UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-36401

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	39-1975614
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1475 West 9000 South, Suite A, West Jordan, Utah	84088
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (801) 566-6681

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $.01 par value	SPWH	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ⌧    No  ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ⌧    No  ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐     No  ⌧

As of December 3, 2020, the registrant had 43,613,789 shares of common stock, $0.01 par value per share, outstanding.

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
	Signatures	36

We operate on a fiscal calendar that, in a given fiscal year, consists of the 52- or 53-week period ending on the Saturday closest to January 31st. Our fiscal third quarters ended October 31, 2020 and November 2, 2019 both consisted of 13 weeks and are referred to herein as the third quarter of fiscal year 2020 and the third quarter of fiscal year 2019, respectively. Fiscal year 2020 contains 52 weeks of operations and will end on January 30, 2021. Fiscal year 2019 contained 52 weeks of operations ended on February 1, 2020.

References throughout this document to “Sportsman’s Warehouse,” “we,” “us,” and “our” refer to Sportsman’s Warehouse Holdings, Inc. and its subsidiaries, and references to “Holdings” refer to Sportsman’s Warehouse Holdings, Inc. excluding its subsidiaries.

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “10-Q”) contains statements that constitute forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995. These statements concern our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition, which are subject to risks and uncertainties. All statements other than statements of historical fact included in this 10-Q are forward-looking statements. These statements may include words such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “should,” “target,” “will,” “would” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events or trends. For example, all statements we make relating to our plans and objectives for future operations, growth or initiatives and strategies are forward-looking statements.

These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors is very difficult, and we cannot anticipate all factors that could affect our actual results.

All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to:

● the impact of COVID-19 pandemic and measures intended to reduce its spread on our operations;

● our ability to integrate the twelve stores we recently acquired from Dick’s Sporting Goods;

● our retail-based business model and the impact of general economic conditions and economic and financial uncertainties on consumer spending;

● current and future government regulations, in particular regulations relating to the sale of firearms and ammunition;

● our concentration of stores in the Western United States;

● the highly fragmented and competitive industry in which we operate and the potential for increased competition;

● changes in consumer demands, including regional preferences, which we may not be able to identify and respond to in a timely manner;

● our entrance into new markets or operations in existing markets, which may not be successful; and

● remediation of identified material weaknesses in our internal control over financial reporting.

The above is not a complete list of factors or events that could cause actual results to differ from our expectations, and we cannot predict all of them. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements disclosed under “Part I. Item 1A. Risk Factors,” appearing in our Annual Report on Form 10-K for the fiscal year ended February 1, 2019 and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this 10-Q, as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, including subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and public communications. You should evaluate all forward-looking statements made in this 10-Q and otherwise in the context of these risks and uncertainties.

2

Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on any forward-looking statements we make. These forward-looking statements speak only as of the date of this 10-Q and are not guarantees of future performance or developments and involve known and unknown risks, uncertainties and other factors that are in many cases beyond our control. Except as required by law, we undertake no obligation to update or revise any forward-looking statements publicly, whether as a result of new information, future developments or otherwise.

3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SPORTSMAN’S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Amounts in Thousands, Except Per Share Data

(unaudited)

	October 31,		February 1,
	2020		2020
Assets
Current assets:
Cash	$	19,314	$	1,685
Accounts receivable, net		462		904
Merchandise inventories		322,078		275,505
Income tax receivable		—		812
Prepaid expenses and other		14,564		12,732
Total current assets		356,418		291,638
Operating lease right of use asset		239,254		224,520
Property and equipment, net		99,495		98,767
Goodwill		1,496		1,496
Definite lived intangibles, net		299		220
Total assets	$	696,962	$	616,641
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	135,949	$	38,157
Accrued expenses		106,430		70,118
Income taxes payable		5,315		—
Operating lease liability, current		35,730		34,487
Revolving line of credit		—		116,078
Current portion of long-term debt, net of discount and debt issuance costs		—		5,936
Total current liabilities		283,424		264,776
Long-term liabilities:
Long-term debt, net of discount, debt issuance costs, and current portion		7,950		23,781
Deferred income taxes		4,154		562
Operating lease liability, noncurrent		227,333		217,254
Total long-term liabilities		239,437		241,597
Total liabilities		522,861		506,373
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 20,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock, $.01 par value; 100,000 shares authorized; 43,591 and 43,296 shares issued and outstanding, respectively		436		433
Additional paid-in capital		88,823		86,806
Accumulated earnings		84,842		23,029
Total stockholders' equity		174,101		110,268
Total liabilities and stockholders' equity	$	696,962	$	616,641

