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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 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 January 29, 2022
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 001-36401
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
1475 West 9000 South Suite A
West Jordan, Utah
(Address of principal executive offices)
39-1975614
(I.R.S. Employer
Identification No.)
84088
(Zip Code)
Registrant’s telephone number, including area code: (801) 566-6681
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.01 per share
Securities registered pursuant to Section 12(g) of the Act: None
Trading symbol(s)
SPWH
Name of each exchange on which registered
The Nasdaq Stock Market LLC
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 for such 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 every Interactive Data File required to be submitted pursuant to 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 such files). YES ⌧ NO ☐
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 the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
⌧
☐
Emerging growth company ☐
Accelerated filer
Smaller reporting 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 accounting
standards provided pursuant to Section 13(a) of the Exchange Act: ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
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 30, 2021, 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 $758,122,580. Shares held by each executive officer
and director and by each other person or entity deemed to be an affiliate have been excluded in such calculation. The determination of affiliate status is not necessarily a conclusive
determination for other purposes.
The number of shares of Registrant’s Common Stock outstanding as of March 30, 2022 was 43,879,984.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Definitive Proxy Statement relating to the 2022 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within 120
days after the end of the 2021 fiscal year, are incorporated by reference into Part III of this Report.
Table of Contents
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Table of Contents
Page
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
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References throughout this document to “Sportsman’s Warehouse,” “we,” “us,” and “our” refer to Sportsman’s
Warehouse 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 as
that 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 business
operations and financial performance and condition, which are subject to risks and uncertainties. All statements other than
statements of historical fact included in this 10-K are forward-looking statements. These statements may include words
such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,”
“likely,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “should,” “target,” “will,” “would” and
other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or
financial performance or other events or trends. For example, all statements we make relating to our plans and objectives
for future operations, growth or initiatives and strategies are forward-looking statements.
These forward-looking statements are based on current expectations, estimates, forecasts and projections about our
business and the industry in which we operate and our management’s beliefs and assumptions. We derive many of our
forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed
assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors
is 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 differ
materially from our expectations. Important factors that could cause actual results to differ materially from our
expectations include, but are not limited to:
● current and future government regulations, in particular regulations relating to the sale of firearms and
ammunition, which may impact the supply and demand for our products and our ability to conduct our business;
● our retail-based business model which is impacted by general economic and market conditions and economic,
market and financial uncertainties that may cause a decline in consumer spending;
● our concentration of stores in the Western United States which makes us susceptible to adverse conditions in
this region, and could affect our sales and cause our operating results to suffer;
● the highly fragmented and competitive industry in which we operate and the potential for increased competition;
● changes in consumer demands, including regional preferences, which we may not be able to identify and
respond to in a timely manner;
● our entrance into new markets or operations in existing markets, which may not be successful; and
● the impact of COVID-19 pandemic on our operations.
The above is not a complete list of factors or events that could cause actual results to differ from our expectations,
and we cannot predict all of them. All written and oral forward-looking statements attributable to us, or persons acting on
our behalf, 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, as
such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the
Securities and Exchange Commission (the “SEC”), including subsequent Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q, and public communications. You should evaluate all forward-looking statements made in this 10-K
and otherwise in the context of these risks and uncertainties.
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Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking
statements 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
and involve known and unknown risks, uncertainties and other factors that in many cases are beyond our control. Except
as required by law, we undertake no obligation to update or revise any forward-looking statements publicly, whether as a
result of new information, future developments or otherwise.
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ITEM 1. BUSINESS
PART I
Overview
Sportsman’s Warehouse is an outdoor sporting goods retailer focused on meeting the everyday needs of the seasoned
outdoor veteran, the first-time participant, and everyone in between. Our mission is to provide outstanding gear and
exceptional service to inspire outdoor memories. We strive to accomplish this goal by tailoring our broad and deep
merchandise assortment to meet local conditions and demand, offering everyday low prices, providing friendly support
from our knowledgeable and highly trained staff, and offering a top-tier e-commerce experience, extensive in-store events
and educational programming. These core strategies help position Sportsman’s Warehouse as the “local outdoor experts”
and the preferred place to not only shop, but to also share outdoor-based experiences in the communities we serve. As a
result, we are growing our loyal customer base in existing markets, expanding our footprint into new markets, and
increasing our omni-channel presence in both new and existing 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 122 stores
across 29 states. Today, we have the largest outdoor specialty store base in the Western United States and Alaska. Our
stores range from 7,500 to 65,000 gross square feet, with an average size of approximately 38,000 gross square feet. Our
store layout is adaptable to both standalone locations and strip centers. We believe it is less capital-intensive for us to open
new stores compared to our principal competitors because our “no frills” store layout requires less initial cash investment
to build out and our stores generally require less square footage than the stores of our competitors. We also have the largest
offering of firearms available online for in-store purchase and buy-online-pickup-in-store when compared to the offerings
of our major competitors. Together, these features and capabilities enable us to effectively serve markets of multiple sizes,
from Metropolitan Statistical Areas (“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 earnings before interest, taxes,
depreciation and amortization (“Adjusted EBITDA” see “—Non-GAAP Measures.”), margins and returns on invested
capital across a range of store sales volumes.
On December 2, 2021, Sportsman’s Warehouse, Great Outdoors Group, LLC and Phoenix Merger Sub I, Inc
(“Merger Subsidiary”) entered into a Termination Agreement (the “Termination Agreement”) under which the parties
agreed to terminate the merger agreement, dated December 21, 2020, among the same parties (the “Merger Agreement”),
effective immediately. Pursuant to the terms and conditions set forth in the Merger Agreement, Merger Subsidiary would
have been merged with and into Sportsman’s Warehouse, with Sportsman’s Warehouse continuing as the surviving
corporation in the Merger and a wholly-owned subsidiary of Great Outdoors Group (the “Merger”). The decision to
terminate the Merger Agreement followed feedback from the Federal Trade Commission (“FTC”) that led the parties to
believe that they would not have obtained FTC clearance to consummate the Merger. Under the Termination Agreement,
Great Outdoors Group agreed to pay us the Parent Termination Fee (as defined in the Merger Agreement) of $55.0 million
by wire transfer of immediately available funds concurrently with the execution of the Termination Agreement. We
received the $55.0 million payment on December 2, 2021.
Our Competitive Strengths
We believe the following competitive strengths allow us to capitalize on the growth opportunity within the outdoor
activities and sporting goods market:
Differentiated Shopping Experience for the Seasoned Outdoor Veteran, the First-Time Participant and Everyone
in Between. We place great emphasis on creating an inviting and engaging store experience for customers of all experience
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 participants and casual
users who are interested in enjoying the outdoors but enter our store without a clear sense for the equipment needed for
their chosen activity. Our highly trained employees, who often are local outdoor enthusiasts and users of the products we
sell, engage and interact with our customers in order to educate them and equip them with the right gear. Our sales
associates draw upon formal vendor sales training as well as first-hand experiences from using our products in local
conditions. This selling approach allows us to offer a broad range of products and to deliver a shopping
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experience centered on the customer’s needs, which we believe results in increased customer loyalty, repeat visits and
frequent referrals to other potential customers.
A customer’s shopping experience in our stores is further enhanced by a variety of helpful in-store offerings and
features, including access to hunting and fishing licenses, local fishing reports, 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-store programs (such as ladies’ night), contests (such as Bucks & Bulls, a
free-to-enter big-game trophy contest) and a wide range of instructional seminars (such as turkey frying and firearm
operation and safety). These programs are all designed to help our customers connect with the outdoors and build the skills
necessary to maximize enjoyment of their chosen activities. As a result, we believe our stores often serve as gathering spots
where local enthusiasts can share stories, product knowledge and advice on outdoor recreation activities, which drives
traffic and fosters customer loyalty.
Our in-store experience is further complimented by our top-tier e-commerce experience available on our website,
sportsmans.com. We also offer the ability for our customers to buy our product on-line and pick up their order in any of our
stores.
Comprehensive Locally Relevant Merchandise Serving the Needs of Outdoor Enthusiasts at a Compelling Value.
We offer our customers an extensive and carefully selected assortment of branded, high-quality outdoor products at
competitive prices. We accomplish this primarily in three ways:
● Locally Relevant Merchandise: We carry over 24,000 SKUs on average in a single store, out of Sportsman’s
Warehouse’s total of approximately 120,000 SKUs. Each store’s merchandise is tailored to meet local conditions
and consumer demand, which takes into account seasonal and weather requirements, regional game and fishing
species and key demographic factors, so that our customers have access to the appropriate product at the right
time for their geography.
● Breadth and Mix of Product Assortment: Our merchandise strategy is designed to serve a variety of purchasing
occasions and user experience levels, from big-ticket items to consumables, and from first-time participants to
seasoned outdoor veterans. We pride ourselves on carrying an extensive selection of branded good, better and
best hard goods at everyday low prices. Approximately 39% of our unit sales and 19% of our dollar sales during
fiscal year 2021 were consumables, such as ammunition, bait, cleaning supplies, food, certain lures, propane and
reloading supplies. We believe our broad array of in-stock consumable goods appeals to a broad range of
customers and drives repeat traffic as well as increased average ticket value. We also carry the largest omni-
channel hunting and shooting sports offering of any retailer.
● Strong Vendor Relationships: We believe our vendors find our brand-centric, high-service store concept to be
unique among national specialty outdoor retailers. Our attractive store locations, consistent presentation of
merchandise and thorough product training present a compelling opportunity for our vendors to offer their
brands to local markets. As a result, we believe we are able to negotiate favorable terms with our vendors that
are similar to those offered to our principal competitors that are larger in size. We share the benefits of these
strategic vendor relationships with our customers through everyday low prices, enhanced access to certain
products that are limited in production and special make-up products sold exclusively at Sportsman’s
Warehouse.
Flexible and Adaptable Real Estate Strategy. We believe that our store model, combined with our rigorous site
selection process, is a competitive advantage that enables us to better address the needs of markets of varying sizes and
geographies. Our stores vary in size from approximately 7,500 to 65,000 gross square feet. We have had success with
leasing existing sites, constructing new build-to-suit sites and purchasing existing stores and converting them to the
Sportsman’s Warehouse brand. 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 and
returns on invested capital across a range of store sales volumes. In small- to medium-sized markets, we are often able to
establish ourselves as a standalone destination for our customers; in larger markets, we have successfully leveraged
existing infrastructure to open stores in shopping plazas near complementary retailers, drawing upon existing foot traffic.
We believe our low-cost, flexible model allows us to access both large and small markets more economically than many of
our peers.
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We maintain a disciplined approach to new store development and perform comprehensive market research before
selecting a new site, including partnering with specialized, third-party local real estate firms. We select sites based on
criteria such as local demographics, traffic patterns, density of hunting and fishing license holders in the area, abundance of
hunting and fishing game and outdoor recreation activities, store visibility and accessibility, purchase data from our
existing customer database and availability of attractive lease terms. We have established productive relationships with
well-regarded commercial real estate firms and believe that we are a sought-after tenant, given the strength of the
Sportsman’s Warehouse brand, the high volume of customers that visit our stores and our strong financial performance
since becoming a public company. As a result, we continue to have access to desirable retail sites on attractive terms.
Low Cost Operating Structure with Attractive and Replicable Store Economics. We strive to maintain a lower
operating cost structure than many of our key competitors, which allows us to serve small- to medium-sized markets as
well as larger MSAs. We achieve this through discipline and financial rigor around store-level expenses, real estate costs
and corporate overhead. In addition, we utilize efficient, localized marketing campaigns and our “no frills” warehouse store
layout helps us maintain comparatively low operating costs and provides us with the opportunity to achieve four-wall
Adjusted EBITDA margins of 10% or more for stores in most new markets after the first 18 to 24 month period after
opening the new store. Our typical new store requires an average net investment of approximately $2.4 million, which
includes store build-out (net of contributions from landlords) and pre-opening cash expenditures. In addition, we stock each
new store with initial inventory at an average cost of approximately $2.4 million. We target a pre-tax return on invested
capital after the first 18 to 24 month period after opening of over 50% excluding initial inventory cost (or over 20%
including initial inventory cost), although our historical returns have often exceeded these thresholds. As of the end of
fiscal year 2021, the majority of our stores that had been open for more than twelve months were profitable and those
stores had an average four-wall Adjusted EBITDA margin of 17.2%. We believe this low-cost, capital-efficient approach
also allows us to successfully serve markets that are not well-suited for the more capital-intensive store models of our key
competitors. Approximately 61% of our markets currently lack another nationally recognized outdoor specialty retailer,
which we believe is a result of these dynamics.
Significant New Store Growth Opportunity within Existing and New Markets. As of January 29, 2022, we operated
122 stores across 29 states, primarily in the Western United States and Alaska. We believe our leadership position in the
Western United States and our continued expansion in other geographical regions of the United States, combined with our
existing scalable infrastructure, provides a strong foundation for continued expansion within our core markets as well as
expanding into new geographies. We believe that we are the largest, fastest growing public, pure-play outdoor specialty
retailer in our space.
Passionate and Experienced Management Team with Proven Track Record. We are focused on delivering an
unsurpassed shopping experience to anyone who enjoys the excitement of the outdoors. This passion and commitment is
shared by team members throughout our entire organization, from senior management to the employees in our stores. Our
senior management team has an average of over 20 years of retail experience, with extensive capabilities across a broad
range of disciplines, including merchandising, real estate, finance, compliance, store operations, supply chain management
and information technology. We also pride ourselves on the long tenure of our more than 300 store managers and corporate
employees.
Our Growth Strategy
We are pursuing a number of strategies designed to continue our growth and strong financial performance, including
the following:
Leveraging Our Omni-Channel Presence and Increasing Our Same Store Sales Growth. We are committed to
leveraging our omni-channel presence and increasing same store sales through a number of ongoing and new initiatives,
including (i) improving the user experience on our website through continuous category optimization and personalization
and product recommendations for online shopping, (ii) expanding our product assortment and SKU count online (with the
assistance of our vendor partners through drop ship and our Federal Firearms License (“FFL”) dealer partners), refining our
buy online, pick-up in store capabilities, expanding our apparel, footwear, and camping offerings and private label program
(such as our proprietary Rustic Ridge™ and Killik™ apparel lines) and (iii) expanding our online content and expertise
through live Q&A and customer reviews and providing exclusive online content, including news, buyer’s guide and how
to’s, accessory finders, and wild game recipes. Each of these ongoing and new initiatives is designed to foster additional
shopping convenience, add deeper merchandise selection and provide
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more product information to the customer. We believe these initiatives have driven and will continue to drive additional
traffic, improved conversion and increased average ticket value.
Continuing to Enhance Our Operating Margins. We believe that our expansion of our store base and growth in net
sales will result in improved Adjusted EBITDA margins as we take advantage of economies of scale in product sourcing
and leverage our existing infrastructure, supply chain, corporate overhead and other fixed costs. Furthermore, we expect to
increase our gross profit margin by improving vendor terms with key suppliers, increasing sales of used firearms, selling
more firearm service plans, expanding product offerings in our private label program, including our proprietary Rustic
RidgeTM and KillikTM apparel lines, and continuing marketing initiatives in our higher-margin apparel and footwear
departments. However, the gross profit margin gains will likely continue to be partially offset by a negative impact from
our product mix. Specifically, firearms and ammunition are lower gross profit margin products as compared to other
categories in our stores.
Growing the Sportsman’s Warehouse Brands. We are committed to supporting our stores, product offerings and
brand through a variety of marketing programs, private label offerings and corporate partnerships. Our marketing and
promotional strategy includes coordinated print, digital and social media platforms. In-store, we offer a wide range of
outdoor-themed activities and seminars, from turkey frying to firearm operation and safety. In addition, we sponsor
community outreach and charity programs to more broadly connect with our local communities with the aim of promoting
our brand and educating consumers. Finally, we are committed to local chapters of national and regional wildlife
federations 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 our
place as leaders in the local outdoor community. We believe all of these programs promote our mission of engaging with
our customers and serving outdoor enthusiasts.
Growing our Loyalty and Credit Card Programs. We offer both a loyalty program and co-branded credit card
program to our customers. These programs allow our customers to earn points that can be redeemed for in-store credit
through purchases at Sportsman’s Warehouse stores and through the use of the co-branded credit card for all daily
purchases. We believe these benefits are key in helping us obtain and retain new customers. We plan to continue to invest
in the marketing of these programs, in particular at the point-of-sale.
Expanding Our Store Base. We believe that our compelling new store economics and our track record of opening
and acquiring successful new stores provide a strong foundation for continued growth through new store openings in
existing, adjacent and new markets. Over the last three fiscal years, we have opened an average of 10 stores per year,
including the twelve stores we acquired from Dick’s Sporting Goods in fiscal 2019 and 2020. We currently plan to open 10
new stores in fiscal year 2022. Our target is to grow our square footage at a rate of 5% to 10% percent annually. Our
longer-term plans include expanding our store base to serve the outdoor needs of enthusiasts in markets across the United
States. We believe our existing infrastructure, including distribution, omni-channel capabilities, information technology,
loss prevention and employee training, is capable of sustaining our current growth plans without significant additional
capital investment, although we may determine to invest in our existing infrastructure to prepare for future growth.
Strategic Acquisitions. While our primary strategy for expansion is through organic store opening, we believe we
can use strategic acquisitions as an additional source of growth, as we did with the 12 stores we acquired from Dick’s
Sporting Goods in fiscal 2019 and 2020. We target acquisitions that will be accretive to our margins and profitability,
provide content, private label expansion, or capabilities that would deliver efficiencies in operations and customer
acquisition retention. We have a proven track record of successfully executing around strategic acquisitions and will
continue to look for complementary targets.
Our Stores
We operate 122 stores across 29 states as of January 29, 2022. Most of our stores are located in power, neighborhood
and lifestyle centers. Power centers are large, unenclosed shopping centers that are usually anchored by three or more
national supercenters, such as Target, Walmart and Costco. Neighborhood centers are shopping centers anchored by a
supermarket or drugstore that provide convenience goods and services to a neighborhood. Lifestyle centers are shopping
centers that combine the traditional functions of a shopping mall with leisure amenities such as pedestrian friendly areas,
open air seating and inviting meeting spaces. We also operate several single-unit, stand-alone locations. Our stores average
approximately 38,000 gross square feet.
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The following table lists the location by state of our 122 stores open as of January 29, 2022:
California
Washington
Utah
Arizona
Oregon
Colorado
Pennsylvania
Idaho
Wyoming
Alaska
Michigan
Nevada
Montana
New Mexico
North Carolina
Number of
Stores
14
13
10
9
8
7
7
6
6
5
4
4
3
3
3
South Carolina
Indiana
Kentucky
New York
Tennessee
Florida
Iowa
Louisiana
Minnesota
Mississippi
Nebraska
North Dakota
Virginia
West Virginia
Store Design and Layout
Number of
Stores
3
2
2
2
2
1
1
1
1
1
1
1
1
1
We present our broad and deep array of products in a convenient and engaging atmosphere to meet the everyday
needs of all outdoor enthusiasts, from the seasoned veteran to the first-time participant. We maintain a consistent floor
layout across our store base that we believe promotes an “easy-in, easy-out” shopping experience. All of our stores feature
wide aisles, high ceilings, visible signage and central checkouts with multiple registers. Sportsman’s Warehouse stores, true
to their name, are designed in a “no frills” warehouse format that welcomes customers directly from or on the way to an
outdoor activity. All of our stores also feature “store-within-a-store” concepts for certain popular brand partners, such as
Leupold, Hornady and Huk, through which we dedicate a portion of our floor space to these brands to help increase
visibility and drive additional sales.
Our stores include locally relevant features such as a large fishing board at the entrance that displays current fishing
conditions in local lakes and rivers with coordinating gear in end-cap displays in the fishing aisles. We actively engage our
customers 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 range of instructional seminars (such as Dutch oven cooking and choosing the right binocular). Annually, we organize
thousands of programs across our stores for the benefit of our customers. We believe these programs help us to connect
with the communities in which we operate and encourage new participants to build the skills necessary to become outdoor
enthusiasts and loyal customers.
In 2021 we started making a serious commitment to refurbishing our stores, with 19 stores completed and seven
additional planned for 2022. Our goal in these refreshes is to keep the stores fresh with updated lifestyle type graphics,
improving the flow of our merchandise and store to our customer, enhance our technological capabilities within the stores
to ensure we are meeting the needs of every customer, and make the stores more energy efficient.
In the last 18 months we have also completed a test concept of a very small format store in Laramie Wyoming. Based
on the successful concept test, this year, we are slated to open two of our newest “spike camp” concept stores. These stores
are approximately 10,000 square foot boxes that are ground up construction and value engineered. We will open both of
these new stores in the first half of 2022 and they will be located in Riverton, Wyoming and Stansbury UT. We are excited
about this new format allowing us to expand into smaller markets where there is an underserved consumer, tailoring our
immense assortment to reflect local needs.
The retail stores and the distribution center have loss prevention employees who monitor an average of 55 cameras at
each store and 250 cameras at the distribution center. These cameras are monitored locally and centrally at our
headquarters in our dedicated surveillance room. Our sophisticated systems are a key factor in our shrink rates of
approximately 1% and an important component of our comprehensive compliance program.
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Expansion Opportunities and Site Selection
We have developed a rigorous and flexible process for site selection. We select sites for new store openings or store
acquisitions based on criteria such as local demographics, traffic patterns, density of hunting and fishing license holders in
the area, abundance of hunting and fishing game and outdoor recreation activities, store visibility and accessibility,
purchase data from our existing customer database and availability of attractive lease terms. Our store model is adaptable
to markets of multiple sizes, from MSAs with populations of less than 75,000 to major metropolitan areas with populations
in excess of 1,000,000. We have been 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 and
lifestyle centers as well as single-unit, stand-alone locations. In small- to medium-sized markets, we generally seek anchor
locations within high-traffic, easily accessible shopping centers. In larger metropolitan areas, we generally seek locations in
retail areas with major discount retailers (such as Walmart), wholesale retailers (such as Costco), other specialty hardline
retailers (such as The Home Depot) or supermarkets. As we continue to expand our store base, we believe that small- to
medium-sized markets offer a significant opportunity. In these markets, we believe our store size, which is smaller than
many of our national competitors, but larger than many independent retailers, enables us to find convenient, easily
accessible store locations while still offering the broad and deep selection of merchandise that our customers desire. In
addition, our store format and size allow us to open multiple stores 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 and utilize sophisticated tools in evaluating prospective
sites before bringing a proposal to our Real Estate Committee. Our Real Estate Committee, which is comprised of members
of our senior management, including our Chief Executive Officer, Chief Financial Officer, Vice President of Real Estate,
and Senior Vice President of Stores, approves all prospective locations before a lease is signed.
We opened 10 new stores in fiscal year 2021. We currently plan to open 10 new stores in fiscal year 2022. Over the
long-term our target is to grow our square footage at a rate of 5% to 10% percent annually. Our new store openings are
planned in existing, adjacent and new markets.
Our new store growth plan is supported by our target new unit economics, which we believe to be compelling. A
typical store location ranges in size from 7,500 to 65,000 gross square feet. Our net investment to open a new store is
approximately $2.4 million, consisting of pre-opening expenses and capital investments, net of tenant allowances. In
addition, we stock each new store with initial inventory at an average cost of approximately $2.4 million. After the first 18
to 24 month period after opening a new store, we typically have a four-wall Adjusted EBITDA margin 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 18 to 24 months after opening, with net
sales increasing approximately 25% in the aggregate during this time period.
Omni-Channel Strategy
We believe our website is an extension of our brand and our retail stores. Our website, www.sportsmans.com, serves
as both a sales channel and a platform for marketing and product education, which allows us to engage more fully with the
outdoor community across all of our localities. In addition to offering similar merchandise found in our retail stores, our
website offers a substantial amount of additional assortment. Regulatory restrictions create certain structural barriers to the
online sale of a portion 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 competition from online-only retailers.
We also provide our online customers with convenient omni-channel services. To ensure that our customers have
access to our entire assortment of products available on the e-commerce website, our retail stores feature kiosks that allow
customers to place orders for items that are available only on our website, out of stock or not regularly stocked. We view
our kiosk offering as an important complement to our larger format stores, as well as a key differentiator and extension of
our smaller format stores. Our in-store pickup offering allows customers to order products through our e-commerce website
and pick up the products in our retail stores without incurring shipping costs. We believe our ship-to-store is a valuable
service offering to customers, as well as a means to generate additional foot traffic to our retail stores.
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We also have the ability to ship-from-store to fulfill customer orders. This feature has allowed us to turn all of our retail
stores into distribution centers, decreasing the time it takes to fulfill orders, and increasing our ability to leverage our
inventory across the Company.
In addition, our website features local-area content, including fishing reports and event schedules, as well as online
educational resources, including buyer’s guides, how to’s, tips, advice and links to video demonstrations on our dedicated
YouTube channel. We have also rolled out our social media strategy through our Facebook page and Instagram feed. These
platforms allow us to reach our customers more directly with targeted postings of advertisements and in-store events. We
leverage technology that aggregates customer location, browsing behavior and purchase history to present a personalized
shopping experience. We believe our online educational resources and community outreach drive traffic to our website and
retail stores, while improving user engagement as shoppers move from single-purchase users to loyal customers. We
provide online customer service support and fulfill orders through our in-house distribution center and through select
partner drop ship integration. In fiscal year 2021, our website received more than 100.8 million visits, which we believe
demonstrates our position as a leading resource for outdoor products and product education.
Merchandise Strategy
Our Products and Services
We offer a broad range of products at a variety of price points and carry a deep selection of branded merchandise
from well-known manufacturers, such as Browning, Carhartt, Coleman, Columbia Sportswear, Federal Premium
Ammunition, Honda, Johnson Outdoors, Crispi, Camp Chef, Shakespeare, Shimano, Smith & Wesson and Ruger. To
reinforce our convenient shopping experience, we offer our products at everyday low prices. We believe our competitive
pricing strategy supports our strong value proposition, instills price confidence in both our customers and our sales
associates, and is a critical element of our competitive position.
We believe we offer a wider selection of hard goods than many of our key competitors. We employ a good, better,
best merchandise strategy, with an emphasis on “better” products that meet the needs of customers of all experience levels.
We strive to keep our merchandise mix fresh and exciting by continuously searching for new, innovative products and
introducing them to our customers. Our hunting and shooting department, which is strategically located at the back of the
store, is a key driver of store traffic and one of the reasons for our high frequency of customer visits. We carry a large array
of consumable goods, which includes ammunition, bait, cleaning supplies, food, certain lures, propane and reloading
supplies. During fiscal year 2021, sales of consumable goods accounted for approximately 39.0% of our unit sales and
19.0% of our dollar sales. We believe the sale of consumables and replenishment items drive repeat traffic, with the
majority of our customers visiting our stores multiple 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 and special make-up offerings under the Rustic RidgeTM, KillikTM, Vital
ImpactTM, Yukon Gold, Lost Creek and Sportsman’s Warehouse brands as well as special make-up items through vendors
such as Tikka, Weatherby, Camp Chef and various others. These products are designed and priced to complement our
branded assortment, by rounding out the offering and ensuring customer choices for good, better and best within key
product categories. During fiscal year 2021, private label offerings accounted for approximately 3.0% of our total sales
with special make-up offerings accounting for an additional 1.0% of our total sales. This combined total of 4.0% compares
to more than 20% for many of our sporting goods retail peers. We believe our private label and special make-up products
are an important opportunity to drive sales and increase margins alongside our branded merchandise.
In addition to outfitting our customers with the correct gear, we provide our customers with value-added, technical
support services, such as gunsmithing and firearm service plans. Our stores offer full-service archery technician services,
fishing-reel line winding, scope mounting and bore sighting, and cleaning services. We also help participants enjoy the
outdoors responsibly by issuing hunting and fishing licenses. We believe the support services provided by our highly
trained staff technicians differentiate us from our competitors, increase customer loyalty and drive repeat traffic to our
stores.
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Products
Our stores are organized into six departments. The table below summarizes the key product lines by department:
Department
Camping
Apparel
Fishing
Product Offerings
Backpacks, camp essentials, canoes and kayaks, coolers, outdoor cooking equipment, sleeping
bags, tents and tools
Camouflage, jackets, hats, outerwear, sportswear, technical gear and work wear
Bait, electronics, fishing rods, flotation items, fly fishing, lines, lures, reels, tackle and small
boats
Footwear
Hiking boots, socks, sport sandals, technical footwear, trail shoes, casual shoes, waders and
work boots
Hunting and Shooting
Ammunition, archery items, ATV accessories, blinds and tree stands, decoys, firearms, firearms
Optics, Electronics,
Gift items, GPS devices, knives, lighting, optics (e.g. binoculars), two-way radios, and other
Accessories, and Other
license revenue, net of revenue discounts
safety and storage, reloading equipment, and shooting gear
Each department has buying and planning teams that are responsible for monitoring product availability from
vendors and sales volume within the department and across all stores. We actively monitor the profitability of each product
category within each department and adjust our assortment and floor space accordingly. This flexibility enables us to
provide customers with more preferred product choices and to enhance the profit potential of each store.
Hunting and shooting have historically been the largest contributor to our sales. Hunting and shooting department
products are generally sold at significantly higher price points than other merchandise, but often have lower margin
percentages. Camping is our second largest department, and family-oriented camping equipment in particular continues to
be a high growth product category. Apparel sales have grown as we have introduced new brands and styles, including
increasing selections for women and children. We view apparel sales as an important opportunity, given its high gross
margins and appeal to a broad, growing demographic.
The following table shows our sales during the past three fiscal years presented by department:
Department
Camping
Apparel
Fishing
Footwear
Hunting and Shooting
Optics, Electronics,
Accessories, and Other
Total
Product Offerings
Backpacks, camp essentials, canoes and kayaks,
coolers, outdoor cooking equipment, sleeping
bags, tents and tools
Camouflage, jackets, hats, outerwear,
sportswear, technical gear and work wear
Bait, electronics, fishing rods, flotation items,
fly fishing, lines, lures, reels, tackle and small
boats
Hiking boots, socks, sport sandals, technical
footwear, trail shoes, casual shoes, waders and
work boots
Ammunition, archery items, ATV accessories,
blinds and tree stands, decoys, firearms,
reloading equipment and shooting gear
Gift items, GPS devices, knives, lighting,
optics, two-way radios, and other license
revenue, net of revenue discounts
January 29,
2022
Fiscal year Ended
January 30,
2021
February 1,
2020
13.1%
12.7%
14.4%
8.4%
7.5%
9.3%
10.0%
9.9%
11.1%
6.8%
5.6%
7.5%
54.2%
57.6%
49.1%
7.5%
100.0%
6.7%
100.0%
8.6%
100.0%
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Camping. Camping represented approximately 13.1% of our net sales during fiscal year 2021. Our camping
assortment addresses both the technical requirements of the heavy-use camper, including gear for long-duration or deep-
woods excursions, as well as the needs of the casual camper. We offer a broad selection of products for multi-day back
country use and also for weekend outings, including tents and shelters, sleeping bags, backpacks and backpacking gear
(including camouflaged styles for hunting), generators for home and camp use, cooking and food preparation equipment
(including stoves and extended-use coolers), and dehydrated foods. Our camping department also includes canoes, kayaks
and a selection of recreational camping equipment for the family, including basic automotive accessories, camp chairs and
canopies. Our camping department includes brands such as Alps Mountaineering, Big Agnes, Camp Chef, Coleman,
Honda, Teton Sports, Rustic Ridge Tents and Lost Creek Coolers.
Apparel. Apparel represented approximately 8.4% of our net sales during fiscal year 2021 and includes camouflage,
outerwear, sportswear, technical gear, work-wear, jackets and hats. We primarily offer well-known brands in our apparel
department, such as Carhartt, Columbia and Sitka. We also intend to grow our private label apparel lines, including Rustic
RidgeTM and KillikTM. Our apparel selection offers technical performance capabilities for a variety of hunting activities,
including upland game, waterfowl, archery, big game hunting, turkey hunting and shooting sports. Performance attributes
include waterproofing, temperature control, scent control features and visual capabilities, such as blaze orange and
camouflage in a wide range of patterns. Outerwear is an important product category for customers who are fishing, hiking,
hunting or marine enthusiasts. We further complement our technical apparel with an assortment of casual apparel that fits
our customers’ lifestyles, including a variety of branded graphic t-shirts, and private label t-shirts.
Fishing. Fishing represented approximately 10.0% of our net sales during fiscal year 2021 and includes products for
fresh-water fishing, salt-water fishing, fly-fishing, ice-fishing and boating. Our broad assortment appeals to the beginning
and weekend angler, as well as avid and tournament anglers. In addition to lures, rods and reels, our fishing assortment
features a wide selection of products in tackle management and organization, electronics, fly-fishing, ice-fishing and
marine accessories sub-categories. We also provide fishing-reel line winding services in all of our stores and live bait in
most of our stores. We offer products for boat care and maintenance, as well as safety equipment and aquatic products such
as float tubes and 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, Orvis and Shimano.
Footwear. Footwear represented approximately 6.8% of our net sales during fiscal year 2021 and includes work
boots, technical footwear, hiking boots, trail shoes, socks, sport sandals and waders. As with apparel, our footwear
selection offers a variety of technical performance features, 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 Hey Dude.
