What Happened?
Shares of outdoor specialty retailer Sportsman's Warehouse (NASDAQ: SPWH) fell 30.7% in the morning session after the company warned of weakening consumer spending and significantly cut its full-year financial forecast, even though its third-quarter results met expectations. The outdoor retailer adjusted its full-year guidance for adjusted EBITDA, a measure of profit, to a range of $22 million to $26 million. This revised guidance, with a midpoint of $24 million, fell well short of analysts' estimates of around $34.61 million. The company noted it saw a softening in consumer spending that began in mid-October, pointing to a challenging fourth quarter. The bleak outlook overshadowed the in-line results for the third quarter, where revenue grew 2.2% year-over-year to $331.3 million and adjusted earnings per share came in at $0.08, both meeting Wall Street's consensus. Following the news, at least one analyst firm, Baird, lowered its price target on the stock from $3.50 to $2.00.
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What Is The Market Telling Us
Sportsman's Warehouse’s shares are extremely volatile and have had 73 moves greater than 5% over the last year. But moves this big are rare even for Sportsman's Warehouse and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 8.5% on the news that comments from a key Federal Reserve official boosted investor optimism for a potential interest rate cut. New York Federal Reserve President John Williams, a voting member of the rate-setting committee, suggested he sees room for "further policy easing," which sent a strong signal to the markets. Following his remarks, the probability of a December rate cut, as measured by the CME FedWatch Tool, surged from 39% to 71%. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates to increased consumer spending. This prospect is outweighing recent reports of lower consumer confidence, as investors bet that a more accommodative Fed policy will support retailers through the holiday season.
Sportsman's Warehouse is down 20.2% since the beginning of the year, and at $2.05 per share, it is trading 50.7% below its 52-week high of $4.16 from June 2025. Investors who bought $1,000 worth of Sportsman's Warehouse’s shares 5 years ago would now be looking at an investment worth $157.94.
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