Q4 2023 Sportsmans Warehouse Holdings Inc Earnings Call

Participants

Riley Timmer; Vice President, Investor Relations; Sportsmans Warehouse Holdings Inc

Paul Stone; President, Chief Executive Officer; Sportsmans Warehouse Holdings Inc

Jeff White; Chief Financial Officer, Principal Accounting Officer, Company Secretary, IR Contact Officer; Sportsmans Warehouse Holdings Inc

Mark Smith; Analyst; Lake Street Capital Markets

Ryan Sigdahl; Analyst; Craig-Hallum Capital Group

Justin Kleber; Analyst; Baird

Anna Gluskin; Analyst; B. Riley Securities

Presentation

Operator

Greetings and welcome to the Sportsmans Warehouse fourth-quarter and full-year 2023 earnings time. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host. Riley Timmer, Vice President of Investor Relations. Thank you. You may begin.

Riley Timmer

Thank you, operator. Participating with me on the call today is Paul Stone, our Chief Executive Officer; and Jeff White, our Chief Financial Officer.
I will now remind everyone of the company's Safe Harbor language.
The statements we make today contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding expectations about our future results of operations, demand for our products, and growth of our industry. Actual results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described in the company's most recent Form 10-K and the company's other filings made with the SEC.
We will also disclose non-GAAP financial measures during today's call. Definitions of such non-GAAP measures as well as reconciliations to the most directly comparable GAAP financial measures are provided as supplemental financial information in our press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC, which is also available on the Investor Relations section of our website at sportsmans.com.
I will now turn the call over to Paul.