Hunting and Shooting. Hunting and shooting is our largest merchandise department, representing approximately
54.2% of our net sales during fiscal year 2021. Products such as ammunition, firearms cleaning supplies, firearms, firearms
safety and storage and reloading products are typically key drivers of traffic in our stores. Our hunting and shooting
merchandise assortment provides equipment, accessories and consumable supplies for virtually every type of hunting and
shooting sport. Our expert technicians allow us to effectively support our hunting assortments for the avid hunter, shooter
and archery enthusiast. Our merchandise selection includes a wide variety of firearms designed for hunting, shooting sports
and home and personal defense, including air guns, black powder muzzle loaders, handguns, rifles and shotguns. We carry
a wide selection of ammunition, archery equipment, dog training products, hunting equipment, reloading equipment and
shooting accessories. Our hunting and shooting department includes brands such as Federal Premium Ammunition,
Hornady, Browning, Ruger, Smith & Wesson and Winchester.
Optics, Electronics, Accessories and Other. Our optics, electronics, accessories and other department represented
approximately 7.5% of our net sales during fiscal year 2021. This department supplements our other equipment
departments with complementary products, such as optics (including binoculars, spotting scopes and rangefinders), GPS
devices and other navigation gear, GoPro video cameras, two-way radios, specialized and basic cutlery and tools, including
hunting knives, lighting, bear spray and other accessories. Our optics, electronics and accessories department includes
brands such as Garmin, Leupold, Leica, Nikon, Swarovski Optik and Vortex Optics. Our other department includes
miscellaneous products and services.
Loyalty and Co-Branded Credit Card Programs
We have a loyalty program through which our customers are able to earn “points” towards Sportsman’s Warehouse
gift cards on most of their purchases. The program is free to join and accepted both online and in-stores for
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purchases and the use of redemption cards. As of January 29, 2022, we had approximately 3.2 million participants in our
loyalty program and approximately 45% of our revenue is generated from our loyalty customers.
Customers may obtain a loyalty program card when making a purchase in-store or online. After obtaining a card, the
customer 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, the
customer is entitled to a $1.00 credit in loyalty rewards, which may be redeemed by logging into our website to request a
redemption card for any whole dollar amount (subject to the customer’s available point balance). The redemption card is
then mailed to the customer and operates as a gift card to be used for in-store and/or online purchasing. In addition,
customers may choose to redeem loyalty rewards at the point-of-sale to be applied against in-store purchases. The rewards
points expire after 12 months of dormancy.
In addition, we offer our customers the multi-use Explorewards VISA Credit Card and the Explorewards Credit Card
issued by Comenity Bank. Comenity Bank extends credit directly to cardholders and provides all servicing for the credit
card accounts, funds the rewards and bears all credit and fraud losses. The Explorewards Visa Card allows customers to
earn points whenever and wherever they use their card while the Explorewards Credit Card can be used only in
Sportsman’s Warehouse stores and at Sportsman.com. Customers may redeem earned points for products and services just
as they would redeem loyalty card points.
Sourcing
Sourcing and Distribution
We maintain central purchasing, replenishment and distribution functions to manage inventory planning, allocate
merchandise to stores and oversee the replenishment of basic merchandise to the distribution center. We have no long-term
purchase commitments. During fiscal year 2021, we purchased merchandise from approximately 1,200 vendors with no
vendor accounting for more than 10% 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 have
field merchants that coordinate certain merchandising functions at the store level to provide a more localized
merchandising model. To ensure that our product offerings are tailored to local market conditions and demand, our
merchant teams regularly meet one-on-one with our vendors, and attend trade shows, review trade periodicals and evaluate
merchandise offered by other retail and online merchants. We also frequently gather feedback and new product reviews
from our store management and 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 currently distribute all of our merchandise from our 507,000 square foot distribution center in Salt Lake City,
Utah. The distribution center supports replenishment for all stores. We use preferred carriers for replenishment to our retail
stores. Direct-to-consumer e-commerce orders are fulfilled by the majority our 122 retail stores, in addition to the
distribution center. We ship merchandise to our e-commerce customers via courier service. Our experienced distribution
management team leads a staff of approximately 700 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 store
growth. We use the HighJump Warehouse Management System (“WMS”) to manage all activities. The system is highly
adaptable and can be easily changed to accommodate new business requirements. For example, our WMS enabled us to
support full omni-channel distribution under one roof by allowing us to comingle inventory to optimize space requirements
and labor. Additionally, we have developed customized radio frequency and voice-directed processes to handle the specific
requirements of our operations. We have the capability to both case pick and item pick, which is designed to ensure that our
stores have sufficient quantities of product while also allowing us to maintain appropriate in-stock levels. This balance
allows us to effectively manage inventory and maximize sales in stores.
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Marketing and Advertising
We believe, based on internal surveys, that the majority of our customers are male, between the ages of 35 and 65,
and have an annual household income between $40,000 and $100,000. We also actively market to women and have
expanded our product offerings of women’s and children’s outerwear, apparel and footwear to address rising participation
rates 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 frequency
and profitability of visits by customers of all types. We employ a two-pronged marketing approach:
● regional advertising programs; and
● local grassroots efforts to build brand awareness and customer loyalty.
Our regional advertising programs emphasize seasonal requirements for hunting, fishing and camping in our various
store geographies. Our advertising medium is typically newspaper inserts (primarily multi-page color inserts during key
shopping periods such as the Christmas season and Father’s Day), supplemented with modest amounts of digital
advertising, email, radio and national television ads. We proactively modify the timing and content of our message to
match local and regional preferences, changing seasons, weather patterns and topography of a given region. Additionally,
we sponsor several regional television and radio programs. Our total marketing expense for fiscal year 2021 was
approximately $20.5 million.
The second prong of our marketing effort involves fostering grassroots relationships in the local community. Each
Sportsman’s Warehouse store employs a variety of outreach tools to build local awareness. One key component to our local
marketing strategy is hosting events throughout the year, targeting a variety of end-user customer profiles (such as hunters,
campers, anglers and women). Our store base hosts or facilitates thousands of in-store and offsite seminars and events per
year, such as ladies’ night, Waterfowl Weekend, Maintain the Terrain, and loyalty member events. 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 corporate level and through store employee local
memberships and participation. Company representatives attend more than 600 events annually to provide support for these
organizations and to solidify ties between their members and the Sportsman’s Warehouse brand. Such grass roots
marketing campaigns and local outreach enable us to reduce our initial marketing spend in connection with new store
openings. We believe that these initiatives are highly cost-effective tools to create brand awareness and engender a loyal
community of local customers, as well as differentiate Sportsman’s Warehouse from its national competitors.
Information Technology
Business-critical information technology (“IT”) systems include the following: supply chain, merchandise, point-of-
sale (“POS”), WMS, e-commerce, loss prevention and financial and payroll. Our IT infrastructure is robustly designed to
be able to access real-time data from any store or channel. The network infrastructure allows us to quickly and cost
effectively add new stores to the wide area network (“WAN”). The private WAN is built on a CenturyLink backbone with
all of its resources and support. Additionally, we have implemented a redundant wireless WAN on Verizon’s infrastructure.
All key systems will continue to run in the event of a power or network outage. All data is backed up daily from one
storage array to another storage array.
We have implemented what we believe to be best-in-class software for all of our major business-critical systems.
Key operating systems include Oracle Applications for ERP, SAP Commerce for our e-commerce channel, Retail.net and
JPOS for in-store functionality, and HighJump for WMS. Our physical infrastructure is also built on products from premier
vendors Cisco, Dell, Oracle Sun and VMWare. Originally designed with the goal of being able to run a significantly larger
retail business, our IT systems are scalable to support our growth.
Furthermore, we have incorporated enhanced reporting tools that allow for more comprehensive and granular
monitoring of business performance, which has been critical to management’s ability to drive financial results.
Management has access to a reporting dashboard that shows key performance indicators (“KPIs”) on a company, store,
department and category level. KPIs include multiple variables and are all available on a daily, weekly, monthly and yearly
basis. All KPIs are compared to comparable prior year periods. District, store and department managers have
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access to the data relevant to their area of responsibility. Real-time sales data is available on 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
Fishing Gear and Accessories®, Rustic RidgeTM, KillikTM, K Killik & DesignTM, LC & DesignTM, and Vital ImpactTM are
among our service marks or trademarks registered with the United States Patent and Trademark Office. In addition, we own
several other registered and unregistered trademarks and service marks involving advertising slogans and other names and
phrases used in our business. We also own numerous domain names, including www.sportsmans.com, among others. The
information 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 related
registrations. We do not know of any material pending claims of infringement or other challenges to our right to use our
marks in the United States or elsewhere. We have no franchises or other concessions that are material to our operations.
Our Market
Our Market and Competition
We compete in the large, growing and fragmented outdoor activities and sporting goods market, which we believe is
currently underserved by full-line multi-activity retailers. We believe, based on 2021 National Sporting Goods Association
data, that U.S. outdoor activities and sporting goods retail sales total over $70 billion annually. The U.S. outdoor activities
and sporting goods sector is comprised of three primary categories—equipment, apparel and footwear—with each category
containing distinct product sets to support a variety of activities, 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, centered
around enhancing performance and enjoyment while participating in sporting and outdoor activities, including new product
introductions, 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, apparel and footwear
segment, which includes hunting and shooting, fishing, camping and boating. This segment is growing at a faster rate than
the sporting goods industry at large. The 2016 U.S. Fish and Wildlife national survey, published once every five years,
found that fishing participation increased 9% and participation in wildlife relation recreation increased 6%, for Americans
aged 16 and older from 2011 to 2016. We believe that in response to COVID-19, the growth rate of the outdoor industry
accelerated in 2020 and 2021 due to people searching for different ways to safely recreate while social distancing. In
addition, first-time firearm buyers, particularly amongst diverse groups, increased in both 2020 and 2021. We believe this
diversification of participant provides us with opportunity to engage a broader group of customers.
Furthermore, we believe that specialty retailers have generated incremental sales volume by expanding their
presence, especially in smaller communities, which has increased customers’ access to products that formerly were less
available. The nature of the outdoor activities to which we cater requires recurring purchases throughout the year, resulting
in high rates of conversion among customers. For example, active anglers typically purchase various fishing tackle
throughout the year based on seasons and changing conditions. Hunting with firearms typically is accompanied by
recurring purchases of ammunition 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 product selection, including locally relevant
offerings, value pricing, convenient locations, technical services and customer service. Some of our competitors 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 with our
distinctive branded selection and superior customer service, as well as our commitment to understanding and providing
merchandise that is relevant to our targeted customer base. We cater to the outdoor enthusiast and believe that we have both
an in-depth knowledge of the technical outdoor customer and a “grab and go” store environment that is uniquely
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conducive to their need for value and convenience. We believe that our flexible box size, combined with our low-cost,
high-service model, 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 a
portion of our revenue, such as firearms, ammunition, certain cutlery, propane and reloading powder, create a structural
barrier to competition from many online retailers.
Our principal competitors include the following:
● independent, local specialty stores with locally relevant product offerings;
● other specialty retailers that compete with us across a significant portion of our merchandising categories
through retail store, catalog or e-commerce businesses;
● large-format sporting goods stores and chains;
● mass merchandisers, warehouse clubs, discount stores, department stores and online retailers; and
● online retailers with deep offerings in the product categories in which we compete.
Independent, Local Specialty Stores. These stores generally range in size from approximately 2,000 to 10,000
square feet, and typically focus on more than one specific product categories, such as hunting, fishing or camping.
Other Specialty Retailers. Some of the other specialty retailers that compete with us across a significant portion of
our merchandising categories are large-format retailers that generally range in size from 40,000 to 250,000 square feet.
These retailers seek to offer a broad selection of merchandise focused on hunting, fishing, camping and other outdoor
product categories. Some of these stores combine the characteristics of an outdoor retailer with outdoor entertainment and
theme attractions. We believe that the number of these stores that can be supported in any single market area is limited
because of their large size and significant per-store buildout cost.
Other specialty retailers are smaller chains that typically focus on offering a broad selection of merchandise in one or
more of the following product categories—hunting, fishing, camping or other outdoor product categories. We believe we
can offer a broader and deeper selection of merchandise or specialized services than these other outdoor-focused chains.
Large-Format Sporting Goods Stores and Chains. These stores generally range from 20,000 to 80,000 square feet
and offer 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 space at 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. With respect to retailers in this
category with physical locations, these stores generally range in size from approximately 50,000 to over 200,000 square
feet and are primarily located in shopping centers, free-standing sites or regional malls. Hunting, fishing and camping
merchandise and apparel represent a small portion of the stores’ assortment and their total sales.
Online Retailers. E-commerce is a growing sales channel. We face competition from a diverse set of online retailers
that sell a wide range of products in categories in which we participate. Online retailers include competitors with e-
commerce only sales channels, in addition to many of the retailers mentioned above that also have an online presence.
We believe the small independent retailers (or “mom & pop” shops) comprise approximately 65% of the market for
outdoor specialty retail products. In addition, while there are over 50,000 Type 01 Federal Firearms Licenses, or FFLs, in
the United States today, only approximately 4,400 are currently held by national or regional specialty stores. Since FFLs
are issued at the store level, these statistics imply that the remaining 91% of the market is fragmented among mom & pop
shops. We believe this fragmentation within the total addressable market presents an attractive opportunity for us to
continue to expand our market share, as customers increasingly prefer a broad and appealing selection of merchandise,
competitive prices, high levels of service and one-stop shopping convenience.
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Seasonality
We experience moderate seasonal fluctuations in our net sales and operating results as a result of holiday spending
and the opening of hunting seasons. While our sales are more balanced throughout the year than many retailers,
historically, our sales are moderately higher in the third and fourth fiscal quarters than in the other quarterly periods. On
average, over the last three fiscal years, we have generated approximately 26.8% and 28.9% 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 this seasonality to a certain degree. For additional information, see Part II, Item 7
“Management’s Discussion and Analysis of Financial Condition and Results of Operation."
Regulation and Legislation
Regulation and Compliance
We operate in a highly regulated industry. There are a number of federal, state and local laws and regulations that
affect our business. In every state in which we operate, we must obtain various licenses and/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 (the “ATF”). Each store has an FFL permitting the sale of firearms, and our distribution center has
obtained an FFL to store and distribute firearms. Certain states require a state license to sell firearms and/or ammunition
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 (the
“NFA”), the Gun Control Act of 1968 (the “GCA”), the Arms Export Control Act of 1976 and Internal Revenue Code
provisions applicable to the Firearms and Ammunition Excise Tax, all of which have been amended from time to time. The
NFA and GCA require our business to, among other things, maintain Federal Firearms Licenses (FFLs”) for our locations
and perform a pre-transfer background check in connection with firearms purchases. We perform this background check
using either the FBI-managed National Instant Criminal Background Check System (“NICS”), or a comparable state
government-managed system that relies on NICS and any additional information collected by the state. These background
check systems 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 an ATF Form 4473 and retain this form in our records for auditing purposes for 20 years for each
approved transfer and five years for each denied or delayed transaction. The federal government is currently proposing
that all FFL holders maintain these records indefinitely, which would increase our possible exposure if the proposal is
finalized. Additionally, these newly proposed federal regulations, if finalized in their present form, may impact the ability
of manufacturers who hold FFL’s to provide certain products to us, which in turn could negatively affect consumer
demand.
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 purchases of firearms. We are also subject to
numerous other federal, state and local laws and regulations regarding firearm sale procedures, record keeping, inspection
and reporting, including adhering to minimum age restrictions regarding the purchase or possession of firearms or
ammunition, residency requirements, applicable waiting periods, importation regulations and regulations pertaining to the
shipment and transportation of firearms.
In September 2004, Congress declined to renew the Assault Weapons Ban of 1994 (the “AWB”), which prohibited
the manufacture of certain firearms defined as “assault weapons,” restricted the sale or possession of “assault weapons,”
except those that were manufactured prior to the law’s enactment, and placed restrictions on the sale of new high-capacity
ammunition feeding devices. Various states and local jurisdictions, including California, Colorado, New York and
Washington (states in which we operate), have adopted their own versions of the AWB or high capacity ammunition
feeding device restrictions, some of 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 governments have 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-
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related products. For example, several states, such as California, Colorado, Connecticut, Florida, Maryland, Minnesota,
New Jersey, New York, Virginia and Washington have enacted laws and regulations that are more restrictive than federal
laws and regulations that limit access to and sale of certain firearms and ammunition. California, Connecticut and New
York impose mandatory screening of ammunition purchases; California has requirements for microstamping (that is,
engraving the handgun’s serial number on each cartridge) of new handguns; Washington recently passed legislation that,
among other things, raises the minimum age to purchase certain firearms to 21 from 18 and imposes a multi-day waiting
period on gun purchases. California also raised the minimum age to purchase certain firearms to 21 and enacted several
restrictions, including background checks on ammunition sales. Some states prohibit the sale of guns without internal or
external locking mechanisms. Other state or local governmental entities may also explore similar legislative or regulatory
initiatives that may further restrict the manufacture, sale, purchase, possession or use of firearms, ammunition and
shooting-related products.
The Protection of Lawful Commerce in Arms Act (“PLCAA”), which became effective in October 2005, prohibits
civil liability actions 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 third parties. The legislation does not preclude traditional product liability actions.
Several states have immunity statues in place similar to the PLCAA. However, New York recently enacted state
legislation that could allow firearm dealers, manufacturers, or importers to be held liable for improper marketing or sales as
defined in the legislation.
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
other matters. Some of these laws affect or restrict the manner in which we can sell certain items, such as archery
equipment, handguns, smokeless powder, black powder substitutes, ammunition, pepper spray, bows, knives and other
products. State and local laws and regulations governing hunting, fishing, boating, all-terrain vehicles and other outdoor
activities and equipment can also affect our business. We believe that we are in substantial compliance with the terms of
such laws and that we have no liabilities under such laws that we 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 limit
the quantity of products that we may import into the United States from other countries or impact the cost of such products.
To date, quotas in the operation of our business have not restricted us, and customs duties have not comprised a material
portion of the total cost of our products.
Our e-commerce business is subject to the Mail or Telephone Order Merchandise Rule and related regulations
promulgated by the FTC, which affect our catalog mail order operations. FTC regulations, in general, govern the
solicitation of orders, the information provided to prospective customers and the timeliness of shipments and 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 local
regulations. While we view such inspections as a starting point, we employ more thorough internal compliance inspections
to help ensure we are in compliance with all applicable laws. With the IT infrastructure systems we have in place, certain
components of inspections can be done remotely.
We dedicate significant resources to ensure compliance with applicable federal, state and local regulations. Since we
began operations in 1986, we have never had a license revoked.
We are also subject to a variety of state laws and regulations relating to, among other things, advertising and product
restrictions. Some of these laws prohibit or limit the sale, in certain states and locations, of certain items, such as black
powder firearms, ammunition, bows, knives and similar products. Our compliance department administers various
restriction codes and other software tools to prevent the sale of such jurisdictionally-restricted items.
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We have particular expertise in the California market and have passed several California Department of Justice (“CA
DOJ”) firearm audits with zero or only minor violations. The CA DOJ communicates with us for policy discussion,
recognizing the strength of our compliance infrastructure.
Compliance with government regulations, including environmental regulations, has not had, and based upon current
information and the applicable laws and regulation currently in effect, is not expected to have a material effect on our
capital expenditures, results of operations or competitive position. However, laws and regulations may be changed,
accelerated or adopted that impose significant operational restrictions and compliance requirements upon us and which
could negatively impact our operating results and financial condition. See Item 1A, “Risk Factors—Risks Related to the
Firearms Business”.
Human Capital
We appreciate the importance of retention, growth and development of our employees. We strive to provide
competitive compensation and benefits packages, opportunities for advancement, and extensive training programs and
learning opportunities for our employees.
As of January 29, 2022, we had approximately 7,700 total employees. Of our total employees, approximately 320
were based at our corporate headquarters in West Jordan, Utah, approximately 520 employees were located at our
distribution center and approximately 6,800 were store employees. We had approximately 3,300 full-time employees and
approximately 4,400 part-time employees, who are primarily store employees. None of our employees are represented by a
labor union or are party to a collective bargaining agreement and we have had no labor-related work stoppages. We pride
ourselves on the long tenure of our more than 300 store managers and corporate employees.
We believe we offer competitive compensation and benefits packages. We strive to ensure pay equity between our
female employees and male employees performing equal or substantially similar work. We are also focused on
understanding our diversity and inclusion strengths and opportunities and executing on a strategy to support further
progress. As our employees are often outdoor enthusiasts, we offer an industry best in-class discount program to our
employees. We believe our level of employee store patronage and employee expertise are unique among our competitors in
this industry and enhances our differentiated shopping experience.
We took early action regarding employee well-being in response to the COVID-19 pandemic, implementing
comprehensive protocols to protect the health and safety of our employees and guests.
We believe that the recruitment, training and knowledge of our employees and the consistency and quality of the
service they deliver are central to our success. We emphasize deep product knowledge for store managers and sales
associates during both the hiring and training stages. We hire most of our sales associates for a specific department or
product category. All of our managers and sales associates undergo focused sales training, consisting of both sales
techniques and specialized product instruction, both immediately upon hiring (approximately 20 hours) and continuing
throughout their career (approximately 16 hours annually). In addition, our sales associates receive loss prevention
instruction and departmental training upon hiring. For example, in our hunting department, all employees receive an
additional nine hours of training on ATF and company policies initially upon hire, with continuing education throughout
the year. Our store managers complete two to six months of on-the-job training at another store with a Sportsman’s
Warehouse district manager, as part of which they receive approximately 80 hours of dedicated managerial training and
instruction. Our department heads receive extensive online training as well as on-site instruction, totaling approximately 40
hours. As a result of these programs, our employees are highly trained to provide friendly and non-intimidating education,
guidance and support to address our customers’ needs.
One of our unique assets is a designated training room located at our headquarters. Our training room is used
frequently for firm-wide training programs and by vendors to stage training demonstrations for new products. Training
room sessions are broadcast real-time in high definition to each store location and are recorded for future viewing. Vendor
training is particularly interactive, permitting vendor representatives to present a uniform message simultaneously to all
employees, while allowing managers and sales staff in individual stores to ask questions and provide real-time feedback on
products. This system increases vendors’ product knowledge reach and provides more effective training to our employees.
Training room sessions are especially important for technical products, with numerous design features and a high unit
price, because they enable our sales associates to better educate customers and provide additional assurance that a given
product fits the customer’s needs.
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Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments
to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or
the Exchange Act, are available on our web site at www.sportsmans.com, free of charge, as soon as reasonably practicable
after the electronic filing of these reports with, or furnishing of these reports to, the SEC. In addition, the SEC maintains a
web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC, including us. We may post information that is important to investors on our website
from time to time. The information provided on our website is not part of this report and is, therefore, not incorporated
herein by reference.
ITEM 1A. RISK FACTORS
Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect
on our 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 addition to other information contained in or incorporated by reference into this 10-K and our other public
filings with the SEC. Other events 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 the Firearms 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 products
and expose us to compliance and litigation risks, which could materially affect our operations and financial results. These
laws may change, sometimes significantly, as a result of political, economic or social events. For instance, Washington
passed legislation that, among other things, raises the minimum age to purchase certain firearms to 21 from 18 and imposes
a five to 10 day waiting period on gun purchases. In addition, Florida has also raised the minimum age for firearms
purchases to 21 with some exceptions. 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 we
offer, 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 and
ammunition 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
regulation by 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 and
tariffs; and
● FTC regulations governing the manner in which orders may be solicited and prescribing other obligations in
fulfilling orders and consummating sales.
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Over the past several years, bills have been introduced in the United States Congress that would restrict or prohibit
the manufacture, transfer, importation or sale of certain calibers of handgun ammunition, impose a tax and import controls
on bullets designed to penetrate bullet-proof vests, impose a special occupational tax and registration requirements on
manufacturers of handgun ammunition and increase the tax on handgun ammunition in certain calibers. Because we carry
these 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 additional
restrictions on the manufacture, transfer, sale, purchase, possession and use of firearms, ammunition and shooting-related
products. For example, in response to mass shootings and other incidents in the United States, several states, such as
Colorado, Connecticut, Florida, Maryland, Minnesota, New Jersey, and New York, have enacted laws and regulations that
limit access to and sale of certain firearms in ways more restrictive than federal laws. Other state or local governmental
entities may continue to explore similar legislative or regulatory restrictions that could prohibit the manufacture, sale,
purchase, possession or use of firearms and ammunition. In New York and Connecticut, mandatory screening of
ammunition purchases is now required. In addition, California has adopted requirements for micro-stamping (that is,
engraving the handgun’s serial number on the firing pin of new handguns), and at least 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 are considering 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 further restrict 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
sales and ownership of firearms and ammunition, could cause the demand for and sales of our products to decrease and
could materially adversely impact our net sales and profitability. Sales of firearms represent a significant percentage of our
net sales and are critical in drawing customers to our stores. A substantial reduction in our sales or margins on sales of
firearms and firearm related products due to the establishment of new regulations could harm our operating results.
Moreover, complying with increased or changed regulations could cause our operating expenses to increase.
We may incur costs from litigation relating to products that we sell, particularly firearms and ammunition, which
could adversely 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 our performance of background checks on firearms purchases and compliance with other sales laws as mandated
by state and federal 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 of firearms and ammunition. For instance, in July 2019, the estate and family of a victim of the Route 91 Harvest
Festival shooting filed litigation against 16 defendants, including us, for wrongful death and negligence. This litigation was
dismissed in March of 2022, with a finding of no liability for the Company. See Note 16 to our Consolidated Financial
Statements for additional information on the resolution of this litigation. Our insurance coverage and the insurance
provided by our vendors for certain products they sell to us may be inadequate to cover claims and liabilities related to
products that we sell. In addition, claims or lawsuits related to products that we sell, or the unavailability of insurance for
product liability claims, could result in the elimination of these products from our product line, thereby reducing net sales.
If one or more successful claims against us are not covered by or exceed our insurance coverage, or if insurance coverage
is no longer available, our available working capital may be impaired and our operating results could be materially
adversely affected. Even unsuccessful claims could result in the expenditure of funds and management time and could have
a negative impact on our profitability and on future premiums we would 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
name is 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
our ability to provide high quality merchandise and a consistent, high quality customer
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experience both in-store and online. Our brand could be adversely affected if we fail to achieve these objectives or if our
public image or reputation were to be tarnished by negative publicity, any of which could result in decreases in net sales. In
addition, the sale of firearm-related products also may present reputational risks and negative publicity that could affect
consumers’ perception of us or willingness to shop with us, which could harm our results of operations and financial
condition.
Risks Related to Our Retail Operations
The novel coronavirus (COVID-19) pandemic could have a negative impact on our business in future periods,
which, could result in a material adverse effect on our operations, liquidity, financial condition and financial results.
The COVID-19 pandemic has severely impacted the global economy, disrupted consumer spending and global
supply chains, and created significant volatility and disruption of financial markets, all of which may continue, and any of
which may adversely affect our business. With respect to our supply chain, we continue to see some interruption with
various vendors as a result of restrictions or limitations on their operations due to the pandemic. We experienced an
increase in sales in fiscal 2020 and fiscal 2021 due to the pandemic and related events and the interruption in our supply
chain has strained our inventory levels at times. Current demand for ammunition is outpacing supply and this trend is
expected to continue during the first half of fiscal 2022. We have also seen shifts in consumer behaviors and preferences,
which have impacted demand for some of our products. Our ability to predict and meet any future changes in the demand
for our products due to the impacts of the pandemic remains uncertain.
We cannot predict the future impact on us of the COVID-19 outbreak. For instance, our financial results and
operations would be significantly impacted if we are required or we deemed it appropriate to temporarily suspend or
restrict the operations of a significant number of our stores. In addition, if we are required to close a large portion of our
stores or we experience an acceleration of reduced store traffic, we may need additional liquidity to maintain our operations
depending on how long these events impact our operations. The future impact of the COVID-19 pandemic will depend on
a number of future developments, which are highly uncertain and cannot be predicted, including, not limited to the
duration, spread and severity of the COVID-19 outbreak, any resurgence of COVID-19, the effects of the outbreak on our
customers and vendors, including any labor shortages experienced by any of our vendors, and the remedial actions and
stimulus measures adopted by local and federal governments.
Our retail-based business model is impacted by general economic and market conditions, and ongoing economic,
market and financial uncertainties, including uncertainties surrounding the impact of COVID-19, 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 customers
reduce, delay or forego their purchases of our products as a result of job losses, bankruptcies, higher consumer debt and
interest rates, increases in inflation, higher energy and fuel costs, reduced access to credit, fluctuations in home prices and
other adverse conditions in the mortgage and housing markets, lower consumer confidence, uncertainty or changes in tax
policies and tax rates, uncertainty due to potential national or international security concerns and adverse or unseasonal
weather conditions. Such events could adversely impact our sales and/or cause the temporary closure of our stores.
Decreases in same store sales, customer traffic to our stores and e-commerce site 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. Promotional activities, vendor incentives, and decreased demand for consumer products could affect
profitability and margins. In addition, 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 fluctuations in the U.S. economy, our
sales, operating and financial results for a particular period are difficult to predict, making it difficult to forecast results to
be expected in future periods. Any of the foregoing factors could have a material adverse effect on our business, results of
operations and financial 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
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operations are more susceptible to regional factors than the operations of more geographically diversified competitors.
These factors include regional economic and weather conditions, natural disasters, demographic and population changes
and governmental regulations in the states in which we operate. Environmental changes and disease epidemics affecting
fish or game populations in any concentrated region may also affect our sales. In addition, adverse weather conditions and
the impacts of climate change in any concentrated region may temporarily reduce the demand for some of our products and
could have a negative effect on our sales, earnings or cash flows. If a region with a concentration of our stores were 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. Some of our competitors
have a larger number of stores, and greater market presence (both brick and mortar and online), name recognition and
financial, distribution, marketing and other resources than we have. As a result of this competition, we may need to spend
more on advertising and promotion than we anticipate. In addition, the ability of consumers to compare prices on a real-
time basis through the use of smartphones and digital technology puts additional pressure on us to maintain competitive
pricing. If our competitors reduce their prices, we may have to reduce our prices in order to compete, which could harm our
margins. Furthermore, some of our competitors 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 Walmart, do not currently compete in
many of the product lines we offer. However, if these competitors were to begin offering a broader array of competing
products, or if any of the other factors listed 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
operating results could suffer.
Our products appeal to consumers who regularly hunt, camp, fish and participate in various shooting sports. The
preferences of these consumers cannot be predicted with certainty and are subject to change. In addition, due to different
game and fishing species and varied weather conditions found in different markets, it is critical that our stores stock
products appropriate for their markets. Our success depends on our ability to identify product trends in a variety of markets
as well as to anticipate, gauge and quickly react to changing consumer demands in these markets. We usually must order
merchandise well in advance of the applicable selling season. The extended lead times for many of our purchases may
make it difficult for us to respond rapidly to new or changing product trends or changes in prices. If we misjudge either the
market for our products or our customers’ purchasing habits, our net sales may decline significantly and we may not have
sufficient quantities of merchandise to satisfy customer demand or we may be required to mark down excess inventory,
either of which would result in lower profit margins and harm our operating results.
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
may cause the price of our common stock to fluctuate significantly. A number of factors have historically affected, and will
continue to affect, our same store sales results, including:
● The impact of the COVID-19 pandemic;
● changes or anticipated changes to regulations related to some of the products we sell;
● consumer preferences, buying trends, and overall political and 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 paying
customers;
● the success of our omni-channel strategy and our e-commerce platform;
● competition in the regional market of a store;
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● 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 three
fiscal years, we have generated 26.8% and 28.9% 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 in
the third and fourth fiscal quarters due to higher purchase volumes and increased staffing in our stores. If, for any reason,
we miscalculate the demand for our products or our product mix during the third or fourth fiscal quarters, our sales in these
quarters could decline, resulting in higher labor costs as a percentage of sales, lower margins and excess inventory, which
could cause our annual operating results to suffer and our stock price to decline. Due to our seasonality, the possible
adverse impact from other risks associated with our business, including atypical weather, consumer spending levels and
general economic and business conditions, is potentially greater if any such risks occur during our peak sales seasons.
We currently rely on a single distribution center for our business, and if there is a natural disaster or other serious
disruption at such facility, we may be unable to deliver merchandise effectively to our stores or customers.
We currently rely on a single distribution center in Salt Lake City, Utah for our business. Any natural disaster or
other serious disruption at such facility due to fire, tornado, earthquake, flood or any other cause could damage our on-site
inventory or impair our ability to use such distribution center. While we maintain business interruption insurance, as well
as general property insurance, the amount of insurance coverage may not be sufficient to cover our losses in such an event.
Any of these occurrences could impair our ability to adequately stock our stores or fulfill customer orders and harm our
operating results.
Increased freight costs could continue to adversely affect our business, financial condition and results of operations.
Freight costs currently represent a significant portion of the cost of our products. We have experienced increased
transportation and logistics costs over the last two years. We believe these increased costs will continue into fiscal year
2022 and beyond and could continue to put pressure on our gross profit and gross margin. Freight rates on our products are
affected by a myriad of factors, including COVID-19 related impacts on the global economy, petroleum prices, congestion
at U.S. ports and ocean freight carrier capacity. We have experienced significant increases in freight charges over the past
year. Although we may be able to partially offset these increases through strategic purchasing, efficiency gains and
pursuing various supply chain alternatives, such increases have adversely affected, and could continue to adversely affect
our business, financial condition and results of operations.
