabilities and stockholders' equity $379,661 $346,248 See accompanying notes to the consolidated financial statements56 Table of ContentsSPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOMEAmounts in Thousands, Except Per Share Data Fiscal Year Ended February 3, January 28, January 30, 2018 2017 2016Net sales $809,671 $779,956 $706,764 Cost of goods sold 535,811 516,726 468,234 Gross profit 273,860 263,230 238,530 Selling, general, and administrative expenses 227,292 202,543 179,218 Income from operations 46,568 60,687 59,312 Interest expense (13,738) (13,402) (14,156) Income before income taxes 32,830 47,285 45,156 Income tax expense 15,088 17,616 17,385 Net income $17,742 $29,669 $27,771 Earnings per share: Basic $0.42 $0.70 $0.66 Diluted $0.42 $0.70 $0.66 Weighted average shares outstanding: Basic 42,496 42,187 41,966 Diluted 42,522 42,485 42,334 See accompanying notes to the consolidated financial statements 57 Table of ContentsSPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)Amounts in Thousands Common Stock Restricted nonvotingcommon stock Additionalpaid-in-capital Accumulateddeficit Totalstockholders'(deficit)equity Shares Amount Shares Amount Amount Amount Amount Balance at January 31, 2015 41,818 $418 — $ — $76,257 $(108,007) $(31,332) Vesting of restricted stock units 186 2 — — (2) — — Payment of withholdings on restricted stockunits — — — — (1,041) — (1,041) Excess tax benefit from restricted stock units — — — — 286 — 286 Stock based compensation — — — — 2,257 — 2,257 Net income — — — — — 27,771 27,771 Balance at January 30, 2016 42,004 $420 — $ — $77,757 $(80,236) $(2,059) Vesting of restricted stock units 207 2 — — (2) — — Payment of withholdings on restricted stockunits — — — — (1,228) — (1,228) Issuance of common stock for cash peremployee stock purchase plan 58 — — — 433 — 433 Stock based compensation — — — — 3,186 — 3,186 Net income — — — — — 29,669 29,669 Balance at January 28, 2017 42,269 $422 — $ — $80,146 $(50,567) $30,001 Vesting of restricted stock units 260 3 — — (3) — — Payment of withholdings on restricted stockunits — — — — (635) — (635) Issuance of common stock for cash peremployee stock purchase plan 88 1 — — 395 — 396 Stock based compensation — — — — 2,294 — 2,294 Net income — — — — — 17,742 17,742 Balance at February 3, 2018 42,617 $426 — $ — $82,197 $(32,825) $49,798 See accompanying notes to the consolidated financial statements 58 Table of ContentsSPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWSAmounts in Thousands Fifty-three/Fifty-two Weeks Ended February 3 January 28, January30, 2018 2017 2016Cash flows from operating activities: Net income $17,742 $29,669 $27,771Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation of property and equipment 15,864 12,169 9,763Amortization of discount on debt and deferred financing fees 708 1,122 817 Amortization of definite lived intangible 1,842 1,805 1,806Change in deferred rent 8,098 6,307 1,161Loss on asset dispositions 516 — —Deferred income taxes 502 167 3,062Excess tax benefits from stock-based compensation arrangements — (449) (286)Stock-based compensation 2,294 3,186 2,257Change in operating assets and liabilities: — — —Accounts receivable, net 92 58 (44)Merchandise inventories (24,305) (28,495) (31,885)Prepaid expenses and other (681) (1,064) (5,435)Accounts payable 7,536 (15,530) 18,198Accrued expenses (1,040) 6,888 983Income taxes payable and receivable 1,607 (351) 7,255Net cash provided by operating activities 30,775 15,482 35,423Cash flows from investing activities: Purchase of property and equipment (41,172) (39,417) (33,957)Proceeds from deemed sale-leaseback transactions 9,022 11,923 19,006Proceeds from sale of property and equipment 14 — —Net cash used in investing activities (32,136) (27,494) (14,951)Cash flows from financing activities: Net borrowings on line of credit (980) 35,709 (16,636)Increase (decrease) in book overdraft 4,589 (1,827) (1,123)Proceeds from issuance of common stock per employee stock purchase plan 396 433 —Excess tax benefits from stock-based compensation arrangements — — 286Payment of withholdings on restricted stock units (635) (1,228) (1,041)Payment of deferred financing costs (551) — —Principal payments on long-term debt (1,600) (21,273) (1,600)Net cash provided by (used in) financing activities 1,219 11,814 (20,114)Net change in cash (142) (198) 358Cash at beginning of period 1,911 2,109 1,751Cash at end of period $1,769 $1,911 $2,109 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest, net of amounts capitalized $13,532 11,965 16,408Income taxes 12,839 18,444 10,328 Supplemental schedule of noncash investing activities: Purchases of property and equipment included in accounts payable and accrued expenses $1,142 5,972 1,263 See accompanying notes to the consolidated financial statements59 Table of ContentsSPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Dollars in Thousands, except per share amounts (1) Nature of Business Description of Business Sportsman’s Warehouse Holdings, Inc. (“Holdings”), a Delaware Corporation, and subsidiaries (collectively, the“Company”) operate retail sporting goods stores. As of February 3, 2018, the Company operated 87 stores in 22 states. Voluntary Reorganization under Chapter 11 On March 21, 2009, the Company and all of its subsidiaries filed a voluntary bankruptcy petition for reorganizationunder Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware(the “Bankruptcy Court”). On July 30, 2009, the Bankruptcy Court entered an order approving and confirming the Plan ofReorganization (the “Reorganization Plan”). On May 22, 2013, the Company’s bankruptcy case was closed after a finaldecree was entered by the Bankruptcy Court. (2) Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements of the Company have been prepared in accordance with U.S. generally acceptedaccounting principles (“GAAP”) and include the accounts of its four wholly owned subsidiaries, Sportsman’s Warehouse, Inc.(“Sportsman’s Warehouse”), Pacific Flyway Wholesale, LLC (“Pacific Flyway”), Sportsman’s Warehouse Southwest, Inc., andMinnesota Merchandising Corporation. All intercompany transactions and accounts have been eliminated in consolidation. Fiscal Year The Company operates using a 52/53 week fiscal year ending on the Saturday closest to January 31. Fiscal year 2017ended February 3, 2018 and contained 53 weeks of operation. Fiscal years 2016 and 2015 ended January 28, 2017, andJanuary 30, 2016, respectively and each contained 52 weeks of operations. Seasonality The Company’s business is generally seasonal, with a significant portion of total sales occurring during the third andfourth quarters of the fiscal year. Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atthe date of the consolidated financial statements and the reported amounts of revenues and expenses during the reportingperiod. Actual results could differ from those estimates. Segment Reporting The Company operates solely as a sporting goods retailer whose Chief Operating Decision Maker (“CODM”) is theChief Executive Officer. The CODM reviews financial information presented on a consolidated and individual store and costcenter basis, for purposes of allocating resources and evaluating financial performance. The Company’s stores typically havesimilar square footage and offer essentially the same general product mix. The Company’s core customer demographicremains similar chainwide, as does the Company’s process for the procurement and marketing of its product mix.Furthermore, the Company distributes its product mix chainwide from a single distribution center. Given60 Table of Contentsthat the stores have the same economic characteristics, the individual stores are aggregated into one single operating andreportable segment. Cash The Company considers cash on hand in stores and highly liquid investments with an initial maturity of three monthsor less as cash. Checks issued pending bank clearance that result in overdraft balances for accounting purposes are classifiedas accrued expenses in the accompanying consolidated balance sheets. In accordance with the terms of a financing agreement (Note 8), the Company maintains depository accounts with twobanks in a lock-box arrangement. Deposits into these accounts are used to reduce the outstanding balance on the line ofcredit as soon as the respective bank allows the funds to be transferred to the financing company. At February 3, 2018 andJanuary 28, 2017, the combined balance in these accounts were $6,629 and $6,138, respectively. Accordingly, these amountshave been classified as a reduction in the line of credit as if the transfers had occurred on February 3, 2018 and January 28,2017, respectively. Accounts Receivable The Company offers credit terms on the sale of products to certain government and corporate retail customers andrequires no collateral from these customers. The Company performs ongoing credit evaluations of its customers’ financialcondition and maintains an allowance for doubtful accounts receivable based upon historical experience and a specificreview of accounts receivable at the end of each period. Actual bad debts may differ from these estimates and the differencecould be significant. At February 3, 2018 and January 28, 2017, the Company had no allowance for doubtful accountsreceivable. Merchandise Inventories The Company adopted Accounting Standards Updates (“ASU”) 2015-11 “Simplifying the Measurement of Inventory”in the first quarter of fiscal year 2017 and has measured its inventory at the lower of cost or net realizable value. Thisadoption had no impact on the value of inventory presented on the consolidated balance sheet for the fiscal year 2017. Cost is determined using the weighted average cost method. The Company estimates a provision for inventoryshrinkage based on its historical inventory accuracy rates as determined by periodic cycle counts. The Company also adjustsinventory for obsolete, slow