Sportsman’s Warehouse breaking private equity bond

A planned secondary stock offering by Sportsman’s Warehouse Holdings means the rapidly expanding outdoor retailer no longer meets the definition of a “controlled company” but the private equity firm that brought the company public last year will still own a huge stake.



Sportsman's Warehouse Holdings plans to offer 6,250,000 shares of the company's common stock in a registered public offering. The company won’t realize any proceeds from the offering because the selling shareholder is Seidler Equity Partners, the private equity firm that first invested in Sportsman’s Warehouse in 2007. Seidler and its affiliates currently own 52.5% of Sportsman’s Warehouse but that figure will drop to 38% after the offering and possibly decline to 35.7% if underwriters of the deal exercise an option to purchase additional shares. Sportsman’s Warehouse filed for bankruptcy in March 2009, but completed an initial public stock offering in April of 2014.



Sportsman's Warehouse bills itself as a high-growth outdoor sporting goods retailer focused on meeting the everyday needs of the seasoned outdoor veteran, the first-time participant and every enthusiast in between. The high growth characterization stems largely from the company’s expansion of its store base rather than its past financial performance.



The company operates 64 stores in 19 western states and has doubled its store base from 33 units in operation at the end of 2012. So far this year, the company has opened nine stores and regulatory filings indicate it plans to expand its based of no-frills stores at a rate of 10% or more annually.



Despite the company’s young store base, same-store sales declined 3.7% in 2013, 8.4% in 2014 and during the first six months of this year comps are flat. By stemming the decline in comp sales, the company turned around what had been a deteriorating financial performance. Profits during the first six months of the year increased to $6.8 million, from $1.7 million last year.



The private equity firmer Seidler, based in Marina del Rey, California, has more than $1 billion under management and is focused on established middle market businesses it views as leaders in their markets.