We have been experiencing supply chain disruptions and delays of the supply of products from our vendors, which
have had an adverse impact on our net sales and profitability.
Due to the effects of the COVID-19 pandemic, the global supply chain has experienced delays, including delays in
the outdoor sporting goods industry. We continue to work diligently with our partners to mitigate the impact these delays
have on our business. While we have begun to see improvement in the supply chain we anticipate that delays are likely to
continue throughout the first half of fiscal 2022. Any continuing delay or disruption in our supply chain could negatively
impact our ability to market and sell our products and serve our customers, which could adversely impact our net sales and
profitability. In addition, some our key vendors have been negatively impacted by supply chain disruptions, which have
affected their ability to maintain delivery schedules. Further, if any of our significant vendors were to become subject to
bankruptcy, receivership or similar proceedings, we may be unable to arrange for alternate or replacement products,
transactions or business relationships on favorable terms, or at all, which could adversely affect our sales and operating
results.
We depend on merchandise purchased from our vendors to obtain products for our stores. We have no contractual
arrangements providing for continued supply from our key vendors, and our vendors may discontinue selling to us at any
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time. Changes in commercial practices of our key vendors or manufacturers, such as changes in vendor support and
incentives or changes in credit or payment terms, could also negatively impact our results. If we lose one or more key
vendors or are unable to promptly replace a vendor that is unwilling or unable to satisfy our requirements with a vendor
providing equally appealing products at comparable prices, we may not be able to offer products that are important to our
merchandise assortment.
We also are subject to risks, such as the price and availability of raw materials and fabrics, labor disputes, union
organizing activity, strikes, inclement weather, natural disasters, war and terrorism and adverse general economic and
political 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 to our 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 and
trade restrictions upon imports from these foreign countries could adversely affect our ability to source
merchandise and operating results.
In fiscal year 2021, approximately 2.4% of our merchandise was imported directly from vendors located in foreign
countries, with a substantial portion of the imported merchandise being obtained directly from vendors in China and El
Salvador. In addition, we believe that a significant portion of our domestic vendors obtain their products from foreign
countries that may also be subject to political and economic uncertainty. We are subject to risks and uncertainties
associated with changing economic, political, market and other conditions in foreign countries where our vendors are
located, such as, increased import duties, tariffs, border-adjusted taxes, trade restrictions and quotas, adverse fluctuations of
foreign currencies and geopolitical turmoil, such as the conflict between Russia and Ukraine and any resulting disruption,
instability or volatility in the global markets and industries resulting from such conflict. Any event causing a disruption or
delay of imports from foreign locations would likely increase the cost or reduce the supply of merchandise available to us
and would adversely affect our operating results.
Finally, potential changes in federal restrictions on the importation of firearms and ammunition products could affect
our ability to acquire certain popular brands of firearms and ammunition products from importers and wholesalers, which
could negatively impact our net sales until replacements in the United States can be obtained, if at all.
Unauthorized disclosure of sensitive or confidential customer information could harm our business and standing
with our customers.
The protection of our customer, employee and company data is critical to us. We rely on commercially available
systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential
customer information, 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 of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar cyber
events. Any cyber incident involving the misappropriation, loss or other unauthorized disclosure of confidential
information, whether by us or our third-party service providers, could damage our reputation, expose us to risk of litigation
and liability, disrupt our operations and harm our business.
In addition, privacy laws, rules, and regulations are constantly evolving in the United States. For example, in June
2018, the State of California enacted the California Consumer Privacy Act, or CCPA, which became effective on January 1,
2020, and will create new individual privacy rights for California consumers and place increased privacy and security
obligations on entities handling certain personal data. Complying with these evolving obligations is costly, and any failure
to comply could give rise to unwanted media attention and other negative publicity, damage our customer and consumer
relationships and reputation, and result in lost sales, fines, or lawsuits, and may harm our business and results of operations.
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 our outdoor culture and are able to adequately represent this culture to our customers. We continually expand
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our employee base to manage our anticipated growth. Competition for non-entry level personnel, particularly for
employees with retail experience, is highly competitive. Additionally, our ability to maintain consistency in the quality of
customer service in our stores is critical to our success. Many of our store employees are in entry-level or part-time
positions that historically have high rates of turnover. We are also dependent on the employees who staff our distribution
center, many of whom are skilled. Qualified individuals of the requisite caliber and number needed to fill these positions
are currently in short supply, which may continue throughout fiscal 2022 given the current low unemployment rates we are
experiencing. We may be unable to meet our labor needs and control our costs due to external factors such as the
availability of a sufficient number of qualified persons in the work force of the markets in which we operate, competition,
unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics,
health and other insurance costs and adoption of new or revised employment and labor laws and regulations. If we are
unable to hire and retain sales associates capable of consistently providing a high level of customer service, as
demonstrated by their enthusiasm for our culture and knowledge of our merchandise, our business could be materially
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. An
inability to recruit and retain a sufficient number of qualified individuals in the future may delay the planned openings of
new stores. Any such delays, any material increases in employee turnover rates at existing stores or any increases in labor
costs could have a material adverse effect on our business, financial condition or operating results.
Increases in the minimum wage have recently adversely affected our financial results.
Recently, several states in which we operate have enacted minimum wage increases and it is possible that other states
or the federal government could also enact minimum wage increases. In fiscal year 2020 and 2021, 62 and 53 of our stores,
respectively, were impacted by minimum wage increases, which increased our selling, general and administrative expenses.
Base wage rates for some of our employees are at or slightly above the minimum wage. As more state minimum wage rates
increase or if the federal government enacts a minimum wage increase, we may need to increase not only the wage rates of
our minimum wage employees, but also the wages paid to our other hourly employees as well. Further, should we fail to
increase our wages competitively in response to increasing wage rates, the quality of our workforce could decline, causing
our customer service to suffer. Any increase in the cost of our labor could have an adverse effect on our operating costs,
financial condition and results of operations.
Risks Related to Our Business Strategy
Our expansion into new, unfamiliar markets presents increased risks that may prevent us from being profitable in
these new markets.
We intend to continue to expand by opening or acquiring stores in new markets, which may include small- to
medium-sized markets and which may not have existing national outdoor sports retailers. As a result, we may have less
familiarity with local customer preferences 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 or acquire stores in new markets and
operate them profitably, many of which are beyond our control, include:
● our ability to identify suitable locations, including our ability to gather and assess demographic and marketing
data 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;
● our ability to properly assess the profitability of potential new retail store locations;
● our ability to successfully rebrand any new stores we acquire and integrate such stores into our existing
operations;
● our ability to secure required governmental permits and approvals;
● our ability to attract, hire and train skilled store operating personnel, especially management personnel;
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● the availability of construction materials and labor and the absence of significant construction delays or cost
overruns;
● our ability to provide a satisfactory mix of merchandise that is responsive to the needs of our customers living in
the 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 a
new 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
overall strength of our business.
Once we decide on a new market and find a suitable location, any delays in opening or acquiring new stores could
impact our financial results. It is possible that events, such as delays in the entitlements process or construction delays
caused by permitting or licensing issues, material shortages, labor issues, weather delays or other acts of god, discovery of
contaminants, accidents, deaths or injunctions, could delay planned new store openings beyond their expected dates or
force us to abandon planned openings altogether. In addition, new retail stores typically generate lower operating margins
because pre-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 in disruption 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
markets on a profitable basis.
If we are unable to successfully develop and maintain our omni-channel strategy, we may not be able to compete
effectively 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
to continue to grow. In 2021, we migrated our website to a new cloud platform with autoscaling capability, significantly
increasing capacity and efficiency. E-commerce continues to be a rapidly growing sales channel for our business and an
increasing source of competition in our industry. If we are unable to continue to successfully develop and maintain our
omni-channel platform, we may not be able to compete effectively and our sales and profitability may be adversely
affected. Our future success could also be adversely affected if we are unable to identify and capitalize on retail trends,
including technology, e-commerce and other process efficiencies to gain market share and better service our customers.
In addition, many of our competitors already have e-commerce businesses that are substantially larger and more
developed than ours, which places us at a competitive disadvantage. There are also regulatory restrictions on the online sale
of a portion of our product offerings, such as ammunition, certain cutlery, firearms, propane and reloading powder. If we
are unable to expand 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
changes in 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 to successfully respond
to these risks and uncertainties could reduce our e-commerce same store sales, increase our costs, diminish our growth
prospects and damage our brand, which could negatively impact our results of operations and stock price.
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Our planned growth may strain our business infrastructure, which could adversely affect our operations and
financial condition.
Over time, we expect to expand the size of our retail store network in new and existing markets. As we grow, we will
face the risk that our existing resources and systems, including management resources, accounting and finance personnel
and operating systems, may be inadequate to support our growth. We cannot assure you that we will be able to retain the
personnel or make the changes in our systems that may be required to support our growth. Failure to secure these resources
and 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 expenditures
and 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
our distribution facility, an increase in information to be processed by our management information systems and diversion
of management attention from existing operations towards the opening of new stores and markets. To the extent that we are
not able to meet these additional challenges, our sales could decrease and our operating expenses could increase.
Our private label brand offerings expose us to various risks.
We expect to continue to grow our exclusive private label brand offerings through a combination of brands that we
own and brands that we license from third parties. We have invested in our development and procurement resources and
marketing efforts relating to these private brand offerings. Although we believe that our private brand products offer value
to our customers 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 elsewhere in 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
the licensors of brands, including, in some instances, certain minimum sales requirements that, if not met, could
cause us 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.
An 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 a material adverse effect on our business, results of operations and financial condition.
We may pursue strategic acquisitions or investments, and the failure of an acquisition or investment to produce the
anticipated results or the inability to fully integrate the acquired companies could have an adverse impact on our
business.
We may from time to time acquire or invest in complementary companies, businesses or assets. The success of such
acquisitions 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 investments
may not produce the results that we expect at the time we enter into or complete the transaction. For example, we may not
be able to capitalize on previously anticipated synergies. Furthermore, acquisitions may result in dilutive issuances of our
equity securities, the incurrence of debt, contingent liabilities, amortization expenses or write-offs of goodwill or other
intangibles, any of which could harm our financial condition or results of operations. We also may not be able to
successfully integrate operations that we acquire, including their personnel, financial systems, supply chain and other
operations, which could adversely affect our business. Acquisitions may also result in the diversion of our capital and our
management’s attention from other business issues and opportunities.
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Risks Related to Liquidity and Capital Resources
Our ability to operate and expand our business and to respond to changing business and economic conditions will
depend on the availability of adequate capital.
The operation of our business, the rate of our expansion and our ability to respond to changing business and
economic conditions 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 under our existing debt agreements.
The amount that we are able to borrow and have outstanding under our revolving credit facility at any given time is
subject to a borrowing base calculation. As a result, our ability to borrow is subject to certain risks and uncertainties, such
as a deterioration in the quality of our inventory (which is the largest asset in our borrowing base), a decline in sales
activity and the collection of our receivables, which could reduce the funds available to us under our revolving credit
facility.
We cannot assure you that our cash flow from operations or cash available under our revolving credit facility will be
sufficient to meet our needs. If we are unable to generate sufficient cash flows from operations in the future, and if
availability under our revolving credit facility is not sufficient, we may have to obtain additional financing. If we obtain
additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional
indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our
operations, and our ability to fund expansion or take advantage of future opportunities. We cannot assure you that we could
obtain refinancing or additional financing on favorable terms or at all.
Our revolving credit facility contains restrictive covenants that may impair our ability to access sufficient capital
and operate our business.
Our revolving credit facility contains 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 to
meet our obligations as they become due or to comply with various financial covenants contained in the instruments
governing our current or future indebtedness, this could constitute an event of default under the instruments governing our
indebtedness.
If there were an event of default under the instruments governing our indebtedness, the holders of the affected
indebtedness could declare all of that indebtedness immediately due and payable, which, in turn, could cause the
acceleration of the maturity of all of our other indebtedness. We may not have sufficient funds available, or we may not
have access to sufficient capital from other sources, to repay any accelerated debt. Even if we could obtain additional
financing, the terms of the financing may not be favorable to us. In addition, substantially all of our assets are subject to
liens securing our revolving credit facility and term loan. If amounts outstanding under the revolving credit facility or term
loans were accelerated, our lenders could foreclose on these liens and we could lose substantially all of our assets. Any
event of default under the instruments governing our indebtedness could have a material adverse effect on our business,
financial condition and results of operations.
An increase in market interest rates, including from any impact of the discontinuation of LIBOR, could
increase our interest costs on existing and future debt and could adversely affect our stock price.
Our existing debt obligations are variable rate obligations with interest and related payments that vary with the
movement of certain indices, and in the future, we may incur additional indebtedness in connection with the entry into new
credit facilities or the financing of any acquisition. If interest rates increase, so could our interest costs for any new debt
and our variable rate debt obligations under our revolving credit facility and term loan. This increased cost could make the
financing of any acquisition more costly, as well as lower our current period earnings. Rising interest rates could limit our
ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing.
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All of our debt outstanding under our credit agreement as of January 29, 2022 bears interest at a floating rate that
uses LIBOR as the applicable reference rate to calculate the interest. In July 2017, the U. K.’s Financial Conduct
Authority, which regulates LIBOR, announced that it intends to phase out LIBOR, with certain tenors phased out after
December 31, 2021 and all other tenors (including overnight and one, three, six and 12 months) to be phased out after June
30, 2023. After June 30, 2023, the LIBOR administrator has indicated that it intends to cease publication of U.S. dollar
LIBOR and in, the interim, the LIBOR administrator has advised that no new contracts using U.S. dollar LIBOR should be
entered into after December 31, 2021. The U.S. Federal Reserve has begun publishing a Secured Overnight Funding Rate
(“SOFR”), which is intended to replace U.S. dollar LIBOR, and has proposed a paced market transition plan to SOFR from
LIBOR. Organizations are currently working on industry wide and company specific transition plans as it relates to
financial and other derivative contracts exposed to LIBOR. Additionally, plans for alternative reference rates for other
currencies have also been announced. At this time, we cannot predict how markets will respond to these proposed
alternative rates or the effect of any changes to LIBOR or the discontinuation of LIBOR. If LIBOR is no longer available,
our credit agreement provides that, if the administrative agent has determined that adequate means do not exist for
ascertaining LIBOR or that LIBOR does not adequately and fairly reflect the cost to lenders for making, funding or
maintaining their loans, then all of our outstanding loans under the credit agreement will be converted into loans that
accrue interest at the alternative base rate on the last day of such interest period that determination is made. Further, the
lenders under our credit agreement will no longer be obligated to make loans using LIBOR as the applicable reference rate.
If future rates based upon a successor reference rate such as SOFR (or a new method of calculating LIBOR) are higher than
LIBOR rates as currently determined or if our lenders have increased costs due to changes in LIBOR, we may experience
potential increases in interest rates on our variable rate debt, which could adversely impact our interest expense, results of
operations and cash flows.
Risks Related to Our Common Stock
Our bylaws, our certificate of incorporation and Delaware law contain provisions that could discourage another
company from acquiring us and may prevent attempts by our stockholders to replace or remove our current
management.
Provisions of our bylaws, our certificate of incorporation and Delaware law may discourage, delay or prevent a
merger or acquisition that stockholders may consider favorable, including transactions in which our stockholders might
otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempts by our
stockholders to replace or remove our current management by making it more difficult for stockholders to replace or
remove our board of directors. These provisions include:
● establishing a classified board of directors;
● 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 our
certificate 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 proposing
matters 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 some
exceptions, Section 203 prohibits a Delaware corporation from engaging in any “business combination” with any
“interested stockholder” (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
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own, 15% or more of the outstanding voting stock of the corporation), for a three-year period following the date that the
stockholder became an interested stockholder. Section 203 could have the effect of delaying, deferring or preventing a
change in control that 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
State of Delaware will be, to the fullest extent permitted by law, the exclusive forum for any derivative action or
proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us
arising pursuant to the Delaware General Corporation Law; or any action asserting a claim against us that is governed by
the internal affairs doctrine. This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial
forum that it finds favorable for disputes with us or our directors, officers or other employees and agents, which may
discourage such lawsuits against us and our directors, officers, employees and agents.
Together, these charter and statutory provisions could make the removal of management more difficult and may
discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common
stock. The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be
willing 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 an
acquisition.
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 January 29,
2022, the closing price of our stock ranged from a high of $17.95 per share to a low of $9.98 per share. Volatility in the
market price of our common stock may prevent our stockholders from being able to sell their common stock at or above
the prices they paid for their common stock. The market price for our common stock could fluctuate significantly for
various reasons, including, among other things, our operating and financial performance; conditions that impact demand
for our products; the public’s reaction to our press releases or other public announcements; changes in earnings estimates or
recommendations by securities analysts; market and industry perception of our success, or lack thereof, in pursuing our
growth strategy; 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 sale of firearms and
ammunition; 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, including those resulting from natural disasters, health crises or pandemics
(including COVID-19), terrorist attacks, acts of war and responses to such events.
In addition, if the market for stocks in our industry, or the stock market in general, experiences a loss of investor
confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition
or results 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.
General Risks
Any material disruption or breach of our information technology systems or those of third-party partners could
materially damage our customer and business partner relationships and subject us to significant reputational,
financial, legal, and operational consequences.
We rely on commercially available systems, software, tools and monitoring to provide security for the processing,
transmission and storage of confidential tenant and customer data, including individually identifiable information relating
to financial accounts. We have taken steps to protect the security of our information systems and the data maintained in
those systems. Our safety and security measures have failed in the past, and may fail in the future, to prevent the systems’
improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the
event of cyber incidents. Security incidents, including those caused by physical or electronic break-ins, computer viruses,
malware, worms, attacks by hackers or foreign governments, disruptions from unauthorized access and tampering
(including through social engineering such as phishing attacks), coordinated denial-of-service attacks and similar breaches,
could create system disruptions, shutdowns or unauthorized disclosure of confidential information. The risk of security
incidents has generally increased as the number, intensity and sophistication of attacks and intrusions from around the
world have increased. In some cases, it may be difficult to anticipate or immediately detect such incidents and the damage
they cause. In addition, due to the fast pace and unpredictability of cyber threats,
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long-term implementation plans designed to address cybersecurity risks become obsolete quickly. Any failure to maintain
proper function, security and availability of our information systems and the data maintained in those systems could
interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a
materially adverse effect on our business, financial condition and results of operations.
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 are
valuable assets that are critical to our success. The unauthorized reproduction or other misappropriation of our intellectual
property could diminish the value of our brands or goodwill and cause a decline in our net sales. Any infringement or other
intellectual 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 a
material adverse effect on our operating results.
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 efficient
operation of our computer hardware and software systems. We use management information systems to track inventory
information at the store level, communicate customer information and aggregate daily sales, margin and promotional
information. These systems are vulnerable to damage or interruption from natural disasters, power loss, computer system
failures, telecommunications failures, security breaches, misappropriation, hacking by third parties and computer viruses,
and similar events.
Any failure that causes an interruption in our systems processing could disrupt our operations and result in reduced
sales. We have centralized the majority of our computer systems in our corporate office. It is possible that an event or
disaster at our corporate office could materially and adversely affect the performance of our company and the ability of
each of our stores to operate efficiently.
Corporate responsibility, specifically related to environmental, social and governance (“ESG”) matters, may impose
additional costs and expose us to new risks.
Public ESG and sustainability reporting is becoming more broadly expected by investors, shareholders and other third
parties. Certain organizations that provide corporate governance and other corporate risk information to investors and
shareholders have developed, and others may in the future develop, scores and ratings to evaluate companies and
investment funds based upon ESG or “sustainability” metrics. Many investment funds focus on positive ESG business
practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as
a reputational or other factor in making an investment decision. In addition, investors, particularly institutional investors,
use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may
engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other
actions, to hold these companies and their boards of directors accountable. Board diversity is an ESG topic that is, in
particular, receiving heightened attention by investors, shareholders, lawmakers and listing exchanges. Certain states have
passed laws requiring companies to meet certain gender and ethnic diversity requirements on their boards of directors. We
may face reputational damage in the event our corporate responsibility initiatives or objectives, including with respect to
board diversity, do not meet the standards set by our investors, shareholders, lawmakers, listing exchanges or other
constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating from third party rating services. A
low ESG or sustainability rating by a third-party rating service could also result in the exclusion of our common stock from
consideration by certain investors who may elect to invest with our competition instead. Ongoing focus on corporate
responsibility matters by investors and other parties as described above may impose additional costs or expose us to new
risks.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 2. PROPERTIES
We do not own any material real property nor do we plan to do so. Instead, we lease all of our store locations and
expect to lease our future store locations. From time to time we 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 property at any particular balance sheet date. Our corporate
headquarters is located in an approximately 70,000 square foot building in West Jordan, Utah. The building is leased under
an agreement expiring on March 31, 2035.
Our distribution center is located in a 507,000 square foot facility in Salt Lake City, Utah. The building is leased
under an agreement expiring on December 31, 2023, with three options that each allow us to extend for an additional five
years. We believe that our distribution center is of sufficient scale to support a network of 135 or more stores.
We currently operate 122 retail stores in 29 states. See above under “Business – Our Stores” for a breakdown of our
stores by state. In total we have approximately 4.7 million gross square feet across all of our stores. All of our stores are
leased from third parties with lease terms typically ranging from five to fifteen years, and many of our lease agreements
have additional five-year renewal options. All of our leases provide for additional payments associated with common area
maintenance, real estate, taxes and insurance. In addition, many of our lease agreements have defined escalating rent
provisions over the initial term and extensions.
ITEM 3. LEGAL PROCEEDINGS
See the “Legal Matters” section of Note 16, “Commitments and Contingencies” to the Consolidated Financial
Statements for information regarding our material legal proceedings, which information is incorporated by reference in this
Item 3.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market for Registrant’s Common Equity
Our common stock is listed on the Nasdaq under the symbol “SPWH.” As of March 8, 2022, there were 165
holders of record of our common stock. This number does not include persons who hold our common stock in nominee or
“street name” accounts through brokers or banks.
Dividend Policy
We did not pay any dividends in fiscal year 2021 or fiscal year 2020. We do not anticipate paying any cash
dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of
directors, subject to compliance with applicable law and any applicable contractual provisions.
Stock Performance Graph
The stock price performance graph below shall not be deemed soliciting material or to be filed with the SEC or
subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, nor shall
it be incorporated by reference into any past or future filing under the Securities Act of 1933, as amended, or the Securities
Act or the Exchange Act, except to the extent we specifically request that it be treated as soliciting material or specifically
incorporate it by reference into a filing under the Securities Act or the Exchange Act.
The following graph shows the cumulative total stockholder return of an investment of $100 in cash at market
close on January 28, 2017 through January 29, 2022 for (i) our Common Stock (“SPWH”), (ii) the S&P 500 Retailing
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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 return shown on the graph below is not
necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder
returns.
SPWH
S&P Retail
Russell 2000
January 28, 2017
$ 100.00
100.00
100.00
February 3, 2018
$ 62.23
139.89
112.88
February 2, 2019
$ 64.89
150.18
109.58
February 1, 2020
$ 82.13
179.48
117.75
January 30, 2021
$ 222.05
252.16
151.28
January 29, 2022
$ 134.85
265.45
143.61
Fiscal Years Ended
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The discussion below contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking statements as a result of various factors, including
those which are discussed in the “Risk Factors” section in Part I, Item 1A of this 10-K. Also see “Statement Regarding
Forward-Looking Statements” preceding Part I.
The following discussion and analysis should be read in conjunction with the consolidated financial statements and
the notes thereto included in this 10-K.
Overview
We are an outdoor sporting goods retailer focused on meeting the everyday needs of the seasoned outdoor veteran,
the first-time participant and everyone in between. Our mission is to provide outstanding gear and exceptional service to
inspire outdoor memories.
Our business was founded in 1986 as a single retail store in Midvale, Utah. Today, we operate 122 stores in 29 states,
totaling approximately 4.7 million gross square feet. During fiscal year 2021, we increased our gross square footage by
6.5% through the opening of 10 store locations.
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Our stores and our e-commerce platform are aggregated into one operating and reportable segment.
On December 2, 2021, Sportsman’s Warehouse, Great Outdoors Group, LLC and Phoenix Merger Sub I, Inc.
(“Merger Subsidiary”) entered into a Termination Agreement (the “Termination Agreement”) under which the parties
agreed to terminate the merger agreement, dated December 21, 2020, among the same parties (the “Merger Agreement”),
effective immediately. Pursuant to the terms and conditions set forth in the Merger Agreement, Merger Subsidiary would
have been merged with and into Sportsman’s Warehouse, with Sportsman’s Warehouse continuing as the surviving
corporation in the Merger and a wholly-owned subsidiary of Great Outdoors Group (the “Merger”). The decision to
terminate the Merger Agreement followed feedback from the Federal Trade Commission (“FTC”) that led the parties to
believe that they would not have obtained FTC clearance to consummate the Merger. Under the Termination Agreement,
Great Outdoors Group agreed to pay us the Parent Termination Fee (as defined in the Merger Agreement) of $55.0 million
by wire transfer of immediately available funds concurrently with the execution of the Termination Agreement. We
received the $55.0 million payment on December 2, 2021.
COVID-19 Pandemic
Since mid-March 2020 and continuing through fiscal year 2021, we experienced a significant increase in sales. A
larger than normal portion of those sales came from certain product categories, particularly firearms and ammunition. As a
result of the higher proportion of firearms and ammunition sales, our product mix during fiscal year 2020 and fiscal 2021
was impacted, which had a negative effect on our gross margin.
The increased demand we experienced during fiscal 2020 and fiscal 2021 resulted in our net sales increasing by
63.8% to $1,451.8 million from fiscal year 2019 to fiscal year 2020 and by 3.7% to $1,506.1 million from fiscal year 2020
to fiscal year 2021. Overall, our net sales have increased 69.9% from fiscal year 2019 to fiscal year 2021. While our net
sales for our hunting and shooting category decreased by $19.0 million, or 2.3%, to $813.6 million from fiscal year 2020 to
fiscal year 2021 due to the strong demand experienced in 2020, net sales of our hunting and shooting category for fiscal
year 2021 were still 86.6% higher than hunting and shooting category net sales for fiscal year 2019. Further, our same store
sales had a similar decrease of 2.2% during fiscal 2021 compared to fiscal 2020, but were still up compared to same store
sales for fiscal 2019. Our hunting and shooting same store sales decreased 8.7% during fiscal 2021 compared to fiscal
2020 due to strong demand in fiscal 2020, but same store sales for fiscal 2021 remained strong and increased 42.5%
compared to fiscal 2019. Gross profit increased to $490.3 million during fiscal year 2021 compared to $476.5 million for
fiscal year 2020, which increased from $296.6 million for fiscal year 2019. As a percentage of net sales, gross profit
decreased to 32.6% and 32.8% for fiscal year 2021 and fiscal year 2020, respectively, compared to 33.5% for fiscal year
2019 due in part to an increase in lower margin products, such as firearms and ammunition, in our product mix.
In addition, with respect to our supply chain, we continue to see some interruption with various vendors as a result
of restrictions or limitations on their operations due to the pandemic. While our increase in sales shows significant demand
for ammunition during the pandemic that we believe is outpacing supply, we do not believe supply chain disruptions
resulting from restrictions and limitations on supplier operations caused by the pandemic are resulting in significantly less
supply and we are working closely with our vendors to limit such disruption. Moreover, the pandemic and current
economic conditions have resulted in a short supply of qualified employees. If we are unable to hire and retain sales
associates capable of consistently providing a high level of customer service, our business could be materially adversely
affected.
While we experienced increased sales during fiscal 2020 and fiscal 2021, especially in our hunting and shooting
category, we cannot predict the future impact on us of the COVID-19 outbreak. The future impact of the COVID-19
pandemic will depend on a number of future developments, which are highly uncertain and cannot be predicted, including,
but not limited to the duration, spread and severity of the COVID-19 outbreak, any resurgence of COVID-19, the effects of
the outbreak on our customers and vendors and the remedial actions and stimulus measures adopted by local and federal
governments. Further, we may experience a decrease in sales if the increased demand we experienced during the pandemic
subsides with the pandemic.
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Fiscal Year
We operate using a 52/53-week fiscal year ending on the Saturday closest to January 31. Fiscal years 2021, 2020 and
2019 ended on January 29, 2022, January 30, 2021 and February 1, 2020, respectively. Each of fiscal year 2021, 2020, and
2019 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 key
measures for determining how our business is performing are net sales, same store sales, gross margin, selling, general and
administrative expenses, income from operations and adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”).
Net Sales and Same Store Sales
Our net sales are primarily received from revenue generated in our stores and also include sales generated through
our e-commerce platform. When measuring revenue generated from our stores, we review our same store sales as well as
the performance of our stores that have not operated for a sufficient amount of time to be included in same store sales. We
include net sales from a store in same store sales on the first day of the 13th full fiscal month following the store’s opening
or acquisition by us. We exclude sales from stores that were closed during the period from our same store sales calculation.
We include net sales from e-commerce in our calculation of same store sales. For fiscal years consisting of 53 weeks, we
exclude net sales during the 53rd week from our calculation of same store sales. Some of our competitors and other
retailers may calculate same store sales differently than we do. As a result, data regarding 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:
● the impact of the COVID-19 pandemic;
● changes or anticipated changes to regulations related to some of the products we sell;
● consumer preferences, buying trends and overall political and 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 paying
customers;
● the success of our omni-channel strategy and our e-commerce platform;
● 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.
Opening new stores and acquiring store locations is also an important part of our growth strategy. For fiscal year
2021 we opened 10 stores and plan to open 10 locations in fiscal year 2022. While our target is to grow square footage at a
rate of 5% to 10% annually, we may deviate from this target if attractive opportunities are presented to open stores or
acquire new store locations outside of our target growth rate.
We also have been scaling our e-commerce platform and increasing sales through our website, www.sportsmans.com.
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We believe the key drivers to increasing our total net sales include:
● increasing our total gross square footage by opening new stores and through strategic acquisitions;
● 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
and continually high standards of customer service;
● growing our loyalty and credit card programs; and
● expanding our omni channel capabilities through larger assortment and inventory, expanded content and
expertise and better user experience.
Gross Margin
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 merchandise
and 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 apparel and footwear, increasing foot traffic within our stores and traffic to our website, improving buying
opportunities with our vendor partners and coordinating pricing strategies among our stores and our merchandise group.
Our ability to properly manage our inventory can also impact our gross margin. Successful inventory management ensures
we have sufficient high margin products in stock at all times to meet customer demand, while overstocking of items could
lead to markdowns in order to help a product sell. We believe that the overall growth of our business can also help improve
our gross margins, because increased merchandise volumes will enable us to maintain our strong relationships with our
vendors. We have, however, experienced increased transportation and logistics costs over the last two years. We believe
these increased costs will continue into fiscal year 2022 and beyond and could continue to put pressure on our gross profit
and gross margin.
Selling, General and Administrative Expenses
We closely manage our selling, general and administrative expenses. Our selling, general and administrative
expenses are comprised of payroll, rent and occupancy, depreciation and amortization, acquisition expenses, pre-opening
expenses and other operating expenses, including stock-based compensation expense. Pre-opening expenses include
expenses incurred in the preparation and opening of a new store location, such as payroll, travel and supplies, but do not
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
our personnel 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 continuing
growth. We also have experienced increased payroll expenses due to increased minimum wages and generally increasing
salaries and wages due to a competitive labor market over the last year, including payments of retention and increased
merit bonuses, and we expect for payroll expense to increase in fiscal year 2022. Fifty-three of our current stores were
impacted by minimum wage increases in fiscal year 2021 that have and will continue to increase our selling, general and
administrative expenses during fiscal year 2022.
Income from Operations
Income from operations is gross profit less selling, general and administrative expenses. We use income from
operations as an indicator of the productivity of our business and our ability to manage selling, general and administrative
expenses.
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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 are indicative of our ongoing expenses. In evaluating our business, we use Adjusted EBITDA and Adjusted
EBITDA margin as an additional measurement tool for purposes of business decision-making, including evaluating store
performance, developing budgets and managing expenditures. See “Non-GAAP Measures.”
