The news
Sportsman’s Warehouse is in stock on its core items more than 80% of the time, up from about 50% two years ago, CEO Paul Stone said on the company’s second-quarter call. Over the same two years the retailer cut its inventory to $399 million, down 10% from a year ago.
The company got there by cutting. In fiscal 2023, it removed about 20% of its SKUs and vendors, and 40% of the SKUs in fishing alone. Then it spent two years clearing what was left.
Sales rose 0.6% to $295.6 million in the quarter, per the release. Same-store sales were flat. The retailer sells hunting, fishing and camping gear through 147 stores, most of them in the West.
Retailers cut SKUs to free up working capital. BJ’s, Under Armour and Dollar General are all in the middle of one right now. Sportsman’s is the first of this group with a finished case: what the cut did to in-stocks, what it cost in margin, and what it has done to sales so far.
What changed
The in-stock gain came from where the freed money went. Stone said savings from removing slow items went into deeper stock of the core 20% of products that drive 80% of sales. The retailer bought fewer items more deeply, so the shelf is fuller with less inventory behind it.
That work is now done, so the company has moved to timing. CFO Jennifer Fall Jung said “the majority of our work around assortment and SKU reduction has kind of been done, and now it is just really optimizing on a seasonal basis.”
Timing means when goods arrive. Through fiscal 2025, the company worked with vendors to pull $20 million of spring and summer goods forward as a buffer against tariffs, per Supply Chain Dive. By September, with that stock sitting in stores, Fall Jung said the second quarter was the year’s peak for inventory and debt.
The company reversed that this year. Spring receipts were scheduled to arrive later, Fall Jung said on the March call, and buys are now matched to the promotional calendar. Inventory will stay below last year through 2026 and end the year under the $312.9 million it finished fiscal 2025 with.
Camping and clothing were the last categories cleaned up. Inventory in those two departments is down 11% to 14%. Stone said new fall goods now arrive without competing against clearance. “This is the first time we have been able to be clean and seasoned on these products,” he said.
By the numbers
Core in-stocks: over 80%, from about 50% two years ago.
Inventory: $399.0 million, down $44.5 million or 10%. Sales up 0.6%, comps flat.
Days of inventory, meaning inventory divided by daily cost of sales: about 182 days at the Q2 peak, down from about 202 a year earlier, based on the 8-K figures.
Gross margin: 32.5%, up 50 basis points, on lower freight, less clearance and a one-time tariff refund.
Net debt: $167 million, down $26 million from a year earlier.
The pattern
Sportsman’s is the fifth retailer since March to report on a SKU cut, and the only one that started before 2024.
BJ’s Wholesale plans to cut about 20% of its items over two years, to 6,000 to 6,500 per club. An earlier cut lost sales and was partly reversed, CEO Bob Eddy said. Its inventory was up 6.3% at the end of its latest quarter.
Under Armour has dropped more than a quarter of its SKUs over two years, CEO Kevin Plank said.
Dollar General finished two years of chain-wide cuts and moved to store-level resets. Its inventory turns went from 4.3 to 4.6.
Bath & Body Works stopped buying seasonal goods to feed its clearance sales. Its inventory is also down 10%.
The cutters are at different stages, so their inventory is moving in different directions. Sportsman’s took out the most of any retailer reporting an August quarter.
The counter
The cut has not shown up in sales. Camping and clothing, the categories cut hardest, fell again in Q2. Stone said August improved in both, but neither has turned positive. The quarter’s growth came from hunting, where sales rose 6.7% on firearms and ammunition, a department the cut did not touch.
Some of the inventory drop is those categories getting smaller. A year ago, Fall Jung said camping inventory was falling faster than camping sales.
Clearing the tail cost margin last year. Fourth-quarter gross margin fell 200 basis points to 28.4%. The company also took a $17.8 million impairment charge on ten stores.
Part of this quarter’s 50 basis point margin gain was a one-time tariff refund. Fall Jung called it “not that significant” because private label is about 3% of what the company sells. The company also lost $4.4 million in the quarter and will close at least one store on January 31, 2027, with two more in negotiation.
My view
The in-stock number is the one I would remember from this call. The other cuts in this group talk about inventory dollars. Sportsman’s got 30 points of availability out of its cut, and that is the part a customer notices.
The bill came first, though: a year of clearance, 200 basis points of margin, ten store impairments, and two categories still shrinking two years on. So the honest timeline for a cut like this is two years, with the cost in year one and the sales question still open at the end of year two.
What's next
Sportsman’s third quarter is hunting season, its biggest. The company reports on December 3. Fall Jung said she has “extreme high confidence” inventory ends the year below last year’s $312.9 million.
That quarter is also the first test of whether camping and clothing sell at the depth the new buys assume.