Paul Stone

Thank you, Riley, and good afternoon, everyone. Let me start by reminding everyone the mission of Sportsman's Warehouse is to provide outstanding gear and exceptional service to inspire Altocor memories. This is the core of our Company and will we have continuously lean into as we carefully navigated tough micro economic environment. As we reported earlier in the earnings release, the business remained under pressure during the fourth quarter with net sales coming in at the low end of our guided range. However, earnings per share exceeded the top end of our guidance range with both our inventory and debt levels finishing the year better than we expected. We will continue to prioritize the paydown of debt with free cash flow generation as we move through 2024, we view 2024 as a year to reset the organization and return the business to profitability, creating a strong foundation for anticipated profitable growth in 2025.
During my first four months, I spent my time visiting stores getting I know our associates, talking with our customers and getting to know many of our vendors and their perspectives. I also reviewed the technology and talent needs for the organization. My early assessments confirmed why I chose to join Sportsman's Warehouse and also provided visibility into the opportunities that exist to become the leader in specialty outdoor retail, our strategy centers on resetting and rebuilding the fundamentals of great retail, which for Sportsman's Warehouse are great gear and exceptional service. While some of our key initiatives are still taking shape, we took several early actions in the areas I mentioned just a moment ago, given the importance of technology culture and operating great stores, we made some leadership changes in these areas, bringing in best-in-class talent for our key roles we now have an experienced retail team, including veteran outdoor retail professionals, who each have a track record of successful execution with organizations like Walmart and Sam's target, Academy Sports and Capella's importantly, I've worked with many of these executives at other high-performing organizations. We speak the same language know what's expected, and we're already moving very quickly. Other areas where our strategic efforts will be highly focused in 2024 include creating stronger omnichannel capabilities, making improvements to our loyalty program and precise execution of our digital and traditional marketing strategies. We also see opportunities to better support the customer through the use of technology by creating annual sales and equipping our store associates with improved tools, we will be better prepared to service the customers Additionally, we are refining our marketing mix model to better understand what resonates with our customer. This allows us to be more productive with our current marketing dollars to capture more share of the online sales and further increase our omnichannel customer base. This is another way for us to further streamline and gain greater efficiency within the current organization. Currently, we are reviewing the foundational techniques for marketing as well as making sure we're building the right tools and capabilities to support our omnichannel efforts. Today, our focus will be on finding the most productive uses of our marketing resources as we continue to improve our capabilities, evolve our programs, invest strategically and leverage our current omnichannel platform. I also see opportunities to refine and evolve our loyalty program. While over 50% of our sales come through our loyalty members, I believe there's an opportunity to improve the value proposition of the program, drive more engagement with our members through personalization, attract and retain more members and increase the lifetime value of our existing customers. As I mentioned earlier, part of the reset of 2024 will include investments in needed tools and technology to support our base of stores. We recently partnered with Blue Yonder, a best-in-class supply chain management solution to develop a comprehensive merchandising assortment and planning software system. With this tool, we will have improved capabilities with inventory management, store planogramming, seasonal regional auto replenishment, as well as improved in-stock and productivity reporting. This will also help facilitate the expansion of our omnichannel capabilities, which support regional and seasonal customer expectations. The other area of technology investment involves workforce management software. This tool will allow us to efficiently staff our stores and be closer aligned with the peak hours of customer visits. This alignment, along with changes we have made in our store compensation and leadership structure are important investments as we navigate towards our continuous goal of exceptional service. As we reported during the fourth quarter, we further reduced our inventory levels and made significant progress to get out of products and brands that simply do not resonate with our core customer. While we made good progress during the fourth quarter, we will continue to closely manage our inventory levels and merch mix. This will ensure we have the right products in the right location at the right time, creating inventory efficiency, which allows us to better service our customers and improve our overall merchandise productivity, significantly reducing inventory also allowed us to invest in newness and relevance seasonal products as we repaired and bought into our key spring outdoor seasons. We are currently seeing positive trends in Camp and fish as we invested in newness and depth going into these early spring seasons.
Another piece to our inventory management strategy includes rationalizing our SKUs and refining our overall product assortment. This will allow us to drive the following improved inventory productivity and turns better depth of the key and never out items new local and regional product offerings and improved overall in-stocks and customer shopping experience over the last few months, our merchant team has successfully worked through this initiative in a number of product areas as we navigated through lower in Q4 inventory. We were very purposeful in how we prepared for our key spring seasons, particularly fishing. This is a category where we have a right to win, especially at the local and regional level for the first time ever. Our fishing set was in place by mid February with depth and critical items. I talked about 2024 being a reset year. Here's what the spring reset meant to the fishing category. First, we rationalize the assortment, removing 40% of SKUs and 30% of the vendors. Next, we reasserted the category across all regions and stores with local relevance and accuracy. Then we invested in depth into key products and our local product offerings. And finally, we reset the sales floor to align our in-store presentation with the new assortment, including better productivity of our endcaps and expanded feature space. It's the execution of key initiatives such as this that gives me confidence. We are moving the business in the right direction to once again, merchandise and operate great stores along with tight inventory management. We expect to maintain both the rigor discipline or our variable SG&A cost. Last year, we eliminated about 25 million of indirect costs out of the business, and we'll continue to manage these efforts carefully. My objective is to sweat the assets of the business using 2024 as a reset year to get us back to operating profitably. Regaining our edge of being the best local and convenient choice is what separates Sportsman's Warehouse from the competition this means having great gear and providing exceptional service in each of our 146 stores every day. I firmly believe we are implementing the right strategies and making the necessary improvements to solidify the foundation of this Company to return us to profitability and increase shareholder value.
With that, I'll now turn the call over to Jeff.