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Amounts in Thousands Except Per Share Data

(unaudited)

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 31,		November 2,		October 31,		November 2,
	2020		2019		2020		2019
Net sales	$	385,748	$	242,466	$	1,013,572	$	628,249
Cost of goods sold		255,166		158,256		679,122		416,644
Gross profit		130,582		84,210		334,450		211,605
Selling, general, and administrative expenses		92,252		68,336		251,077		191,326
Income from operations		38,330		15,874		83,373		20,279
Bargain purchase gain		(2,218)		—		(2,218)		—
Interest expense		536		2,094		3,088		6,552
Income before income taxes		40,012		13,780		82,503		13,727
Income tax expense		9,530		3,287		20,690		3,195
Net income	$	30,482	$	10,493	$	61,813	$	10,532
Earnings per share:
Basic	$	0.70	$	0.24	$	1.42	$	0.24
Diluted	$	0.68	$	0.24	$	1.40	$	0.24
Weighted average shares outstanding:
Basic		43,609		43,230		43,490		43,126
Diluted		44,510		43,559		44,260		43,316

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Amounts in Thousands

(unaudited)

For the Thirteen Weeks Ended October 31, 2020 and November 2, 2019
	Common Stock			Restricted nonvoting common stock			Additional paid-in- capital		Accumulated (deficit) earnings		Total stockholders' equity
	Shares	Amount		Shares	Amount		Amount		Amount		Amount
Balance at August 3, 2019	43,230	$	432	—	$	—	$	85,422	$	2,853	$	88,707
Stock based compensation	—		—	—		—		619		—		619
Net income	—		—	—		—		—		10,493		10,493
Balance at November 2, 2019	43,230	$	432	—	$	—	$	86,041	$	13,346	$	99,819
Balance at August 1, 2020	43,591	$	436	—	$	—	$	87,941	$	54,360	$	142,737
Stock based compensation	—		—	—		—		882		—		882
Net income	—		—	—		—		—		30,482		30,482
Balance at October 31, 2020	43,591	$	436	—	$	—	$	88,823	$	84,842	$	174,101
For the Thirty-Nine Weeks Ended October 31, 2020 and November 2, 2019
	Common Stock			Restricted nonvoting common stock			Additional paid-in- capital		Accumulated (deficit) earnings		Total stockholders' equity
	Shares	Amount		Shares	Amount		Amount		Amount		Amount
Balance at February 2, 2019	42,978	$	430	—	$	—	$	84,671	$	(6,441)	$	78,660
Impact of change for ASC 842 adoption	—		—	—		—		—		9,255		9,255
Vesting of restricted stock units	198		2	—		—		(2)		—		—
Payment of withholdings on restricted stock units	—		—	—		—		(369)		—		(369)
Issuance of common stock for cash per employee stock purchase plan	54		—	—		—		174		—		174
Stock based compensation	—		—	—		—		1,567		—		1,567
Net income	—		—	—		—		—		10,532		10,532
Balance at November 2, 2019	43,230	$	432	—	$	—	$	86,041	$	13,346	$	99,819
Balance at February 1, 2020	43,296	$	433	—	$	—	$	86,806	$	23,029	$	110,268
Vesting of restricted stock units	255		3	—		—		(3)		—		—
Payment of withholdings on restricted stock units	—		—	—		—		(689)		—		(689)
Issuance of common stock for cash per employee stock purchase plan	40		—	—		—		273		—		273
Stock based compensation	—		—	—		—		2,436		—		2,436
Net income	—		—	—		—		—		61,813		61,813
Balance at October 31, 2020	43,591	$	436	—	$	—	$	88,823	$	84,842	$	174,101
​ The accompanying notes are an integral part of these condensed consolidated financial statements