moving, or damaged inventory based on inventory activity thresholds and by specificidentification of slow moving or obsolete inventory. The inventory reserves for shrinkage, damaged, or obsolescence totaled$7,139 and $6,539 at February 3, 2018 and January 28, 2017, respectively. Property and Equipment Property and equipment are recorded at cost. Leasehold improvements primarily include the cost of improvementsfunded by landlord incentives or allowances. Maintenance, repairs, minor renewals, and betterments are expensed asincurred. Major renewals and betterments are capitalized. Upon retirement or disposal of assets, the cost and accumulateddepreciation and amortization are eliminated from the respective accounts and the related gains or losses are credited orcharged to earnings. Depreciation and amortization of property and equipment is computed using the straight-line method over theestimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the useful lives of theimprovements or the term of the lease. Furniture, fixtures, and equipment, are depreciated over useful lives ranging from3 to 10 years. Impairment of Long-Lived Assets The Company reviews its long-lived assets with definite lives for impairment whenever events or changes incircumstances may indicate that the carrying value of an asset may not be recoverable. The Company uses an estimate of thefuture undiscounted net cash flows of the related asset or group of assets over their remaining useful lives in measuringwhether the assets are recoverable. If the carrying amount of an asset exceeds its estimated future cash flows,61 Table of Contentsan impairment charge is recognized for the amount by which the carrying amount exceeds the estimated fair value of theasset. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that areindependent of other groups of assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value,less the estimated costs to sell. No impairment charge to long-lived assets was recorded during the fiscal years endedFebruary 3, 2018, January 28, 2017, or January 30, 2016. Prepaid Expenses and Other Prepaid expenses and other primarily consists of prepaid expenses, vendor rebates receivable, vendor advertisingreceivables and miscellaneous deposits. Revenue Recognition Revenue is recognized for retail sales at the time of the sale in the store. The Company records a reserve for estimatedproduct returns in each reporting period, based on its historical experience. The Company’s reserve for estimated returns anddiscounts is recorded against retail sales on a net basis. The Company’s sales returns reserve was $697 and $964 at February3, 2018, and January 28, 2017, respectively. Revenue for gift cards sold is deferred and recognized as the gift cards are redeemed for merchandise. Gift cardbreakage income is recognized based upon historical redemption patterns and represents the balance of gift cards for whichthe Company believes the likelihood of redemption by the customer is remote. During the fiscal years ended February 3,2018, January 28, 2017, and January 30, 2016, the Company recognized $1,337, $347, and $846 of gift card breakageincome, respectively. This income is included in the accompanying consolidated statements of income as a reduction inselling, general, and administrative expenses (“SG&A”). In November of 2013, the Company launched a customer loyalty program. Under this program, the Company issuescredits in the form of points to loyalty program members. The value of points earned by loyalty program members is includedin accrued liabilities and recorded as a reduction of net sales at the time the points are earned. Loyalty breakage income isrecognized based upon the balance of loyalty points that have expired after a dormancy period of 18 months. During thefiscal year ended February 3, 2018, January 28, 2017, and January 30, 2016 the Company recognized $1,022, $611 and$232, respectively of loyalty breakage income. This income is included in the accompanying consolidated statements ofincome as an increase in net sales. Customer deposits on items placed in layaway are recorded as a liability. Revenue is recognized on layawaytransactions at the point where the customer takes possession of the merchandise. These liabilities are recorded as unearnedrevenue in accrued expenses in the consolidated balance sheets. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and,therefore, are excluded from net sales in the consolidated statements of income. Cost of Goods Sold Cost of goods sold primarily consists of merchandise acquisition costs, including freight-in costs, shipping costs, termsdiscounts received from the vendor and vendor allowances and rebates associated directly with merchandise. Vendorallowances include allowances and rebates received from vendors. The Company records an estimate of earned allowancesbased on purchase volumes. These funds are determined for each fiscal year, and the majority is based on various quantitativecontract terms. Amounts expected to be received from vendors relating to purchase of merchandise inventories arerecognized as a reduction of cost of goods sold as the merchandise is sold. Historical program results and current purchasevolumes are reviewed when establishing the estimate for earned allowances. Shipping and Handling Fees and Costs All shipping and handling fees billed to customers are recorded as a component of net sales. All costs incurred relatedto the shipping and handling of products are recorded in cost of sales. 62 Table of ContentsVendor Allowances Vendor allowances include price allowances, volume rebates, store opening costs reimbursements, marketingparticipation and advertising reimbursements received from vendors under the terms of specific arrangements with certainvendors. Vendor allowances related to merchandise are recognized as a reduction of the costs of merchandise as sold. Vendorreimbursements of costs are recorded as a reduction to expense in the period the related cost is incurred based on actual costsincurred. Any cost reimbursements exceeding expenses incurred are recognized as a reduction of the cost of merchandisesold. Volume allowances may be estimated based on historical purchases and estimates of projected purchases. Operating Leases and Deferred Rent The Company has various operating lease commitments on its store locations. Certain leases contain rent escalationclauses that require higher rental payments in later years. Leases may also contain rent holidays, or free rents, during the leaseterm. Rent expense is recognized on a straight-line basis over the lease term. Rent expense in excess of rental payments isrecorded as deferred rent on the accompanying consolidated balance sheets. Tenant Allowances The Company enters into various types of lease agreements in the operation of its stores, including remodel and build-to-suit arrangements. Under any type of lease agreement, the Company may receive reimbursement from a landlord for someof the costs related to occupancy or tenant improvements per lease provisions. These reimbursements may be referred to astenant allowances or landlord reimbursements. Reimbursement from a landlord for occupancy or tenant improvements istreated differently depending on the type of arrangement. Under most of the Company’s lease agreements, tenant allowancesare included within deferred rent on the accompanying consolidated balance sheets. The deferred rent credit is amortized asrent expense on a straight-line basis over the term of the lease. Landlord reimbursements from these transactions are includedin cash flows from operating activities as a change in deferred rent. In lease agreements where the Company is the deemed owner of the building during the construction period, a deemedsale-leaseback of the building occurs when construction is complete and the lease term begins. Under these lease agreements,as the tenant allowances are received, the value of the Company’s construction-in-progress or leasehold improvements isreduced accordingly. The proceeds from deemed sale-leaseback transactions are included in cash flows from investingactivities. Health Insurance The Company maintains for its employees a partially self-funded health insurance plan. The Company maintains stop-loss insurance through an insurance company with a $100 per person deductible and aggregate claims limit above apredetermined threshold. The Company intends to maintain this plan indefinitely. However, the plan may be terminated,modified, suspended, or discontinued at any time for any reason specified by the Company. The Company has established reserve amounts based upon claims history and estimates of claims that have beenincurred but not reported (“IBNR”) for this plan. As of February 3, 2018, and January 28, 2017, the Company estimated theIBNR for this plan to be $922 and $1,001, respectively. Actual claims may differ from the estimate and such difference couldbe significant. These reserves are included in accrued expenses in the accompanying consolidated balance sheets. Workers Compensation Insurance The Company maintains for its employees a high-deductible workers compensation plan. The Company maintainsstop-loss insurance through an insurance company with a $150 per claim deductible and aggregate claims limit above apredetermined threshold. The Company intends to maintain this plan indefinitely. However, the plan may be terminated,modified, suspended, or discontinued at any time for any reason specified by the Company. The Company has established reserve amounts based upon claims history and estimates of IBNR for this plan. As ofFebruary 3, 2018, and January 28, 2017, the Company estimated the IBNR for this plan to be $659 and $650,63 Table of Contentsrespectively, related to the workers compensation plan. Actual claims may differ from the estimate and such difference couldbe significant. These reserves are included in accrued expenses in the accompanying