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The following table summarizes key components of our results of operations as a percentage of net sales for the
periods indicated:
Results of Operations
Percentage of net sales:
Net sales
Cost of goods sold
Gross profit
Selling, general, and administrative expenses
Income from operations
Gain on bargain purchase
Merger termination payment
Interest expense
Income before income taxes
Income tax expense
Net income
Adjusted EBITDA
Fiscal Year Ended
January 29,
January 30,
February 1,
2022
2021
2020
100.0%
67.4
32.6
26.6
6.0
-
(3.7)
0.1
9.6
2.4
7.2%
9.1%
100.0%
67.2
32.8
24.3
8.5
(0.2)
-
0.3
8.4
2.1
6.3%
11.3%
100.0%
66.5
33.5
29.7
3.8
-
-
0.9
2.9
0.6
2.3%
6.7%
The following table shows our sales during the periods presented by department:
Department
Camping
Apparel
Fishing
Footwear
Hunting and Shooting
Optics, Electronics,
Accessories, and Other
Total
Product Offerings
Backpacks, camp essentials, canoes and kayaks,
coolers, outdoor cooking equipment, sleeping
bags, tents and tools
Camouflage, jackets, hats, outerwear,
sportswear, technical gear and work wear
Bait, electronics, fishing rods, flotation items,
fly fishing, lines, lures, reels, tackle and small
boats
Hiking boots, socks, sport sandals, technical
footwear, trail shoes, casual shoes, waders and
work boots
Ammunition, archery items, ATV accessories,
blinds and tree stands, decoys, firearms,
reloading equipment and shooting gear
Gift items, GPS devices, knives, lighting,
optics, two-way radios, and other license
revenue, net of revenue discounts
January 29,
2022
Fiscal year Ended
January 30,
2021
February 1,
2020
13.1%
12.7%
14.4%
8.4%
7.5%
9.3%
10.0%
9.9%
11.1%
6.8%
5.6%
7.5%
54.2%
57.6%
49.1%
7.5%
100.0%
6.7%
100.0%
8.6%
100.0%
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Fiscal Year 2021 Compared to Fiscal Year 2020
Net Sales. Net sales increased by $54.3 million, or 3.7%, to $1,506.1 million in fiscal year 2021 compared to
$1,451.8 million in fiscal year 2020. Our net sales increased largely due to the opening of 10 new stores since January 30,
2021 and strong growth in our e-commerce platform, partially offset by lower demand during the second, third, and fourth
quarters of fiscal 2021 compared to the same periods in fiscal 2020 in certain categories as we anniversaried the demand
driven in the prior year by the COVID-19 pandemic, social unrest and the pending presidential election. Stores that were
opened in fiscal year 2021 and stores that have been open for less than 12 months and were, therefore, not included in our
same store sales, contributed $92.6 million to net sales. Same store sales decreased by 2.2% for fiscal year 2021 compared
to fiscal year 2020, primarily driven by a decrease in our hunting and shooting department. The decrease in our hunting and
shooting department was driven by a decline in demand for firearms compared to fiscal year 2020 as we anniversaried the
increased demafnd due to the COVID-19 pandemic, social unrest and pending presidential election of the prior year and
supply chain constraints in ammunition. As of January 29, 2022, we had 112 stores included in our same store calculation.
All of our departments had increases in net sales for fiscal year 2021 compared to fiscal year 2020, with the
exception of our hunting and shooting department. Our footwear, apparel, camping, optics, electronics, and accessories,
and fishing departments saw increases in net sales of $21.8 million, $18.6 million, $13.2 million, $11.6 million and $7.7
million, respectively, for fiscal year 2021 compared to fiscal year 2020 due to increased demand and higher online sales.
Our hunting and shooting department decreased by 2.3% or $19.0 million for fiscal year 2021 compared to fiscal year 2020
as we anniversaried the demand driven in the prior year by the COVID-19 pandemic, social unrest and pending presidential
election. Within hunting, our firearm and ammunition categories saw decreases of $20.5 million, or 5.6%, and $18.6
million, or 7.3%, respectively, for fiscal year 2021 compared to fiscal year 2020, which decreases resulted from the drivers
of decreased demand and supply chain constraints discussed above.
With respect to same store sales, our footwear, apparel, optics, electronics and accessories, and camping departments
saw increased same store sales of 21.2%, 12.7%, 7.0%, and 2.6%, respectively. Our hunting and shooting and fishing
departments incurred decreases in same store sales of 8.7% and 0.6% respectively. Firearms same store sales decreased by
12.5% and ammunition same store sales decreased by 13.7% during fiscal year 2021 compared to fiscal year 2020.
Gross Profit. Gross profit increased by $13.8 million, or 2.9%, to $490.3 million for fiscal year 2021 from $476.5
million for fiscal year 2020. As a percentage of net sales, gross profit decreased to 32.6% for fiscal year 2021 compared to
32.8% for fiscal year 2020 due to higher freight costs. The higher freight costs were partially offset by higher product
margins and increased vendor incentives, which positively impacted gross margin. We expect higher transportation costs
to continue to impact our business during fiscal 2022 and beyond.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $46.0
million, or 13.0%, to $399.7 million for fiscal year 2021 from $353.7 million for fiscal year 2020. This increase was
primarily due to an increase in our payroll expense of $22.8 million, which mostly resulted from the opening of 10 new
store locations during fiscal year 2021, minimum wage increases impacting 53 of our stores in fiscal year 2021 and the
payment of $2.5 million in retention pay to certain senior employees. We also had increases in rent, other selling, general,
and administration expenses, depreciation and preopening expenses of $6.9 million, $4.5 million, $3.6 million and $2.2
million respectively, each primarily related to the opening of 10 new store locations during fiscal year 2021. The increase
in other selling, general and administrative expenses was primarily due to increased efforts in marketing. Additionally,
acquisitions costs increased to $9.7 million with respect to the terminated Merger Agreement with the Great Outdoors
Group, which was terminated on December 2, 2021. Selling, general and administrative expenses increased to 26.5% of
net sales in fiscal year 2021 compared to 24.4% of net sales in fiscal year 2020, primarily due to the normalization of our
business after the impacts of the COVID-19 pandemic, social unrest and pending presidential election experienced in the
prior year.
Interest Expense. Interest expense decreased by $2.1 million, or 60.6%, to $1.4 million in fiscal year 2021 from $3.5
million for fiscal year 2020. Interest expense decreased primarily as a result of our lower debt balances during fiscal year
2021 compared to fiscal year 2020, including our repayment of our term loan and borrowings outstanding under our
revolving credit facility in fiscal year 2020.
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Other Income. Other income increased by $55.0 million in fiscal year 2021 from $2.2 million for fiscal year 2020
due to the receipt of a $55.0 million payment in connection with the termination of the Merger Agreement with Great
Outdoors Group.
Income Taxes. We recorded an income tax expense of $35.8 million for fiscal year 2021 compared to income tax
expense of $30.1 million for fiscal year 2020. Our effective tax rate remained flat from fiscal year 2020 at 24.8% in 2021.
Fiscal Year 2020 Compared to Fiscal Year 2019
Net Sales. Net sales increased by $565.4 million, or 63.8%, to $1,451.8 million in fiscal year 2020 compared to
$886.4 million in fiscal year 2019. Our net sales increased due to a variety of reasons including; increased outdoor activity
participation, demand driven by the change in consumer behavior associated with the COVID-19 pandemic, increased
demand due to the presidential election and social unrest, increased demand driven by the exit of competitors and market
share gains due to increased participation in outdoor activities, and strong growth in our e-commerce platform. Stores that
were opened in fiscal year 2020 and stores that have been open for less than 12 months and were, therefore, not included in
our same store sales, contributed $155.3 million to net sales. Same store sales increased by 48.3% for fiscal year 2020
compared to fiscal year 2019, primarily driven by increases in our hunting and shooting department due to the drivers of
increased demand discussed above. Existing stores that were included in same store sales generated $408.6 million in
additional net sales in fiscal year 2020 over fiscal year 2019.
All of our departments had increases in net sales for fiscal year 2020 compared to fiscal year 2019, led by our
hunting and shooting department with an increase in net sales of $397.1 million, or 91.1%. Our camping, fishing, apparel,
footwear, and optics, electronics, and accessories departments also had increases in net sales of $57.4 million, $44.8
million, $25.7 million, $14.6 million and $27.7 million, respectively, for fiscal year 2020 compared to fiscal year 2019 due
to increased traffic within our stores and higher online sales. Within hunting, our firearm and ammunition categories saw
increases of $194.8 million, or 115.5%, and $122.6 million, or 93.7%, respectively, for fiscal year 2020 compared to fiscal
year 2019, which increases resulted from the drivers of increased demand discussed above.
Each of our departments had increases in same store sales for fiscal year 2020 compared to fiscal year 2019, led by
our hunting and shooting department with an increase in same store sales of 70.0%. Our camping, fishing, optics,
electronics and accessories, footwear, and apparel departments had increases in same store sales of 34.0%, 30.8%, 28.9%,
18.5%, and 13.0% respectively, for fiscal year 2020 compared to fiscal year 2019. As of January 30, 2021, we had 102
stores included in our same store sales calculation.
Gross Profit. Gross profit increased by $179.8 million, or 60.6%, to $476.4 million for fiscal year 2020 from $296.6
million for fiscal year 2019. As a percentage of net sales, gross profit decreased to 32.8% for fiscal year 2020 compared to
33.5% for fiscal year 2019 due to the change in product mix as a result of the majority of revenue being generated from
lower margin categories such as firearms and ammunition and a channel mix shift to higher e-commerce driven sales
causing increased freight costs. The gross margin decline was partially offset by higher product margins, volume
incentives, and other adjustments, which positively impacted gross margin.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $90.5
million, or 34.4%, to $353.7 million for fiscal year 2020 from $263.2 million for fiscal year 2019. This increase was
primarily due to an increase in our payroll expense of $51.9 million, which mostly resulted from the opening of 10 new or
acquired store locations during fiscal year 2020, minimum wage increases impacting 62 of our stores in fiscal year 2020
and the payment of $6.5 million in hazard pay. We also had increases in other selling, general, and administration expenses,
rent, and depreciation of $24.8 million, $8.2 million, and $3.3 million, respectively, each primarily related to the opening or
acquiring of 10 new store locations during fiscal year 2020. The increase in other selling, general and administrative
expenses was primarily due to increased credit card fees. Additionally, we incurred increased acquisitions costs of $3.0
million with respect to our proposed merger with the Great Outdoors Group, which was announced on December 21, 2020.
Selling, general and administrative expenses decreased to 24.3% of net sales in fiscal year 2020 compared to 29.7% of net
sales in fiscal year 2019, primarily because of the significant increase in net sales we experienced in fiscal year 2020
compared to fiscal year 2019.
Interest Expense. Interest expense decreased by $4.5 million, or 56.2%, to $3.5 million in fiscal year 2020 from $8.0
million for fiscal year 2019. Interest expense decreased primarily as a result of our lower debt balances during fiscal
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year 2020 compared to fiscal year 2019, including our repayment of our term loan and all outstanding amounts under our
revolving credit facility during fiscal year 2020.
Income Taxes. We recorded an income tax expense of $30.1 million for fiscal year 2020 compared to income tax
expense of $5.3 million for fiscal year 2019. Our effective tax rate changed from fiscal year 2019 of 20.6% to 24.8% in
2020 primarily due to discrete items recognized in 2019 relating to prior year tax credits and changes in our estimated
deferred state tax rate which did not repeat in 2020.
Seasonality
Due to the openings of hunting season across the country and consumer holiday buying patterns, net sales are
typically higher in the third and fourth fiscal quarters than in the first and second fiscal quarters. We also incur additional
expenses in the third and fourth fiscal quarters due to higher sales volume and increased staffing in our stores. We
anticipate our net sales will continue to reflect this seasonal pattern.
The timing of our new retail store openings also may have an impact on our quarterly results. First, we incur certain
non-recurring expenses related to opening each new retail store, which are expensed as they are incurred. Second, most
store expenses generally vary proportionately with net sales, but there is also a fixed cost component, which includes
occupancy costs. These fixed costs typically result in lower store profitability during the initial period after a new retail
store opens. Due to both of these factors, new retail store openings may result in a temporary decline in operating profit, in
dollars and/or as a percentage of net sales.
Weather conditions affect outdoor activities and the demand for related apparel and equipment. Customers’ demand
for our products, and, therefore, our net sales, can be significantly impacted by weather patterns on a local, regional and
national basis.
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Liquidity and Capital Resources
Overview; Sources and Uses of Cash
Our primary cash requirements are for seasonal working capital needs and capital expenditures related to opening
and acquiring new store locations. For both the short term and the long term, 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 cash on hand, cash generated by operating activities
and funds available under our revolving credit facility will be sufficient to finance our operating activities for at least the
next twelve months and beyond. In addition, on December 2, 2021, we received a $55.0 million cash payment from Great
Outdoors Group in connection with the termination of the Merger Agreement. See above under “Overview” for additional
information.
Material Cash Requirements
Our material cash requirements are primarily for opening and acquiring new store locations, along with our general
operating expenses and other expenses discussed below.
Capital Expenditures. For fiscal year 2021, we incurred approximately $53.5 million in capital expenditures
primarily related to the construction of new stores and the refurbishment of existing stores during the period. We expect
capital expenditures between $48 million and $55 million for fiscal year 2022 primarily to refurbish some of our existing
stores and to open 10 new stores in fiscal year 2022. We intend to fund these capital expenditures with our operating cash
flows, cash on hand and funds available under our revolving credit facility. Other investment opportunities, such as
potential strategic acquisitions or store expansion rates in excess of those presently planned, may require additional
funding.
Principal and Interest Payments. We maintain a $250.0 million revolving credit facility. As of January 29, 2022,
$77.0 million was outstanding under the revolving credit facility. Assuming no additional repayments or borrowings on
our revolving credit facility after January 29, 2022 our interest payments would be approximately $1.1 million for fiscal
year 2022 based on the interest rate at January 29, 2022. See below under “Indebtedness” for additional information
regarding our revolving credit facility, including the interest rate applicable to any borrowing under such facility.
Operating Lease Obligations. Lease commitments consist principally of leases for our retail stores, corporate office
and distribution center. Our leases often include options which allow us to extend the terms beyond the initial lease term.
For 2022, our expected operating lease payments will be $63.1 million and our total committed lease payments are $384.3
million as of January 29, 2022. Other operating lease obligations consist of distribution center equipment. Additional
information regarding our operating leases is available in Note 6, Leases, of the Notes to Consolidated Financial
Statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K
Purchase Obligations. In the ordinary course of business, we enter into arrangements with vendors to purchase
merchandise in advance of expected delivery. We or the vendor can generally terminate the purchase orders at any time.
These purchase orders do not contain any termination payments or other penalties if cancelled.
Share Repurchase Authorization. In addition, our board recently authorized a share repurchase program to allow for
the repurchase of up to $75.0 million of outstanding shares of our common stock for the period from March 31, 2022 to
March 31, 2023. We may repurchase shares of our common stock at any time or from time to time, without prior notice,
subject to market conditions and other considerations. Our repurchases may be made through Rule 10b5-1 plans,
accelerated share repurchase transactions, open market purchases, privately negotiated transactions, tender offers, block
purchases or other transactions. We intend to fund repurchases under the repurchase program using cash on hand or
available borrowings under its revolving credit facility. We have no obligation to repurchase any shares of our common
stock under the share repurchase program and we may modify, suspend or discontinue it at any time.
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Cash Flows
Cash flows from operating, investing and financing activities are shown in the following table:
Cash flows (used in) provided by operating activities
Cash flows used in investing activities
Cash provided by (used in) financing activities
Cash and cash equivalents at end of period
Fifty-Two Weeks Ended
January 29,
2022
January 30,
2021
(in thousands)
$ (21,626) $ 238,816
(26,227)
(148,749)
65,525
(53,452)
66,571
57,018
Net cash used in operating activities was $21.6 million for fiscal year 2021, compared to cash provided by operating
activities of $238.8 million for fiscal year 2020, a change of approximately $260.4 million. The decrease in our cash flows
from operating activities was primarily the result of our buildup of inventory during fiscal year 2021 and a reduction in
accounts payable. We focused on rebuilding our inventory during fiscal year 2021 and consider our inventory position to
be a strength heading into 2022.
Net cash used in investing activities was $53.5 million for fiscal year 2021 compared to $26.2 million for fiscal year
2020. For fiscal year 2021, we incurred capital expenditures related to the construction of new stores and the refurbishment
of existing stores. Our cash flows used in investing activities in fiscal year 2020 primarily related to costs incurred in
connection with opening and acquiring new stores.
Net cash provided in financing activities was $66.6 million for fiscal year 2021 compared to net cash used in
financing activities of $148.7 million for fiscal year 2020. During fiscal year 2021, we had an increase in borrowings
under our revolving line of credit, primarily to pay for the increased capital expenditures associated with the opening of
new stores and refurbishing of existing stores and the buildup of our inventory.
Indebtedness
We maintain a $250.0 million revolving credit facility. As of January 29, 2022, $77.0 million was outstanding under
the revolving credit facility. Borrowings under our revolving credit facility are subject to a borrowing base calculation.
Our revolving credit facility is governed by an amended and restated credit agreement with a consortium of banks led by
Wells Fargo Bank, National Association (“Wells Fargo”). The revolving credit facility matures on May 23, 2023. As of
January 29, 2022, we had $146.1 million available for borrowing, subject to certain borrowing base restrictions, and $2.0
million in stand-by commercial letters of credit.
Borrowings under our revolving credit facility bear interest based on either, at our option, the base rate or LIBOR, in
each case plus an applicable margin. The base rate is the higher of (1) Wells Fargo’s prime rate, (2) the federal funds 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 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 LIBOR loans.
Interest on base rate loans is payable monthly in arrears and interest on LIBOR loans is payable based on the LIBOR
interest period selected by us, which can be 7, 30, 60 or 90 days. All amounts that are not paid when due under our
revolving credit facility will accrue interest at the rate otherwise applicable plus 2.00% until such amounts are paid in full.
Each of the subsidiaries of Holdings is a borrower under the revolving credit facility and Holdings guarantees all
obligations under the revolving credit facility. All obligations under the revolving credit facility are secured by a lien on
substantially all of Holdings’ tangible and intangible assets and the tangible and intangible assets of all of Holdings’
subsidiaries, including a pledge of all capital stock of each of the Holdings’ subsidiaries. The lien securing the obligations
under the revolving credit facility is a first priority lien as to certain liquid assets, including cash, accounts receivable,
deposit accounts and inventory. In addition, our credit agreement contains provisions that enable Wells Fargo to require us
to maintain a lock-box, or similar arrangement, for the collection of all receipts.
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We may be required to make mandatory prepayments under the revolving credit facility in the event of a disposition
of certain property or assets, in the event of receipt of certain insurance or condemnation proceeds, upon the issuance of
certain debt or equity securities, upon the incurrence of certain indebtedness for borrowed money or upon the receipt of
certain payments not received in the ordinary course of business.
Our revolving credit facility requires us to maintain a minimum availability at all times of not less than 10% of the
gross borrowing base. In addition, the credit agreement governing our revolving credit facility contains customary
affirmative and negative covenants, including covenants that limit our ability to incur, create or assume certain
indebtedness, to create, incur or assume certain liens, to make certain investments, to make sales, transfers and dispositions
of certain property and to undergo certain fundamental changes, including certain mergers, liquidations and consolidations.
The credit agreement also contains customary events of default. As of January 29, 2022, we were in compliance with all
covenants under the revolving credit facility.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with accounting principles generally accepted in the United
States of America (“GAAP”). In connection with the preparation of the financial statements, we are required to make
assumptions, make estimates and apply judgment that affect the reported amounts of assets, liabilities, revenue, expenses
and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and
other factors that we believe to be relevant at the time the consolidated financial statements are prepared. On a regular
basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are
presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with
certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Our significant accounting policies are discussed in Note 2 to our Consolidated Financial Statements elsewhere in
this 10-K. We believe that the following accounting policies are the most critical to aid in fully understanding and
evaluating our reported financial results.
Revenue Recognition
We operate solely as an outdoor retailer, which includes both retail stores and an e-commerce platform, that offers
a broad range of products in the United States and online. Generally, all revenues are recognized when control of the
promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods.
Accordingly, we implicitly enter into a contract with customers to deliver merchandise inventory at the point of sale.
Collectability is reasonably assured since we only extend immaterial credit purchases to certain municipalities.
Substantially all of our revenue is for single performance obligations for the following distinct items:
● Retail store sales
● e-commerce sales
● Gift cards and loyalty reward program
For performance obligations related to retail store and e-commerce sales contracts, we typically transfer control,
for retail stores, upon consummation of the sale when the product is paid for and taken by the customer and, for e-
commerce sales, when the products are tendered for delivery to the common carrier.
The transaction price for each contract is the stated price on the product, reduced by any stated discounts at that
point in time. We do not engage in sales of products that attach a future material right which could result in a separate
performance obligation for the purchase of goods in the future at a material discount. The implicit point-of-sale contract
with the customer, as reflected in the transaction receipt, states the final terms of the sale, including the description,
quantity, and price of each product purchased. Payment for our contracts is due in full upon delivery. The customer agrees
to a stated price implicit in the contract that does not vary over the contract.
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The transaction price relative to sales subject to a right of return reflects the amount of estimated consideration to
which we expect to be entitled. This amount of variable consideration included in the transaction price, and measurement
of net sales, is included in net sales only to the extent that it is probable that there will be no significant reversal in a future
period. Actual amounts of consideration ultimately received may differ from our estimates. The allowance for sales returns
is estimated based upon historical experience and a provision for estimated returns is recorded as a reduction in sales in the
relevant period. The estimated merchandise inventory cost related to the sales returns is recorded in prepaid expenses and
other. If actual results in the future vary from our estimates, we adjust these estimates, which would affect net sales and
earnings in the period such variances become known.
Contract liabilities are recognized primarily for gift card sales and our loyalty reward program. Cash received
from the sale of gift cards is recorded as a contract liability in accrued expenses, and we recognize revenue upon the
customer’s redemption of the gift card. Gift card breakage is recognized as revenue in proportion to the pattern of customer
redemptions by applying a historical breakage rate of 4.0% when no escheat liability to relevant jurisdictions exists. We do
not sell or provide gift cards that carry expiration dates. We recognized revenue for the breakage of loyalty reward points as
revenue in proportion to the pattern of customer redemption of the points by applying a historical breakage rate of 54%.
As it relates to e-commerce sales, we account for shipping and handling as fulfillment activities, and not a separate
performance obligation. Accordingly, we recognize revenue for only one performance obligation, the sale of the product,
at the shipping point (when the customer gains control). Revenue associated with shipping and handling is not material.
The costs associated with fulfillment are recorded in costs of goods sold.
We offer promotional financing and credit cards issued by a third-party bank that manages and directly extends credit
to our customers. We provide a license to our brand and marketing services, and we facilitate credit applications in our
stores and online. The banks are the sole owners of the accounts receivable generated under the program and, accordingly,
we do not hold any customer receivables related to these programs and act as an agent in the financing transactions with
customers. We are eligible to receive a profit share from certain of our banking partners based on the annual performance
of their corresponding portfolio, and we receive monthly payments based on forecasts of full-year performance. This is a
form of variable consideration. We record such profit share as revenue over time using the most likely amount method,
which reflects the amount earned each month when it is determined that the likelihood of a significant revenue reversal is
not probable, which is typically monthly. Profit-share payments occur monthly, shortly after the end of each program
month.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-
producing transaction, that are collected by us from a customer, are excluded from revenue.
Sales returns
We estimate a reserve for sales returns and record the respective reserve amounts, including a right to return asset
when a product is expected to be returned and resold. Historical experience of actual returns, and customer return rights are
the key factors used in determining the estimated sales returns.
Inventory Valuation
Inventory is measured at the lower of cost or net realizable value. Cost is determined using the weighted average cost
method. We estimate a provision for inventory shrinkage based on our historical inventory accuracy rates as determined by
periodic cycle counts. The allowance for damaged goods from returns is based upon our historical experience. We also
adjust inventory for obsolete or slow-moving inventory based on inventory productivity reports and by specific
identification of obsolete or slow-moving inventory. Had our estimated inventory reserves been lower or higher by 10% as
of January 29, 2022, our cost of sales would have been correspondingly lower or higher by approximately $0.5 million.
Valuation of Long-Lived Assets
We review our long-lived assets with definite lives for impairment whenever events or changes in circumstances may
indicate that the carrying value of an asset may not be recoverable. We use an estimate of the future undiscounted net cash
flows of the related asset or group of assets over their remaining useful lives in measuring whether the assets are
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recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized
for the amount by which the carrying amount exceeds the estimated fair value of the asset. Impairment of long-lived assets
is assessed at the lowest levels for which there are identifiable cash flows that are independent 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 year ended January 29, 2022. During the year ended
January 30, 2021, the Company recorded an impairment charge of $1.0 million relating to the closure of one store.
Leases
We have operating leases for the Company’s retail stores facilities, distribution center, and corporate office. In
accordance with ASC 842, which we adopted on February 3, 2019, we determine if an arrangement is a lease at inception.
Operating lease liabilities are calculated using the present value of future payments and recognized at the commencement
date based on the present value of lease payments over the reasonably certain lease term. As our leases generally do not
provide an implicit rate, we used an estimated incremental borrowing rate (“IBR”) to determine the present value of lease
payments. The IBR is determined by using our credit rating to develop a yield curve that approximates our market risk
profile.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see Note 2 to our Consolidated Financial Statements
included elsewhere in this report.
Non-GAAP Measures
In evaluating our business, we use Adjusted EBITDA and Adjusted EBITDA margin as supplemental measures of
our operating performance. 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 are indicative of our ongoing expenses. Adjusted EBITDA excludes pre-opening expenses
because we do not believe 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 opened during any given period. Adjusted EBITDA margin means, for any period, the Adjusted EBITDA for
that period divided by the net sales for that period. We consider Adjusted EBITDA and Adjusted EBITDA margin
important supplemental measures of our operating performance and believe they are frequently used by analysts, investors
and other interested parties in the evaluation of companies in our industry. Other companies in our industry, however, may
calculate Adjusted EBITDA and Adjusted EBITDA margin differently than we do. Management also uses Adjusted
EBITDA and Adjusted EBITDA margin as additional measurement tools for purposes of business decision-making,
including evaluating store performance, developing budgets and managing expenditures. Management believes Adjusted
EBITDA and Adjusted EBITDA margin allow investors to evaluate our operating performance and compare our results of
operations from period to period on a consistent basis by excluding 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 or
liquidity presented in accordance with GAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessing
our operating performance, you should not consider Adjusted EBITDA in isolation or as a substitute for net income or
other consolidated income statement data prepared in accordance with GAAP. Some of these limitations include, but are
not limited to:
● Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or
contractual 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 directly
comparable to the results of other companies in our industry;
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● Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or
principal payments, on our debt; and
● Adjusted EBITDA does not reflect income taxes or the cash requirements for any tax payments.
A reconciliation of net income to Adjusted EBITDA is set forth below.
January 29,
2022
Fifty-Two Weeks Ended
January 30,
2021
February 1,
2020
Net income
Interest expense
Income tax expense (benefit)
Depreciation and amortization
Stock-based compensation expense (1)
Pre-opening expenses (2)
Hazard pay (3)
Acquisition costs (4)
Bargain purchase (5)
Legal accrual (6)
Store closing write-off (7)
Executive transition costs (8)
Retention pay (9)
Merger termination payment (10)
Adjusted EBITDA
Net sales
Net income margin (11)
Adjusted EBITDA margin (11)
$
$
108,470
1,379
35,769
26,226
3,328
4,098
—
9,733
—
—
—
—
2,549
(55,000)
136,552
$
$
91,380
3,506
30,080
21,830
3,302
1,942
6,526
3,710
(2,218)
2,125
1,039
—
—
—
163,222
$
$
1,506,072
7.2%
9.1%
1,451,767
6.3%
11.2%
20,215
7,995
5,254
19,321
2,104
2,695
—
662
—
—
—
770
—
—
59,016
886,401
2.3%
6.7%
(1) Stock-based compensation expense represents non-cash expenses related to equity instruments granted to employees
under our 2019 Performance Incentive Plan and Employee Stock Purchase Plan.
(2) Pre-opening expenses include expenses incurred in the preparation and opening of a new store location, such as
payroll, travel and supplies, but do not include the cost of the initial inventory or capital expenditures required to open
a location.
(3) Expense relating to bonuses and increased wages paid to front-line and back office associates due to the COVID-19
pandemic.
(4) Includes $237 of expenses incurred relating to the acquisition of cash, inventory, furniture, fixtures, and equipment,
and certain other assets related to Field & Stream stores operated by DICK’S in fiscal year 2020. Also includes $3,473
and $9,733 of expenses incurred relating to the proposed merger with Great Outdoors Group on December 21, 2020,
respectively, for fiscal year 2020 and fiscal year 2021.
(5) Excess of the fair value over the purchase price of tangible assets acquired in connection with the Field & Stream
stores acquired during fiscal year 2020. See Note 3 to the financial statements for additional information.
(6) Accrual relating to pending labor litigation in the state of California.
(7) Costs and impairments recorded relating to the closure of one store during the first quarter of 2020. These costs were
recorded as a component of selling, general, and administration expenses on the condensed consolidated statement of
operations.
(8) Costs incurred for the recruitment and hiring of various key members of our senior management team.
(9) Expense relating to retention bonuses paid to certain senior employees in response to the terminated merger with Great
Outdoors Group.
(10) Represents a one-time $55 million termination payment received in connection with the terminated merger with Great
Outdoors Group.
(11) We calculate net income margin as net income divided by net sales and we define adjusted EBITDA margin as
adjusted EBITDA divided by net sales
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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 loan
carry floating interest rates that are tied to LIBOR, the federal funds rate and the prime rate, and, therefore, our income and
cash flows will be exposed to changes in interest rates to the extent that we do not have effective hedging arrangements in
place. We historically have not used interest rate swap agreements to hedge the variable cash flows associated with the
interest on our credit facilities. Based on a sensitivity analysis at January 29, 2022, assuming the amount outstanding under
our revolving credit facility would be outstanding for a full year, a 100 basis point increase in interest rates would have
increased our interest expense by $0.8 million. We do not use derivative financial instruments for speculative or trading
purposes. However, this does not preclude our adoption of specific hedging strategies in the future.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – GRANT THORNTON LLP
(PCAOB ID Number 248)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – KPMG LLP (PCAOB ID
Number 185)
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
51
Page
52
53
54
55
56
57
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Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Sportsman’s Warehouse Holdings, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Sportsman’s Warehouse Holdings, Inc. (a Delaware
corporation) and subsidiaries (the “Company”) as of January 29, 2022 and January 30, 2021, the related consolidated
statements of income, stockholders’ equity, and cash flows for each of the two fiscal years in the period ended January 29,
2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of January 29, 2022 and January 30, 2021,
and the results of its operations and its cash flows for each of the two fiscal years in the period ended January 29, 2022, in
conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of January 29, 2022, based on criteria
established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (“COSO”), and our report dated March 30, 2022 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations 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
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our
opinion.
Critical audit matter
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that
there are no critical audit matters.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2020.
Salt Lake City, Utah
March 30, 2022
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Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Sportsman’s Warehouse Holdings, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of income, stockholders’ equity, and cash flows of Sportsman’s
Warehouse Holdings, Inc. and subsidiaries (the Company) for the year ended February 1, 2020 and the related notes
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in
all material respects, the results of operations of the Company and its cash flows for the year ended February 1, 2020, in
conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ KPMG LLP
We served as the Company’s auditor from 2002 to 2020.