6

SPORTSMAN'S WAREHOUSE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Amounts in Thousands

(unaudited)

	Thirty-Nine Weeks Ended
	October 31,		November 2,
	2020		2019
Cash flows from operating activities:
Net income	$	61,813	$	10,532
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		15,992		14,070
Amortization and write-off of discount on debt and deferred financing fees		422		252
Amortization of definite lived intangible		21		20
Loss (gain) on asset dispositions		937		(311)
Gain on bargain purchase		(2,218)		—
Noncash lease expense		17,760		22,132
Deferred income taxes		2,801		(245)
Stock-based compensation		2,436		1,567
Change in operating assets and liabilities, net of amounts acquired:
Accounts receivable, net		442		(371)
Operating lease liabilities		(20,781)		(22,571)
Merchandise inventories		(38,887)		(42,142)
Prepaid expenses and other		(2,021)		165
Accounts payable		94,900		70,270
Accrued expenses		31,992		3,449
Income taxes payable and receivable		6,127		1,030
Net cash provided by operating activities		171,736		57,847
Cash flows from investing activities:
Purchase of property and equipment, net of amounts acquired		(15,394)		(22,914)
Acquisition of Field and Stream stores, net of cash acquired		(4,778)		(19,074)
Proceeds from sale of property and equipment		—		311
Net cash used in investing activities		(20,172)		(41,677)
Cash flows from financing activities:
Net payments on line of credit		(116,078)		(13,541)
Increase in book overdraft, net		4,559		3,756
Proceeds from issuance of common stock per employee stock purchase plan		273		174
Payment of withholdings on restricted stock units		(689)		(369)
Principal payments on long-term debt		(22,000)		(6,000)
Net cash used in financing activities		(133,935)		(15,980)
Net change in cash		17,629		190
Cash at beginning of period		1,685		1,547
Cash at end of period	$	19,314	$	1,737
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	3,087	$	6,761
Income taxes, net of refunds		11,763		2,416
Supplemental schedule of noncash activities:
Noncash change in operating lease right of use asset and operating lease liabilities from	$	33,392	$	48,737
remeasurement of existing leases and addition of new leases
Purchases of property and equipment included in accounts payable and accrued expenses	$	1,991	$	2,636
Payable to seller relating to acquisition of Field and Stream stores	$	1,774	$	9,462

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Amounts reported in thousands, except per share data and store count data

(1) Description of Business and Basis of Presentation

Description of Business

Sportsman’s Warehouse Holdings, Inc. (“Holdings”) and its subsidiaries (collectively, the “Company”) operate retail sporting goods stores. As of October 31, 2020, the Company operated 112 stores in 27 states. The Company also operates an e-commerce platform at www.sportsmans.com. The Company’s stores and website are aggregated into one single operating and reportable segment.

Basis of Presentation

The condensed consolidated financial statements included herein are unaudited and have been prepared by management of the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company’s condensed consolidated balance sheet as of February 1, 2020 was derived from the Company’s audited consolidated balance sheet as of that date. All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments that are, in the opinion of management, necessary to summarize fairly our condensed consolidated financial statements for the periods presented. All of these adjustments are of a normal recurring nature. The results of the fiscal quarter ended October 31, 2020 are not necessarily indicative of the results to be obtained for the year ending January 30, 2021. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020 filed with the SEC on April 9, 2020 (the “Fiscal 2019 Form 10-K”).

Impact of COVID-19 Pandemic

During March 2020, the World Health Organization declared the rapidly growing coronavirus outbreak to be a global pandemic. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States. Beginning in March 2020, the Company reduced store hours to allow sufficient time to restock its shelves and perform additional cleaning, and the Company was also limited the number of customers in its stores at any one time. During the second quarter of fiscal 2020, the Company returned to normal operating hours in each of its stores. The Company may again restrict the operations of its stores and its distribution facility if it deems this appropriate or if recommended or mandated by authorities.