Jeff White

Thank you, Paul. And good afternoon, everyone. I'll begin my remarks today with a review of our fourth quarter and full year fiscal 2023 financial results, then cover our liquidity and capital allocation plans and finally review our outlook for 2024. As Paul mentioned, net sales for the fourth quarter were $370.4 million and came in at the low end of our guided range. This is compared to 379.3 million in the fourth quarter of the prior year. Our net sales remained pressured from a challenging macroeconomic environment and persistently high inflation weighing on our consumer discretionary spending through the holiday season. As a reminder, 2023 was a 53 week year, which resulted in one extra week in the fourth quarter when compared with the prior year. The 53rd week for 2023 contributed 15.4 million of net sales and resulted in an additional $0.06 loss to EPS compared to the prior year's 52-week period.
Same-store sales decreased 12.8% in the fourth quarter on a 14-week basis compared to the same time period of fiscal year 2022. Excluding the additional week, same-store sales in the fourth quarter were down 12.8%. Looking at comparable sales by department hunting was the best performing category during the fourth quarter, down 3.9% on a 14-week basis compared with the prior year. This outperformance versus the run rate of the Company was driven by items that correlated with holiday gift-giving such as scopes and optics. All other departments were down double digits in the quarter, reflecting the tough macroeconomic environment and underscoring the importance of having the right inventory for the right location and season. So we can provide a better overall shopping experience for our customers during the holiday season. The customer came in specifically for the promotions with very little attachment to other items in the store, highlighting the continuing inflationary pressure on our core customer base.
On our last call, we outlined our strategy to further promote and markdown distressed portions of our apparel and footwear inventory in an effort to end the year in a much healthier position.
During the fourth quarter, we successfully executed on this plan, exceeding our goal and ending the year with 354.7 million in inventory, 10 million below our guidance by reducing inventory nearly $90 million in the quarter, we generated excess cash flow, allowing us to pay down our debt by over 59 million. Gross margin for the fourth quarter was 26.8% versus 32.4% in the prior year period. This decrease was primarily driven by the promotional efforts to move through distressed apparel and footwear inventory as well as lower gross margins on ammunition. However, while down significantly compared with the prior year, gross margin in the quarter came in better than we expected, as we did not have to be as aggressive as planned with our markdowns to move through the distressed inventory. We estimate that the EPS impact from the gross margin reduction relating to the markdowns was between 30 and $0.4 in the fourth quarter of 2023. As a percentage of net sales, SG&A expense increased to 29% compared to 28.1% in the fourth quarter of the prior year. This increase was primarily due to higher rent and depreciation expense from the addition of 15 new stores opened during 2023 and the stores refreshed over the last two years, while SG&A was up as a percentage of sales on a year-over-year basis, SG&A dollars were down 9.8% on a per-store basis versus Q4 of 2022. The most significant year-over-year decrease was in payroll, which was down approximately 3.9 million from last year or a decrease of 17.4% on a per-store basis. During the back half of 2023, we undertook a comprehensive expense reduction initiative to align our costs with the declining trends of the business These efforts resulted in approximately 25 million of annualized savings. We expect to continue to realize the benefit of these cost reduction efforts throughout 2024 and will continue to reduce expenses where we believe we can simplify the business.
Net loss for the fourth quarter was 8.7 million or negative $0.23 per diluted share compared with net income of 11 million or $0.29 per diluted share in the fourth quarter of the prior year. Adjusted net loss in the fourth quarter was $7.5 million or negative $0.2 per diluted share compared with adjusted net income of $12.7 million or $0.33 per diluted share in the fourth quarter of the prior year.
Adjusted EBITDA for the fourth quarter was $5.3 million compared with adjusted EBITDA of $28.2 million in the fourth quarter of 2022 Shifting now to the full fiscal year. For the full year of 2023, we finished with sales of approximately $1.29 billion and adjusted EPS of negative $0.64 per diluted share for the full year of 2023. We estimate that the earnings per share impact from the clearing of distressed inventory was between 60 and $0.8.
I will now take a minute and review our balance sheet and liquidity. As of the end of 2023, full year 2023 ending inventory was 354.7 million compared to 399.1 million at the end of 2022, a decrease of 44.4 million or approximately 20% on a per-store basis compared to the end of the third quarter. Inventory is down nearly $92 million successfully.
Moving to our seasonal and distress inventory during the fourth quarter facilitated the better than planned inventory balance and debt paydown at year end. This is important and provided us the open-to-buy dollars needed to lean into new merchandise to support our spring and early summer seasons to which we are already seeing success. Inventory management will remain a primary focus as we now expect to move more efficiently in and out of seasons and improve the productivity of our inventory as we continue to rationalize SKUs and vendors.
For the full year 2023, we incurred approximately 60 million of net capital expenditures primarily related to the construction of our 15 new stores and ongoing fleet maintenance.
In regards to liquidity, we ended the year with a debt balance of $122.9 million and total liquidity of 91.4 million. We used our cash flow generated during the first fourth quarter to pay down debt, and we'll continue to emphasize debt paydown as our primary use of free cash flow until we reduce our leverage ratio.
Turning now to our guidance. As we mentioned in the earnings release, we are adjusting our cadence and will now provide annual net sales and adjusted EBITDA guidance, which we will provide an update to quarterly. Our focus will be on longer-term measures being a great retailer and returning Sportsman's Warehouse to profitability in 2024.
Starting with our net sales outlook, we estimate fiscal 2020 for net sales to be in the range of 1.15 billion to $1.23 billion. We expect adjusted EBITDA for fiscal 2024 to be in the range of 45 to $65 million. We expect CapEx for 2024 to be between 20 and $25 million relating to technology investments to improve store service and merchandising productivity as well as our normal store maintenance. To reiterate, our priority for 2024 is to use excess free cash flow to pay down our debt, decrease our leverage ratio and invest in needed technology. As we carefully manage inventory and variable expenses, we believe we can return the business to profitability.
That concludes our prepared remarks today. I will now turn the call back over to the operator to facilitate questions.