Salt Lake City, Utah
April 9, 2020
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SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Amounts in Thousands, Except Per Share Data
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Merchandise inventories
Prepaid expenses and other
Total current assets
Operating lease right of use asset
Property and equipment, net
Goodwill
Definite lived intangibles, net
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued expenses
Income taxes payable
Operating lease liability, current
Revolving line of credit
Total current liabilities
Long-term liabilities:
Deferred income taxes
Operating lease liability, noncurrent
Total long-term liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 20,000 shares authorized; 0 shares issued and outstanding
Common stock, $.01 par value; 100,000 shares authorized; 43,880 and 43,623 shares
issued and outstanding, respectively
Additional paid-in capital
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
January 29,
2022
January 30,
2021
57,018
1,937
386,560
21,955
467,470
243,047
128,304
1,496
264
840,581
58,916
109,012
9,500
40,924
66,054
284,406
5,779
236,227
242,006
526,412
$
65,525
581
243,434
15,113
324,653
235,262
99,118
1,496
289
$ 660,818
$
77,441
109,056
4,917
36,014
—
227,428
434
228,296
228,730
456,158
—
—
439
90,851
222,879
314,169
840,581
436
89,815
114,409
204,660
$ 660,818
$
$
$
$
See accompanying notes to the consolidated financial statements
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SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Amounts in Thousands, Except Per Share Data
Net sales
Cost of goods sold
Gross profit
Selling, general, and administrative expenses
Income from operations
Other (income) expense:
Bargain purchase gain
Merger termination payment
Interest expense
Income before income taxes
Income tax expense
Net income
Income per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
$
$
$
$
January 29,
2022
1,506,072
1,015,775
490,297
399,678
90,619
—
(55,000)
1,380
144,239
35,769
108,470
2.47
2.44
43,827
44,543
$
$
$
$
Fiscal Year Ended
January 30,
2021
1,451,767
975,313
476,454
353,706
122,748
(2,218)
—
3,506
121,460
30,080
91,380
2.10
2.06
43,525
44,430
$
$
$
$
February 1,
2020
886,401
589,768
296,633
263,169
33,464
—
—
7,995
25,469
5,254
20,215
0.47
0.46
43,166
43,588
See accompanying notes to the consolidated financial statements
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SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Amounts in Thousands
Balance at February 2, 2019
Impact of change for ASC 842 adoption
Vesting of restricted stock units
Payment of withholdings on restricted
stock units
Issuance of common stock for cash per
employee stock purchase plan
Stock based compensation
Net income
Balance at February 1, 2020
Vesting of restricted stock units
Payment of withholdings on restricted
stock units
Issuance of common stock for cash per
employee stock purchase plan
Stock based compensation
Net income
Balance at January 30, 2021
Vesting of restricted stock units
Payment of withholdings on restricted
stock units
Stock based compensation
Net income
Balance at January 29, 2022
Common Stock
Shares
42,978
—
198
$
Amount
430
—
2
—
120
—
—
43,296
255
—
72
—
—
43,623
257
—
—
—
43,880
$
$
$
—
1
—
—
433
3
—
—
—
—
436
3
—
—
—
439
Restricted nonvoting
common stock
Shares
Amount
— $
—
—
Additional
paid-in-
capital
Amount
— $ 84,671
—
—
(2)
—
Accumulated
(deficit)
earnings
Amount
Total
stockholders'
equity
Amount
$
(6,441) $ 78,660
9,255
9,255
—
—
—
—
(369)
—
(369)
—
—
—
— $
—
402
—
2,104
—
—
—
— $ 86,806
(3)
—
—
—
20,215
$ 23,029
—
403
2,104
20,215
$ 110,268
—
—
—
(870)
—
(870)
—
—
—
— $
—
—
—
—
— $
—
580
—
3,302
—
—
— $ 89,815
(3)
—
—
—
91,380
$ 114,409
—
580
3,302
91,380
$ 204,660
—
(2,289)
—
3,328
—
—
—
— $ 90,851
—
—
108,470
$ 222,879
(2,289)
3,328
108,470
$ 314,169
See accompanying notes to the consolidated financial statements
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SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in Thousands
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation of property and equipment
Amortization of deferred financing fees
Amortization of definite lived intangible
Loss (gain) on asset dispositions
Gain on bargain purchase
Noncash lease expense
Deferred income taxes
Stock-based compensation
Change in operating assets and liabilities, net of amounts acquired:
Accounts receivable, net
Operating lease liabilities
Merchandise inventories
Prepaid expenses and other
Accounts payable
Accrued expenses
Income taxes payable and receivable
Net cash (used in) provided by operating activities
Cash flows from investing activities:
Purchase of property and equipment, net of amounts acquired
Acquisition of Field and Stream stores, net of cash acquired
Proceeds from deemed sale-leaseback transactions
Proceeds from sale of property and equipment
Net cash used in investing activities
Cash flows from financing activities:
Net borrowings/ (payments) on line of credit
(Decrease) increase in book overdraft, net
Proceeds from issuance of common stock per employee stock purchase plan
Payment of withholdings on restricted stock units
Principal payments on long-term debt
Net cash provided by (used in) financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized
Income taxes, net of refunds
Supplemental schedule of noncash activities:
Noncash change in operating lease right of use asset and operating lease liabilities from
remeasurement of existing leases and addition of new leases
Purchases of property and equipment included in accounts payable and accrued expenses
Fiscal Year Ended
January 29,
2022
January 30, February 1,
2021
2020
$
108,470 $
91,380 $
20,215
26,200
251
26
—
—
31,536
5,345
3,328
(1,356)
(26,479)
(143,126)
(7,093)
(20,382)
(2,929)
4,583
(21,626)
(53,452)
—
—
—
(53,452)
21,801
535
28
804
(2,218)
25,307
(919)
3,302
323
(24,390)
39,938
(2,633)
37,812
42,017
5,729
238,816
(19,754)
(6,473)
—
—
(26,227)
66,054
2,806
—
(2,289)
—
66,571
(8,507)
65,525
57,018 $
(116,078)
(2,381)
580
(870)
(30,000)
(148,749)
63,840
1,685
65,525 $
19,294
339
26
(311)
—
27,009
710
2,104
(655)
(28,374)
20,247
(1,571)
12,709
8,774
(2,650)
77,866
(30,372)
(28,536)
9,533
311
(49,064)
(28,228)
5,530
403
(369)
(6,000)
(28,664)
138
1,547
1,685
1,380 $
25,841
3,506 $
25,304
7,945
7,292
39,437 $
39,119 $
66,095
3,821 $
1,887 $
1,112
$
$
$
$
See accompanying notes to the consolidated financial statements
57
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SPORTSMAN’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 January 29, 2022, the Company operated 122 stores in 29 states.
(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
accepted accounting 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., and Minnesota 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 2021
ended January 29, 2022 and contained 52 weeks of operation. Fiscal year 2020 ended January 30, 2021 and contained 52
weeks of operations. Fiscal year 2019 ended February 1, 2020 and contained 52 weeks of operations.
Seasonality
The Company’s business is generally seasonal, with a significant portion of total sales occurring during the third and
fourth 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
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. 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 the
Chief Executive Officer. The CODM reviews financial information presented on a consolidated and individual store and
cost center basis, for purposes of allocating resources and evaluating financial performance. The Company’s stores
typically have similar square footage and offer essentially the same general product mix. The Company’s core customer
demographic remains 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. Given that the
stores have the same economic characteristics, the individual stores are aggregated into one single operating and reportable
segment.
Cash and Cash Equivalents
The Company considers cash on hand in stores and operating accounts as cash. Checks issued pending bank
clearance that result in overdraft balances for accounting purposes are classified as accrued expenses in the
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accompanying consolidated balance sheets. Cash equivalents consist of short-term money market securities with maturities
less than three months from the time of investment.
In accordance with the terms of a financing agreement (Note 9), the Company maintains depository accounts with
two banks in a lock-box or similar arrangement. Deposits into these accounts are used to reduce the outstanding balance on
the line of credit as soon as the respective bank allows the funds to be transferred to the financing company. At January 29,
2022 and January 30, 2021, the combined balance in these accounts was $10,923 and $13,552, respectively. Accordingly,
for 2021 these amounts have been classified as a reduction in the line of credit as if the transfers had occurred on January
29, 2022. For 2020, there was no remaining balance on the line of credit so these amounts were included in Cash as of
January 30, 2021.
Accounts Receivable
The Company offers credit terms on the sale of products to certain government and corporate retail customers and
requires no collateral from these customers. The Company performs ongoing credit evaluations of its customers’ financial
condition and maintains an allowance for doubtful accounts receivable based upon historical experience and a specific
review of accounts receivable at the end of each period. Actual bad debts may differ from these estimates and the
difference could be significant. At January 29, 2022 and January 30, 2021, the Company had no allowance for doubtful
accounts receivable.
Merchandise Inventories
The Company measures its inventory at the lower of cost or net realizable value. Cost is determined using the
weighted average cost method. The Company estimates a provision for inventory shrinkage based on its historical
inventory accuracy rates as determined by periodic cycle counts. The Company also adjusts inventory for obsolete, slow
moving, or damaged inventory based on inventory activity thresholds and by specific identification of certain slow moving
or obsolete inventory. The inventory write downs for shrinkage, damage, or obsolescence totaled $8,405 and $4,745 at
January 29, 2022 and January 30, 2021, respectively.
Property and Equipment
Property and equipment are recorded at cost. Leasehold improvements primarily include the cost of improvements
funded by landlord incentives or allowances. Maintenance, repairs, minor renewals, and betterments are expensed as
incurred. Major renewals and betterments are capitalized. Upon retirement or disposal of assets, the cost and accumulated
depreciation and amortization are eliminated from the respective accounts and the related gains or losses are credited or
charged to earnings.
Depreciation and amortization of property and equipment is computed using the straight-line method over the
estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the useful lives of
the improvements or the term of the lease. Furniture, fixtures, and equipment, are depreciated over useful lives ranging
from 3 to 10 years.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets with definite lives for impairment whenever events or changes in
circumstances may indicate that the carrying value of an asset may not be recoverable. The Company uses an estimate of
the future undiscounted net cash flows 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 amount by which the carrying amount exceeds the estimated fair value of the asset.
Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are
independent 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. An impairment charge of $1,039 relating to long-lived assets of a closed store was
recorded during the fiscal year ended January 30, 2021. There were no impairment charges relating to long-lived assets that
were recorded during the fiscal years ended January 29, 2022 and February 1, 2020.
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Goodwill
At least annually, during the fourth quarter, or when events and circumstances warrant an evaluation, the
Company performs its impairment assessment of goodwill. This assessment permits an entity to initially perform a
qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount
before applying the quantitative goodwill impairment test. If an entity concludes that it is not more likely than not that the
fair value of a reporting unit is less than its carrying amount, it would not need to perform the impairment test for the
reporting unit.
If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying
amount, the impairment analysis is performed, which incorporates a fair-value based approach. The Company determines
the fair value of its reporting units based on discounted cash flows and market approach analyses as considered necessary.
The Company considers factors such as the economy, reduced expectations for future cash flows coupled with a decline in
the market price of its stock and market capitalization for a sustained period as indicators for potential goodwill
impairment. If the reporting unit’s carrying amount exceeds its fair value, the Company will record an impairment charge
based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.
No impairment charge to goodwill was recorded during the fiscal years ended January 29, 2022, January 30, 2021 and
February 1, 2020.
Prepaid Expenses and Other
Prepaid expenses and other primarily consists of prepaid expenses, vendor rebates receivable, vendor advertising
receivables, right of return assets, and miscellaneous deposits.
Leases
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet assets and liabilities
for leases with lease terms of more than 12 months. Consistent with prior GAAP, the recognition, measurement, and
presentation of expenses and cash flows arising from a lease by a lessee will depend primarily on its classification as a
finance or operating lease. However, unlike prior GAAP—which required only finance (formerly capital) leases to be
recognized on the balance sheet—the new ASU requires both types of leases to be recognized on the balance sheet. The
ASU took effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2018. This standard could be applied at the beginning of the earliest period presented using the modified
retrospective approach, which includes certain practical expedients that an entity may elect to apply, including an election
to use certain transition relief. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842,
Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which made improvements to Accounting
Standards Codification (“ASC”) 842 and allow entities to not restate comparative periods in transition to ASC 842 and
instead report the comparative periods under ASC 840.
The Company adopted ASC 842 using the modified retrospective approach on February 3, 2019, coinciding with
the standard’s effective date. In accordance with ASC 842, the Company did not restate prior comparative periods in
transition to ASC 842 and instead reported prior comparative periods under ASC 840. Adoption of the standard resulted in
the initial recognition of operating lease right-of-use (“ROU”) assets of $183,000 and operating lease liabilities of
$214,000 as of February 3, 2019. These amounts were based on the present value of such commitments as of February 3,
2019 using the Company’s incremental borrowing rate (“IBR”), which was determined through use of the Company’s
credit rating to develop a rate curve that approximates the Company’s market risk profile. The adoption of this standard had
a material impact on the Company’s consolidated statement of income, balance sheet, stockholders’ equity and cash flows,
with a $9,300 net adjustment recorded to beginning retained earnings on February 3, 2019 due to the acceleration of
recognition of a deferred gain and derecognition of the related deferred tax asset the Company was amortizing relating to
the historical sale and lease back of owned properties. In addition, the Company completed its evaluation of the practical
expedients offered and enhanced disclosures required in ASC 842, as well as reviewed arrangements to identify embedded
leases, among other activities, to account for the adoption of this standard.
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The Company elected the following practical expedients:
● A package of practical expedients allowing the Company to:
1. Carry forward its historical lease classification (i.e. it was not necessary to reclassify any existing leases
at the adoption date of ASC 842),
2. Avoid reassessing whether any expired or existing contracts are or contain leases, and
3. Avoid reassessing initial indirect costs for any existing lease.
● A practical expedient allowing the Company to not separate lease components (e.g. fixed payments including,
rent, real estate taxes, and insurance costs) from nonlease components (e.g. common area maintenance costs),
primarily impacting the Company’s real estate leases. The election of this practical expedient eliminates the
burden of separately estimating the real estate lease and nonlease costs on a relative stand-alone basis.
● A practical expedient related to land easements, allowing the Company to carry forward the accounting treatment
for land easements on existing agreements and eliminated the need to reassess existing lease contracts to
determine if land easements are separate leases under ASC 842.
The Company did not elect a practical expedient which would allow the Company to use hindsight in determining
the lease term (that is, when considering lessee options to extend or terminate the lease and to purchase the underlying
asset) and to assess impairment of the entity’s ROU assets, since election of this expedient could make adoption of ASC
842 more complex given that re-evaluation of the lease term and impairment consideration affect other aspects of lease
accounting.
In accordance with ASC 842, the Company determines if an arrangement is a lease at inception. The Company
has operating leases for the Company’s retail stores, distribution center, and corporate office. Operating leases are included
in operating lease ROU assets and operating lease liabilities, current and noncurrent, on the consolidated balance sheet.
Lease liabilities are initially recorded at the present value of the lease payments by discounting the lease payments by the
IBR and then recording accretion over the lease term using the effective interest method. Operating lease classification
results in a straight-line expense recognition pattern over the lease term and recognized lease expense as a single expense
component, which results in amortization of the ROU asset that equals the difference between lease expense and interest
expense. Operating lease expense is included in selling, general and administrative expense, based on the use of the leased
asset, on the consolidated statement of income. Leases with an initial term of 12 months or less are not recorded on the
balance sheet and are not material; the Company recognizes lease expense for these leases on a straight-line basis over the
remaining lease term.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the
commencement date based on the present value of lease payments over the reasonably certain lease term. As the
Company’s leases generally do not provide an implicit rental rate, the Company uses an IBR to determine the present value
of future rental payments. The IBR is determined by using the Company’s credit rating to develop a yield curve that
approximates the Company’s market risk profile. The operating lease ROU asset also includes any prepaid lease payments
made by the tenant and is reduced by lease incentives such as tenant improvement allowances. The operating lease terms
may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that
option. Lease expense is recognized on a straight-line basis over the lease term.
See Note 6 for a further discussion on leases.
Revenue Recognition
Revenue recognition accounting policy
The Company operates solely as an outdoor retailer, which includes both retail stores and an e-commerce
platform, that offers a broad range of products in the United States and online. Generally, all revenues are recognized when
control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those
goods. Accordingly, the Company implicitly enters into a contract with customers to deliver merchandise inventory at the
point of sale. Collectability is reasonably assured since the Company only extends immaterial credit purchases to certain
municipalities.
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Substantially all of the Company’s revenue is for single performance obligations for the following distinct items:
● Retail store sales
● E-commerce sales
● Gift cards and loyalty rewards program
For performance obligations related to retail store and e-commerce sales contracts, the Company typically transfers
control, for retail stores, upon consummation of the sale when the product is paid for and taken by the customer and, for e-
commerce sales, when the products are tendered for delivery to the common carrier.
The transaction price for each contract is the stated price on the product, reduced by any stated discounts at that point
in time. The Company does not engage in sales of products that attach a future material right which could result in a
separate performance obligation for the purchase of goods in the future at a material discount. The implicit point-of-sale
contract with the customer, as reflected in the transaction receipt, states the final terms of the sale, including the
description, quantity, and price of each product purchased. Payment for the Company’s contracts is due in full upon
delivery. The customer agrees to a stated price implicit in the contract that does not vary over the contract.
The transaction price relative to sales subject to a right of return reflects the amount of estimated consideration to
which the Company expects to be entitled. This amount of variable consideration included in the transaction price, and
measurement of net sales, is included in net sales only to the extent that it is probable that there will be no significant
reversal in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates.
The allowance for sales returns is estimated based upon historical experience and a provision for estimated returns is
recorded as a reduction in sales in the relevant period. The estimated merchandise inventory cost related to the sales returns
is recorded in prepaid expenses and other. The estimated refund liabilities are recorded in accrued expenses. If actual
results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net sales
and earnings in the period such variances become known.
Contract liabilities are recognized primarily for gift card sales and our loyalty reward program. Cash received from the
sale of gift cards is recorded as a contract liability in accrued expenses, and the Company recognizes revenue upon the
customer’s redemption of the gift card. Gift card breakage is recognized as revenue in proportion to the pattern of customer
redemptions by applying a historical breakage rate of 4.0% when no escheat liability to relevant jurisdictions exists. Based
upon historical experience, gift cards are predominantly redeemed in the first two years following their issuance date. The
Company does not sell or provide gift cards that carry expiration dates. ASC 606 requires the Company to allocate the
transaction price between the goods and the loyalty reward points based on the relative standalone selling price. The
Company recognized revenue for the breakage of loyalty reward points as revenue in proportion to the pattern of customer
redemption of the points by applying a historical breakage rate of 54%.
As it relates to e-commerce sales, the Company accounts for shipping and handling as fulfillment activities, and not a
separate performance obligation. Accordingly, the Company recognizes revenue for only one performance obligation, the
sale of the product, at the shipping point (when the customer gains control). Revenue associated with shipping and
handling is not material. The costs associated with fulfillment are recorded in costs of goods sold.
The Company offers promotional financing and credit cards issued by a third-party bank that manages and directly
extends credit to its customers. The Company provides a license to its brand and marketing services, and it facilitates credit
applications in its stores and online. The banks are the sole owners of the accounts receivable generated under the program
and, accordingly, the Company does not hold any customer receivables related to these programs and acts as an agent in the
financing transactions with customers. The Company is eligible to receive a profit share from certain of its banking
partners based on the annual performance of their corresponding portfolio, and the Company receives monthly payments
based on forecasts of full-year performance. This is a form of variable consideration. The Company records such profit
share as revenue over time using the most likely amount method, which reflects the amount earned each month when it is
determined that the likelihood of a significant revenue reversal is not probable, which is typically monthly. Profit-share
payments occur monthly, shortly after the end of each program month.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-
producing transaction, that are collected by the Company from a customer, are excluded from revenue.
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Sales returns
The Company allows customers to return items purchased within 30 days provided the merchandise is in
resaleable condition with original packaging and the original sales/gift receipt is presented. The Company estimates a
reserve for sales returns and record the respective reserve amounts, including a right to return asset when a product is
expected to be returned and resold. Historical experience of actual returns and customer return rights are the key factors
used in determining the estimated sales returns.
Contract Balances
The following table provides information about right of return assets, contract liabilities, and sales return liabilities
with customers as of fiscal years ended January 29, 2022 and January 30, 2021:
Right of return assets, which are included in prepaid expenses and other
Estimated gift card contract liability, net of breakage
Estimated loyalty contract liability, net of breakage
Sales return liabilities, which are included in accrued expenses
January 29, 2022
$
2,142
(23,128)
(7,211)
(3,197)
$
January 30, 2021
2,940
(22,069)
(12,131)
(4,388)
For the fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020, the Company recognized
$1,606, $1,167, and $1,430 in gift card breakage, respectively. For the fiscal years ended January 29, 2022, January 30,
2021, and February 1, 2020, the Company recognized $5,769, $4,730, and $2,480, in loyalty reward breakage, respectively.
The impact of these adjustments on the statement of cash flow for the year ended January 29, 2022 were recorded in cash
provided by operating activities. For the fiscal years ended January 29, 2022, January 30, 2021 and February 1, 2020 the
Company recognized $17,167, $8,110, and $8,219 of revenue related to the beginning contract liability from the previous
year.
The current balance of the right of return assets is the expected amount of inventory to be returned that is expected
to be resold. The current balance of the contract liabilities primarily relates to the gift card and loyalty reward program
liabilities. The Company expects the revenue associated with these liabilities to be recognized in proportion to the pattern
of customer redemptions over the next two years. The current balance of sales return liabilities is the expected amount of
sales returns from sales that have occurred.
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Disaggregation of revenue from contracts with customers
In the following table, revenue from contracts with customers is disaggregated by department. The percentage of
net sales related to our departments for the fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020,
were as follows:
Product Offerings
Backpacks, camp essentials, canoes and kayaks,
coolers, outdoor cooking equipment, sleeping
bags, tents and tools
Camouflage, jackets, hats, outerwear,
sportswear, technical gear and work wear
Bait, electronics, fishing rods, flotation items,
fly fishing, lines, lures, reels, tackle and small
boats
Hiking boots, socks, sport sandals, technical
footwear, trail shoes, casual shoes, waders and
work boots
Ammunition, archery items, ATV accessories,
blinds and tree stands, decoys, firearms,
reloading equipment and shooting gear
Gift items, GPS devices, knives, lighting,
optics, two-way radios, and other license
revenue, net of revenue discounts
Department
Camping
Apparel
Fishing
Footwear
Hunting and Shooting
Optics, Electronics,
Accessories, and Other
Total
Cost of Goods Sold
January 29,
2022
Fiscal year Ended
January 30,
2021
February 1,
2020
13.1%
12.7%
14.4%
8.4%
7.5%
9.3%
10.0%
9.9%
11.1%
6.8%
5.6%
7.5%
54.2%
57.6%
49.1%
7.5%
100.0%
6.7%
100.0%
8.6%
100.0%
Cost of goods sold primarily consists of merchandise acquisition costs, including freight-in costs, shipping costs,
terms discounts received from the vendor and vendor allowances and rebates associated directly with merchandise. Vendor
allowances include allowances and rebates received from vendors. The Company records an estimate of earned allowances
based on purchase volumes. These funds are determined for each fiscal year, and the majority is based on various
quantitative contract terms. Amounts expected to be received from vendors relating to purchase of merchandise inventories
are recognized as a reduction of cost of goods sold as the merchandise is sold. Historical program results and current
purchase volumes 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
related to the shipping and handling of products are recorded in cost of sales.
Vendor Allowances
Vendor allowances include price allowances, volume rebates, store opening costs reimbursements, marketing
participation and advertising reimbursements received from vendors under the terms of specific arrangements with certain
vendors. Vendor allowances related to merchandise are recognized as a reduction of the costs of merchandise as sold.
Vendor reimbursements of costs are recorded as a reduction to expense in the period the related cost is incurred based on
actual costs incurred. Any cost reimbursements exceeding expenses incurred are recognized as a reduction of the cost of
merchandise sold. Volume allowances may be estimated based on historical purchases and estimates of projected
purchases.
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 a
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predetermined 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 been
incurred but not reported (“IBNR”) for this plan. As of January 29, 2022, and January 30, 2021, the Company estimated
the IBNR for this plan to be $1,349 and $1,070, respectively. Actual claims may differ from the estimate and such
difference could be 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 maintains
stop-loss insurance through an insurance company with a $150 per claim deductible and aggregate claims limit above a
predetermined 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 of
January 29, 2022, and January 30, 2021, the Company estimated the IBNR for this plan to be $1,249 and $1,079,
respectively, related to the workers compensation plan. Actual claims may differ from the estimate and such difference
could be 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
these programs, reimburse the Company for certain costs incurred. Payments received under these cooperative programs
are recorded as a decrease to expense in the period that the advertising occurred. For the fiscal years ended January 29,
2022, January 30, 2021, and February 1, 2020, net advertising expenses totaled $20,537, $15,663, and $11,493,
respectively. These amounts are included in selling, general and administrative expenses in the accompanying consolidated
statements of income.
Stock-Based Compensation
Compensation expense is estimated based on grant date fair value on a straight-line basis over the requisite service or
offering period. Costs associated with awards are included in compensation expense as a component of selling, general,
and administrative expenses.
Income Taxes
The Company recognizes a deferred income tax liability or deferred income tax asset for the future tax consequences
attributable to differences between the financial statement basis of existing assets and liabilities and their respective tax
basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is
provided against deferred income tax assets when it is more likely than not that all or some portion of the deferred income
tax assets will not be realized.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax
position 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
As of January 29, 2022, and January 30, 2021, the carrying amounts of financial instruments except for long-term
debt approximate fair value because of the general short-term nature of these instruments. The carrying amounts of long-
term variable rate debt approximate fair value as the terms are consistent with market terms for similar debt instruments.
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Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock
outstanding, reduced by shares repurchased and held in treasury, during the period. Diluted earnings per share represents
basic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvested
share awards and nonvested share unit awards.
Comprehensive Income
The Company has no components of income that would require classification as other comprehensive income for the
fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects
of Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to
existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference
rates, such as the London Inter-Bank Offered Rate (“LIBOR”), certain tenors of which were phased out in 2021, to
alternate reference rates, such as the Secured Overnight Financing Rate.
The standard is currently effective and upon adoption may be applied prospectively to contract modifications
made on or before December 31, 2022. The provisions have impact as contract modifications and other changes occur
while LIBOR is phased out. The Company is in the process of evaluating the optional relief guidance provided within this
ASU. Management will continue its assessment and monitor regulatory developments during the LIBOR transition period.
(3) Acquisition of Field & Stream Stores
2020 Acquisitions
On February 14, 2020, Sportsman’s Warehouse, Inc. (“SWI”), a wholly owned subsidiary of Holdings, entered
into an Asset Purchase Agreement (the “2020-I Purchase Agreement”) with DICK’s Sporting Goods (“DICK’S”). Pursuant
to the 2020-I Purchase Agreement, SWI agreed, subject to certain conditions, to acquire from DICK’S all cash, inventory,
furniture, fixtures, and equipment, and certain other assets related to one Field & Stream store located in Kentucky and
operated by DICK’S (the “2020-I Acquisition”). The acquisition of the 2020-I Acquisition closed on March 12, 2020 (the
“2020-I Closing Date”). On the 2020-I Closing Date, SWI entered into a sublease with DICK’s with respect to the 2020-I
Acquisition location. Pursuant to the 2020-I Purchase Agreement and in connection with closing of the acquisition, the
parties also entered into a transition services agreement pursuant to which DICK’S provided transition services to the
Company for a period of up to 120 days after the 2020-I Closing Date.
The aggregate consideration paid to DICK’S under the 2020-I Purchase Agreement was $2,139 (the “2020-I Purchase
Price”), subject to certain post-closing adjustments set forth in the 2020-I Purchase Agreement. On the 2020-I Closing
Date, SWI drew $1,100 under the Revolving Line of Credit (as defined below) to fund a portion of the 2020-I Purchase
Price. The remaining approximately $1,000 of consideration owed to DICK’S in connection with the 2020-I Acquisition
was paid in June 2020.
On March 6, 2020, SWI, entered into an Asset Purchase Agreement (the “2020-II Purchase Agreement”) with
DICK’S. Pursuant to the 2020-II Purchase Agreement, SWI agreed, subject to certain conditions, to acquire from DICK’S
all cash, inventory, furniture, fixtures, and equipment, and certain other assets related to one Field & Stream store located
in Michigan and operated by DICK’S (the “2020-II Acquisition”). The 2020-II Acquisition closed on May 14, 2020 (the
“2020-II Closing Date”). On the 2020-II Closing Date, SWI entered into a sublease with DICK’s with respect to the 2020-
II Acquisition. Pursuant to the 2020-II Purchase Agreement and in connection with closing of the acquisition, the parties
also entered into a transition services agreement related to the 2020-II Acquisition pursuant to which DICK’S provided
transition services to the Company for a period of up to 120 days after the 2020-II Closing Date.
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The aggregate consideration paid to DICK’S under the 2020-II Purchase Agreement was $2,411 (the “2020-II
Purchase Price”), subject to certain post-closing adjustments set forth in the 2020-II Purchase Agreement. On the 2020-II
Closing Date, SWI drew $1,317 under the Revolving Line of Credit to fund a portion of the 2020-II Purchase Price. The
remaining approximately $1,100 of consideration owed to DICK’S in connection with the 2020-II Acquisition was paid in
August 2020.
On September 16, 2020, SWI, entered into an Asset Purchase Agreement (the “2020-III Purchase Agreement”)
with DICK’S. Pursuant to the 2020-III Purchase Agreement, SWI agreed, subject to certain conditions, to acquire from
DICK’S all cash, inventory, furniture, fixtures, and equipment, and certain other assets related to two Field & Stream stores
located in South Carolina and Pennsylvania and operated by DICK’S (the “2020-III Acquisition”). The 2020-III
Acquisition closed on October 8, 2020 (the “2020-III Closing Date”). On the 2020-III Closing Date, SWI entered into a
sublease with DICK’s with respect to the locations. Pursuant to the 2020-III Purchase Agreement and in connection with
closing of the acquisition, the parties also entered into a transition services agreement pursuant to which DICK’S provided
transition services to the Company for a period of up to 120 days after the 2020-III Closing Date.
The aggregate consideration to be paid to DICK’S under the 2020-III Purchase Agreement is $2,001, net of rent
concessions and deferrals of $2,597 (the “2020-III Purchase Price”), and subject to certain post-closing adjustments set
forth in the 2020-III Purchase Agreement. On the 2020-III Closing Date, SWI drew $226 under the Revolving Line of
Credit (as defined in Note 8) to fund a portion of the 2020-III Purchase Price. The remaining approximately $1,774 of
consideration owed to DICK’S in connection with the 2020-III Acquisition was paid in cash in January 2021.
As part of the acquisitions that closed in 2020, the Company incurred legal, accounting, and other due diligence
fees that were expensed as incurred. Total fees incurred for the fiscal year 2020 were $237, which were included as a
component of selling, general, and administrative expenses.
The acquired locations were in line with the seller’s intention to reduce its footprint in the hunting and firearms
business, which resulted in a below fair value purchase price consideration shown in the tables below.
The following table summarizes the 2020-I Purchase Price consideration and related cash outflow at the 2020-I
Closing Date:
Cash paid to seller
Payable to seller
Total purchase price
$
$
March 12, 2020
1,075
1,064
2,139
The net 2020-I Purchase Price of $2,139 has been allocated to identifiable assets acquired based on their
respective estimated fair values. No liabilities were assumed as part of the acquisition of the 2020-I Acquired Stores other
than the lease obligation. The excess of the fair value over the 2020-I Purchase price of the tangible and intangible assets
acquired is recorded as a bargain purchase. The following table summarizes the estimated fair value of the identifiable
assets acquired and assumed liabilities as of the 2020-I Closing Date:
Cash
Inventory
Property, plant, and equipment
Operating lease right of use asset
Operating lease right of use liability
Deferred tax liability
Bargain purchase
Total
$
$
67
March 12, 2020
10
2,133
892
2,070
(1,794)
(314)
(858)
2,139
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The following table summarizes the 2020-II Purchase Price consideration and related cash outflow at the 2020-II
Closing Date:
Cash paid to seller
Payable to seller
Total purchase price
$
$
May 14, 2020
1,317
1,094
2,411
The net 2020-II Purchase Price of $2,411 has been allocated to identifiable assets acquired based on their
respective estimated fair values. No liabilities were assumed as part of the acquisition of the 2020-II Acquired Stores other
than the lease obligation. The excess of the fair value over the 2020-II Purchase Price of the tangible and intangible assets
acquired is recorded as a bargain purchase. The following table summarizes the estimated fair value of the identifiable
assets acquired and assumed liabilities as of the 2020-II Closing Date:
Cash
Inventory
Property, plant, and equipment
Operating lease right of use asset
Operating lease right of use liability
Deferred tax liability
Bargain purchase
Total
$
$
May 14, 2020
18
2,218
375
5,605
(5,605)
(53)
(147)
2,411
The following table summarizes the 2020-III Purchase Price consideration and related cash outflow at the 2020-III
Closing Date:
Cash paid to seller
Payable to seller
Total purchase price
$
$
October 8, 2020
227
1,774
2,001
The net 2020-III Purchase Price of $2,001 has been allocated to identifiable assets acquired based on their
respective estimated fair values. No liabilities were assumed as part of the acquisition of the 2020-III Acquired Stores other
than the lease obligation. The excess of the fair value over the 2020-III Purchase Price of the tangible and intangible assets
acquired is recorded as a bargain purchase. The following table summarizes the estimated fair value of the identifiable
assets acquired and assumed liabilities as of the 2020-III Closing Date:
Cash
Inventory
Property, plant, and equipment
Operating lease right of use asset
Operating lease right of use liability
Deferred tax liability
Bargain purchase
Total
$
$
October 8, 2020
50
3,515
1,046
9,534
(10,508)
(423)
(1,213)
2,001
As of January 30, 2021, all purchase price allocations of 2020 acquisitions were finalized and the Company does
not expect any further adjustments to the allocation in future periods.
2019 Acquisition
On September 28, 2019, SWI entered into an Asset Purchase Agreement (the “Purchase Agreement”) with
DICK’S. Pursuant to the Purchase Agreement, SWI agreed, subject to certain conditions, to acquire from DICK’S all cash,
inventory, furniture, fixtures, and equipment, and certain other assets related to up to eight Field & Stream stores operated
by DICK’S (the “Acquired Stores”). The Acquired Stores were located in New York (2), Pennsylvania (3), North Carolina
(2) and Michigan (1). The acquisition of the eight Acquired Stores closed on October 11, 2019 (the
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“Closing Date”). On or prior to the Closing Date, SWI entered into a sublease with DICK’s with respect to each Acquired
Store location. Pursuant to the Purchase Agreement and in connection with closing of the acquisition, the parties also
entered into a transition services agreement related to the Acquired Stores by which DICK’S provided transition services to
the Company for a period of up to 120 days of the Closing Date.
The aggregate consideration paid to DICK’S under the Purchase Agreement was $28.7 million (the “Purchase
Price”). On the Closing Date, Sportsman’s Warehouse drew $19.8 million under the Revolving Line of Credit to fund a
portion of the Purchase Price. The remaining approximately $9 million of consideration owed to DICK’S was paid in
January 2020.