(2) Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 to the Company’s Fiscal 2019 Form 10-K. Except for the changes below, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (“Topic 740”)-Simplifying the Accounting for Income Taxes, which removes certain exception to the general principles in Topic 740 and amends existing guidance to improve consistent application. For public entities, ASU 2019-12 is required to be adopted for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company plans to adopt this ASU on January 31, 2021 Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements and related disclosures.

8

(3) Revenue Recognition

Revenue recognition accounting policy

The Company operates solely as an outdoor retailer, which includes both retail stores and an e-commerce platform, that offers a broad range of products in the United States and online. Generally, all revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration in exchange for those goods. Accordingly, the Company implicitly enters into a contract with customers to deliver merchandise inventory at the point of sale. Collectability is reasonably assured since the Company only extends credit for immaterial purchases to certain municipalities.

Substantially all of the Company’s revenue is for single performance obligations for the following distinct items:

● Retail store sales

● E-commerce sales

● Gift cards and loyalty reward program

For performance obligations related to retail store and e-commerce sales contracts, the Company typically transfers control, for retail stores, upon consummation of the sale when the product is paid for and taken by the customer and, for e-commerce sales, when the products are tendered for delivery to the common carrier.

The transaction price for each contract is the stated price on the product, reduced by any stated discounts at that point in time. The Company does not engage in sales of products that attach a future material right which could result in a separate performance obligation for the purchase of goods in the future at a material discount. The implicit point-of-sale contract with the customer, as reflected in the transaction receipt, states the final terms of the sale, including the description, quantity, and price of each product purchased. Payment for the Company’s contracts is due in full upon delivery. The customer agrees to a stated price implicit in the contract that does not vary over the contract.

The transaction price relative to sales subject to a right of return reflects the amount of estimated consideration to which the Company expects to be entitled. This amount of variable consideration included in the transaction price, and measurement of net sales, is included in net sales only to the extent that it is probable that there will be no significant reversal in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. The allowance for sales returns is estimated based upon historical experience and a provision for estimated returns is recorded as a reduction in sales in the relevant period. The estimated merchandise inventory cost related to the sales returns is recorded in prepaid expenses and other. The estimated refund liabilities are recorded in accrued expenses. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect net sales and earnings in the period such variances become known.

Contract liabilities are recognized primarily for gift card sales and our loyalty reward program. Cash received from the sale of gift cards is recorded as a contract liability in accrued expenses, and the Company recognizes revenue upon the customer’s redemption of the gift card. Gift card breakage is recognized as revenue in proportion to the pattern of customer redemptions by applying a historical breakage rate of 3.5% when no escheat liability to relevant jurisdictions exists. Based upon historical experience, gift cards are predominantly redeemed in the first two years following their issuance date. The Company does not sell or provide gift cards that carry expiration dates.

Accounting Standards Codification (“ASC”) 606 requires the Company to allocate the transaction price between the goods and the loyalty reward points based on the relative stand alone selling price. The Company recognized revenue for the breakage of loyalty reward points as revenue in proportion to the pattern of customer redemption of the points by applying a historical breakage rate of 50% when no escheat liability to relevant jurisdictions exists.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

9

Sales returns

The Company allows customers to return items purchased within 30 days provided the merchandise is in resaleable condition with original packaging and the original sales/gift receipt is presented. The Company estimates a reserve for sales returns and records the respective reserve amounts, including a right to return asset when a product is expected to be returned and resold. Historical experience of actual returns and customer return rights are the key factors used in determining the estimated sales returns.

Contract balances

The following table provides information about right of return assets, contract liabilities, and sales return liabilities with customers as of October 31, 2020 and February 1, 2020:

	October 31, 2020		February 1, 2020
Right of return assets, which are included in prepaid expenses and other	$	2,323	$	1,683
Estimated gift card contract liability, net of breakage		(16,088)		(13,575)
Estimated loyalty contract liability, net of breakage		(8,654)		(9,621)
Sales return liabilities, which are included in accrued expenses		(3,467)		(2,512)

For the 13 and 39 weeks ended October 31, 2020, the Company recognized approximately $287 and $809 in gift card breakage and approximately $820 and $2,148 in loyalty reward breakage, respectively. For the 13 and 39 weeks ended November 2, 2019, the Company recognized approximately $235 and $740 in gift card breakage and approximately $404 and $1,064 in loyalty reward breakage, respectively. For the 13 and 39 weeks ended October 31, 2020, the Company recognized revenue of $1,428 and $6,849 relating to contract liabilities that existed at February 1, 2020.