consolidated balance sheets. Advertising Costs for newspaper, television, radio, and other advertising are expensed in the period in which the advertising occurs.The Company participates in various advertising and marketing cooperative programs with its vendors, who, under theseprograms, reimburse the Company for certain costs incurred. Payments received under these cooperative programs arerecorded as a decrease to expense in the period that the advertising occurred. For the fiscal years ended February 3, 2018,January 28, 2017 and January 30, 2016, net advertising expenses totaled $7,760, $7,513, and $6,634, respectively. Theseamounts are included in selling, general and administrative expenses in the accompanying consolidated statements ofincome. Stock-Based Compensation Compensation expense is estimated based on grant date fair value on a straight-line basis over the requisite service oroffering period. Costs associated with awards are included in compensation expense as a component of selling, general, andadministrative expenses. Income Taxes The Company recognizes a deferred income tax liability or deferred income tax asset for the future tax consequencesattributable to differences between the financial statement basis of existing assets and liabilities and their respective taxbasis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income inthe years in which those temporary differences are expected to be recovered or settled. A valuation allowance is providedagainst deferred income tax assets when it is more likely than not that all or some portion of the deferred income tax assetswill not be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the taxposition will be sustained on examination by the relevant tax authorities, based on the technical merits of the position.Interest and potential penalties are accrued related to unrecognized tax benefits in the provision for income taxes. Fair Value of Financial Instruments The carrying amounts of financial instruments except for long-term debt approximate fair value because of the generalshort-term nature of these instruments. The carrying amounts of long-term variable rate debt approximate fair value as theterms are consistent with market terms for similar debt instruments. The carrying amount of the Company’s financialinstruments approximates fair value as of February 3, 2018 and January 28, 2017. Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stockoutstanding, reduced by shares repurchased and held in treasury, during the period. Diluted earnings per share representsbasic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvestedshare awards and nonvested share unit awards. Comprehensive Income The Company has no components of income that would require classification as other comprehensive income for thefiscal years ended February 3, 2018, January 28, 2017 or January 30, 2016. 64 Table of ContentsRecent Accounting Pronouncements Revenue from Contracts with CustomersIn May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2014-09 “Revenue from Contracts with Customers” (Topic 606) (“ASU 2014-09”). ASU 2014-09 is a comprehensive newrevenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customerat an amount reflecting the consideration it expects to receive in exchange for those goods or services. In August 2015, theFASB issued ASU 2015-14, “Deferral of the Effective Date” (“ASU 2015-14”). ASU 2015-14 simply formalized a one yeardeferral of the effective date of ASU 2014-09. In March 2016, the FASB issued ASU 2016-08 “Principal versus AgentConsiderations – Reporting Revenue Gross versus Net”, amending the principal-versus-agent implementation guidance setforth in ASU 2014-09. In April 2016, the FASB issued ASU 2016-10 “Identifying Performance Obligations and Licensing”,which amends certain aspects of the guidance set forth in the FASB’s new revenue standard related to identifyingperformance obligations and licensing implementation. As a result of these four standards updates, the Company will applythe new revenue standard to annual and interim reporting periods beginning after December 15, 2017. In adopting thesestandard updates, companies may use either a full retrospective or a modified retrospective approach. Management evaluatedthe provisions of these standard updates and has determined that the Company will adopt this standard using a modifiedretrospective approach with the cumulative effect of adoption recorded at the date of initial application. Managementexpects the new standards to impact the timing of revenue recognition for gift card and loyalty program rewards breakage.Revenue related to the unredeemed portion of the Company’s gift cards and loyalty program rewards will be recognized overthe expected redemption period, rather than waiting until the likelihood of redemption becomes remote or the rewards expire.This change is not expected to change the total amount of revenue recognized, but would accelerate the timing of whenrevenue is recognized. Management has completed its analysis over the acceleration of revenue relating to the gift card andloyalty program rewards breakage and determined the amount to be approximately $3.4 million that will be recorded as anaddition to beginning retained earnings in the first quarter of 2018. Management does not anticipate significant changes tothe timing and amounts of the Company’s core revenue streams compared to the current revenue recognition policy resultingfrom adoption of the new guidance; however, management anticipates significant changes related to footnote disclosures tothe consolidated financial statements as a result of the adoption of the new guidance. Lease AccountingIn February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). The standard amends the existingaccounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets andmaking targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Earlyadoption of ASU 2016-02 is permitted. The Company plans to adopt the standard during the first quarter of 2019. The newleases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date ofinitial application, with an option to use certain transition relief. Management is currently evaluating the impact of adoptingASU 2016-02 on the Company’s consolidated financial statements, including whether to elect the practical expedientsoutlined in the new standard. Currently all of the Company’s store and corporate locations are accounted for as operatingleases, and therefore are not recorded on our balance sheet. The Company expect this adoption will result in a materialincrease in the assets and liabilities on the Company’s consolidated balance sheets. Once the Company adopts this newstandard, it expects that, for the majority of its leases, the leases would include the amortization of the right-of-use asset andthe recognition of interest expense based on the lessee’s incremental borrowing rate (or the rate implicit in the lease, ifknown) on the repayment of the lease obligation. Currently, management is still assessing the impact this will have on theCompany’s consolidated statement of income. In preparation for the adoption of the guidance, the Company is implementingcontrols and system changes to enable the preparation of financial information. Recognition of Breakage for Certain Prepaid Stored-Value ProductsIn March 2016, the FASB issued ASU 2016-04, “Recognition of Breakage for Certain Prepaid Stored-ValueProducts” (“ASU 2016-04”). ASU 2016-04 entitles a company to derecognize amounts related to expected breakage inproportion to the pattern of rights expected to be exercised by the product holder to the extent that it is probable a significantreversal of the recognized breakage amount will not subsequently occur. ASU 2016-04 is effective for reporting periodsbeginning after December 15, 2017 and is to be applied retrospectively. Early adoption is permitted. Management believesASU 2016-02 will have no impact on the Company’s consolidated financial statements. 65 Table of ContentsClassification of Certain Cash Receipts and Cash PaymentsIn August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”(“ASU 2016-15”). The update amends the guidance in Accounting Standard Codification 230, Statement of Cash Flows, andclarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows with theobjective of reducing the existing diversity in practices related to eight specific cash flow issues. The amendments in thisupdate are effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years.Early adoption is permitted. Management has determined this will have no impact on the Company’s consolidated financialstatements. Intangible – Goodwill and OtherIn January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test forGoodwill Impairment,” which requires an entity to no longer perform a hypothetical purchase price allocation to measuregoodwill impairment. Instead, impairment will be measured using the difference between the carrying amount and the fairvalue of the reporting unit. The ASU is effective for annual and interim periods in fiscal years beginning after December 15,2019. All entities may early adopt the standard for goodwill impairment tests with measurement dates after January 1, 2017.Management believes ASU 2017-04 will have no impact on the Company’s consolidated financial statements. Compensation – Stock CompensationIn May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718),” which clarifies whatconstitutes a modification of a share-based payment award. This ASU is effective for all entities for annual and interimreporting periods in fiscal years beginning after December 15, 2017. Early adoption is permitted as of the beginning of anannual period for which financial statements (interim or annual) have not been issued or made available for issuance.Management believes ASU 2017-09 will have no impact on the Company’s consolidated financial statements. (3) Secondary Offering