Question and Answer Session

Operator

(Operator Instructions) Mark Smith, Lake Street Capital.
Correct.

Mark Smith

I guess first question for me is really around margins and kind of what's built into your outlook here in 24. Any additional thoughts you can give us around that maybe even SG&A and of the $25 million in savings. And any insight you can give us on maybe where that falls for the full year or any additional insights into new gross profit margin, maybe improvements over where it came in here in the latter half of the year?

Jeff White

Yes, Mark, great question. It's Jeff.
Good to hear from you from a gross margin perspective as we think about going into 24, I would frame it up as well. You won't see as aggressive degradation as we saw in 23 as we had to move through the distress inventory. Our goal really is to now that we've gotten out of that to claw back the gross margin losses that we had during 23 on the clearance of inventory and really get the margin back up to where we've historically run. So as Paul and I had stated on our call, we feel confident that we moved through the brunt of that during Q4 and that we will be able to see some margin increases during 20 as we move into 24.
In terms of SG&A cuts, I think the best way to think about that is we started that process kind of mid Q3. So Q4, we saw really good execution and expense cuts. Those expense cuts are going to flow into Q1 two and partially into Q3 into 2024. So we're going to continue to we see benefits from those expense cuts as we move through a big part of 2024.
And I would just say, I mean, we continue to be focused on being a low-cost operator. And I mean, ultimately, we are a warehouse and we should operate as a warehouse as we just continuously look at ways to be able to take costs down the business without impacting our stores and our service. And as we reinvest back into exceptional service that we'll have to continue to invest in our stores. But and we're going to be I think extremely scrappy would be the West best way of saying it around being able to keep costs in check and to be able to continue to flow.

Mark Smith

Okay. Next question for me is, you know, it's kind of a tough environment here. Any additional insight you can give us on the consumer environment. And in particular, I'm curious your thoughts around a recent mixed data here in March and if that maybe some of that weakness kind of applies to you guys as well.

Jeff White

And Mark, what I would just say, we're not seeing the same decline in mix that's being reported and we believe we're leaning into it and taking share as a company. So I know as we saw that come out yesterday and as we look and we kind of gather our data, we fill, but we're continuing to be able to grow. And as we think about the business and we see others walking away from the business that we feel we have a huge opportunity to continue to gain share in that part of the business in terms of end market.
And in terms of the consumer trends that we saw during the holiday, we said it in our remarks, but the customer was really focused on promotional activities. We're continuing to see them focused on that end trending downwards towards an entry-level or mid-level price point. So we're seeing some pressure that's coming through on our customer and our spending habits in terms of them, looking at promotions, but also really gravitating towards that entry and mid-level price points.