The current balance of the right of return assets is the expected amount of inventory to be returned that is expected to be resold. The current balance of the contract liabilities primarily relates to the gift card and loyalty reward program liabilities. The Company expects the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions over the next two years. The current balance of sales return liabilities is the expected amount of sales returns from sales that have occurred.

Disaggregation of revenue from contracts with customers

In the following table, revenue from contracts with customers is disaggregated by department. The percentage of net sales related to the Company’s departments for the 13 and 39 weeks ended October 31, 2020 and November 2, 2019, was approximately:

		Thirteen Weeks Ended		Thirty-Nine Weeks Ended
		October 31,	November 2,	October 31,	November 2,
Department	Product Offerings	2020	2019	2020	2019
Camping	Backpacks, camp essentials, canoes and kayaks, coolers, outdoor cooking equipment, sleeping bags, tents and tools	12.9%	14.9%	13.8%	15.5%
Apparel	Camouflage, jackets, hats, outerwear, sportswear, technical gear and work wear	8.6%	10.3%	6.5%	8.7%
Fishing	Bait, electronics, fishing rods, flotation items, fly fishing, lines, lures, reels, tackle and small boats	7.8%	8.9%	11.5%	12.6%
Footwear	Hiking boots, socks, sport sandals, technical footwear, trail shoes, casual shoes, waders and work boots	5.6%	7.5%	5.3%	7.4%
Hunting and Shooting	Ammunition, archery items, ATV accessories, blinds and tree stands, decoys, firearms, reloading equipment and shooting gear	57.4%	48.5%	56.3%	47.4%
Optics, Electronics, Accessories, and Other	Gift items, GPS devices, knives, lighting, optics, two-way radios, and other license revenue, net of revenue discounts	7.7%	9.9%	6.6%	8.4%
Total		100.0%	100.0%	100.0%	100.0%

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(4) Property and Equipment

Property and equipment as of October 31, 2020 and February 1, 2020 were as follows:

	October 31,		February 1,
	2020		2020
Furniture, fixtures, and equipment	$	93,459	$	84,059
Leasehold improvements		107,026		103,791
Construction in progress		5,241		1,571
Total property and equipment, gross		205,726		189,421
Less accumulated depreciation and amortization		(106,231)		(90,654)
Total property and equipment, net	$	99,495	$	98,767

(5) Accrued Expenses

Accrued expenses consisted of the following as of October 31, 2020 and February 1, 2020:

	October 31,		February 1,
	2020		2020
Book overdraft	$	20,386	$	15,827
Unearned revenue		29,928		25,705
Accrued payroll and related expenses		25,605		11,436
Sales and use tax payable		9,134		5,169
Accrued construction costs		796		1,112
Other		20,581		10,869
Total accrued expenses	$	106,430	$	70,118

(6) Leases

At the inception of the lease, the Company’s operating leases have certain lease terms of up to 10 years, which typically includes multiple options for the Company to extend the lease which are not reasonably certain and as such are excluded from the measurement of the right of use asset and liability.

The Company determines whether a contract is or contains a lease at contract inception. Beginning in fiscal 2019, operating lease assets and operating lease liabilities are recognized at commencement date based on the present value of remaining fixed lease payments over the lease term. As the rate implicit in the lease is not readily determinable in most of the Company’s leases, it uses its incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The operating lease asset also includes any fixed lease payments made and includes lease incentives and incurred initial direct costs. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. The Company’s lease terms may include options to extend or terminate the lease. Additionally, the Company’s leases do not contain any material residual guarantees or material restrictive covenants.