As part of the acquisition, the Company incurred legal, accounting, and other due diligence fees that were
expensed as incurred. Total fees incurred for the year ended February 1, 2020 were $662, which were included as a
component of Selling, general, and administrative expenses.
The following table summarizes the Purchase Price consideration and related cash outflow at the Closing Date:
Cash paid to seller
Payable to seller
Total purchase price
$
$
October 11, 2019
19,241
9,462
28,703
The net Purchase Price of $28,703 has been allocated to the identifiable assets acquired based on their respective
estimated fair values. No liabilities were assumed as part of the acquisition of the Acquired Stores other than the lease
obligation. The excess of the Purchase Price over the fair value of the tangible and intangible assets acquired is recorded as
goodwill. The following table summarizes the estimated fair value of the identifiable assets acquired and assumed
liabilities as of the Closing Date:
Cash
Inventory
Property, plant, and equipment
Operating lease right of use asset
Operating lease right of use liability
Deferred tax asset
Goodwill
Total
$
$
October 11, 2019
167
19,152
5,250
33,436
(31,051)
253
1,496
28,703
The allocation of the Purchase Price for the Acquired Stores in 2019 was finalized as of February 1, 2020 and the
Company does not expect any further adjustments to the allocation in future periods.
Right of Use Asset and Liability for 2019 and 2020 Acquisitions
The right of use asset and liability were determined by taking the present value of the future minimum lease
payments associated with the Acquired stores. The Company utilized discount rates for the leases similar to the rates used
to present value its other leases. The difference between the asset and the liability noted above for the 2019 acquisitions is
attributable to net favorable lease rates in the acquired store leases. The difference between the asset and the liability noted
above for the 2020 acquisitions is attributable to net unfavorable lease rates in the acquired store leases.
Goodwill for 2019 Acquisition
Goodwill represents the excess of the Purchase Price over the fair value of the assets acquired. The Company
believes that the primary factors supporting the amount of goodwill is the workforce acquired in the store locations. The
amount of goodwill that is amortizable for tax purposes is $4,134.
Results of Operations for 2019 and 2020 Acquisition
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The results of operations of the Acquired Stores in 2019 were included in the Company’s results of operations
beginning on October 11, 2019. From October 11, 2019 through February 1, 2020 the Acquired Stores generated net sales
of $24,345 and net income of approximately $2,246.
The results of operations of the stores acquired in 2020 were included in the Company’s results of operations
beginning on the respective dates of acquisition noted above. From the respective dates of acquisition, the stores acquired
in 2020 generated net sales of $34,555 and net income of approximately $4,659.
Pro Forma Results for 2020 Acquisitions (unaudited)
The following pro forma results are based on the individual historical results of the 2020 acquired stores with
adjustments to give effect to the combined operations as if the acquisitions had been consummated at the beginning of
fiscal year 2019. The pro forma results are intended for informational purposes only and do not purport to represent what
the combined results of operations would actually have been had the acquisitions in fact occurred at the beginning of the
earliest period presented. The pro forma information includes the following adjustments (i) depreciation based on the fair
value of acquired property, plant, and equipment; (ii) cost of goods sold based on the step-up in fair value of the acquired
inventory; (iii) interest expense incurred in connection with the borrowings on the Revolving Line of Credit used to finance
the acquisitions; and (iv) elimination of acquisition expenses.
Net sales
Net income
Earnings per share:
Basic
Diluted
(4) Property and Equipment
Fifty-Two Weeks Ended
January 30,
2021
February 1,
2020
1,464,406
91,475
2.10
2.07
909,113
19,775
0.46
0.45
Property and equipment as of January 29, 2022 and January 30, 2021 was as follows:
Furniture, fixtures, and equipment
Leasehold improvements
Construction in progress
Total property and equipment, gross
Less accumulated depreciation and amortization
Total property and equipment, net
January 29,
2022
115,597
143,064
5,007
263,668
(135,364)
128,304
$
$
January 30,
2021
96,085
112,338
2,614
211,037
(111,919)
99,118
$
$
Depreciation expense was $26,200, $21,801, and $19,294, for the fiscal years ended January 29, 2022, January 30,
2021, and February 1, 2020, respectively.
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(5) Definite Lived Intangible Assets
The following table summarizes the definite lived intangible assets:
Amortizing intangible assets:
Domain Name
Intellectual Property
Total
Amortizing intangible assets:
Domain Name
Intellectual Property
Total
Amortization
Period
10 years
8 years
Amortization
Period
10 years
8 years
January 29, 2022
Gross carrying
amount
Accumulated
amortization
Net carrying
amount
257
100
357
$
(78)
(15)
(93)
179
85
264
January 30, 2021
Gross carrying
amount
Accumulated
amortization
Net carrying
amount
257
100
357
$
(65)
(3)
(68)
192
97
289
Amortization expense for definite lived intangible asset was $26, $28, and $26, for the fiscal years ended January 29,
2022, January 30, 2021, and February 1, 2020, respectively.
(6) Leases
At the inception of the lease, the Company’s operating leases have remaining certain lease terms of up to 15 years,
which typically includes multiple options for the Company to extend the lease which are not reasonably certain.
The adoption of ASC 842 resulted in recording a non-cash transitional adjustment to ROU assets and operating
lease liabilities of $183,000 and $214,000, respectively, as of February 3, 2019. The difference between the ROU assets
and operating lease liabilities at transition primarily represented existing deferred rent, tenant improvement allowances and
prepaid rent of $14,200, $20,600 and $3,800, respectively, which were recorded as a component of the ROU asset in
connection with the non-cash transitional adjustment. As a result of the adoption of ASC 842, the Company also recorded
an increase to retained earnings of $9,300, net of tax, as of February 3, 2019, in relation to the accelerated recognition of a
deferred lease gain, and derecognition of the related deferred tax asset, which the Company was amortizing relating to the
historical sales of owned properties it currently leases.
In the fiscal year ended January 29, 2022, the Company recorded a non-cash increase of $39,437, to ROU assets
and operating lease liabilities resulting from lease remeasurements from the exercise of lease extension options, acquired
leases, and new leases added.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive
covenants.
In accordance with ASC 842, total lease expense was comprised of the following:
Operating lease expense
Variable lease expense
Short-term lease expense
Total lease expense
January 29,
2022
Fiscal Year Ended
January 30,
2021
February 1,
2020
$
$
56,293
17,252
1,325
74,870
$
$
51,948
15,376
688
68,012
$
$
45,760
13,806
280
59,846
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In accordance with ASC 842, other information related to leases was as follows:
Operating cash flows from operating leases
Cash paid for lease liabilities - operating leases
January 29,
2022
(59,502) $
(59,502)
Fiscal Year Ended
January 30,
2021
(55,765) $
(55,765)
$
February 1,
2020
(49,713)
(49,713)
As of January 29, As of January 30, As of February 1,
2021
2020
2022
Right-of-use assets obtained in exchange for new or remeasured
operating lease liabilities
Terminated right-of-use assets and liabilities
Weighted-average remaining lease term - operating leases
Weighted-average discount rate - operating leases
$
$
39,437
—
5.83
8.29%
$
39,119
(2,947)
6.09
8.35%
66,095
—
6.26
8.00%
In accordance with ASC 842, maturities of operating lease liabilities as of January 29, 2022 were as follows:
Year Endings:
2022
2023
2024
2025
2026
Thereafter
Undiscounted cash flows
Reconciliation of lease liabilities:
Present values
Lease liabilities - current
Lease liabilities - noncurrent
Lease liabilities - total
Difference between undiscounted and discounted cash flows
Operating
Leases
63,061
59,231
50,555
43,995
38,830
128,633
384,305
277,151
40,924
236,227
277,151
107,154
$
$
$
$
$
The Company has excluded in the table above approximately $21.7 million of leases (undiscounted basis) that
were entered into as of March 30, 2022. These leases will commence in 2022 with lease terms of 10 years.
(7) Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following at January 29, 2022 and January 30, 2021:
Book overdraft
Unearned revenue
Accrued payroll and related expenses
Sales and use tax payable
Accrued construction costs
Other
Total accrued expenses
72
January 29,
2022
16,252
42,058
26,309
8,788
416
15,189
109,012
$
$
January 30,
2021
13,445
38,454
28,453
7,317
339
21,048
109,056
$
$
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(8) Fair Value Measurements
Fair value measurements are reported based upon three categories, with the lowest level of measurement available
applied. The levels of fair value measurement are as follows: Level 1 - quoted prices on active markets; Level 2 -
observable market inputs other than quoted prices on active markets; Level 3 - unobservable data requiring the Company to
develop its own approach that cannot be corroborated by market data.
The following table shows the fair value measurements of the Company on a recurring basis:
Asset
Type
Short-term Investments (1) Cash and Cash Equivalents Level 1
Measurement Level
$
Fair Value as of
January 29, 2022
Fair Value as of
January 30, 2021
55,000
$
-
(1) Fair value approximates carrying value because maturities are less than three months.
(9) Revolving Line of Credit
On May 23, 2018, SWI, as lead borrower, and Wells Fargo Bank, National Association (“Wells Fargo”), with a
consortium of banks led by Wells Fargo, entered into an Amended and Restated Credit Agreement (as amended, restated,
supplemented or otherwise modified, the “Amended Credit Agreement”). The Amended Credit Agreement governs the
Company’s senior secured revolving credit facility (“Revolving Line of Credit”) and a $40,000 term loan (the “Term
Loan”). The Revolving Line of Credit provides a borrowing capacity of up to $250,000, subject to a borrowing base
calculation. Information on the Term Loan is provided in Note 9.
In conjunction with the Amended Credit Agreement, the Company incurred $1,331 of fees paid to various parties
which were capitalized. Fees associated with the Revolving Line of Credit were recorded in prepaid and other assets. Fees
associated with the Term Loan offset the loan balance on the consolidated balance sheet of the Company.
As of January 29, 2022, and January 30, 2021, the Company had $76,976 and $0, respectively, in outstanding
revolving loans under the Revolving Line of Credit. Amounts outstanding are offset on the consolidated balance sheets by
amounts in depository accounts under lock-box type arrangements, which were $10,923 and $13,552 as of January 29,
2022 and January 30, 2021, respectively. As of January 29, 2022, the Company had stand-by commercial letters of credit of
$1,955 under 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
or LIBOR, in each case plus an applicable margin. The base rate is the higher of (1) Wells Fargo’s prime rate, (2) the
federal funds rate (as defined in the credit agreement) plus 0.50% and (3) the one-month LIBOR (as defined in the
Amended Credit Agreement) plus 1.00%. The applicable margin for loans under the Revolving Line of Credit, 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 LIBOR loans.
The Company may be required to make mandatory prepayments under the Revolving Line of Credit in the event of a
disposition of certain property or assets, in the event of receipt of certain insurance or condemnation proceeds, upon the
issuance of certain debt or equity securities, upon the incurrence of certain indebtedness for borrowed money or upon the
receipt of certain payments not received in the ordinary course of business.
The Amended Credit Agreement contains customary affirmative and negative covenants, including covenants that
limit the Company’s ability to incur, create or assume certain indebtedness, to create, incur or assume certain liens, to make
certain investments, to make sales, transfers and dispositions of certain property and to undergo certain fundamental
changes, including certain mergers, liquidations and consolidations. The Amended Credit Agreement also requires the
Company to maintain a minimum availability at all times of not less than 10% of the gross borrowing base. The Amended
Credit Agreement also contains customary events of default. The Revolving Line of Credit matures on May 23, 2023.
Each of the subsidiaries of Holdings is a borrower under the Revolving Line of Credit, and all obligations under the
Revolving Line of Credit are guaranteed by Holdings. All of the obligations under the Revolving Line of Credit are secured
by a lien on substantially all of the Holdings’ tangible and intangible assets and the tangible and intangible assets
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of all of Holdings’ subsidiaries, including a pledge of all capital stock of each of Holdings’ subsidiaries. The lien securing
the obligations under the Revolving Line of Credit is a first priority lien as to certain liquid assets, including cash, accounts
receivable, deposit accounts and inventory.
As of January 29, 2022 and January 30, 2021, the Amended Credit Agreement had $333 and $583, respectively in
outstanding deferred financing fees. During each of the fiscal years ended January 29, 2022, January 30, 2021, and
February 1, 2020, the Company recognized $251 of non-cash interest expense with respect to the amortization of deferred
financing fees.
As of January 29, 2022, January 30, 2021, and February 1, 2020, gross borrowings under the Revolving Line of
Credit were $1,731,998, $1,443,172, and $958,869, respectively. As of January 29, 2022, January 30, 2021, and February
1, 2020, gross paydowns under the Revolving Line of Credit were $1,656,140, $1,599,611, and $994,666, respectively.
(10) Sale Leaseback Transactions
During the fiscal years ended January 29, 2022 and January 30, 2021 the Company did not complete any deemed
sale-leaseback or sale leaseback transactions. During the fiscal year ended February 1, 2020 the Company completed
deemed sale-leaseback and sale-leaseback transactions of the land and building associated with one corporate office
location. In the related lease agreement for the deemed sale leaseback location, the Company was required to pay all
construction costs directly with the right of reimbursement up to a pre-determined tenant allowance. Also, the Company
indemnified the landlord with respect 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 was the owner of the land and building during the construction period. The
sale occurred when the construction of the assets was substantially complete and the lease terms began. At the time of sale,
any assets, up to the value of each pre-determined tenant allowance, were written off the Company’s books, and any
remaining assets were considered leasehold improvements. For the sale leaseback transaction, the Company was the owner
of the building and paid all construction costs directly. Once construction was deemed complete and occupancy permits
were obtained, the Company sold the building and rights to the constructed assets to the landlord for a predetermined
amount and were written off the Company’s books. Any remaining assets were considered leasehold improvements or
property and equipment. The total value of tenant allowance received under this transaction during fiscal year 2019 was
$9,533.
(11) Common Stock
Holders of common stock are entitled to one vote per share, and to receive dividends and, upon liquidation or
dissolution, are entitled to receive all assets available for distribution to stockholders on a proportional basis with the
restricted nonvoting common stockholders. The holders have no preemptive or other subscription rights, and there are no
redemption or sinking fund provisions with respect to such shares.
(12) Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted-average number of shares of common
stock outstanding, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the
potentially dilutive effect of nonvested share awards and nonvested share unit awards.
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The following table sets forth the computation of basic and diluted earnings per common share:
Net income
Weighted-average shares of common stock outstanding:
Basic
Dilutive effect of common stock equivalents
Diluted
Basic earnings per share
Diluted earnings per share
Restricted stock units considered anti-dilutive and excluded
in the calculation
(13) Stock-Based Compensation
Stock-Based Compensation
$
$
$
January 29,
2022
108,470
43,827
716
44,543
2.47
2.44
38
Fiscal Year Ended
January 30,
2021
February 1,
2020
$
$
$
91,380
$
20,215
43,525
905
44,430
2.10
2.06
15
$
$
43,166
422
43,588
0.47
0.46
4
The Company recognized total stock-based compensation expense, including expense relating to the employee
stock purchase plan, of $3,328, $3,302, and $2,104, during fiscal years 2021, 2020, and 2019, respectively. Compensation
expense related to the Company's stock-based payment awards is recognized in selling, general, and administrative
expenses in the consolidated statements of income. As of January 29, 2022, and January 30, 2021, the Company had
$13,233 and $7,275, respectively, remaining in unrecognized compensation costs, respectively.
Employee Stock Plans
As of January 29, 2022, the number of shares available for awards under the 2019 Performance Incentive Plan
(the “2019 Plan”) was 2,015. As of January 29, 2022, there were 1,416 awards outstanding under the 2019 Plan. All shares
granted during the current year were newly issued shares. All subsequent awards were, and all future awards are expected
to be, granted under the 2019 Plan.
Nonvested Performance-Based Stock Awards
During fiscal year 2021, the Company did not issue any nonvested performance-based stock awards to employees.
During fiscal year 2020, the Company issued 206 nonvested performance-based stock awards to employees at a
weighted average grant date fair value of $5.95 per share. The nonvested performance-based stock awards issued to
employees vest at the end of three years. The number of shares issued is contingent on management achieving a fiscal year
2020, 2021 and 2022 performance target for same store sales and gross margin. Based on the performance conditions met
for 2020 and 2021, the finalized granted awards were 412 as presented in the table below.
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The following table sets forth the rollforward of outstanding nonvested performance-based stock awards (per
share amounts are not in thousands):
Balance at January 30, 2021
Grants
Forfeitures
Vested
Balance at January 29, 2022
Balance at February 1, 2020
Grants
Forfeitures
Vested
Balance at January 30, 2021
Nonvested Stock Unit Awards
Weighted
average
grant-date
fair value
5.13
—
5.10
4.91
5.13
Weighted
average
grant-date
fair value
3.66
5.95
4.33
—
5.13
$
$
$
$
Shares
624
—
(115)
(22)
487
Shares
250
412
(38)
—
624
During the fiscal year 2021, the Company issued 708 nonvested stock units to employees of the Company and
independent members of the Board of Directors at a weighted average grant date fair value of $14.70 per share. The shares
issued to the independent members of the Board of Directors vest over 12 months with one twelfth vesting each month
from the grant date. The shares issued to employees of the Company vest over a three-year period with one third of the
shares vesting on each grant date anniversary.
During the fiscal year 2020, the Company issued 431 nonvested stock units to employees of the Company and
independent members of the Board of Directors at a weighted average grant date fair value of $6.38 per share. The shares
issued to the independent members of the Board of Directors vest over 12 months with one twelfth vesting each month
from the grant date. The shares issued to employees of the Company vest over a three-year period with one third of the
shares vesting on each grant date anniversary.
The following table sets forth the rollforward of outstanding nonvested stock units:
Balance at January 30, 2021
Grants
Forfeitures
Vested
Balance at January 29, 2022
Balance at February 1, 2020
Grants
Forfeitures
Vested
Balance at January 30, 2021
76
Weighted
average
grant-date
fair value
5.19
14.70
7.91
5.87
11.56
Weighted
average
grant-date
fair value
4.32
6.38
4.73
4.86
5.19
$
$
$
$
Shares
779
708
(217)
(341)
929
Shares
744
431
(65)
(331)
779
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As of January 30, 2022, and January 30, 2021, the weighted average grant date fair value of the outstanding shares
was $11.56 and $5.19, respectively.
(14) Employee Stock Purchase Plan
In June 2015, the Company’s stockholders approved the Sportsman’s Warehouse Holdings, Inc. Employee Stock
Purchase Plan (“ESPP”), which provides for the granting of up to 800 shares of the Company’s common stock to eligible
employees. 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 of the common stock on the purchase date. The first plan period began on January 1, 2016. Stock-based
compensation expense related to the ESPP in fiscal year 2021, 2020, and 2019 was $35, $212, and $133, respectively.
During the fiscal year ended January 30, 2021, the Company discontinued the ESPP program due to the proposed
merger with the Great Outdoors Group. The ESPP program was later reinstated during fiscal year 2021 after the proposed
merger with the Great Outdoors Group was terminated in December 2021.
(15) Income Taxes
For the fiscal years ended January 29, 2022, January 30, 2021, and February 1, 2020, the income tax provision
consisted of the following:
Current:
Federal
State
Total current
Deferred:
Federal
State
Total deferred
Total income tax provision
January 29,
2022
January 30, February 1,
2021
2020
$ 23,107
7,312
30,419
$ 24,023
6,991
31,014
5,133
217
5,350
$ 35,769
(390)
(544)
(934)
$ 30,080
$
$
4,004
540
4,544
1,246
(536)
710
5,254
The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows
for the following periods:
Federal statutory rate
State tax, net of federal benefit
Permanent items
Tax Credits
Other items
Effective income tax rate
January 29,
2022
21.0 %
4.1
0.1
(0.6)
0.2
24.8 %
January 30,
2021
21.0 %
4.1
(0.3)
(0.4)
0.4
24.8 %
February 1,
2020
21.0 %
1.5
1.1
(2.8)
(0.2)
20.6 %
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The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred
tax liabilities at January 29, 2022 and January 30, 2021, respectively, are presented below:
Deferred tax assets:
Accrued liabilities
Operating lease liability
Gift card liability
Goodwill
Intangible asset
Inventories
Sales return reserve
Stock-based compensation
Loyalty program
Total gross deferred tax assets
Deferred tax liabilities:
Depreciation
ROU asset
Prepaid expenses
Total gross deferred tax liabilities
Net deferred tax asset
January 29,
2022
January 30,
2021
$
$
$
$
1,521
69,565
1,332
671
927
2,940
265
1,082
1,810
80,113
(23,860)
(61,005)
(1,027)
(85,892)
(5,779)
$
$
$
$
2,746
66,341
862
752
1,075
1,052
363
768
3,045
77,004
(17,533)
(59,044)
(861)
(77,438)
(434)
Deferred tax assets have resulted primarily from the Company’s future deductible temporary differences. In assessing
the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of
the deferred tax asset will not be realized. The Company’s ability to realize its deferred tax assets depends upon the
generation of sufficient future taxable income.
Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowances
quarterly. At January 29, 2022, based on current facts and circumstances, management believes that it is more likely than
not that the Company will realize benefit for its deferred tax assets.
As of January 29, 2022, the Company had no unrecognized tax benefits. The Company does not anticipate that
unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. Federal and state
tax years that remain subject to examination are periods ended January 30, 2016 through February 1, 2020.
The Company’s policy is to accrue interest expense, and penalties as appropriate, on estimated unrecognized tax
benefits as a charge to interest expense in the consolidated statements of income. No interest or penalties were accrued for
fiscal years 2021, 2020 or 2019.
(16) Commitments and Contingencies
Legal Matters
The Company is involved in various legal matters generally incidental to its business. After discussion with legal
counsel, management is not aware of any matters for which the likelihood of a loss is probable and reasonably estimable
and which could have a material impact on its consolidated financial condition, liquidity, or results of operations.
Parsons v. Colt’s Manufacturing Company, 2:19-cv-01189-APG-EJY – On July 2, 2019 the estate and family of a
victim of the Route 91 Harvest Festival shooting filed litigation against 16 defendants, one of which being a subsidiary of
Sportsman’s Warehouse Holdings, Inc., for wrongful death and negligence. On March 3, 2022 the case was dismissed with
prejudice.
TMS McCarthy, LP, Etc., Pltf. v. Sportsman’s Warehouse Southwest, Inc. Etc. Et Al., Dfts.- On June 23, 2020 TMS
McCarthy, LP filed a complaint against Sportsman’s Warehouse Southwest, Inc., a wholly owned subsidiary of
Sportsman’s Warehouse Holdings Inc., claiming the Company wrongfully terminated the lease relating to one of its
78
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stores. The Company believes the plaintiffs’ complaint is without merit based on the plain language of the lease at issue
and on August 14, 2020 filed a counterclaim for declaratory relief. No reasonable estimate of the amount of any potential
losses or range of potential losses relating to this matter can be determined at this time.
(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 by management. The Company made contributions of $1,974, $1,532, and $835, for the fiscal years ended
January 29, 2022, January 30, 2021, and February 1, 2020, respectively.
(18) Terminated Merger with Great Outdoors Group
On December 2, 2021, Sportsman’s Warehouse, Great Outdoors Group, LLC and Phoenix Merger Sub I, Inc.
(“Merger Subsidiary”) entered into a Termination Agreement (the “Termination Agreement”) under which the parties
agreed to terminate the merger agreement, dated December 21, 2020, among the same parties (the “merger Agreement”),
effective immediately. Pursuant to the terms and conditions set forth in the Merger Agreement, Merger Subsidiary would
have been merged with and into Sportsman’s Warehouse, with Sportsman’s Warehouse continuing as the surviving
corporation in the Merger and a wholly-owned subsidiary of Great Outdoors Group (the “Merger”). The decision to
terminate the Merger Agreement followed feedback from the Federal Trade Commission (“FTC”) that led the parties to
believe that they would not have obtained FTC clearance to consummate the Merger. Under the Termination Agreement,
Great Outdoors Group agreed to pay us the Parent Termination Fee (as defined in the Merger Agreement) of $55.0 million
by wire transfer of immediately available funds concurrently with the execution of the Termination Agreement. The
Company received the $55.0 million payment on December 2, 2021 included in other income (expense) in the consolidated
statements of income.
(19) Subsequent Events
On March 24, 2022, the Company announced that its Board of Directors authorized a share repurchase program
(the “Repurchase Program”) to allow for the repurchase of up to $75.0 million of outstanding shares of the Company’s
common stock, $.01 par value per share commencing on March 31, 2022 (the “Commencement Date”). The Repurchase
Program will terminate on the first anniversary of the Commencement Date.
Under the Repurchase Program, the Company may repurchase shares of its common stock at any time or from
time to time, without prior notice, subject to market conditions and other considerations. The Company’s repurchases may
be made through Rule 10b5-1 plans, accelerated share repurchase transactions, open market purchases, privately negotiated
transactions, tender offers, block purchases or other transactions. The Company intends to fund repurchases under the
Repurchase Program using cash on hand or available borrowings under its Revolving Line of Credit. The Company has no
obligation to repurchase any shares of its common stock under the Repurchase Program and may modify, suspend or
discontinue it at any time.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
1. Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are
designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to
ensure that information required to be disclosed is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.
Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act), as of the end of the period covered by this Report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of
January 29, 2022.
Inherent Limitations in Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our
disclosure controls and procedures, or our internal controls, will prevent all error and all fraud. A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the
company have been detected. These inherent limitations include the realities that judgments in decision making can be
faulty, and that breakdowns can occur because of simple error or mistake or fraud. Additionally, controls can be
circumvented by individuals or groups of persons or by an unauthorized override of the controls. Accordingly, because of
the inherent limitations in our control system, misstatements in our public reports due to error or fraud may occur and not
be detected.
2. Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting
as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act for us. Internal control over financial reporting is a
process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in
accordance with accounting principles generally accepted in the United States of America. Our internal control over
financial reporting includes those policies and procedures that:
● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets;
● provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial
statements in accordance with GAAP;
● provide reasonable assurance that receipts and expenditures are being made only in accordance with management and
director authorization; and
● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of assets that could have a material effect on the consolidated financial statements.
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With the participation of our Chief Executive Officer and our Chief Financial Officer, management evaluated the
effectiveness of our internal control over financial reporting as of January 29, 2022, based on the criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation management concluded that our internal controls over financial reporting were
effective as of January 29, 2022.
Our independent registered public accounting firm, Grant Thornton LLP, has audited our internal controls over
financial reporting. Their opinion on the effectiveness of our internal controls over financial reporting as of January 29,
2022 appears in item 4 below.
3. Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended January 29, 2022 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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4. Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Sportsman’s Warehouse Holdings, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited the internal control over financial reporting of Sportsman’s Warehouse Holdings, Inc. (a Delaware
corporation) and subsidiaries (the “Company”) as of January 29, 2022, based on criteria established in the 2013 Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of January 29, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued
by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended January 29, 2022,
and our report dated March 30, 2022 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Salt Lake City, Utah
March 30, 2022
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ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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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. This
Code of Conduct and Ethics is applicable to our principal executive officer, principal financial officer, principal accounting
officer and controller, or persons performing similar functions. The code is available on the Company’s website at
investors.sportsmanswarehouse.com. To the extent required by rules adopted by the SEC and Nasdaq, we intend to
promptly disclose future amendments to certain provisions of the code, or waivers of such provisions granted to executive
officers and directors on our website at investors.sportsmanswarehouse.com.
The remaining information required by this Item 10 will be included in our proxy statement for our 2022 annual
meeting of stockholders (the “Proxy Statement”) and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 will be included in our Proxy Statement and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED
STOCKHOLDER MATTERS
The information required by this Item 12 will be included in our Proxy Statement and is incorporated herein by
reference.
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 by
reference.
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 by
reference.
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this report:
PART IV
1.
Financial Statements: The following financial statements are included in Part II, Item 8 of this Annual Report
on Form 10-K.
●
●
●
●
●
●
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets – January 29, 2022 and January 30, 2021
Consolidated Statements of Income – Years ended January 29, 2022, January 30, 2021, and February 1,
2020
Consolidated Statements of Stockholders’ Equity – Years ended January 29, 2022, January 30, 2021, and
February 1, 2020
Consolidated Statements of Cash Flows – Years ended January 29, 2022, January 30, 2021, and
February 1, 2020
Notes to Consolidated Financial Statements
2.
Exhibits: See Item 15(b) below.
(b)
Exhibits
Exhibit
Number
2.1
3.1
3.2
4.1
4.2
10.1
10.2
10.3
Agreement and Plan of Merger, dated as of December 21, 2020, among Sportsman’s Warehouse Holdings,
Inc. Great Outdoors Group, LLC and Phoenix Merger Sub I, Inc. (incorporated by reference to Exhibit 2.1 to
the Company’s Current Report on Form 8-K filed on December 21, 2020).
Description
Amended and Restated Certificate of Incorporation of Sportsman’s Warehouse Holdings, Inc. (incorporated
by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on June 11, 2014).
Amended and Restated Bylaws of Sportsman’s Warehouse Holdings, Inc. (incorporated by reference to
Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on April 3, 2020).
Form of Specimen Common Stock of Sportsman’s Warehouse Holdings, Inc. (incorporated by reference to
Exhibit 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).
Description of Sportsman’s Warehouse Holdings, Inc. Common Stock (incorporated by reference to Exhibit
4.2 to the Company’s Annual Report on Form 10-K filed on April 9, 2020)
Termination Agreement, dated December 2, 2021, among Sportsman’s Warehouse Holdings, Inc., Great
Outdoors Group, LLC and Phoenix Merger Sub I, Inc. (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K filed with the SEC on December 2, 2021).
Amended and Restated Credit Agreement, dated as of May 23, 2018, Sportsman’s Warehouse, Inc., as Lead
Borrower, Wells Fargo Bank, National Association, as Administrative Agents, Collateral Agent, and Swing
Line Lender, and the other parties listed on the signature pages thereto. (incorporated by reference to Exhibit
10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 25, 2018).
Guaranty, dated as of May 23, 2018, by Sportsman’s Warehouse Holdings, Inc., as Guarantor, in favor of
Wells Fargo Retail Finance, LLC, as Administrative Agent and Collateral Agent, and the Credit Parties
(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May
25, 2018).
85
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Exhibit
Number
10.4
10.5
10.6
Description
Security Agreement, dated as of May 23, 2018, by Sportsman’s Warehouse, Inc., Minnesota Merchandising
Corp., Sportsman’s Warehouse Southwest, Inc. and Pacific Flyway, LLC, as Borrowers, and Sportsman’s
Warehouse Holdings, Inc., as Guarantor, in favor of Wells Fargo Retail Finance, LLC, as Collateral Agent
(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (Registration
No. 333-1944421) filed on May 25, 2018).
Sportsman’s Warehouse Holdings, Inc. 2019 Performance Incentive Plan (incorporated by reference to
Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 30, 2019).
Sportsman's Warehouse Holdings, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit
10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 28, 2015).
10.7*
Form of Director Restricted Stock Unit Award Agreement (2020) (incorporate by reference to Exhibit 10.9
to the Company’s Annual Report on Form 10-K filed on April 9, 2020)
10.8*+
Form of Time-Based Restricted Stock Unit Award Agreement (2021).
10.9*+
Form of Performance Restricted Stock Unit Award Agreement (2020).
10.10*
10.11*
10.12
10.13*
10.14*
10.15*
10.16*
Form of Indemnification Agreement for Directors and Executive Officers (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 8, 2019).
Employment Agreement, January 21, 2022, 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
January 27, 2022).
Severance Agreement, dated April 2, 2019, between Sportsman’s Warehouse Holdings, Inc. and Robert
Julian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
April 8, 2019).
Severance Agreement, dated September 26, 2021, between Sportsman’s Warehouse Holdings, Inc. and Jeff
White (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on
September 28, 2021).
Letter Agreement, dated January 21, 2022, between Sportsman’s Warehouse Holdings, Inc. and Jeff White
(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January
27, 2022).
280G Best-Net Agreement dated January 28, 2021 between Sportsman’s Warehouse Holdings, Inc. and Jon
Barker (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed on
April 2, 2021).
280G Best-Net Agreement dated January 28, 2021 between Sportsman’s Warehouse Holdings, Inc. and
Robert Julian (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K
filed on April 2, 2021).
21.1+
Subsidiaries of Sportsman’s Warehouse Holdings, Inc.
23.1+
Consent of Grant Thornton LLP.
23.2+
Consent of KPMG LLP
31.1+
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Exhibit
Number
31.2+
32.1***
101
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Description
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as created
by Section 906 of the Sarbanes-Oxley Act of 2002.