Mark Smith

Perfect.
And last question, I think for me just as we look at the inventory, really solid improvements there, and maybe this will sound like a weird question given where we came from. But is there a point where your per-store inventory where you cut too much or give me a feel for kind of your comfort levels around your current inventory?

Paul Stone

And Mark, we feel good with the inventory position, and I think really good with the price of what the merchant team was able to do in Q4. The one got out of the distressed merchandise but two still have an eye on spring and knowing that we've missed spring in a big way around fish and camp. So I mean, they did a really, really nice job of I'm managing the liquidation process, but keeping our eye on what we needed to do for Q. one Q. two, as you come into fish and you come into camp. So I think as we think about it in terms of getting out of some of these X Y Z items and then being able to double down and really invest in what the customer wants in the AB. and C. item. We're going to have depth in the product the customers want. And then quite frankly, we're going to have feature space like we've never had before as an organization to be able to to highlight that great new merchandise that we bring in and be able to open up our stores where if you're going to be able to see features a more direct line of sight for people to be able to navigate our stores. So I would say the tail that we pulled out we feel really good with and now to be able to double down and invest on those key items, which I think we've lacked in the past of being able to really buy with depth on the key items and to be able to freshen the stores with newness. And we're seeing the newness work. And as we come into spring and the work that the team and the merchant team was able to do in Q4 to keep their eye on Q1. We're liking what we see actually.
Thank you, guys.

Operator

Ryan Sigdahl, Craig-Hallum Capital Group.

Ryan Sigdahl

Yes, good afternoon, Paul. Joe, just curious if you have any commentary on year-to-date trends, whether it be sales and or on the margin side?

Jeff White

Yes, I think where we'd say we I mean, you come into February and we continued to fill softness from a traffic and just some of the macros that was happening. And then really as we started to get into the back half of March and really what we've seen as we've started April as the weather broke and then going back to my point to be ready for the key categories and and both with camp and first week, I think we feel good with it out. February felt a little bit like January felt like quite honestly. And in men's, we broke and the weather started to break. We've started to see the traction that we wanted to see. So we're very happy with what we're seeing, especially in those key categories that spring is really important, too. So I would just I know as we kind of round that out, I don't know, Jeff has anything to add that we would just look at January and say continued trend of what we saw at the beginning or at the end of the year. And then as we've really built and continue to build into the quarter and the execution, both from the merchants and from the operations to bring the team and bring the stores to life. We're happy with what we're seeing at this point.
Yes.
The only thing I would add to that, Ryan, is on the margin front to your question is, as you see better performance out of the camping and fishing category. Obviously, those categories for us are more margin accretive than selling more firearms and ammo. So seeing life in those parts of the business give pulse and I some optimism on where we're heading in terms have the right trend of the business.
Great.
And then maybe just one to put a finer point on inventory.
I guess is the right way to think about it as absolute inventory dollars are pretty stable here through the year, but it's just a rationalization and optimization of the mix contract there.
Yes.
Ryan, from a working capital perspective, I think there's always a little bit more. We can squeeze out inventory. I'm going to beat up the merchant team to always increase turns and be more productive on inventory. So I don't think we see huge cash generation like we did last year in terms of the reduction of inventory, but there is always better efficiency that we can drive and cleanup to be had in order to drive more productive inventory across the board.
So I know that wasn't a direct answer to your question, but and where we ended, we felt comfortable that's not to say that there's not things we need to clean up, so then we can take those dollars and reinvest back into inventory that we want to have in the store.
So it's going to be a continuous process throughout the year and we're going to continue to work on really driving the productivity of inventory yes, I would say we just continue to keep a cadence of being able to get out when we need to get out.
And as we start the year in better position in key categories that's going to give us legs to be able to turn that merchandise quicker than what we have in the past. I think we've been a little late and now being able to be proactive to help with our sell through and our turns.
And last one for me, just some of the ammo OEMs taken price increases presumably impact you guys, I guess, are you able to pass that on and then consumer and any commentary kind of on Camel margins relative to what we've seen recently?
Thanks.