In the 13 and 39 weeks ended October 31, 2020, the Company recorded a non-cash increase, net of terminations, of $20,329 and $32,102, respectively, to the right of use assets and operating lease liabilities resulting from lease remeasurements from the exercise of lease extension options, acquired leases, and new leases added.

In accordance with ASC 842, total lease expense, including common area maintenance (“CAM”), recorded during the 13 and 39 weeks ended October 31, 2020 was $17,068 and $50,270, respectively.

In accordance with ASC 842, total lease expense, including CAM, recorded during the 13 and 39 weeks ended November 2, 2019 was $14,666 and $43,480, respectively.

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In accordance with ASC 842, other information related to leases was as follows:

	Thirty-Nine Weeks Ended
	October 31,		November 2,
	2020		2019
Operating cash flows from operating leases	$	(41,257)	$	(36,300)
Cash paid for amounts included in the measurement of lease liabilities - operating leases		(41,257)		(36,300)
	As of October 31,		As of November 2,
	2020		2019
Right-of-use assets obtained in exchange for new or remeasured operating lease liabilities	$	33,392	$	48,737
Terminated right-of-use assets and liabilities		(3,202)		—
Weighted-average remaining lease term - operating leases		5.11		5.52
Weighted-average discount rate - operating leases		8.09%		7.90%

In accordance with ASC 842, maturities of operating lease liabilities as of October 31, 2020 were as follows:

	Operating
Year Endings:	Leases
2020 (remainder)	$	14,416
2021		56,232
2022		53,245
2023		48,574
2024		40,158
Thereafter		161,734
Undiscounted cash flows	$	374,359
Reconciliation of lease liabilities:
Present values	$	263,063
Lease liabilities - current		35,730
Lease liabilities - noncurrent		227,333
Lease liabilities - total	$	263,063
Difference between undiscounted and discounted cash flows	$	111,296

(7) Revolving Line of Credit

On May 23, 2018, Sportsman’s Warehouse, Inc. (“SWI”), a wholly owned subsidiary of the Company, as lead borrower, and Wells Fargo Bank, National Association (“Wells Fargo”), with a consortium of banks led by Wells Fargo, entered into an Amended and Restated Credit Agreement (as amended, restated, supplemented or otherwise modified, the “Amended Credit Agreement”). The Amended Credit Agreement governs the Company’s senior secured revolving credit facility (“Revolving Line of Credit”) and a $40,000 term loan (the “Term Loan”).  The Revolving Line of Credit provides a borrowing capacity of up to $250,000, subject to a borrowing base calculation.  Information on the Term Loan is provided in Note 8. 

In conjunction with the Amended Credit Agreement, the Company incurred $1,331 of fees paid to various parties which were capitalized. Fees associated with the Revolving Line of Credit were recorded in prepaid expenses and other. Fees associated with the Term Loan offset the loan balance on the condensed consolidated balance sheet of the Company.

As of October 31, 2020, and February 1, 2020, the Company had $0 and $123,478 in outstanding revolving loans under the Revolving Line of Credit, respectively. Amounts outstanding are offset on the condensed consolidated balance sheets by amounts in depository accounts under lock-box or similar arrangements, which were $16,844 and $7,400 as of

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October 31, 2020 and February 1, 2020, respectively. As of October 31, 2020, the Company had stand-by commercial letters of credit of $1,705 under the terms of the Revolving Line of Credit.

The Amended Credit Agreement contains customary affirmative and negative covenants, including covenants that limit the Company’s ability to incur, create or assume certain indebtedness, to create, incur or assume certain liens, to make certain investments, to make sales, transfers and dispositions of certain property and to undergo certain fundamental changes, including certain mergers, liquidations and consolidations. The Amended Credit Agreement also requires the Company to maintain a minimum availability at all times of not less than 10% of the gross borrowing base. The Amended Credit Agreement contains customary events of default. The Revolving Line of Credit matures on May 23, 2023.

As of October 31, 2020, the Revolving Line of Credit had $646 in deferred financing fees and as of February 1, 2020, the Revolving Line of Credit had $834 in deferred financing fees. During the 13 and 39 weeks ended October 31, 2020, the Company recognized $63 and $188, respectively of non-cash interest expense with respect to the amortization of deferred financing fees. During the 13 and 39 weeks ended November 2, 2019, the Company recognized $67 and $188, respectively of non-cash interest expense with respect to the amortization of deferred financing fees.