The following financial statements from the Company’s Annual Report on Form 10-K for the fiscal year
ended January 29, 2022, formatted in Inline XBRL: (i) Consolidated Statements of Income, (ii) Consolidated
Statements of Comprehensive Income, (iii) Consolidated Balance Sheets (iv) Consolidated Statements of
Stockholders’ Equity, (v) Consolidated Statements of Cash Flow and (v) Notes to Consolidated Financial
Statements, tagged as blocks of text and including detailed tags
104
The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended January 29,
2022, formatted in Inline XBRL (included as Exhibit 101)
* Management contract or compensatory plan or arrangement
+
Filed herewith
*** Furnished herewith
ITEM 16. FORM 10-K SUMMARY
Not Applicable
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
Date: March 30, 2022
By:
/s/Jon Barker
Jon Barker
President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
/s/Jon Barker
Jon Barker
/s/Jeff White
Jeff White
/s/Christopher Eastland
Christopher Eastland
/s/Gregory P. Hickey
Gregory P. Hickey
/s/Joseph P. Schneider
Joseph P. Schneider
/s/Richard McBee
Richard McBee
/s/Martha Bejar
Martha Bejar
/s/Phillip Williamson
Phillip Williamson
Title
Chief Executive
Officer and Director
(Principal Executive Officer)
Chief Financial Officer and Secretary
(Principal Financial and
Accounting Officer)
Director
Director
Director
Director
Director
Director
88
Date
March 30, 2022
March 30, 2022
March 30, 2022
March 30, 2022
March 30, 2022
March 30, 2022
March 30, 2022
March 30, 2022
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
2019 PERFORMANCE INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
Exhibit 10.8
THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is dated
as of [___________, 2021] (the “Grant Date”) by and between Sportsman’s Warehouse Holdings,
Inc., a Delaware corporation (the “Corporation”), and [___________] (the “Participant”).
W I T N E S S E T H
WHEREAS, pursuant to the Sportsman’s Warehouse Holdings, Inc. 2019 Performance
Incentive Plan (the “Plan”), the Corporation has granted to the Participant effective as of the date
hereof (the “Award Date”), a credit of stock units under the Plan (the “Award”), upon the terms and
conditions set forth herein and in the Plan;
NOW THEREFORE, in consideration of services rendered and to be rendered by the
Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the
parties agree as follows:
1.
Defined Terms. Capitalized terms used herein and not otherwise defined herein shall
have the meaning assigned to such terms in the Plan.
2.
Grant. Subject to the terms of this Agreement, the Corporation hereby grants to the
Participant an Award with respect to an aggregate of [___________] restricted stock units (subject to
adjustment as provided in Section 7.1 of the Plan) (the “Stock Units”). As used herein, the term
“stock unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes
to be equivalent to one outstanding share of the Corporation’s Common Stock (subject to adjustment
as provided in Section 7.1 of the Plan) solely for purposes of the Plan and this Agreement. The Stock
Units shall be used solely as a device for the determination of the payment to eventually be made to
the Participant if such Stock Units vest pursuant to Section 3. The Stock Units shall not be treated as
property or as a trust fund of any kind.
3.
Vesting. Subject to Section 8 below, the Award shall vest and become nonforfeitable
with respect to one-third (1/3) of the total number of Stock Units (subject to adjustment under
Section 7.1 of the Plan) on each of [___________, 2022], [___________, 2023] and [___________,
2024] (each, a “Vesting Tranche”, and the last such scheduled vesting date, the “Final Vesting
Date”).
4.
Continuance of Employment/Service Required; No Employment/Service
Commitment. Except as otherwise expressly provided in Section 8, the vesting schedule in Section 3
requires continued employment or service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Award and the rights and benefits under this Agreement.
Employment or service for only a portion of the vesting period, even if a substantial portion, will not
entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and
benefits upon or following a termination of employment or services as provided in Section 8 below or
under the Plan (except as otherwise expressly provided in Section 8).
Nothing contained in this Agreement or the Plan constitutes an employment or service
commitment by the Corporation, affects the Participant’s status, if he or she is an employee, as an
employee at will who is subject to termination without cause, confers upon the Participant any right to
remain employed by or in service to the Corporation or any Subsidiary, interferes in any way with the
right of the Corporation or any Subsidiary at any time to terminate such employment or services, or
affects the right of the Corporation or any Subsidiary to increase or decrease the Participant’s other
compensation or benefits. Nothing in this Agreement, however, is intended to adversely affect any
independent contractual right of the Participant without his or her consent thereto.
5.
Dividend and Voting Rights.
(a)
Limitations on Rights Associated with Units. The Participant shall have no
rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section
5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Stock Units
and any shares of Common Stock underlying or issuable in respect of such Stock Units until such
shares of Common Stock are actually issued to and held of record by the Participant. No adjustments
will be made for dividends or other rights of a holder for which the record date is prior to the date of
issuance of such shares.
(b)
Dividend Equivalent Rights Distributions. As of any date that the
Corporation pays an ordinary cash dividend on its Common Stock, the Corporation shall credit the
Participant with an additional number of Stock Units equal to (i) the per share cash dividend paid by
the Corporation on its Common Stock on such date, multiplied by (ii) the total number of Stock Units
(including any dividend equivalents previously credited hereunder) (with such total number adjusted
pursuant to Section 7.1 of the Plan) subject to the Award as of the related dividend payment record
date, divided by (iii) the fair market value of a share of Common Stock on the date of payment of such
dividend. Any Stock Units credited pursuant to the foregoing provisions of this Section 5(b) shall be
subject to the same vesting, payment and other terms, conditions and restrictions as the original Stock
Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 5(b)
with respect to any Stock Units which, as of such record date, have either been paid pursuant to
Section 7 or terminated pursuant to Section 8.
6.
Restrictions on Transfer and Other Restrictions. Neither the Award, nor any interest
therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or
otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily, except as set forth
in Section 5.6 of the Plan. The Amended and Restated Articles of Incorporation (the “Articles”) and
Bylaws of the Corporation, as either of them may be amended from time to time, may provide for
additional restrictions and limitations with respect to the Common Stock (including additional
restrictions and limitations on the transfer of shares). To the extent that these restrictions and
limitations are greater than those set forth in this Agreement, such restrictions and limitations shall
apply to the shares of Common Stock issuable with respect to the Award and are incorporated herein
by this reference. Such restrictions and limitations are not, however, in lieu of, nor shall they in any
way reduce or eliminate, any limitation or restriction on the shares of Common Stock acquired
pursuant to the Award imposed under the Plan or this Agreement.
7.
Timing and Manner of Payment of Stock Units. On or as soon as administratively
practical following each vesting of the applicable portion of the total Award pursuant to Section 3 or 8
hereof or Section 7 of the Plan (and in all events not later than two and one-half months after the
applicable vesting date), the Corporation shall deliver to the Participant a number of shares of
Common Stock (either by delivering one or more certificates for such shares or by entering such
shares in book entry form, as determined by the Corporation in its discretion) equal to the number of
Stock Units subject to this Award that vest on the applicable vesting date, unless such Stock Units
terminate prior to the given vesting date pursuant to Section 8. The Corporation’s obligation to deliver
shares of Common Stock or otherwise make payment with respect to vested Stock Units is subject to
the condition precedent that the Participant or other person entitled under the Plan to receive any
shares with respect to the vested Stock Units deliver to the Corporation any representations or other
documents or assurances required pursuant to Section 8.1 of the Plan. The Participant shall have no
further rights with respect to any Stock Units that are paid or that terminate pursuant to Section 8.
8.
Effect of Termination of Employment or Service.
(a)
General. If the Participant ceases to be employed by or ceases to provide
services to the Corporation or a Subsidiary regardless of the reason for the termination of the
Participant’s employment or service with the Corporation or a Subsidiary, whether with or without
cause, voluntarily or involuntarily, the Participant’s Stock Units shall, except as expressly provided
below, terminate as of the Severance Date (as defined below) to the extent such units have not become
vested pursuant to Section 3 hereof, Section 8(b) hereof, or Section 8(c) hereof upon the Severance
Date. If any unvested Stock Units are terminated hereunder, such Stock Units shall automatically
terminate and be cancelled as of the applicable Severance Date without payment of any consideration
by the Corporation and without any other action by the Participant, or the Participant’s beneficiary or
personal representative, as the case may be.
(b)
Termination Due to Death or Permanent Disability. In the event the
Participant’s Severance Date occurs prior to the Final Vesting Date and other than on one of the
vesting dates set forth in Section 3, and the Participant’s Severance Date is the result of the death or
Permanent Disability (as defined below) of the Participant, the next Vesting Tranche of the Award that
is scheduled to vest following the Participant’s Severance Date shall immediately vest and become
nonforfeitable as of the Participant’s Severance Date. The remaining unvested portion of the Stock
Units subject to the Award, after giving effect to the preceding sentence, shall terminate in accordance
with Section 8(a) of this Agreement.
(c)
Change of Control. In the event a Change of Control (as defined below) occurs
prior to the Final Vesting Date and prior to the Participant’s Severance Date, if the Participant’s
Severance Date is the result of a termination of the Participant’s employment by the Corporation or a
Subsidiary without Cause or by the Participant for Good Reason, in either case upon or within two
years following the Change of Control, the unvested portion of the Award shall immediately vest and
become nonforfeitable as of the Participant’s Severance Date.
(d)
Defined Terms. The following definitions shall apply for purposes of this
Agreement:
(i)
“Cause” with respect to the Participant means the definition of “Cause”
expressly provided in any written employment agreement (or offer letter or similar written agreement)
between the Participant and the Corporation or any Subsidiary that defines such term (or substantially
similar term, such as (without limitation) “gross misconduct”) in the context of the Participant’s
employment. If the Participant is not covered by such an agreement with the Corporation or a
Subsidiary that defines such term, then “Cause” with respect to the Participant means that one or more
of the following has occurred, as reasonably determined by the Board based on the information then
known to it: (A) the Participant’s commission of any felony; (B) the Participant takes any actions or
omissions intentionally causing the Corporation or any Subsidiary to violate any law, rule or regulation
(other than technical violations that have no material adverse impact on the Corporation or Subsidiary,
as applicable); (C) the Participant’s willful or reckless act or omission that injures the reputation or
business of the Corporation or any Subsidiary in any material way or is otherwise demonstrably
detrimental to the Corporation or a Subsidiary; (D) the Participant willfully fails or refuses to follow
the legal and clear directives of the Board or any superior to whom the Participant reports (unless the
following of such directive would be a violation of applicable law); (E) the Participant has been
dishonest in connection with his employment activities or committed or engaged in an act of theft,
embezzlement or fraud; or (F) the Participant has materially breached any provision of any agreement
to which the Participant is a party with the Corporation or any Subsidiary or any fiduciary duty the
Participant owes to the Corporation or any Subsidiary, provided in the event of a breach of such an
agreement or duty in which a cure is reasonably possible in the circumstances, the Corporation or
Subsidiary (as the case may be) provides written notice to the Participant of the condition(s) claimed
to constitute such breach and the Participant fails to remedy such condition(s) within thirty (30) days
after the date of such notice.
after the Award Date:
(ii)
“Change of Control” means the occurrence of any of the following
(A)
The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than 30% of either (1) the then-outstanding shares of common stock of the Corporation (the
“Outstanding Company Common Stock”) or (2) the combined voting power of the then-
outstanding voting securities of the Corporation entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that, for
purposes of this clause (A), the following acquisitions shall not constitute a Change of Control;
(a) any acquisition directly from the Corporation, (b) any acquisition by the Corporation, (c)
any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any affiliate of the Corporation or a successor, (d) any acquisition by a Person
or affiliate of a Person who owned more than 30% of the Outstanding Company Common
Stock or Outstanding Company Voting Securities on the Award Date, or (e) any acquisition by
any entity pursuant to a transaction that complies with clauses (C)(1), (2) and (3) below;
(B)
Individuals who, as of the Award Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
Award Date whose election, or nomination for election by the Corporation’s stockholders, was
approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board
(including for these purposes, the new members whose election or nomination was so
approved, without counting the member and his predecessor twice) shall be considered as
though such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person other than the
Board;
(C)
Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving the Corporation or any of
its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the
Corporation, or the acquisition of assets or stock of another entity by the Corporation or any of
its Subsidiaries (each, a “Business Combination”), in each case unless, following such
Business Combination, (1) all or substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such transaction, owns
the Corporation or all or substantially all of the Corporation's assets directly or through one or
more subsidiaries (a “Parent”)) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding
any entity resulting from such Business Combination or a Parent or any employee benefit plan
(or related trust) of the Corporation or such entity resulting from such Business Combination or
Parent) beneficially owns, directly or indirectly, more than 30% of, respectively, the then-
outstanding shares of common stock of the entity resulting from such Business Combination or
the combined voting power of the then-outstanding voting securities of such entity, except to
the extent that the ownership in excess of 30% existed prior to the Business Combination, and
(3) at least a majority of the members of the board of directors or trustees of the entity resulting
from such Business Combination or a Parent were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action of the Board providing for such
Business Combination; or
(D)
Approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation other than in the context of a Business
Combination.
(iii)
“Good Reason” with respect to the Participant means the definition of
“Good Reason” expressly provided in any written employment agreement (or offer letter or similar
written agreement) between the Participant and Corporation or any Subsidiary that defines such term
(or substantially similar term) in the context of the Participant’s employment. If the Participant is not
covered by such an agreement with the Corporation or a
Subsidiary that defines such term, then “Good Reason” with respect to the Participant means the
occurrence (without the Participant’s consent) of any one or more of the following conditions: (A) a
significant and material diminution by the Corporation in the Participant’s position, responsibilities,
reporting responsibilities or title, or a reduction by the Corporation in the Participant’s base salary; or
(B) a material breach by the Corporation of a written employment agreement to which the Corporation
and the Participant are a party; provided, however, that any such condition or conditions, as applicable,
shall not constitute grounds for a termination for Good Reason unless both (x) the Participant provides
written notice to the Corporation of the condition claimed to constitute grounds for Good Reason
within sixty (60) days of the initial existence of such condition(s), and (y) the Corporation fails to
remedy such condition(s) within thirty (30) days of receiving such written notice thereof; and
provided, further, that in all events the termination of the Participant’s employment shall not constitute
a termination for Good Reason unless such termination occurs not more than one hundred and eighty
(180) days following the initial existence of the condition claimed to constitute grounds for Good
Reason.
(iv)
“Permanent Disability” with respect to the Participant means any
mental or physical illness or disability that renders the Participant incapable of performing the
Participant’s duties, even with a reasonable accommodation, for more than twelve (12) consecutive
weeks in any twelve-month period, unless a longer period is required by law. The date of Permanent
Disability will be the date on which the Administrator declares the incapacity on the grounds
described above.
(v)
“Severance Date” means the last day that the Participant is employed
by or provides services to the Corporation or a Subsidiary. A termination of employment shall not be
considered to have occurred for purposes of the Award if the Participant is employed by the
Corporation and such employment terminates but immediately following such termination of
employment the Participant continues as an employee of a Subsidiary or if the Participant is employed
by a Subsidiary and such employment terminates but immediately following such termination of
employment the Participant continues as an employee of the Corporation or another Subsidiary.
9.
Adjustments Upon Specified Events. Upon the occurrence of certain events relating
to the Corporation’s stock contemplated by Section 7.1 of the Plan (including, without limitation, an
extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance
with such section in the number of Stock Units then outstanding and the number and kind of securities
that may be issued in respect of the Award. No such adjustment shall be made with respect to any
ordinary cash dividend for which dividend equivalents are credited pursuant to Section 5(b).
10.
Restrictive Covenants. The Participant agrees to abide by and be subject to the non-
competition restrictions, non-solicitation restrictions, confidentiality restrictions, non-disparagement
restrictions and other restrictive covenants as set forth in the attached Exhibit A, incorporated herein
by this reference (the “Restrictive Covenants”).
11.
Tax Withholding. Subject to Section 8.1 of the Plan, upon any distribution of shares
of Common Stock in respect of the Stock Units, the Corporation shall automatically reduce the
number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole
shares, valued at their then fair market value (with the “fair market value” of such shares determined
in accordance with the applicable provisions of the Plan), to satisfy any withholding obligations of the
Corporation or its Subsidiaries with respect to such distribution of shares. In the event that the
Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or in the
event of a cash payment or any other withholding event in respect of the Stock Units, the Corporation
(or a Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to
deduct from other compensation payable to the Participant any sums required by federal, state or local
tax law to be withheld with respect to such distribution or payment.
12.
Notices. Any notice to be given under the terms of this Agreement shall be in writing
and addressed to the Corporation at its principal office to the attention of the Secretary, and to the
Participant at the Participant’s last address reflected on the Corporation’s records, or at such other
address as either party may hereafter designate in writing to the other. Any such notice shall be given
only when received, but if the Participant is no longer an employee of or in service to the Corporation,
shall be deemed to have been duly given by the Corporation when enclosed in a properly sealed
envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly maintained by the United
States Government.
13.
Plan. The Award and all rights of the Participant under this Agreement are subject to
the terms and conditions of the provisions of the Plan, incorporated herein by reference. The
Participant agrees to be bound by the terms of the Plan and this Agreement. The Participant
acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this
Agreement. Unless otherwise expressly provided in other sections of this Agreement, provisions of
the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be
deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are
otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of
the Board or the Administrator under the Plan after the date hereof.
14.
Entire Agreement. This Agreement (including the Restrictive Covenants attached
hereto) and the Plan together constitute the entire agreement and supersede all prior understandings
and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The
Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must
be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any
provision hereof in writing to the extent such waiver does not adversely affect the interests of the
Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of
the same provision or a waiver of any other provision hereof.
15.
Limitation on Participant’s Rights. Participation in the Plan confers no rights or
interests other than as herein provided. This Agreement creates only a contractual obligation on the
part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither
the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only
the rights of a general unsecured creditor of the Corporation with respect to amounts credited and
benefits payable, if any, with respect to the Stock Units, and rights no
greater than the right to receive the Common Stock as a general unsecured creditor with respect to
Stock Units, as and when payable hereunder.
16.
Counterparts. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which together shall constitute one
and the same instrument.
17.
Section Headings. The section headings of this Agreement are for convenience of
reference only and shall not be deemed to alter or affect any provision hereof.
18.
Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without regard to conflict of law principles
thereunder.
19.
Construction. It is intended that the terms of the Award will not result in the
imposition of any tax liability pursuant to Section 409A of the Code. This Agreement shall be
construed and interpreted consistent with that intent.
20.
Clawback Policy. The Stock Units are subject to the terms of the Corporation’s
recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar
provisions of applicable law, any of which could in certain circumstances require repayment or
forfeiture of the Stock Units or any shares of Common Stock or other cash or property received with
respect to the Stock Units (including any value received from a disposition of the shares acquired upon
payment of the Stock Units).
21.
No Advice Regarding Grant. The Participant is hereby advised to consult with his or
her own tax, legal and/or investment advisors with respect to any advice the Participant may determine
is needed or appropriate with respect to the Stock Units (including, without limitation, to determine
the foreign, state, local, estate and/or gift tax consequences with respect to the Award). Neither the
Corporation nor any of its officers, directors, affiliates or advisors makes any representation (except
for the terms and conditions expressly set forth in this Award Agreement) or recommendation with
respect to the Award. Except for the withholding rights set forth in Section 11 above, the Participant is
solely responsible for any and all tax liability that may arise with respect to the Award.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed on its
behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the date
and year first above written.
SPORTSMAN’S WAREHOUSE
HOLDINGS, INC.,
a Delaware corporation
By:__________________________________
Print Name: [__________]
Its: [__________]
PARTICIPANT
___________________________________
Signature
___________________________________
Print Name
EXHIBIT A
RESTRICTIVE COVENANTS
The Participant agrees to abide by and be subject to the covenants set forth in this Exhibit A. If
the Participant previously received one or more awards under the Plan, the provisions of this Exhibit A
also replace the covenants set forth in any similar restrictive covenant exhibit to any award
agreement(s) evidencing such prior award(s) (the “Prior Restrictive Covenants”). In the event of
any conflict or inconsistency between this Exhibit A and any Prior Restrictive Covenants, this Exhibit
A controls.
1.
Confidentiality.
The Participant will not, during the term of his/her employment with the Corporation or at any
time thereafter, (a) directly or indirectly, divulge, furnish, publish, distribute, disclose, exploit or
otherwise make available to any person or entity, whether or not a competitor of the Corporation, or
(b) otherwise use Confidential Information for any purpose except as necessary to perform such
Participant’s duties to the Corporation. In addition, and without limiting the generality of the
foregoing, the Participant will not make any Unauthorized disclosure of Confidential Information. All
references herein to the “Corporation” will be deemed to include its subsidiaries and affiliates.
As used herein, the term:
(a)
“Confidential Information” means trade secrets, confidential or proprietary
information, and all other information, documents or materials, relating to, owned, developed or
possessed by the Corporation, whether in tangible or intangible form. Confidential Information
includes, but is not limited to, financial information, products, product and service costs, prices, profits
and sales, new business, technical or other ideas, proposals, plans and designs, business strategies,
product and service plans, marketing plans and studies, forecasts, budgets, projections, computer
programs, data bases and the documentation and information contained therein, computer access codes
and similar information, source codes, know-how, technologies, concepts and designs, including,
without limitation, patent applications, research projects and all information connected with research
and development efforts, records, business relationships, methods and recommendations, existing or
prospective client, customer, vendor and supplier information (including, but not limited to, identities,
needs, transaction histories, volumes, characteristics, agreements, prices, identities of individual
contacts, and spending preferences or habits), training manuals and similar materials used by the
Corporation in conducting its business operations, skills, responsibilities, compensation and personnel
files of employees, directors and independent contractors of the Corporation, competitive analyses,
contracts, product formulations, and other confidential or proprietary information that has not been
made available to the general public by the Corporation. Confidential Information will not include
information that (i) is or becomes generally available to the public through no act or omission on the
part of the Participant, (ii) is hereafter received on a non-confidential basis by the Participant from a
third party who has the lawful right to disclose such information, or (iii) the Participant is required to
disclose pursuant to court order or law.
(b)
“Unauthorized” means: in contravention of or otherwise inconsistent with (i)
this Award Agreement or the policies or procedures of the Corporation; (ii) any measures taken by the
Corporation to protect its interests in the Confidential Information; (iii) lawful instruction or directive,
either written or oral, of a director, officer or employee of the Corporation empowered to issue such
instruction or directive; (iv) any duty existing under law or contract; or (v) the Corporation’s best
interests.
The Participant further agrees to take all reasonable measures to prevent unauthorized persons
or entities from obtaining or using Confidential Information. Promptly upon termination, for any
reason, of the Participant’s employment with the Corporation, the Participant agrees to deliver to the
Corporation all property and materials within the Participant’s possession or control that belong to the
Corporation or contain Confidential Information.
Notwithstanding anything in this Award Agreement or in a prior equity award or other
agreement with the Corporation or any of its affiliates to the contrary: (1) the Participant may
truthfully respond to a lawful and valid subpoena or other legal process, but shall give the Corporation
the earliest possible notice thereof, shall, as much in advance of the return date as possible, make
available to the Corporation and its counsel the documents and other information sought, and shall
assist the Corporation and such counsel in resisting or otherwise responding to such process; and (2)
no provision in this Award Agreement or any such other agreement limits the Participant’s right (i) to
discuss the terms, wages, and working conditions of the Participant’s employment to the extent
permitted and/or protected by applicable labor laws, (ii) to report Confidential Information in a
confidential manner either to a federal, state or local government official or to an attorney where such
disclosure is solely for the purpose of reporting or investigating a suspected violation of law, or (iii) to
disclose Confidential Information in an anti-retaliation lawsuit or other legal proceeding, so long as
that disclosure or filing is made under seal and the Participant does not otherwise disclose such
Confidential Information, except pursuant to court order. The Corporation encourages the Participant,
to the extent legally permitted, to give the Corporation the earliest possible notice of any such report or
disclosure.
2.
Non-Competition; Non-Solicitation; Non-Disparagement.
(a)
In consideration for the rights granted to Participant under this Award
Agreement, during the applicable Restriction Period, as described below, the Participant will not,
directly or indirectly, in any Restricted Area, own, manage, engage in, operate, control, work for,
consult with, render services for, do business with, maintain any interest in (proprietary, financial or
otherwise), lend money or reputation to, or participate in the ownership, management, operation or
control of, any business or entity, whether in corporate, proprietorship or partnership form or
otherwise, that directly or indirectly competes with the Corporation, whether on a retail or e-commerce
basis, including, without limitation, any business that owns or operates, directly or indirectly, stores
commonly referred to as Cabela’s, Bass Pro Shops, Scheels or Gander Outdoors (in each case a
“Restricted Business”); provided, however, that the restrictions in this Section 2(a) will not restrict
the acquisition by the Participant, directly or indirectly, of less than 2% of the outstanding capital stock
of any publicly traded company engaged in a Restricted Business. As used herein, “Restricted Area”
means North America.
(b)
During the applicable Restriction Period, the Participant will not, directly or
indirectly:
(i)
hire, offer to hire, solicit, divert, entice away, or in any other manner
persuade, or attempt to do any of the foregoing (“Solicit”), any person who is an officer,
employee or consultant of the Corporation to accept employment with a third party (including,
for purposes of this Section 2(b), any business or entity that is not an affiliate of the
Corporation, even if the business or entity is affiliated with a stockholder of the Corporation);
(ii)
solicit any person or entity who was, at any time within six months prior
to the Solicitation, an officer, employee, agent or consultant of the Corporation to work for a
third party engaged in a Restricted Business;
(iii)
publish or communicate (other than statements made while employed by
the Corporation or one of its affiliates in connection with carrying out the Participant's duties
and responsibilities for the Corporation or any of its affiliates), in a manner intended to be
public or that should reasonably be expected to become public (including, without limitation,
through social media), disparaging or derogatory statements or opinions about the Corporation
or any of its affiliates, stockholders, officers, employees, directors, or customers; provided that
it shall not be a breach of this clause (iv) for the Participant to testify truthfully in any judicial
or administrative proceeding or to make statements or allegations in legal filings that are based
on the Participant's reasonable belief and are not made in bad faith; or
(iv)
solicit, (A) any actual or prospective customer, supplier or distributor of
the Corporation to become a customer, supplier or distributor of any third party engaged in a
Restricted Business or (B) any customer, supplier or distributor to cease doing business with
the Corporation or reduce its dealings with the Corporation.
(c)
“Restriction Period” means the duration of the Participant’s employment by
the Corporation, and:
(i)
with respect to Section 2(a) above, the 12 months following the
cessation of Participant’s employment; provided, however, that if the shares of Common Stock
that are issued pursuant to the Award are redeemed by the Corporation pursuant to the Articles,
the Restriction Period for purposes of Section 2(a) will end;
(ii)
with respect to Sections 2(b)(i), 2(b)(ii) and 2(b)(iv), three years
following the termination of such employment; and
(iii)
with respect to Section 2(b)(iii), indefinitely thereafter.
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
2019 PERFORMANCE INCENTIVE PLAN
PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT
Exhibit 10.9
THIS PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT (this
“Agreement”) is dated as of [_______], 20[__] by and between Sportsman’s Warehouse Holdings,
Inc., a Delaware corporation (the “Corporation”), and [_______] (the “Participant”).
W I T N E S S E T H
WHEREAS, pursuant to the Sportsman’s Warehouse Holdings, Inc. 2019 Performance
Incentive Plan (the “Plan”), the Corporation has granted to the Participant effective as of the date
hereof (the “Award Date”), a credit of stock units under the Plan (the “Award”), upon the terms and
conditions set forth herein and in the Plan.
NOW THEREFORE, in consideration of services rendered and to be rendered by the
Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the
parties agree as follows:
1.
Defined Terms. Capitalized terms used herein and not otherwise defined herein shall
have the meaning assigned to such terms in the Plan.
2.
Grant. Subject to the terms of this Agreement, the Corporation hereby grants to the
Participant an Award with respect to a “target” of [______] restricted stock units (subject to
adjustment as provided in Section 7.1 of the Plan) (the “Stock Units”) (such number of Stock Units
subject to the Award is referred to as the “Target Stock Units”). As used herein, the term “stock unit”
shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be
equivalent to one outstanding share of the Corporation’s Common Stock (subject to adjustment as
provided in Section 7.1 of the Plan) solely for purposes of the Plan and this Agreement. The Stock
Units shall be used solely as a device for the determination of the payment to eventually be made to
the Participant if such Stock Units vest pursuant to Section 3. The Stock Units shall not be treated as
property or as a trust fund of any kind.
3.
Performance-Based and Time-Based Vesting. Subject to Section 8 below, between
0% and 200% of one-third of the Target Stock Units subject to the Award shall become eligible to vest
based on the achievement of certain performance goals in each of the Corporation’s 20[__], 20[__] and
20[__] fiscal years (each, a “Performance Year,” and collectively, the “Performance Period”) as set
forth in Section 3(a) of this Agreement and, with respect to any Stock Units subject to the Award that
become eligible to vest in accordance with Section 3(a) of this Agreement, such units shall vest and
become nonforfeitable based on the achievement of the time-based vesting requirements set forth in
Section 3(b) of this Agreement.
(a)
Eligibility to Vest Based Upon Corporate Performance. The percentage of the
Target Stock Units that become eligible to vest, if any, based on the achievement of the performance
goals with respect to the applicable Performance Year, as determined in accordance with Exhibit A
attached hereto, are referred to as the “Eligible Stock Units.” (For purposes of clarity, in no event
shall the maximum number of stock units that are deemed to be Eligible Stock Units for any
applicable Performance Year exceed 200% of one-third of the Target Stock
Units subject to the Award.) Any Stock Units corresponding to a particular Performance Year (one-
third of the Target Stock Units subject to the Award) that the Administrator determines shall not be
Eligible Stock Units for the applicable Performance Year in accordance with this Section 3(a) shall
terminate and be forfeited as of the last day of such Performance Year, and the Participant shall have
no further rights with respect to any such Stock Units corresponding to the Performance Year that are
determined not to be Eligible Stock Units for such Performance Year in accordance with this Section
3(a).
(b)
Vesting. Subject to the terms and conditions of this Agreement, the number of
Stock Units that (1) the Administrator has determined are Eligible Stock Units in accordance with
Section 3(a) of this Agreement and (2) do not otherwise vest in accordance with Section 8 of this
Agreement, if any, shall vest and shall become nonforfeitable on [_______], 20[__], subject to the
Participant’s continuous employment or service to the Corporation or a Subsidiary through such date.
4.
Continuance of Employment/Service Required; No Employment/Service
Commitment. Except as otherwise expressly provided in Section 8, the vesting schedule in Section 3
requires continued employment or service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Award and the rights and benefits under this Agreement.
Employment or service for only a portion of the vesting period, even if a substantial portion, will not
entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and
benefits upon or following a termination of employment or services as provided in Section 8 below or
under the Plan (except as otherwise expressly provided in Section 8).
Nothing contained in this Agreement or the Plan constitutes an employment or service
commitment by the Corporation, affects the Participant’s status, if he or she is an employee, as an
employee at will who is subject to termination without cause, confers upon the Participant any right to
remain employed by or in service to the Corporation or any Subsidiary, interferes in any way with the
right of the Corporation or any Subsidiary at any time to terminate such employment or services, or
affects the right of the Corporation or any Subsidiary to increase or decrease the Participant’s other
compensation or benefits. Nothing in this Agreement, however, is intended to adversely affect any
independent contractual right of the Participant without his or her consent thereto.
5.
Dividend and Voting Rights.
(a)
Limitations on Rights Associated with Units. The Participant shall have no
rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section
5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Stock Units
and any shares of Common Stock underlying or issuable in respect of such Stock Units until such
shares of Common Stock are actually issued to and held of record by the Participant. No adjustments
will be made for dividends or other rights of a holder for which the record date is prior to the date of
issuance of such shares.
(b)
Dividend Equivalent Rights Distributions. As of any date that the
Corporation pays an ordinary cash dividend on its Common Stock, the Corporation shall credit
the Participant with an additional number of Stock Units equal to (i) the per share cash dividend paid
by the Corporation on its Common Stock on such date, multiplied by (ii) the total number of Stock
Units (including any dividend equivalents previously credited hereunder) (with such total number
adjusted pursuant to Section 7.1 of the Plan) subject to the Award as of the related dividend payment
record date, divided by (iii) the fair market value of a share of Common Stock on the date of payment
of such dividend. Any Stock Units credited pursuant to the foregoing provisions of this Section 5(b)
shall be subject to the same vesting, payment and other terms, conditions and restrictions as the
original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this
Section 5(b) with respect to any Stock Units which, as of such record date, have either been paid
pursuant to Section 7 or terminated pursuant to Section 8.
6.
Restrictions on Transfer and Other Restrictions. Neither the Award, nor any interest
therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or
otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily, except as set forth
in Section 5.6 of the Plan. The Amended and Restated Articles of Incorporation (the “Articles”) and
Bylaws of the Corporation, as either of them may be amended from time to time, may provide for
additional restrictions and limitations with respect to the Common Stock (including additional
restrictions and limitations on the transfer of shares). To the extent that these restrictions and
limitations are greater than those set forth in this Agreement, such restrictions and limitations shall
apply to the shares of Common Stock issuable with respect to the Award and are incorporated herein
by this reference. Such restrictions and limitations are not, however, in lieu of, nor shall they in any
way reduce or eliminate, any limitation or restriction on the shares of Common Stock acquired
pursuant to the Award imposed under the Plan or this Agreement.
7.
