Sportsman's Warehouse Holdings (SPWH) risk factors, FY2025 10-K

Risks Related to the Firearms Business

1. 01Current and future government regulations, particularly regulations relating to the sale of firearms and ammunition, may negatively impact the demand for our products and our ability to conduct our business
2. 02FTC regulations governing the manner in which orders may be solicited and prescribing other obligations in fulfilling orders and consummating sales
3. 03We may incur costs from litigation involving products that we sell, particularly firearms and ammunition, which could adversely affect our net sales and profitability
4. 04Our 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

Risks Related to Our Retail Operations

1. 05Our concentration of stores in the Western United States makes us susceptible to adverse conditions in this region
2. 06Competition in the outdoor activities and sporting goods market could reduce our net sales and profitability
3. 07If we fail to anticipate changes in consumer demands, including regional preferences, in a timely manner, our operating results could suffer
4. 08Our same store sales may fluctuate and may not be a meaningful indicator of future performance
5. 09Our operating results are subject to seasonal fluctuations
6. 10If we are unable to protect against inventory shrink, our results of operations and financial condition could be adversely affected
7. 11We 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
8. 12Dynamic freight costs could adversely affect our business, financial condition, results of operations and our ability to accurately predict financial results
9. 13We have experienced in the past, and may experience in the future, supply chain disruptions and delays of the supply of products from our vendors, which may have an adverse impact on our net sales and profitability
10. 14Political and economic uncertainty and unrest in foreign countries where our merchandise vendors are located and trade restrictions, including new tariffs and duties upon imports from these foreign countries could adversely affect our ability to source merchandise and operating results
11. 15We and the third parties with whom we work are subject to stringent and evolving U.S. obligations related to data privacy and security, and our actual or perceived failure to comply with such obligations (or such failure by the third parties with whom we work) could lead to adverse business consequences
12. 16We are also bound by other contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful
13. 17lawsuits. If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages
14. 18Our business depends on our ability to meet our labor needs and control our labor costs
15. 19Increases in the minimum wage have recently adversely affected our financial results

Risks Related to Our Business Strategy

1. 20Our expansion into new, unfamiliar markets presents increased risks that may prevent us from being profitable in these new markets
2. 21general economic, political, and business conditions affecting consumer confidence and spending and the overall strength of our business
3. 22If 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
4. 23If our information technology systems, or those of third parties with whom we work, or our data are or were compromised, we could experience adverse consequences
5. 24Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program
6. 25We may expend significant resources or modify our business activities to try to protect against security incidents. Additionally, certain data privacy and security obligations require us to implement and maintain specific security measures to protect our information technology systems and sensitive data
7. 26Our computer hardware and software systems are vulnerable to damage from natural disasters, power loss or other events outside of our control that could harm our business
8. 27Our future growth may strain our business infrastructure, which could adversely affect our operations and financial condition
9. 28The utilization, expansion and management of machine learning and other types of artificial intelligence in our business could adversely affect our business, financial condition and results of operations
10. 29Our private label brand offerings expose us to various risks
11. 30other risks generally encountered by entities that source, sell and market exclusive branded offerings for retail
12. 31Our inability to protect our intellectual property could have a negative impact on our operating results
13. 32We 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

Risks Related to Liquidity and Capital Resources

1. 33Our ability to operate and expand our business and to respond to changing business and economic conditions will depend on the availability of adequate capital
2. 34Our revolving credit facility and our term loan facility contain restrictive covenants that may impair our ability to access sufficient capital and operate our business
3. 35An increase in market interest rates could increase our interest costs on existing and future debt and could adversely affect our stock price

Risks Related to Our Common Stock

1. 36Our 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
2. 37authorizing the issuance of “blank check” preferred stock without any need for action by stockholders
3. 38We expect that the price of our common stock will fluctuate