On April 18, 2016, 6,000 shares of common stock were sold in a secondary offering by Seidler Equity Partners III,L.P. On April 22, 2016, the underwriters of the secondary offering fully exercised the option granted at the time of thesecondary offering to purchase an additional 900 shares of common stock at the secondary offering price of $11.25 per share,less underwriting discounts and commissions, which consisted solely of shares sold by affiliates of Seidler Equity Partners III,L.P. The Company received no proceeds from the secondary offering or full exercise of the option. Total expenses incurredrelated to the secondary offering and the exercise of the option were $143 and are recorded in selling, general, andadministrative expenses in the accompanying Statements of Income. On September 30, 2015, 6,250 shares of common stock were sold in a secondary offering by certain existingshareholders, including affiliates of Seidler Equity Partners III, L.P. On October 26, 2015, the underwriters of the secondaryoffering partially exercised the option granted at the time of the secondary offering to purchase an additional 649 shares ofcommon stock at the secondary offering price of $12.25 per share, less underwriting discounts and commissions, whichconsists solely of shares sold by affiliates of Seidler Equity Partners III, L.P. The Company received no proceeds from thesecondary offering or partial exercise of the option. Total expenses incurred related to the secondary offering and the exerciseof the option were $727 and are recorded in selling, general, and administrative expenses in the accompanying statements ofincome. 66 Table of Contents(4) Property and Equipment Property and equipment as of February 3, 2018 and January 28, 2017 are as follows: February 3, January 28, 2018 2017 Furniture, fixtures, and equipment $65,437 $52,719 Leasehold improvements 84,345 61,986 Construction in progress 2,434 10,746 Total property and equipment, gross 152,216 125,451 Less accumulated depreciation and amortization (58,181) (42,342) Total property and equipment, net $94,035 $83,109 Depreciation expense was $15,864, $12,169, and $9,763, for the fiscal years ended February 3, 2018, January 28, 2017and January 30, 2016, respectively. (5) Definite Lived Intangible Asset The following table summarizes the definite lived intangible assets: February 3, 2018 Amortizationperiod Gross carryingamount Accumulatedamortization Net carryingamount Amortizing intangible assets: Non-compete agreement 5 years $9,063 (8,787) 276 Total $9,063 (8,787) 276 January 28, 2017 Amortizationperiod Gross carryingamount Accumulatedamortization Net carryingamount Amortizing intangible assets: Non-compete agreement 5 years $9,063 (6,945) 2,118 Total $9,063 (6,945) 2,118 Amortization expense for definite lived intangible asset was $1,842, $1,805, and $1,806 for the fiscal years endedFebruary 3, 2018, January 28, 2017 and January 30, 2016. Amortization expense for the next year is $276 in fiscal year 2018. (6) Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following at February 3, 2018 and January 28, 2017: February 3, January 28, 2018 2017 Book overdraft $9,944 $5,355 Unearned revenue 22,874 18,019 Accrued payroll and related expenses 8,004 9,430 Sales and use tax payable 3,277 4,802 Accrued construction costs 605 3,138 Other 5,898 8,842 $50,602 $49,586 (7) Revolving Line of CreditThe Company has a senior secured revolving credit facility (“Revolving Line of Credit”) with Wells Fargo Bank,National Association (“Wells Fargo”). On July 24, 2017, the Company amended the credit agreement increasing the67 Table of Contentsamount available to borrow under the Company’s senior secured revolving credit facility by $15.0 million to $150.0 million,subject to a borrowing base calculation. Each of the subsidiaries of the Company is a borrower under the revolving credit facility, and all obligations under therevolving credit facility are guaranteed by the Company. All of the Company’s obligations under the revolving creditfacility are secured by a lien on substantially all of the Company’s tangible and intangible assets and the tangible andintangible assets of all of the Company’s subsidiaries, including a pledge of all capital stock of each of the Company’ssubsidiaries. The lien securing the obligations under the revolving credit facility is a first priority lien as to certain liquidassets, including cash, accounts receivable, deposit accounts and inventory. In addition, the credit agreement containsprovisions that enable Wells Fargo to require the Company to maintain a lock-box for the collection of all receipts. As of February 3, 2018, and January 28, 2017, the Company had $66,621 and $67,110, respectively, in outstandingrevolving loans under the Revolving Line of Credit. Amounts outstanding are offset on the consolidated balance sheets byamounts in depository accounts under lock-box arrangements, which were $6,629 and $6,138 as of February 3, 2018 andJanuary 28, 2017, respectively. As of February 3, 2018, the Company had stand-by commercial letters of credit of $1,505under the terms of the Revolving Line of Credit. Borrowings under the Revolving Line of Credit bear interest based on either, at the Company’s option, the base rate orLIBOR, in each case plus an applicable margin. The base rate is the higher of (1) Wells Fargo’s prime rate, (2) the federalfunds rate (as defined in the credit agreement) plus 0.50% and (3) the one-month LIBOR (as defined in the credit agreement)plus 1.00%. The applicable margin for loans under the Revolving Line of Credit, which varies based on the average dailyavailability, ranges from 0.25% to .75% per year for base rate loans and from 1.25% to 1.75% per year for LIBOR loans. Theweighted average interest rate on the amount outstanding under the Revolving Line of Credit as of February 3, 2018 was3.26%. The Company may be required to make mandatory prepayments under the Revolving Line of Credit in the event of adisposition of certain property or assets, in the event of receipt of certain insurance or condemnation proceeds, upon theissuance of certain debt or equity securities, upon the incurrence of certain indebtedness for borrowed money or upon thereceipt of certain payments not received in the ordinary course of business. The Revolving Line of Credit contains customary affirmative and negative covenants, including covenants that limitthe Company’s ability to incur, create or assume certain indebtedness, to create, incur or assume certain liens, to make certaininvestments, to make sales, transfers and dispositions of certain property and to undergo certain fundamental changes,including certain mergers, liquidations and consolidations. The Revolving Line of Credit also requires the Company tomaintain a minimum availability at all times of not less than 10% of the gross borrowing base, and in any event, not less than$5,000. The Revolving Line of Credit also contains customary events of default. The Revolving Line of Credit matures onthe earlier to occur of (x) the date that is 90 days prior to the maturity date of our senior secured term loan, which maturitydate is currently December 3, 2020, unless the term loan has been repaid to the extent permitted under the credit agreementgoverning the Revolving Line of Credit or the term loan maturity has been extended to October 23, 2022 or later and (y) July24, 2022. As of February 3, 2018, and January 28, 2017, the Revolving Line of Credit had $393 and $419, respectively inoutstanding deferred financing fees. During the 53 weeks ended February 3, 2018, the Company recognized $131 of non-cash interest expense with respect to the amortization of deferred financing fees. During the 52 weeks ended January 28,2017, the Company recognized $161 of non-cash interest expense with respect to the amortization of deferred financing fees. 68 Table of Contents(8) Long-Term Debt Long-term debt consisted of the following as of February 3, 2018 and January 28, 2017: February 3, January 28, 2018 2017 Term loan $135,127 $136,727 Less discount (678) (877) Less debt issuance costs (1,110) (1,146) 133,339 134,704 Less current portion, net of discount and debt issuance costs (990) (983) Long-term portion $132,349 $133,721 Term Loan The Company has a $160,000 senior secured term loan facility (“Term Loan”) with a financial institution. The TermLoan was issued at a price of 99% of the aggregate principal amount and has a maturity date of December 3, 2020. On May 18, 2017, Sportsman’s Warehouse, Inc. entered into an amendment to its Term Loan. The amendmentincreased the maximum leverage ratio in each of the remaining quarters by amounts ranging from 0.2x to 1.3x, with anaverage quarterly increase of 0.75x. As a result of the amendment, the interest rate on the Company’s Term Loan increased 25basis points to LIBOR plus 6.25% with a 1.25% LIBOR floor. The Company incurred $341 in fees associated with theamendment to its Term Loan which were recorded as debt issuance costs on the consolidated balance sheet. The Term Loan bears interest at a rate per annum equal to the one-, two-, three-, or six-month LIBOR (or, the nine- or12-month LIBOR), as defined in the term loan agreement, at the Company’s election, which cannot be less than 1.25%, plusan applicable margin of 6.25%. During 2017, LIBOR exceeded the floor rate of 1.25%. At February 3, 2018, the rate of theCompany’s borrowings under our term loan was 7.63%. All of Sportsman’s Warehouse, Inc.’s obligations under the Term Loan are guaranteed by Holdings, MinnesotaMerchandising Corporation, a wholly owned subsidiary of Holdings, and each of Sportsman’s Warehouse, Inc.’s subsidiaries. The Term Loan is secured by a lien on substantially all of the Company’s tangible and intangible assets. The liensecuring the obligations under the Term Loan is a first priority lien as to certain non-liquid assets, including equipment,intellectual property, proceeds of