Paul Stone

Good luck, guys.
Yes, Ryan, on the ammo front, you know, I called out that we see we continue to see pressure on the gross margin line in ammunition, particularly in your range type calibers. Your nine millimeter, you're five five, six, two, two three.

Jeff White

We're seeing pricing pressure out in the retail market.
We're seeing retailers take the price point down on those to stay competitive for us, it really is the milk in the back of the store. So we have to use that as a traffic driver. We need to stay competitive in the market. So while we're seeing a degradation in the margin in those categories because of increased availability and the competitive landscape, I would frame it up. We're not seeing it go back to pre-COVID levels but it is something that we're keeping our eye on and making sure that we stay competitive in order to use that as a traffic driver.

Operator

Justin Kleber, Baird.

Justin Kleber

Yes, hey, good afternoon, guys. Thanks for taking the questions. Just the first one I had was a follow-up to Mark's gross margin question of that 300 basis point decline in 23. Just could you size, I guess the drags specifically related to markdowns and clearance, just as we think about the recapture opportunity here in 24?

Jeff White

Yes, just some great question.
As we looked at the degradation that we called out in the press release, that is all driven by the clearance of inventory in apparel and footwear that we needed to get out of. So we quantified that. We said that that was relating directly to those clearance activities. As you think about what opportunity that creates and our anticipation in the back half of the year would be not to anniversary a clearance event like that and be able to bring highly productive full margin products to the stores, bring them to life and sell through them in a much better fashion than what we had to do in Q2 three and four of 2023, where really it was about getting out of the inventory as quickly as possible.
I think the other thing I would just add to it is the technology investment that Jeff mentioned is really as we think about the partnership with Blue Yonder and being able to get ourselves in a much greater position around product assortment around inventory allocation. And these tools are going to be key for us as we think about it to be able to get us to speed with what a retailer should look like as having the tools for the merchants to be much more in tune with what's happening. And I think really puts us in a position as we think about getting a great return on this product that we're investing in from a technology standpoint.

Riley Timmer

Okay, thanks. I guess maybe I'll ask it more directly. I mean, you talked about returning to gross margin like historical levels. So if I look at kind of 2020 through 2022 in the upper 32% range. Is there is there any reason why that's not where you get back to here in 24?
I think the biggest one UNKNOWN there, Justin, is obviously the health of the customer, and that's something we navigate every single day. But as we think about from a merchandise perspective and where we sit today. There are great opportunities for us to move through, have productive inventory, have the right stuff in the right place at the right time, service it right with the store labor and really see some good improvements from the margin point.
The other thing I would call out is just mix. If we if we go through the year and we see heavy penetration in firearms and ammunition. That's obviously is going to weigh on the gross margin line because mix is always going to add in that factor that I can't control, if I'm selling a lot of firearms and ammunition and those are lower margin categories.
Yes, that makes sense. I think speaks to that, Jeff. Our next question, Paul, you mentioned this new workforce management system, just thinking about payroll dollars more holistically or in aggregate, at least at the store level, do you see a need to reinvest back into the business from a store level perspective? Or does this system just allow you to be to be smarter with your existing dollars and kind of how you deploy them at the peak hours during the day supply up, you noted, I think it's about part of something today.
The way we're doing it is it's extremely manual versus being able to have the ability to look at it and to be able to truly forecast or we can go four to six, we felt based on what we're seeing on trends and to be able to ensure we've got the people at the right time and on the right days, we think Thursday through Sunday, the importance of all hands on deck and 11 to two customer. We have which is unique to retail versus a drivetime consumer that you have, it really allows us to be able to one, I think, take time away from any type of administrative work you're doing and we reinvest those hours back into being able to service the customer. So there are there are ways that we think as we we went to market within the stores and looking at how we're incenting our employee base and our store managers to ensure that they're selling product and giving them the opportunity to be able to make more and to be able to drive top line at the same time. So I think as we think about reinvesting more in stores, it's more about having generalists in the stores to be able to help the consumer and to be able to incent them the right way about growing profitable sales and profitable top line as we look at it. So that's a long way of saying, I'm super excited to be able to get workforce management to where we can get less administrative work and things being done and more opportunity for folks to be out there on the floor and being able to engage and give exceptional service to the consumer.

