Dive Brief:
- Sportsman’s Warehouse is proactively pulling forward holiday and hunting season inventory in categories impacted by tariffs, President and CEO Paul Stone said during a June 3 earnings call.
- In Q1, ahead of an expected rise in U.S. tariffs, the retailer worked with specific vendors to frontload $20 million worth of spring and summer inventory, primarily in hunting, fishing and camping categories, per the earnings call.
- “We believe this was a low risk investment given these are high turning products,” said CFO Jeff White. “We will also continue to look for low risk inventory investment opportunities as we navigate the changing tariff environment.”
Dive Insight:
Cargo frontloading has been a popular tactic among shippers looking to deflect tariff impact. Footwear manufacturer Rocky Brands, for instance, opted to create an up to seven-month inventory buffer to give the company time to shift its production footprint away from China. Build-A-Bear Workshop also pulled forward inventory purchases, primarily for its core products, to shield itself from tariffs.
The strategy brought Sportsman’s Warehouse’s total inventory to $412.3 million by the end of Q1, up 5% year over year, White told analysts. The retailer reported higher freight expenses due to the inventory pull forward, resulting in a roughly 50 basis point drag on margin during the quarter. However, the CFO noted that it was “an intentional trade off that positions us to deliver better full price sell through during peak selling seasons.”
The retailer focused on buying core items with predictable customer demand, like high turning products and seasonal merchandising categories, he said. By prioritizing the “items that truly matter,” Sportsman’s Warehouse aims to “preempt some of the uncertainty that’s in the market right now,” White said.
The retailer has also made progress on reducing SKUs, slashing them by 20% YoY in a bid to “simplify the assortment, improve inventory terms and drive margin improvement over time,” said White. That builds on a 40% cut in fishing category SKUs and 30% YoY decrease in vendors in Q4 2023.
The retailer also developed a merchandising and planning software system last year with software company Blue Yonder to streamline its inventory management capabilities.
Sportsman’s Warehouse will continue its SKU reduction push as a simplification and efficiency strategy throughout 2025, said White.
“Our buying discipline has improved and we are much better positioned to flex into peak periods,” the CFO said. “With a focus on SKU reduction, we are confident that we can drive sales, increase churn and use less working capital.”