assets sales and other personal property. The Term Loan requires quarterly principal payments of $400 payable on the last business day of each fiscal quarter upto and including October 30, 2020. A final installment payment consisting of the remaining unpaid balance is due onDecember 3, 2020. Sportsman’s Warehouse, Inc. may be required to make mandatory prepayments on the Term Loan in the event of,among other things, certain asset sales, the receipt of payment in respect of certain insurance claims or the issuance orincurrence of certain indebtedness. Sportsman’s Warehouse, Inc. may also be required to make mandatory prepayments basedon any excess cash flows as defined in the agreement for the Term Loan. Due to the Company not having excess cash flow asof February 3, 2018, no mandatory prepayment will be required to be made during the fiscal year 2018. The Term Loan contains customary affirmative and negative covenants, including covenants that limit the Company’sability to incur, create or assume certain indebtedness, to incur or assume certain liens, to purchase, hold or acquire certaininvestments, to declare or make certain dividends and distributions and to engage in certain mergers, consolidations andasset sales. The Term Loan also requires the Company to comply with specified financial covenants, including a minimuminterest coverage ratio on a trailing twelve month basis and a maximum total net leverage ratio. The Term Loan also containscustomary events of default. As of February 3, 2018, the Company was in compliance with all of the covenants of the TermLoan. 69 Table of ContentsAs of February 3, 2018, the Term Loan had $133,339 outstanding, net of an unamortized discount of $678 and debtissuance costs of $1,110. During fiscal year 2017, Company recognized $199 of non-cash interest expense with respect to theamortization of this discount. During fiscal year 2016, the Company recognized $411 of non-cash interest expense withrespect to the amortization of the discount on the Term Loan. Restricted Net Assets The provisions of the Term Loan and the Revolving Line of Credit restrict all of the net assets of the Company’sconsolidated subsidiaries, which constitute all of the net assets on the Company’s consolidated balance sheet as of February3, 2018, from being used to pay any dividends without prior written consent from the financial institutions party to theCompany’s Term Loan and Revolving Line of Credit. (9) Sale Leaseback Transactions During the fiscal years ended February 3, 2018, January 28, 2017, and January 30, 2016 the Company completeddeemed sale-leaseback transactions of the land and buildings associated with 4, 4, and 2 store locations, respectively. In eachof the related lease agreements for these store locations, the Company was required to pay all construction costs directly withthe right of reimbursement up to a pre-determined tenant allowance. Also, the Company indemnified the landlords withrespect to costs arising from third-party damage arising from the acts or omission of employees, sub-lessees, assignees, agent,and/or contractors arising during construction. As a result, and, based on appropriate accounting guidance, the Company wasdeemed the owner of the land and building during the construction period. The deemed sale occurred when the constructionof the assets was complete and the lease terms began. At the time of sale, any assets, up to the value of each pre-determinedtenant allowance, were written off the Company’s books, and any remaining amounts were considered leaseholdimprovements. The total value of tenant allowances received under these transactions during fiscal year 2017, 2016, and2015 was $9,022, $11,923, and $5,652 respectively. (10) Common Stock Holders of common stock are entitled to one vote per share, and to receive dividends and, upon liquidation ordissolution, are entitled to receive all assets available for distribution to stockholders on a proportional basis with therestricted nonvoting common stockholders. The holders have no preemptive or other subscription rights, and there are noredemption or sinking fund provisions with respect to such shares. (11) Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted-average number of shares of commonstock outstanding, reduced by the number of shares repurchased and held in treasury, during the period. Diluted earnings pershare represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding share optionawards, nonvested share awards and nonvested share unit awards. The following table sets forth the computation of basic and diluted earnings per common share: Fiscal Year Ended February 3, January28, January 30, 2018 2017 2016 Net income $ 17,742 $ 29,669 $ 27,771 Weighted-average shares of common stock outstanding: Basic 42,496 42,187 41,966 Dilutive effect of common stock equivalents 26 298 368 Diluted 42,522 42,485 42,334 Basic earnings per share $ 0.42 $ 0.70 $ 0.66 Diluted earnings per share $ 0.42 $ 0.70 $ 0.66 Restricted stock units considered anti-dilutive and excluded in the calculation 191 - - 70 Table of Contents(12) Stock-Based Compensation Stock-Based Compensation The Company recognized total stock-based compensation expense, including expense relating tothe employee stock purchase plan, of $2,294, $3,186, and $2,257, during fiscal years 2017, 2016, and2015, respectively. Compensation expense related to the Company's stock-based payment awards isrecognized in selling, general, and administrative expenses in the consolidated statements of income. As ofFebruary 3, 2018, and January 28, 2017, respectively, the Company had $3,963 and $4,874 remaining inunrecognized compensation costs, respectively. Employee Stock Plans As of February 3, 2018, the number of shares available for awards under the 2013 Performance Incentive Plan (the“2013 Plan”) was 1,392. As of February 3, 2018, there were 579 awards outstanding under the 2013 Plan. All shares grantedduring the current year were newly issued shares. All subsequent awards were, and all future awards are expected to be,granted under the 2013 Plan. Nonvested Restricted Stock AwardsDuring the fiscal year 2017, the Company did not issue any nonvested restricted stock awards to employees.During the fiscal year 2016, the Company issued 162 nonvested restricted stock awards to employees at a weightedaverage grant date fair value of $11.25 per share. The nonvested stock awards issued to employees vest over three years, withone third vesting on each grant date anniversary. The following table sets forth the rollforward of outstanding nonvested stock awards (per share amounts are not inthousands): Weighted average grant-date Shares fair value Balance at January 28, 2017 162 $11.25 Grants — — Forfeitures — — Vested 54 11.25 Balance at February 3, 2018 108 $11.25 Weighted average grant-date Shares fair value Balance at January 30, 2016 — — Grants 162 11.25 Forfeitures — — Vested — — Balance at January 28, 2017 162 $11.25 Nonvested Performance-Based Stock AwardsDuring fiscal year 2017 the Company did not issue any nonvested performance-based stock awards to employees.During fiscal year 2016, the Company issued 159 nonvested performance-based stock awards to employees at aweighted average grant date fair value of $11.25 per share. The nonvested performance-based stock awards issued toemployees vest over three years with one third vesting on each grant date anniversary. The number of shares issued iscontingent on management achieving a fiscal year 2016 performance target for same store sales and return on investedcapital for new stores. Based on the performance conditions met for 2016, the finalized granted awards was 73 as presented inthe table below. 71 Table of ContentsThe following table sets forth the rollforward of outstanding nonvested performance-based stock awards (per shareamounts are not in thousands): Weighted average grant-date Shares fair value Balance at January 28, 2017 73 $11.25 Grants — — Forfeitures — — Vested 24 11.25 Balance at February 3, 2018 49 $11.25 Weighted average grant-date Shares fair value Balance at January 30, 2016 — — Grants 73 11.25 Forfeitures — — Vested — — Balance at January 28, 2017 73 $11.25 Nonvested Stock Unit Awards During the fiscal year 2017, the Company issued 397 nonvested stock units to employees of the Company at aweighted average grant date fair value of $5.15 per share. During the fiscal year 2017, the Company issued 59 nonvestedstock units to independent members of the Board of Directors at a weighted average grant date fair value of $4.73. The sharesissued to the independent members of the Board of Directors vest over 12 months with one twelfth vesting each month fromthe grant date. The shares issued to employees of the Company vest over a three year period with one third of the sharesvesting on each grant date anniversary. During fiscal year 2016, the Company issued 29 nonvested stock units to independent members of the Board ofDirectors at a weighted average grant date fair value of $9.81 per share. These nonvested stock units vest over 12 monthswith one twelfth vesting each month from the grant date. The Company had no net share settlements in fiscal year 2017 or 2016. 