Paul Stone

Great.

Riley Timmer

And last question for me would be on just your view, Paul, on the store fleet. Obviously, a lot of growth and new openings went when demand was surging kind of post pandemic initially. Is there any need from your standpoint of perspective to clean up the portfolio at all or is that not really in the cards?
Neither great retailers are always monitoring your your entire fleet. And I think at any time that we look at it and say you're going to have a list of stores that you're looking at. But our main goal would be to be able to nurse and back to health and get them in a good position. I think to turn that I see this as an opportunity for us. Again, as we get the gear right, we get the service right for the consumer that we put ourselves back in a potential to be able to grow. And on that, there's always grooming as a great retailer, you're always going to look at our little things that don't make sense. But coming at us looking at and going, hey, we're looking to pull stores out of our fleet. That's not the case. We want to be able to be productive in all of our stores and for us, the merchants, the operators, our visual team to ensure we're doing everything we do have stores that are not performing at the level we need to be able to get them back in the shape that we need. But ultimately, I would just flip that and say we want to be able to get the balance sheet in a great position this year as we pay down debt and then we generate free cash flow and then put ourself in a position in 25 and then in particular in 2016 where we can go and start growing again.
Thanks for the time and best of luck.

Paul Stone

Thank you.

Jeff White

Thanks, Justin.

Operator

Anna Gluskin, B. Riley Securities.

Anna Gluskin

Thanks. Good afternoon, and thanks for taking my questions and thanks for the detail on campuses from really helpful.

Jeff White

Putting that in perspective, we just wanted to clarify on noted positive trends in the categories are you seeing, but year-over-year positive growth there, just sequential improvement from at the most recent quarter and from what we're seeing right now, the market has year over year growth and it really goes back to how what Paul talked about.
If we think back to last year, not only was the season late because of the weather, but we also were not in a position to invest in the right goods and have them in the right place in the right time this year, we were setting those areas of the business much earlier as soon as January and February. So not only have we beat the seasons, we were the first to market and at the stores are in great shape with good in-stock positions. So we've really set ourselves up for the trends that we're seeing, and we're seeing the fruits of the labors right now as we sit here today.
I'd say the other thing just on that, as we're just, we're really seeing some positive results around newness and depth and that you don't the most important thing. Our newness and depth is we're getting an opportunity to be more local, more regional. And the team did a great job and say when in particular, Enfission fed, how we count can we hit the mark and the different geographies and to be able to get more local than what we've been. And we've taken our eye off the ball there.
So I think the exciting thing for the consumer and what the stores are seeing out there today is that as the team worked and at the back end of Q4, they were able to keep their eye on the local regional component, and you're getting to see that. And I think the other thing that I would add to it is we've got a lot more space as we went through the inventory reduction process. We really was strategic on and being able to open up space and feature space where we needed to open it up and the line of sight for features on our end and for our dry vans to be able to bring that store at the bring that those items out and bring them to life in the store much, much different than what we've ever had in the past. So I think being able to be really productive with every square foot at the store, and we're excited about what that looks like.
And at this point, we've touched just about every area as we finish out the March and resetting and being able to open up the stores and give us the additional feature space we needed to. So we can we can showcase the newness.
Hey, thanks, Scott. And turning to apparel and footwear. You've been clear about So clearing some of that distressed inventory and the need to reset that category. What do you think is the appropriate time line to think about when you'll be presenting fully reset assortment in those categories?
I mean, we're in the products flowing today, and I mentioned that we've reset every part of the store that was really through the gondolas and as we think of camp fish hunt. And then right now, we're in the process of resetting setting up the shops that we have and that you're going to feed the spring colors in a much better place. Ultimately as we come into really our peak as we get into fall and you see our fall season and then we go into the holidays with that buying team really being able to lean into it there. You're going to start to see it as you get into spring and summer but you're really going to be able to see the impact as we get into fall.
Thank you. Okay.