Timing and Manner of Payment of Stock Units. On or as soon as administratively
practical following each vesting of the applicable portion of the total Award pursuant to Section 3 or 8
hereof or Section 7 of the Plan (and in all events not later than two and one-half months after the
applicable vesting date), the Corporation shall deliver to the Participant a number of shares of
Common Stock (either by delivering one or more certificates for such shares or by entering such
shares in book entry form, as determined by the Corporation in its discretion) equal to the number of
Stock Units subject to this Award that vest on the applicable vesting date, unless such Stock Units
terminate prior to the given vesting date pursuant to Section 3(a) or Section 8. The Corporation’s
obligation to deliver shares of Common Stock or otherwise make payment with respect to vested
Stock Units is subject to the condition precedent that the Participant or other person entitled under the
Plan to receive any shares with respect to the vested Stock Units deliver to the Corporation any
representations or other documents or assurances required pursuant to Section 8.1 of the Plan. The
Participant shall have no further rights with respect to any Stock Units that are paid or that terminate
pursuant to Section 8.
8.
Effect of Termination of Employment or Service.
(a)
General. If the Participant ceases to be employed by or ceases to provide
services to the Corporation or a Subsidiary regardless of the reason for the termination of the
Participant’s employment or service with the Corporation or a Subsidiary, whether with or without
cause, voluntarily or involuntarily, the Participant’s Stock Units shall, except as expressly provided
below, terminate as of the Severance Date (as defined below) to the extent such units have not become
vested pursuant to Section 3 hereof, Section 8(b) hereof, or Section 8(c) hereof upon the Severance
Date. If the period of time that the Participant has to consider the release contemplated
by Sections (d)(i), (d)(ii) and (d)(iii) hereof and Section [____] of the Participant’s
[Employment/Severance] Agreement with the Corporation dated [_________] (the
“[Employment/Severance] Agreement”), plus any applicable revocation period, spans two calendar
years, payment of any Stock Units that accelerate and become vested as of the Severance Date shall be
made as provided in Section 7 but in the second of such two calendar years. If any unvested Stock
Units are terminated hereunder, such Stock Units shall automatically terminate and be cancelled as of
the applicable Severance Date without payment of any consideration by the Corporation and without
any other action by the Participant, or the Participant’s beneficiary or personal representative, as the
case may be.
(b)
Termination Due to Death or Permanent Disability. In the event the
Participant’s Severance Date occurs prior to [______], 20[__], and the Participant’s Severance Date is
the result of the death or Permanent Disability (as defined below) of the Participant, the following
shall apply with respect to the Award:
(i)
If the Severance Date occurs on or before [______], 20[__]: (A) the
Stock Units subject to the Award corresponding to the fiscal 20[__] Performance Year will continue to
be eligible to vest in accordance with Section 3(a) hereof with respect to that Performance Year as
though the Participant’s employment or service had not terminated; (B) any Stock Units subject to the
Award that are deemed to be Eligible Stock Units for the fiscal 20[__] Performance Year in accordance
with Section 3(a) hereof shall immediately vest and become nonforfeitable as of the last day of such
Performance Year; and (C) the remaining unvested Stock Units subject to the Award, after giving
effect to the preceding clause (B), shall terminate in accordance with Section 8(a) of this Agreement.
(ii)
If the Severance Date occurs after [______], 20[__] but on or before
[______], 20[__]: (A) any Stock Units subject to the Award that are deemed to be Eligible Stock Units
for the fiscal 20[__] Performance Year shall immediately vest and become nonforfeitable as of the
Participant’s Severance Date; (B) the Stock Units subject to the Award corresponding to the fiscal
20[__] Performance Year will continue to be eligible to vest in accordance with Section 3(a) hereof
with respect to that Performance Year as though the Participant’s employment or service had not
terminated; (C) any Stock Units subject to the Award that are deemed to be Eligible Stock Units for
the fiscal 20[__] Performance Year in accordance with Section 3(a) hereof shall immediately vest and
become nonforfeitable as of the last day of such Performance Year; and (D) the remaining unvested
Stock Units subject to the Award, after giving effect to the preceding clauses (A) and (C), shall
terminate in accordance with Section 8(a) of this Agreement.
(iii)
If the Severance Date occurs after [______], 20[__] but on or before
[______], 20[__]: (A) any Stock Units subject to the Award that are deemed to be Eligible Stock Units
for the fiscal 20[__] Performance Year or for the fiscal 20[__] Performance Years shall immediately
vest and become nonforfeitable as of the Participant’s Severance Date; (B) the Stock Units subject to
the Award corresponding to the fiscal 20[__] Performance Year will continue to be eligible to vest in
accordance with Section 3(a) hereof with respect to that Performance Year as though the Participant’s
employment or service had not terminated; (C) any
Stock Units subject to the Award that are deemed to be Eligible Stock Units for the fiscal 20[__]
Performance Year in accordance with Section 3(a) hereof shall immediately vest and become
nonforfeitable as of the last day of such Performance Year; and (D) the remaining unvested Stock
Units subject to the Award, after giving effect to the preceding clauses (A) and (C), shall terminate in
accordance with Section 8(a) of this Agreement.
(c)
Change of Control. Notwithstanding anything to the contrary in Section 7 of
the Plan, in the event a Change of Control (as defined below) occurs prior to [______], 20[__] and
prior to the Participant’s Severance Date, the following shall apply with respect to the Award:
(i)
If the Award is assumed, substituted, exchanged, or otherwise continued
following the Change of Control, and in the event the Participant’s Severance Date occurs as a result
of a termination of employment by the Corporation or a Subsidiary without Cause or by the Participant
for Good Reason upon or following the Change of Control and on or before [______], 20[__] (in lieu
of any accelerated vesting provided for in Section [____] of the [Employment/Severance] Agreement;
subject to the Participant satisfying the release requirement of Section [____] of the
[Employment/Severance] Agreement), the Target Stock Units shall be subject to adjustment and pro-
rated vesting as provided in the next sentence. In such circumstances, the number of Target Stock
Units that will become eligible to vest will be the sum of: (1) the greater of: (A) the number of Eligible
Stock Units with respect to the fiscal 20[__] Performance Year determined as though the fiscal 20[__]
Performance Year ended as of the Severance Date, with the Adjusted EPS and Total Revenue
performance goals set forth on Exhibit A for the fiscal 20[__] Performance Year pro-rated based on the
ratio of the number of calendar days in the fiscal 20[__] Performance Year that occurred while the
Participant was employed by or providing services to the Corporation or a Subsidiary to the total
number of calendar days in the fiscal 20[__] Performance Year, and with performance for the fiscal
20[__]Performance Year determined based on actual performance for such shortened period against
the pro-rated Adjusted EPS and Total Revenue goals, and (B) one-third of the number of Target Stock
Units, and (2) two-thirds of the number of Target Stock Units. Any Stock Units subject to the Award
that are deemed eligible to vest in accordance with the preceding provisions of this Section 8(c)(i)
shall immediately vest and become nonforfeitable as of the Participant’s Severance Date. The
remaining unvested portion of the Stock Units subject to the Award, after giving effect to the
preceding sentence, shall terminate in accordance with Section 8(a) of this Agreement.
(ii)
If the Award is assumed, substituted, exchanged, or otherwise continued
following the Change of Control, and in the event the Participant’s Severance Date occurs as a result
of a termination of employment by the Corporation or a Subsidiary without Cause or by the Participant
for Good Reason upon or following the Change of Control and after [______], 20[__] but on or before
[______], 20[__] (in lieu of any accelerated vesting provided for in Section [___]of the
[Employment/Severance] Agreement; subject to the Participant satisfying the release requirement of
Section [___] of the [Employment/Severance] Agreement), the Target Stock Units shall be subject to
adjustment and pro-rated vesting as provided in the next sentence. In such circumstances, the number
of Target Stock Units that will become eligible to vest will be the sum of: (1) any Stock Units subject
to the Award that are deemed to be Eligible Stock Units for the fiscal 20[__] Performance Year, (2) the
greater of: (A) the
number of Eligible Stock Units with respect to the fiscal 20[__] Performance Year determined as
though the fiscal 20[__] Performance Year ended as of the Severance Date, with the Adjusted EPS and
Total Revenue performance goals set forth on Exhibit A for the fiscal 20[__] Performance Year pro-
rated based on the ratio of the number of calendar days in the fiscal 20[__] Performance Year that
occurred while the Participant was employed by or providing services to the Corporation or a
Subsidiary to the total number of calendar days in the fiscal 20[__] Performance Year, and with
performance for the fiscal 20[__] Performance Year determined based on actual performance for such
shortened period against the pro-rated Adjusted EPS and Total Revenue goals, and (B) one-third of the
number of Target Stock Units, and (3) one-third of the number of Target Stock Units. Any Stock Units
subject to the Award that are deemed eligible to vest in accordance with the preceding provisions of
this Section 8(c)(ii) shall immediately vest and become nonforfeitable as of the Participant’s Severance
Date. The remaining unvested portion of the Stock Units subject to the Award, after giving effect to
the preceding sentence, shall terminate in accordance with Section 8(a) of this Agreement.
(iii)
If the Award is assumed, substituted, exchanged, or otherwise continued
following the Change of Control, and in the event the Participant’s Severance Date occurs as a result
of a termination of employment by the Corporation or a Subsidiary without Cause or by the Participant
for Good Reason upon or following the Change of Control and after [______], 20[__] but on or before
[______], 20[__] (in lieu of any accelerated vesting provided for in Section [___] of the
[Employment/Severance] Agreement; subject to the Participant satisfying the release requirement of
Section [___] of the [Employment/Severance] Agreement), the Target Stock Units shall be subject to
adjustment and pro-rated vesting as provided in the next sentence. In such circumstances, the number
of Target Stock Units that will become eligible to vest will be the sum of: (1) any Stock Units subject
to the Award that are deemed to be Eligible Stock Units for the fiscal 20[__] Performance Year plus
any Stock Units subject to the Award that are deemed to be Eligible Stock Units for the fiscal 20[__]
Performance Year and (2) the greater of: (A) the number of Eligible Stock Units with respect to the
fiscal 20[__] Performance Year determined as though the fiscal 20[__] Performance Year ended as of
the Severance Date, with the Adjusted EPS and Total Revenue performance goals set forth on Exhibit
A for the fiscal 20[__] Performance Year pro-rated based on the ratio of the number of calendar days
in the fiscal 20[__] Performance Year that occurred while the Participant was employed by or
providing services to the Corporation or a Subsidiary to the total number of calendar days in the fiscal
20[__] Performance Year, and with performance for the fiscal 20[__] Performance Year determined
based on actual performance for such shortened period against the pro-rated Adjusted EPS and Total
Revenue goals, and (B) one-third of the Target Stock Units. Any Stock Units subject to the Award that
are deemed eligible to vest in accordance with the preceding provisions of this Section 8(c)(iii) shall
immediately vest and become nonforfeitable as of the Participant’s Severance Date. The remaining
unvested portion of the Stock Units subject to the Award, after giving effect to the preceding sentence,
shall terminate in accordance with Section 8(a) of this Agreement.
(iv)
If the Award is not assumed, substituted, exchanged, or otherwise
continued following the Change of Control, and the Change of Control occurs on or before [______],
20[__], the Target Stock Units shall be subject to adjustment and pro-rated vesting as provided in the
next sentence. In such circumstances, the number of Target Stock Units that will become eligible to
vest will be the sum of: (1) the greater of: (A) the number of Eligible Stock
Units with respect to the fiscal 20[__] Performance Year determined as though the fiscal 20[__]
Performance Year ended as of the date of the Change of Control, with the Adjusted EPS and Total
Revenue performance goals set forth on Exhibit A for the fiscal 20[__] Performance Year pro-rated
based on the ratio of the number of calendar days in the fiscal 20[__] Performance Year that occurred
prior to the date of the Change of Control to the total number of calendar days in the fiscal 20[__]
Performance Year, and with performance for the fiscal 20[__] Performance Year determined based on
actual performance for such shortened period against the pro-rated Adjusted EPS and Total Revenue
goals, and (B) one-third of the Target Stock Units, and (2) two-third of the number of Target Stock
Units. Any Stock Units subject to the Award that are deemed eligible to vest in accordance with the
preceding provisions of this Section 8(c)(iv) shall immediately vest and become nonforfeitable as of
(or, as necessary to give effect to such acceleration, immediately prior to) the Change of Control. The
remaining unvested portion of the Stock Units subject to the Award, after giving effect to the
preceding sentence, shall terminate as of the date of the Change of Control.
(v)
If the Award is not assumed, substituted, exchanged, or otherwise
continued following the Change of Control, and the Change of Control occurs after [______], 20[__]
but on or before [______], 20[__], the Target Stock Units shall be subject to adjustment and pro-rated
vesting as provided in the next sentence. In such circumstances, the number of Target Stock Units that
will become eligible to vest will be the sum of: (1) any Stock Units subject to the Award that are
deemed to be Eligible Stock Units for the fiscal 20[__] Performance Year, (2) the greater of: (A) the
number of Eligible Stock Units with respect to the fiscal 20[__] Performance Year determined as
though the fiscal 20[__] Performance Year ended as of the date of the Change of Control, with the
Adjusted EPS and Total Revenue performance goals set forth on Exhibit A for the fiscal 20[__]
Performance Year pro-rated based on the ratio of the number of calendar days in the fiscal 20[__]
Performance Year that occurred prior to the date of the Change of Control to the total number of
calendar days in the fiscal 20[__] Performance Year, and with performance for the fiscal 20[__]
Performance Year determined based on actual performance for such shortened period against the pro-
rated Adjusted EPS and Total Revenue goals, and (B) one-third of the number of Target Stock Units,
and (3) one-third of the number of Target Stock Units. Any Stock Units subject to the Award that are
deemed eligible to vest in accordance with the preceding provisions of this Section 8(c)(v) shall
immediately vest and become nonforfeitable as of (or, as necessary to give effect to such acceleration,
immediately prior to) the Change of Control. The remaining unvested portion of the Stock Units
subject to the Award, after giving effect to the preceding sentence, shall terminate as of the date of the
Change of Control.
(vi)
If the Award is not assumed, substituted, exchanged, or otherwise
continued following the Change of Control, and the Change of Control occurs after [______], 20[__]
but on or before [______], 20[__], the Target Stock Units shall be subject to adjustment and pro-rated
vesting as provided in the next sentence. In such circumstances, the number of Target Stock Units that
will become eligible to vest will be the sum of: (1) any Stock Units subject to the Award that are
deemed to be Eligible Stock Units for the fiscal 20[__] Performance Year plus any Stock Units subject
to the Award that are deemed to be Eligible Stock Units for the fiscal 2021 Performance Year and (2)
the greater of: (A) the number of Eligible Stock Units with respect to the fiscal 20[__] Performance
Year determined as though the fiscal 20[__] Performance Year ended as of the date of the Change of
Control, with the Adjusted
EPS and Total Revenue performance goals set forth on Exhibit A for the fiscal 20[__] Performance
Year pro-rated based on the ratio of the number of calendar days in the fiscal 20[__] Performance Year
that occurred prior to the date of the Change of Control to the total number of calendar days in the
fiscal 20[__] Performance Year, and with performance for the fiscal 20[__] Performance Year
determined based on actual performance for such shortened period against the pro-rated Adjusted EPS
and Total Revenue goals, and (B) one-third of the number of Target Stock Units. Any Stock Units
subject to the Award that are deemed eligible to vest in accordance with the preceding provisions of
this Section 8(c)(vi) shall immediately vest and become nonforfeitable as of (or, as necessary to give
effect to such acceleration, immediately prior to) the Change of Control. The remaining unvested
portion of the Stock Units subject to the Award, after giving effect to the preceding sentence, shall
terminate as of the date of the Change of Control.
(d)
Agreement:
Defined Terms. The following definitions shall apply for purposes of this
(i)
“Cause” with respect to the Participant means the definition of “Cause”
expressly provided in any written employment agreement (or offer letter or similar written agreement)
between the Participant and the Corporation or any Subsidiary that defines such term (or substantially
similar term, such as (without limitation) “gross misconduct”) in the context of the Participant’s
employment. If the Participant is not covered by such an agreement with the Corporation or a
Subsidiary that defines such term, then “Cause” with respect to the Participant means that one or more
of the following has occurred, as reasonably determined by the Board based on the information then
known to it: (A) the Participant’s commission of any felony; (B) the Participant takes any actions or
omissions intentionally causing the Corporation or any Subsidiary to violate any law, rule or regulation
(other than technical violations that have no material adverse impact on the Corporation or Subsidiary,
as applicable); (C) the Participant’s willful or reckless act or omission that injures the reputation or
business of the Corporation or any Subsidiary in any material way or is otherwise demonstrably
detrimental to the Corporation or a Subsidiary; (D) the Participant willfully fails or refuses to follow
the legal and clear directives of the Board or any superior to whom the Participant reports (unless the
following of such directive would be a violation of applicable law); (E) the Participant has been
dishonest in connection with his employment activities or committed or engaged in an act of theft,
embezzlement or fraud; or (F) the Participant has materially breached any provision of any agreement
to which the Participant is a party with the Corporation or any Subsidiary or any fiduciary duty the
Participant owes to the Corporation or any Subsidiary, provided in the event of a breach of such an
agreement or duty in which a cure is reasonably possible in the circumstances, the Corporation or
Subsidiary (as the case may be) provides written notice to the Participant of the condition(s) claimed
to constitute such breach and the Participant fails to remedy such condition(s) within thirty (30) days
after the date of such notice.
after the Award Date:
(ii)
“Change of Control” means the occurrence of any of the following
(A)
The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 30% of either (1) the then-outstanding shares of
common stock of the Corporation (the “Outstanding Company Common Stock”) or (2) the
combined voting power of the then-outstanding voting securities of the Corporation entitled to
vote generally in the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that, for purposes of this clause (A), the following acquisitions shall not
constitute a Change of Control; (a) any acquisition directly from the Corporation, (b) any
acquisition by the Corporation, (c) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any affiliate of the Corporation or a
successor, (d) any acquisition by a Person or affiliate of a Person who owned more than 30% of
the Outstanding Company Common Stock or Outstanding Company Voting Securities on the
Award Date, or (e) any acquisition by any entity pursuant to a transaction that complies with
clauses (C)(1), (2) and (3) below;
(B)
Individuals who, as of the Award Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the Award Date
whose election, or nomination for election by the Corporation’s stockholders, was approved by
a vote of at least two-thirds of the directors then comprising the Incumbent Board (including
for these purposes, the new members whose election or nomination was so approved, without
counting the member and his predecessor twice) shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
(C)
Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving the Corporation or any of
its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the
Corporation, or the acquisition of assets or stock of another entity by the Corporation or any of
its Subsidiaries (each, a “Business Combination”), in each case unless, following such
Business Combination, (1) all or substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such transaction, owns
the Corporation or all or substantially all of the Corporation's assets directly or through one or
more subsidiaries (a “Parent”)) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding
any entity resulting from such Business Combination or a Parent or any employee benefit plan
(or related trust) of the Corporation or such entity resulting from such Business Combination or
Parent) beneficially owns, directly or indirectly, more than 30% of, respectively, the then-
outstanding shares of common stock of the entity resulting from
such Business Combination or the combined voting power of the then-outstanding voting
securities of such entity, except to the extent that the ownership in excess of 30% existed prior
to the Business Combination, and (3) at least a majority of the members of the board of
directors or trustees of the entity resulting from such Business Combination or a Parent were
members of the Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination; or
(D)
Approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation other than in the context of a Business
Combination.
(iii)
“Good Reason” with respect to the Participant means the definition of
“Good Reason” expressly provided in any written employment agreement (or offer letter or similar
written agreement) between the Participant and Corporation or any Subsidiary that defines such term
(or substantially similar term) in the context of the Participant’s employment. If the Participant is not
covered by such an agreement with the Corporation or a Subsidiary that defines such term, then “Good
Reason” with respect to the Participant means the occurrence (without the Participant’s consent) of
any one or more of the following conditions: (A) a significant and material diminution by the
Corporation in the Participant’s position, responsibilities, reporting responsibilities or title, or a
reduction by the Corporation in the Participant’s base salary; or (B) a material breach by the
Corporation of a written employment agreement to which the Corporation and the Participant are a
party; provided, however, that any such condition or conditions, as applicable, shall not constitute
grounds for a termination for Good Reason unless both (x) the Participant provides written notice to
the Corporation of the condition claimed to constitute grounds for Good Reason within sixty (60) days
of the initial existence of such condition(s), and (y) the Corporation fails to remedy such condition(s)
within thirty (30) days of receiving such written notice thereof; and provided, further, that in all events
the termination of the Participant’s employment shall not constitute a termination for Good Reason
unless such termination occurs not more than one hundred and eighty (180) days following the initial
existence of the condition claimed to constitute grounds for Good Reason.
(iv)
“Permanent Disability” with respect to the Participant means any
mental or physical illness or disability that renders the Participant incapable of performing the
Participant’s duties, even with a reasonable accommodation, for more than twelve (12) consecutive
weeks in any twelve-month period, unless a longer period is required by law. The date of Permanent
Disability will be the date on which the Administrator declares the incapacity on the grounds
described above.
(v)
“Severance Date” means the last day that the Participant is employed
by or provides services to the Corporation or a Subsidiary. A termination of employment shall not be
considered to have occurred for purposes of the Award if the Participant is employed by the
Corporation and such employment terminates but immediately following such termination of
employment the Participant continues as an employee of a Subsidiary or if the Participant is employed
by a Subsidiary and such employment terminates but immediately following such termination of
employment the Participant continues as an employee of the Corporation or another Subsidiary.
9.
Adjustments Upon Specified Events. Upon the occurrence of certain events relating
to the Corporation’s stock contemplated by Section 7.1 of the Plan (including, without limitation, an
extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance
with such section in the number of Stock Units then outstanding and the number and kind of securities
that may be issued in respect of the Award. No such adjustment shall be made with respect to any
ordinary cash dividend for which dividend equivalents are credited pursuant to Section 5(b).
10.
Restrictive Covenants. The Participant agrees to abide by and be subject to the non-
competition restrictions, non-solicitation restrictions, confidentiality restrictions, non-disparagement
restrictions and other restrictive covenants as set forth in Section 4 of the [Employment/Severance]
Agreement, incorporated herein by this reference (the “Restrictive Covenants”).
11.
Tax Withholding. Subject to Section 8.1 of the Plan, upon any distribution of shares
of Common Stock in respect of the Stock Units, the Corporation shall automatically reduce the
number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares,
valued at their then fair market value (with the “fair market value” of such shares determined in
accordance with the applicable provisions of the Plan), to satisfy any withholding obligations of the
Corporation or its Subsidiaries with respect to such distribution of shares. In the event that the
Corporation cannot legally satisfy such withholding obligations by such reduction of shares, or in the
event of a cash payment or any other withholding event in respect of the Stock Units, the Corporation
(or a Subsidiary) shall be entitled to require a cash payment by or on behalf of the Participant and/or to
deduct from other compensation payable to the Participant any sums required by federal, state or local
tax law to be withheld with respect to such distribution or payment.
12.
Notices. Any notice to be given under the terms of this Agreement shall be in writing
and addressed to the Corporation at its principal office to the attention of the Secretary, and to the
Participant at the Participant’s last address reflected on the Corporation’s records, or at such other
address as either party may hereafter designate in writing to the other. Any such notice
shall be given only when received, but if the Participant is no longer an employee of or in service to
the Corporation, shall be deemed to have been duly given by the Corporation when enclosed in a
properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and
registry or certification fee prepaid) in a post office or branch post office regularly maintained by the
United States Government.
13.
Plan. The Award and all rights of the Participant under this Agreement are subject to
the terms and conditions of the provisions of the Plan, incorporated herein by reference. The
Participant agrees to be bound by the terms of the Plan and this Agreement. The Participant
acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this
Agreement. Unless otherwise expressly provided in other sections of this Agreement, provisions of
the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be
deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are
otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of
the Board or the Administrator under the Plan after the date hereof.
14.
Entire Agreement. This Agreement (including the Restrictive Covenants) and the
Plan together constitute the entire agreement and supersede all prior understandings and agreements,
written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this
Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing
and signed by the Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the interests of the Participant
hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same
provision or a waiver of any other provision hereof.
15.
Limitation on Participant’s Rights. Participation in the Plan confers no rights or
interests other than as herein provided. This Agreement creates only a contractual obligation on the
part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither
the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only
the rights of a general unsecured creditor of the Corporation with respect to amounts credited and
benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive
the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable
hereunder.
16.
Counterparts. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which together shall constitute one
and the same instrument.
17.
Section Headings. The section headings of this Agreement are for convenience of
reference only and shall not be deemed to alter or affect any provision hereof.
18.
Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without regard to conflict of law principles
thereunder.
19.
Construction. It is intended that the terms of the Award will not result in the
imposition of any tax liability pursuant to Section 409A of the Code. This Agreement shall be
construed and interpreted consistent with that intent.
20.
Clawback Policy. The Stock Units are subject to the terms of the Corporation’s
recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar
provisions of applicable law, any of which could in certain circumstances require repayment or
forfeiture of the Stock Units or any shares of Common Stock or other cash or property received with
respect to the Stock Units (including any value received from a disposition of the shares acquired upon
payment of the Stock Units).
21.
No Advice Regarding Grant. The Participant is hereby advised to consult with his or
her own tax, legal and/or investment advisors with respect to any advice the Participant may determine
is needed or appropriate with respect to the Stock Units (including, without limitation, to determine
the foreign, state, local, estate and/or gift tax consequences with respect to the Award). Neither the
Corporation nor any of its officers, directors, affiliates or advisors makes any representation (except
for the terms and conditions expressly set forth in this Agreement) or recommendation with respect to
the Award. Except for the withholding rights set forth in Section 11 above, the Participant is solely
responsible for any and all tax liability that may arise with respect to the Award.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed on its
behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the date
and year first above written.
SPORTSMAN’S WAREHOUSE
HOLDINGS, INC.,
a Delaware corporation
By:__________________________________
Print Name:
Its:
PARTICIPANT
___________________________________
Signature
___________________________________
Print Name
EXHIBIT A
PERFORMANCE-BASED VESTING REQUIREMENTS
This Exhibit A is subject to the other provisions of the Agreement (including, without
limitation, Sections 4, 8 and 9 of the Agreement).
One-third of the Target Stock Units subject to the Award will correspond to each Performance
Year. The aggregate percentage of the Target Stock Units that shall be deemed to be Eligible Stock
Units for each Performance Year in accordance with Section 3(a) of the Agreement shall be
determined as follows: (1) fifty percent (50%) of one-third of the Target Stock Units shall become
eligible to vest based on the Corporation’s level of Total Revenue (as defined below) for the applicable
Performance Year; and (2) fifty percent (50%) of one-third of the Target Stock Units shall become
eligible to vest based on the Corporation’s Adjusted EPS (as defined below) for such Performance
Year. The aggregate percentage of the Target Stock Units that shall be deemed to be Eligible Stock
Units for the applicable Performance Year in accordance with Section 3(a) of the Agreement shall be
determined in accordance with the tables below as follows:
FY 20[__] Total Revenue
FY 20[__] Adjusted EPS
Actual Level of
Total Revenue for
the Performance
Year
$[______] or Less
$[______]
$[______]
$[______] or
Greater
Vesting Eligibility
Percentage
0%
100%
150%
200%
Actual Adjusted EPS
for the
Performance Year
$[__] or Less
$[__]
$[__]
$[__] or Greater
Vesting Eligibility
Percentage
0%
100%
150%
200%
FY 20[__] Total Revenue
FY 20[__] Adjusted EPS
Actual Level of
Total Revenue for
the Performance
Year
Vesting Eligibility
Percentage
Actual Adjusted EPS
for the
Performance Year
Vesting Eligibility
Percentage
A-1
$[______]or Less
$[______]
$[______]
$[______] or
Greater
0%
100%
150%
200%
$[__]or Less
$[__]
$[__]
$[__] or Greater
0%
100%
150%
200%
FY 20[__] Total Revenue
FY 20[__] Adjusted EPS
Actual Level of
Total Revenue for
the Performance
Year
$[______]or Less
$[______]
$[______]
$[______] or
Greater
Vesting Eligibility
Percentage
0%
100%
150%
200%
Actual Adjusted EPS
for the
Performance Year
$[__]or Less
$[__]
$[__]
$[__] or Greater
Vesting Eligibility
Percentage
0%
100%
150%
200%
For actual Total Revenue or Adjusted EPS achievement results between two points in the
preceding tables, the actual vesting eligibility percentage shall be determined on a straight-line bases
between the two closest points based on the actual level of achievement of the Total Revenue or
Adjusted EPS, as applicable, with the actual vesting eligibility percentage in each case rounded to the
nearest two decimal places.
Determination. As soon as practicable (and in all events within two and one-half months) after the
last day of each Performance Year, the Administrator shall determine performance for the applicable
Performance Year and whether and the extent to which the Target Stock Units shall be deemed to be
Eligible Stock Units that will be eligible to become vested in accordance with the time-based
requirements under Section 3(b) of this Agreement. The number of Target Stock Units that will be
deemed to be Eligible Stock Units for the Performance Year shall be determined as follows: (1) fifty
percent (50%) of one-third of the number of Target Stock Units will be multiplied by the Total
Revenue Vesting Eligibility Percentage determined pursuant to the preceding tables (based on the
actual level of Total Revenue for the Performance Year); and (2) fifty percent (50%) of one-third of the
number of Target Stock Units will be multiplied by the Adjusted EPS Percentage determined pursuant
to the preceding tables (based on the actual Adjusted EPS for the Performance Year). The total
number of Eligible Stock Units (the sum of the two amounts in clauses (1) and (2) of the preceding
sentence) will be rounded down to the nearest whole unit. All such determinations shall be made by
the Administrator whose
A-2
determinations shall be final and binding.
Defined Terms. For purposes of the Award, the following definitions will apply.
“Adjusted EPS” means the Corporation’s earnings per share of common stock for the
applicable fiscal year as determined by the Corporation in accordance with GAAP and reflected in its
financial statements, without taking into account cash bonuses paid with respect such fiscal year and
adjusted as provided below.
“GAAP” means U.S. generally accepted accounting principles.
“Total Revenue” means the Corporation’s net sales for the applicable fiscal year, as
determined by the Corporation in accordance with its standard practices and procedures reflected in its
financial statements.
Adjustments. For purposes of determining Adjusted EPS and Total Revenue under the Award for the
Performance Year, the Administrator shall adjust (without duplication) the Corporation’s Adjusted
EPS and Total Revenue (each as determined before giving effect to such adjustments), for the
unbudgeted impact of the following items that occur during the Performance Year:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
any new changes in accounting standards announced during the year that are required
to be applied during the year in accordance with GAAP;
any restructuring;
any acquisitions or spin-off transaction (including any related expenses, regardless of
whether such acquisition or spin-off transaction is successful);
any disposal of a business or segment of a business;
any stock dividend, stock split, combination or exchange of stock;
any amortization of acquired intangible assets;
any changes in tax laws;
any new licensing or partnership arrangements;
any asset impairment charges;
any gains or losses for litigation, arbitration and contractual settlements;
any costs related to store closings;
any costs related to executive transitions; and
(m)
any natural disasters and related insurance recoveries.
A-3
The Administrator’s determination of whether an adjustment is required, and the nature and
extent of any such adjustment, shall be final and binding.
* * * * *
A-4
Subsidiaries
Sportsman’s Warehouse Holdings, Inc.
Sportsman’s Warehouse, Inc.
Sportsman’s Warehouse Southwest, Inc.
Pacific Flyway Wholesale, LLC
Exhibit 21.1
Jurisdiction of Incorporation
Delaware
Utah
California
Delaware
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
The Board of Directors
Sportsman’s Warehouse Holdings, Inc.
We have issued our reports dated March 30, 2022, with respect to the consolidated financial statements and
internal control over financial reporting included in the Annual Report of Sportsman’s Warehouse Holdings, Inc.
and subsidiaries on Form 10-K for the year ended January 29, 2022. We consent to the incorporation by
reference of said reports in the Registration Statements of Sportsman’s Warehouse Holdings, Inc. and
subsidiaries on Forms S-8 (File Nos. 333-206632, 333-195338, and 333-233569).
/s/ GRANT THORNTON LLP
Salt Lake City, Utah
March 30, 2022
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Sportsman’s Warehouse Holdings, Inc.:
We consent to the incorporation by reference in the registration statements (No. 333-206632, 333-195338,
and 333-233569) on Form S-8 of our report dated April 9, 2020, with respect to the consolidated financial
statements of Sportsman’s Warehouse Holdings, Inc.
/s/ KPMG LLP
Salt Lake City, Utah
March 30, 2022
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.1
I, Jon Barker, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Sportsman’s Warehouse Holdings, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present 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;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (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
to be 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, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: March 30, 2022
/s/ Jon Barker
Jon Barker
President and Chief Executive Officer
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Jeff White, certify that:
Exhibit 31.2
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Sportsman’s Warehouse Holdings, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present 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;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (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
to be 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, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: March 30, 2022
/s/ Jeff White
Jeff White
Chief Financial Officer and Secretary
Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Sportsman’s Warehouse Holdings, Inc. (the “Registrant”) for
the fiscal year ended January 29, 2022, 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 Jeff White, the Chief Financial
Officer and Secretary of the Registrant, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:
1.
2.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Registrant.
Date: March 30, 2022
/s/ Jon Barker
Jon Barker
President and Chief Executive Officer
Date: March 30, 2022
/s/ Jeff White
Jeff White
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
Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing
of the Company, regardless of any general incorporation language in such filing.