72 Table of ContentsThe following table sets forth the rollforward of outstanding nonvested stock units: Weighted average grant-date Shares fair value Balance at January 28, 2017 301 $7.17 Grants 456 5.09 Forfeitures 1 7.06 Vested 337 6.87 Balance at February 3, 2018 419 $5.15 Weighted average grant-date Shares fair value Balance at January 30, 2016 599 $7.15 Grants 29 9.81 Forfeitures 6 7.05 Vested 321 7.37 Balance at January 28, 2017 301 $7.17 As of February 3, 2018, and January 28, 2017, the weighted average grant date fair value of the outstanding shareswere $5.15 and $7.17, respectively. (13) Employee Stock Purchase Plan In June 2015, the Company’s stockholders approved the Sportsman’s Warehouse Holdings, Inc. Employee StockPurchase Plan (“ESPP”), which provides for the granting of up to 800 shares of the Company’s common stock to eligibleemployees. The ESPP period is semi-annual and allows participants to purchase the Company’s stock at 85% of the lower of(i) the market value per share of the common stock on the first day of the offering period or (ii) the market value per share ofthe common stock on the purchase date. The first plan period began on January 1, 2016. Stock-based compensation expenserelated to the ESPP in fiscal year 2017 was $160 and 2016 was $165. The Company uses the Black-Scholes model to estimate the fair value of shares to be issued as of the grant date usingthe following weighted average assumptions: Fiscal Year Ended Fiscal Year Ended February 3, 2018 January 28, 2017Risk-free interest rate 1.53% 0.66%Expected life (in years) 0.5 0.5Expected volatility 45.3% 25.6%Dividend yield — — 73 Table of Contents(14) Income Taxes For the fiscal years ended February 3, 2018, January 28, 2017 and January 30, 2016, the income tax provisionconsisted of the following: February3, January28, January30, 2018 2017 2016 Current: Federal $12,718 $14,919 $12,341 State 1,868 2,530 1,982 Total current 14,586 17,449 14,323 Deferred: Federal 780 164 2,746 State (278) 3 316 Total deferred 502 167 3,062 Total income tax provision $15,088 $17,616 $17,385 The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows forthe following periods: February 3, January28, January 30, 2018 2017 2016 Federal statutory rate 33.7% 35% 35% State tax, net of federal benefit 3.8 3.6 3.5 Permanent items 2.0 (0.4) 0.2 Other items (0.2) (0.9) (0.2) Tax reform adjustment 6.7 — — Effective income tax rate 46.0% 37.3% 38.5% The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred taxliabilities at February 3, 2018 and January 31, 2017, respectively, are presented below: February 3, January 28, 2018 2017Deferred tax assets: Accrued liabilities $369 $517Deferred rent 11,703 14,833Intangible asset 1,456 1,756Inventories 1,906 2,757Sales return reserve 175 372Capital loss carryforward 41 63Stock-based compensation 304 939Loyalty program 1,374 —Total gross deferred tax assets $17,328 $21,237Deferred tax liabilities: Depreciation $(11,999) $(15,468)Prepaid expenses (603) (672)Gift card escheatment (131) —Total gross deferred tax liabilities $(12,733) $(16,140)Net deferred tax asset $4,595 $5,097 On December 22, 2017 the U.S. Government enacted comprehensive tax legislation commonly referred to as the TaxCuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to existing U.S. tax laws that impact theCompany. Most notably, the Tax Act reduced the U.S. Federal corporate tax rate from 35 percent to 21 percent effectiveJanuary 1, 2018. The Tax Act also provides for the acceleration of depreciation for certain assets placed in service afterSeptember 27, 2017. The Tax Act also established prospective changes beginning in 2018 including the74 Table of Contentslimitations on the deductibility of certain executive compensation and interest expense. The Company does not expect theselimitations to have a significant impact on our consolidated financial statements. The Company recognized the income tax effects of the Tax Act in its 2017 financial statements in accordance withSEC Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance for the application of ASC 740, IncomeTaxes, in the reporting period in which the Tax Act was signed into law. SAB 118 provides a measurement period that shouldnot extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. Inaccordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which theaccounting under ASC 740 is complete. To the extent a company’s accounting for certain income tax effects of the Tax Act isincomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. Pursuant to SAB 118, the Company is allowed a measurement period of up to one year after the enactment date of theTax Act to finalize the recording of the related tax impacts. However, the Company does not have any provisional estimatesassociated with the Tax Act and has recorded a tax expense related to the net change in deferred tax assets of $2,600 for2017. As a result of the Tax Act, the Company has recorded a discrete net tax expense of $2,153 in the period endingFebruary 3, 2018. The primary components of this tax expense include $2,600 for the revaluation of U.S deferred tax assetsand liabilities at the new corporate tax rate of 21 percent, offset by a tax benefit of $447 due to the reduction in effective ratebased on the time of enactment of the tax law and our fiscal year-end. Deferred tax assets have resulted primarily from the Company’s future deductible temporary differences. In assessingthe realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of thedeferred tax asset will not be realized. The Company’s ability to realize its deferred tax assets depends upon the generation ofsufficient future taxable income as well as the ability to use historical taxable income to allow for the utilization of itsdeductible temporary differences. Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowancesquarterly. At February 3, 2018, based on current facts and circumstances, management believes that it is more likely than notthat the Company will realize benefit for its deferred tax assets. As of February 3, 2018, the Company had no unrecognized tax benefits. The Company does not anticipate thatunrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. Federal and state taxyears that remain subject to examination are periods ended February 2, 2013 through January 28, 2017. The Company’s policy is to accrue interest expense, and penalties as appropriate, on estimated unrecognized taxbenefits as a charge to interest expense in the consolidated statements of income. During fiscal year 2017, the Companyaccrued interest and penalties of $95. (15) Commitments and Contingencies Operating Leases The Company leases its retail store, office space, and warehouse locations under non-cancelable operating leases.Certain of these leases include tenant allowances that are amortized over the life of the lease. In 2017, 2016 and 2015, theCompany received tenant allowances of $10,696, $16,718, and $5,652, respectively. The Company expects to receive$6,112 in tenant allowances under leases during fiscal year 2018. Certain leases require the Company to pay contingentrental amounts based on a percentage of sales, in addition to real estate taxes, insurance, maintenance and other operatingexpenses associated with the leased premises. These agreements expire at various dates through July 2030 and generallycontain three, five-year renewal options. Rent expense under these leases totaled $49,860, $37,132, and $33,209, for thefiscal years ended February 3, 2018, January 28, 2017 and January 30, 2016, respectively. 75 Table of ContentsFuture minimum lease payments for non-cancelable operating leases by fiscal year, as of February 3, 2018 are asfollows: Fiscal Year: 2018 45,128 2019 43,531 2020 42,883 2021 38,759 2022 34,455 Thereafter 98,730 $303,486 Legal MattersThe Company is involved in various legal matters generally incidental to its business. After discussion with legalcounsel, management is not aware of any matters for which the likelihood of a loss is probable and reasonably estimable andwhich could have a material impact on its consolidated financial condition, liquidity, or results of operations. On March 12, 2014, the Company was added as a defendant to a pending consolidated action filed in the United StatesDistrict Court, Western District of Washington, captioned as Lacey Market Place Associates II, LLC, et al. v. United Farmersof Alberta Co-Operative Limited, et al., Case No. 2:13-cv-00383-JLR against United Farmers of Alberta Co-OperativeLimited (the seller of Wholesale Sports), Wholesale Sports, Alamo Group, LLC and Donald F. Gaube and spouse. Theamended complaint was filed by the landlords of two stores that the Company did not assume in the Company’s purchase ofassets from Wholesale Sports. Such stores were formerly operated by Wholesale Sports in Skagit and Thurston Counties inWashington. The amended complaint alleged breach of lease, breach of collateral assignment, misrepresentation, intentionalinterference with contract, piercing the corporate veil and violation of Washington’s Fraudulent Transfer Act. The Companywas named as a co-defendant with respect to the intentional interference with contract and fraudulent conveyance claims.The amended complaint sought against the Company and all defendants unspecified money damages, declaratory relief andattorneys’ fees and costs. On January 28, 2015, the court in the Lacey Marketplace action granted in part and denied in partthe Company’s motion for summary judgment and dismissed the intentional interference claim against the Company, butdeclined to dismiss the fraudulent transfer claim. Trial in the Lacey Marketplace action began March 2, 2015 and concluded March 6, 2015. On March 9, 2015, the juryin the trial assessed $11,887 against the defendants to the action, including the Company. The Company reviewed thedecision and accrued $4,000 in its results for the fiscal year ended January 31, 2015 related to this matter. The Companystrongly disagreed with the jury’s verdict and filed post-trial motions seeking to have the verdict set aside. On July 30, 2015,the court granted the Company’s motion for judgment as a matter of law. Based on the court’s most recent judgment in favorof the Company on July 30, 2015, the Company determined that the likelihood of loss in this case is not probable, and, assuch, the Company reversed the previous accrual of $4,000 in its results for the fiscal year ended January 30, 2016. BothUnited Farmers of Alberta Co-Operative Limited, a co-defendant, and the plaintiff have appealed the court’s summaryjudgment ruling against the tortious interference claim, and the July 30, 2015 ruling setting aside the jury verdict, to theappellate court. The oral argument for the appeal was conducted on December 5, 2017 and on December 21, 2017 the appealscourt ruled there to be no judgment against Sportsman’s Warehouse. (16) Related-Party Transactions On August 14, 2009, the Company entered into a reimbursement agreement with Seidler Equity Partners III, L.P. Underthe terms of this agreement, the Company agreed to reimburse Seidler Equity Partners III, L.P. for various out-of-pocket costsand expenses related to the Company up to a maximum of $150 annually. During the fiscal years ended February 3, 2018,January 28, 2017, and January 30, 2016, the Company made payments of $5, $2, and $12, respectively, under this agreement.At February 3, 2018 and January 28, 2017, there were no amounts payable under the terms of this agreement. 