Operator

Mark Herman, Five Capital.

Hey, guys, thanks for taking my question. Tom, you gave out some numbers about the fishing skus and vendor rationalization. I just want to clarify those and those are before you added back any depth of product, is that right? And kind of what is the permanent change in the SKUs and vendors look like in both fishing and the overall business, if you can kind of quantify that?
I think it's at the same time. I mean, you're going through the rationalization process, but as you're putting your buy and the team did a really good job of being able to get out in front from a clearance standpoint and get out of the old distressed goods even in fish. And then as we came back, we were able to go and you can see in the stores today with much, much greater depth. So I think they both go hand in hand and the distressed inventory moving help and then us being able to really, really go into depth on those key items and the investment that we were able to see. And that's inclusive of us bringing in, as we talked about that skew assortment and rationalization, that's inclusive of being able to be more regional and local as we make those buys as well.

Jeff White

Yes, Mark, this is Jeff.
As we think about as we move through the inventory last year in totality across the business, we've removed roughly about 20% of our skew assortment and vendor assortment out are in totality across the business. What that does is allow us to go deeper and more meaningful with key vendors that resonate with our customer. And that's what's really driving. That's what drove the efforts behind the scenes is making sure, again, back to the right goods, the right place for the right seasons with the right vendors. And that's what that's what has changed about how we think about the business going forward.
And I think the energy and the feedback that we're receiving from our partners, supplier community one, the strategy and being able to be very targeted on approach and buying in the depth is it's been welcomed and it allows us to be able to manage the product and regionally as we've restructured our field organization to align from a geography standpoint. It's some it's given us the opportunity, I think, to really double down.

So in apparel and footwear, given the discounting would you would you say that the kind of the non-go-forward brands and styles would also be maybe somewhat in the 20% range?
I've long term for those two categories or how much of the fourth quarter discounting raise permanently eliminate aisle a lot higher than that for apparel and footwear?
Mark, that's why we had to specifically call those out last year. If you notice, we haven't called out some of the other categories because we've been able to get out of those vendors without having it be materially impactful to the business apparel and footwear was much, much higher than that, which is why the out last year was necessary to make because it was going to be very significant for the overall profitability of the business.
Okay, great. And just one last thing. We haven't heard about private label in awhile. Have your goals changed at all for that and have you thought about focusing even more there just given the consumer trade-down comments you made today?
Yes, I think that's always top of mind. And as we look at it as a management team, we want to ensure we do this right? And it takes the team and it takes processes to be able to truly build out the private label. And you'll see that improve this year. But I think as we look at it overall, we need to be thoughtful. We need to be extremely strategic. And most importantly, I think the team here, we've seen what great private label looks like and within our industry. And we've also seen what private label should never look like within the categories which we serve and the consumer we serve. So if we're going to put our name and we are and we're going to for Sportsman's Warehouse one that we have to ensure that we have the quality and standards and expectation we need it's front of mind for us. We want to make sure as we go through this journey with private label that we're doing it right that we do not lose credibility with the consumer and they can look back and go like this crew quality gear that you're getting here. So I would tell you it's front of mind. And as we think about the build out over a period of time. We've just got to be really thoughtful and strategic, but you will start to see it. I'm really pleased with some of the things we're working on right now and you're going to see the back half of the year that you're going to have. But ultimately, I mean, we are a house of brands, our consumer depends on that. But we do think that we can mix and then we have an opportunity and a right to win to be able to bring a quality private label to market.
Great.

Jeff White

Thank you.

Operator

Thank you. There are no further questions at this time. I would like to turn the floor back over to Paul Stone for any closing comments.

Paul Stone

Yes, thank you for joining the call today, and thank you to all the passionate employees around the country for your commitment to Sportsman's Warehouse. Together, we look forward to providing our customers with great care and exceptional service. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for participating.