76 Table of Contents(17) Retirement Plan The Company sponsors a profit sharing plan (the “Plan”) for which Company contributions are based upon wages paid.As approved by the Board of Directors, the Company makes discretionary contributions to the Plan at rates determined bymanagement. The Company made contributions of $390, $351, and $282, for the fiscal years ended February 3, 2018,January 28, 2017, and January 30, 2016, respectively. (18) Subsequent Event On March 13, 2018 Mr. John Schaefer, the Chief Executive Officer of Sportsman’s Warehouse Holdings, Inc. (the“Company”) notified the Board of Directors (the “Board”) of his retirement as Chief Executive Officer and as a Class IIImember of the board, and the Company entered into a retirement agreement with Mr. Schaefer effective immediately. Inconjunction with the agreement, the Company will pay an aggregate amount of $1,459 subject to tax withholdings and otherauthorized deductions, in accordance with the Company’s regular payroll practice over eighteen (18) months following theeffective date of the agreement. Also, as of the effective date of the agreement, all unvested restricted shares, unvestedperformance restricted shares, and unvested restricted stock units became fully vested and any restrictions lapsed. The totalnumber of unvested shares as of the effective date of the agreement that were subject to accelerated vesting was 242 shares. In connection with the retirement of Mr. Schaefer, on March 13, 2018, the Board appointed Mr. Barker, theCompany’s President and Chief Operating Officer, as Chief Executive Officer, with such appointment to be effectiveimmediately upon Mr. Schaefer’s retirement. Also, on March 13, 2018, the Board appointed Mr. Barker to serve as a Class IIImember of the Board, to serve until the Company’s 2020 annual meeting of stockholders and until his successor is electedand qualified. 77 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures As of the end of the period covered by this report, management, including our chief executive officer and chieffinancial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon the evaluation, our chiefexecutive officer and chief financial officer concluded that our disclosure controls and procedures were effective as ofFebruary 3, 2018 to ensure that information required to be disclosed in the reports we file or submit under the Exchange Actof 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated toour management, including our chief executive officer and our chief financial officer, as appropriate to allow timelydecisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting asdefined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act for us. Internal control over financial reporting is a processto provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance withaccounting principles generally accepted in the United States of America. With the participation of our Chief Executive Officer and our Chief Financial Officer, management evaluated theeffectiveness of our internal control over financial reporting as of February 3, 2018, based on the criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission. Based on this evaluation, management concluded that our internal control over financial reporting waseffective as of February 3, 2018. Exemption from Attestation Report of Independent Registered Public Accounting Firm This 10-K does not include an attestation report from our registered public accounting firm regarding internal controlover financial reporting. Management’s report was not subject to attestation by our registered public accounting firmpursuant to rules of the SEC that permit emerging growth companies, which we are, to provide only management’s report inthis 10-K. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the 14 weeks ended February 3, 2018 thathave materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None.78 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The Company has adopted a Code of Conduct and Ethics applicable to our employees, directors, and officers. ThisCode of Conduct and Ethics is applicable to our principal executive officer, principal financial officer, principal accountingofficer and controller, or persons performing similar functions. The code is available on the Company’s website atinvestors.sportsmanswarehouse.com. To the extent required by rules adopted by the SEC and Nasdaq, we intend to promptlydisclose future amendments to certain provisions of the code, or waivers of such provisions granted to executive officers anddirectors on our website at investors.sportsmanswarehouse.com. The remaining information required by this Item 10 will be included in our Proxy Statement and is incorporated hereinby reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item 11 will be included in our Proxy Statement and is incorporated herein byreference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATEDSTOCKHOLDER MATTERS The information required by this Item 12 will be included in our Proxy Statement and is incorporated herein byreference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item 13 will be included in our Proxy Statement and is incorporated herein byreference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item 14 will be included in our Proxy Statement and is incorporated herein byreference. 79 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)The following documents are filed as part of this report: 1.Financial Statements: ·Report of Independent Registered Public Accounting Firm·Consolidated Balance Sheets – February 3, 2018 and January 28, 2017·Consolidated Statements of Income – Years ended February 3, 2018, January 28, 2017, and January 30,2016·Consolidated Statements of Stockholders’ Equity (Deficit) – Years ended February 3, 2018, January 28,2017 and January 30, 2016·Consolidated Statements of Cash Flows – Years ended February 3, 2018, January 28, 2017 and January 30,2016·Notes to Consolidated Financial Statements 2.Exhibits: See Item 15(b) below. (b)Exhibits ExhibitNumber Description 3.1 Amended and Restated Certificate of Incorporation of Sportsman’s Warehouse Holdings, Inc. (incorporated byreference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on June 11, 2014). 3.2 Amended and Restated Bylaws of Sportsman’s Warehouse Holdings, Inc. (incorporated by reference toExhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed on June 11, 2014). 4.1 Form of Specimen Common Stock of Sportsman’s Warehouse Holdings, Inc. (incorporated by reference toExhibit 4.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (Registration No.333.1944421) filed on March 24, 2014). 4.2 Registration Rights Agreement, dated April 15, 2014, among Sportsman’s Warehouse Holdings, Inc., SEPSWH Holdings, L.P. and New SEP SWH Holdings, L.P. (incorporated by reference to Exhibit 4.2 to theCompany's Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.1.1† Second Amendment to Credit Agreement (amended and restated Credit Agreement to reflect first amendment),dated as of November 13, 2012, among Sportsman’s Warehouse, Inc., as Lead Borrower, the other Borrowersparty thereto, Sportsman’s Warehouse Holdings, Inc., as a Guarantor, the Lenders party thereto, and WellsFargo Bank, National Association, as Administrative Agent, Collateral Agent, and Swing Line Lender(incorporated by reference to Exhibit 10.3.2 to the Company’s Registration Statement on Form S-1(Registration No. 333-1944421) filed on March 7, 2014). 10.1.2 Side Letter, dated as of July 8, 2013, from Wells Fargo Bank, National Association to Sportsman’s Warehouse,Inc. (incorporated by reference to Exhibit 10.3.3 to the Company’s Registration Statement on Form S-1(Registration No. 333-1944421) filed on March 7, 2014). 10.1.2† Third Amendment to Credit Agreement, dated as of August 20, 2013, among Sportsman’s Warehouse, Inc., asLead Borrower, the other Borrowers party thereto, Sportsman’s Warehouse Holdings, Inc., as a Guarantor, theLenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, CollateralAgent, and Swing Line Lender (incorporated by reference to Exhibit 10.3.4 to the Company’s RegistrationStatement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 80 Table of ContentsExhibitNumber Description 10.1.4 Side Letter, dated as of October 21, 2013, from Wells Fargo Bank, National Association to Sportsman’sWarehouse, Inc. (incorporated by reference to Exhibit 10.3.5 to the Company’s Registration Statement onForm S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.1.5 Fourth Amendment to Credit Agreement, dated as of March 20, 2014, among Sportsman’s Warehouse, Inc., asLead Borrower, the other Borrowers party thereto, Sportsman’s Warehouse Holdings, Inc., as a Guarantor, theLenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, CollateralAgent, and Swing Line Lender (incorporated by reference to Exhibit 10.3.6 to Amendment No. 1 to theCompany’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 24, 2014). 10.1.6 Fifth Amendment to Credit Agreement and Third Amendment to Security Agreement, effective as of December3, 2014, by and among Wells Fargo Retail Finance, LLC, a global investment company, as Lender, andSportsman’s Warehouse, Inc., as Borrower (incorporated by reference to Exhibit 10.3 to the Company’sQuarterly Report on Form 10-Q filed on December 5, 2014). 10.1.7 Sixth Amendment to Credit Agreement, effective as of August 26, 2015, by and among Wells Fargo Bank,National Association (as successor by merger to Wells Fargo Retail Finance, LLC), as Lender, and Sportsman’sWarehouse, Inc., as Borrower (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Reporton Form 10-Q filed on August 28, 2015). 10.1.8 Seventh Amendment to Credit Agreement, dated as of September 21, 2015, by and among Wells Fargo Bank,National Association, as Administrative Agent, Collateral Agent, and Swing Line Lender, and Sportsman’sWarehouse, Inc., as Lead Borrower, and the other parties listed on the signature pages thereto (incorporated byreference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 21, 2015). 10.1.9 Eighth Amendment to Credit Agreement, dated as of July 24, 2017 by and among Wells Fargo Bank, NationalAssociation, as Administrative Agent, Collateral Agent, and Swing Line Lender, and Sportsman’s Warehouse,Inc., as Lead Borrower, and the other parties listed on the signature pages thereto (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 24, 2017). 10.2 Guaranty, dated as of May 28, 2010, by Sportsman’s Warehouse Holdings, Inc., as Guarantor, in favor of WellsFargo Retail Finance, LLC, as Administrative Agent and Collateral Agent, and the Credit Parties (incorporatedby reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.3 Security Agreement, dated as of May 28, 2010, by Sportsman’s Warehouse, Inc., Minnesota MerchandisingCorp., Sportsman’s Warehouse Southwest, Inc. and Pacific Flyway, LLC, as Borrowers, and Sportsman’sWarehouse Holdings, Inc., as Guarantor, in favor of Wells Fargo Retail Finance, LLC, as Collateral Agent(incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1(Registration No. 333-1944421) filed on March 7, 2014). 10.4.1† Term Loan Agreement, effective as of December 3, 2014, by and among Cortland Capital Market ServicesLLC, a global investment company, as Lender, and Sportsman’s Warehouse, Inc., as Borrower (incorporatedby reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on December 5, 2014). 10.4.2 Second amendment to term loan agreement, effective May 18, 2017, by and among Cortland Capital MarketServices LLC, a global investment company, as Lender, and Sportsman’s Warehouse, Inc., as Borrower(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 19,2017). 81 † Table of ContentsExhibitNumber Description 10.5† Guarantee and Collateral Agreement, effective as of December 3, 2014, by and among Cortland CapitalMarket Services LLC, a global investment company, as Lender, and Sportsman’s Warehouse, Inc., as Borrower(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed onDecember 5, 2014). 10.6 Form of Agreement between holders of restricted nonvoting common stock and Sportsman’s WarehouseHoldings, Inc. (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.7* Sportsman’s Warehouse Holdings, Inc. 2013 Performance Incentive Plan. (incorporated by reference toExhibit 10.7 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed onMarch 7, 2014). 10.8 Sportsman's Warehouse Holdings, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 28, 2015). 10.9* Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.8 to the Company’sRegistration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7, 2014). 10.10* Form of Indemnification Agreement for Directors and Executive Officers (incorporated by reference to Exhibit10.9 to the Company’s Registration Statement on Form S-1 (Registration No. 333-1944421) filed on March 7,2014). 10.11* Employment Agreement, dated December 10, 2013, between Sportsman’s Warehouse Holdings, Inc. and JohnV. Schaefer (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1(Registration No. 333-1944421) filed on March 7, 2014). 10.12* Employment Agreement, dated January 21, 2014, between Sportsman’s Warehouse Holdings, Inc. and KevanP. Talbot (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1(Registration No. 333-1944421) filed on March 7, 2014). 10.13† Letter Agreement, dated December 6, 2016, between Sporstman’s Warehouse Holdings, Inc. and Kevan P.Talbot (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (RegistrationNo. 333-1944421) filed on December 7, 2016. 10.14* Employment Agreement, March 22, 2017, between Sportsman’s Warehouse Holdings, Inc. and Jon Barker(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 23,2017). 10.15* Retirement Agreement, March 13, 2018, between Sportsman’s Warehouse Holdings, Inc. and John Schaefer(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 14,2018. 21.1** Subsidiaries of Sportsman’s Warehouse Holdings, Inc. 23.1** Consent of KPMG LLP. 31.1** Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2** Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1*** Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as created bySection 906 of the Sarbanes-Oxley Act of 2002. 101.INS** XBRL Instance Document. 101.SCH** XBRL Taxonomy Extension Schema Document.82 Table of ContentsExhibitNumber Description 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB** XBRL Taxonomy Extension Label Linkbase Document. 101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document.*Management contract or compensatory plan or arrangement**Filed herewith***Furnished herewith†Indicates that certain information contained herein has been omitted and confidentially submitted separately with theSecurities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. ITEM 16. Form 10-K Summary Not Applicable 83 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registranthas duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. SPORTSMAN’S WAREHOUSE HOLDINGS, INC. Date: March 29, 2018By:/s/ Jon Barker Jon Barker President and Chief Executive Officer (Principal Executive Officer) Date: March 29, 2018By:/s/ Kevan P. Talbot Kevan P. Talbot Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date /s/Jon Barker Chief Executive March 29, 2018Jon Barker Officer and Director (Principal Executive Officer) /s/ Kevan P. Talbot Chief Financial Officer and Secretary March 29, 2018Kevan P. Talbot (Principal Financial and Accounting Officer) /s/ Christopher Eastland Director March 29, 2018Christopher Eastland /s/ Kent V. Graham Director March 29, 2018Kent V. Graham /s/ Gregory P. Hickey Director March 29, 2018Gregory P. Hickey /s/ Joseph P. Schneider Director March 29, 2018Joseph P. Schneider /s/ Kay L. Toolson Director March 29, 2018Kay L. Toolson 84 Exhibit 21.1Subsidiaries Jurisdiction of IncorporationSportsman’s Warehouse Holdings, Inc. Delaware Sportsman’s Warehouse, Inc. Utah Sportsman’s Warehouse Southwest, Inc. California Pacific Flyway Wholesale, LLC Delaware Exhibit 23.1Consent of Independent Registered Public Accounting FirmThe Board of DirectorsSportsman’s Warehouse Holdings, Inc.:We consent to the incorporation by reference in the registration statement (No. 333‑206632 and333‑195338) on Form S‑8 and (No. 333‑204517) on Form S‑3 of Sportsman’s Warehouse Holdings, Inc. ofour report dated March 29, 2018, with respect to the consolidated balance sheets of Sportsman’s WarehouseHoldings, Inc. as of February 3, 2018 and January 28, 2017 and the related consolidated statements ofincome, stockholders’ equity (deficit), and cash flows for each of the fiscal years in the three-year periodended February 3, 2018, and the related notes, which report appears in the February 3, 2018 annual reporton Form 10‑K of Sportsman’s Warehouse Holdings, Inc..(signed) KPMG LLPSalt Lake City, UtahMarch 29, 2018 Exhibit 31.1Certification of Chief Executive Officer pursuant toSection 302 of the Sarbanes-Oxley Act of 2002I, Jon Barker, certify that:1.I have reviewed this annual report on Form 10-K of Sportsman’s Warehouse Holdings, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the end ofthe period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the caseof an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significantrole in the registrant’s internal control over financial reporting.Date: March 29, 2018/s/ Jon Barker Jon Barker President and Chief Executive Officer Exhibit 31.2Certification of Chief Financial Officer pursuant toSection 302 of the Sarbanes-Oxley Act of 2002I, Kevan P. Talbot, certify that:1.I have reviewed this annual report on Form 10-K of Sportsman’s Warehouse Holdings, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the end ofthe period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the caseof an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significantrole in the registrant’s internal control over financial reporting.Date: March 29, 2018/s/ Kevan P. Talbot Kevan P. Talbot Chief Financial Officer and Secretary Exhibit 32.1Certification pursuant to 18 U.S.C. Section 1350,as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002In connection with the Annual Report on Form 10-K of Sportsman’s Warehouse Holdings, Inc. (the “Registrant”) forthe fiscal year ended February 3, 2018, as filed with the Securities and Exchange Commission on the date hereof (the“Report”), Jon Barker, as President and Chief Executive Officer of the Registrant, and Kevan P. Talbot, the Chief FinancialOfficer and Secretary of the Registrant, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of theSarbanes-Oxley Act of 2002, that, to the best of their knowledge:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Registrant.Date: March 29, 2018/s/ Jon Barker Jon Barker President and Chief Executive Officer Date: March 29, 2018/s/ Kevan P. Talbot Kevan P. Talbot Chief Financial Officer and Secretary The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of theCompany, regardless of any general incorporation language in such filing.
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