For the 13 and 39 weeks ended October 31, 2020, gross borrowings under the Revolving Line of Credit were $403,960 and $984,577, respectively. For the 13 and 39 weeks ended November 2, 2019 gross borrowing under the Revolving Line of Credit were $271,309 and $676,639, respectively. For the 13 and 39 weeks ended October 31, 2020, gross paydowns under the Revolving Line of Credit were $424,826 and $1,110,758, respectively. For the 13 and 39 weeks ended November 2, 2019, gross paydowns under the Revolving Line of Credit were $268,972 and $692,989, respectively.

(8) Long-Term Debt

Long-term debt consisted of the following as of October 31, 2020 and February 1, 2020:

	October 31,		February 1,
	2020		2020
Term loan	$	8,000		30,000
Less debt issuance costs		(50)		(283)
		7,950		29,717
Less current portion, net of discount and debt issuance costs		—		(5,936)
Long-term portion	$	7,950	$	23,781

Term Loan

On May 23, 2018, Sportsman’s Warehouse, a wholly owned subsidiary of Holdings, as lead borrower, and Wells Fargo, with a consortium of banks led by Wells Fargo, entered into the Amended Credit Agreement.  The Amended Credit Agreement governs the Revolving Line of Credit and the Term Loan.  The Term Loan was issued at a price of 100% of the aggregate principal amount of $40,000 and has a maturity date of May 23, 2023.  Information on the Revolving Line of Credit is provided in Note 7.

The Term Loan bears interest at a rate of LIBOR plus 5.75%. The effective rate for the Term Loan as of October 31, 2020 was 6.75%

As of October 31, 2020, and February 1, 2020, the Term Loan had an outstanding balance of $8,000 and $30,000, respectively. The outstanding amounts under the Term Loan as of October 31, 2020 and February 1, 2020 are offset on the condensed consolidated balance sheets by debt issuance costs of $50 and $283, respectively.

During the 13 and 39 weeks ended October 31, 2020, the Company recognized $102 and $233, respectively, of non-cash interest expense with respect to the amortization of the deferred financing fees. During the 13 and 39 weeks ended November 2, 2019, the Company recognized $21 and $64, respectively, of non-cash interest expense with respect to the amortization of the deferred financing fees.

During the 13 weeks ended October 31, 2020, the Company made a voluntary $8,000 payment on the Term Loan.

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Restricted Net Assets

The provisions of the Term Loan and the Revolving Line of Credit restrict all of the net assets of the Company’s consolidated subsidiaries, which constitute all of the net assets on the Company’s condensed consolidated balance sheet as of October 31, 2020, from being used to pay any dividends without prior written consent from the financial institutions party to the Company’s Term Loan and Revolving Line of Credit.

(9) Income Taxes

The Company recognized an income tax expense of $9,530 and $3,287 in the 13 weeks ended October 31, 2020 and November 2, 2019, respectively. The Company’s effective tax rate for the 13 weeks ended October 31, 2020 and November 2, 2019 was 23.8% and 23.9%, respectively. The Company recognized an income tax expense of $20,690 and $3,195 in the 39 weeks ended October 31, 2020 and November 2, 2019, respectively. The Company’s effective tax rate for the 39 weeks ended October 31, 2020 and November 2, 2019 was 25.1% and 23.3%, respectively. The Company’s effective tax rate will generally differ from the U.S. Federal statutory rate of 21.0%, due to state taxes, permanent items, and discrete items relating to stock award deductions.

(10) Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding, reduced by the number of shares repurchased and held in treasury, during the period. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding share option awards, nonvested share awards and nonvested share unit awards.

The following table sets forth the computation of basic and diluted income per common share:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
		October 31,		November 2,		October 31,		November 2,
		2020		2019		2020		2019
Net income	$	30,482	$	10,493	$	61,813	$	10,532
Weighted-average shares of common stock outstanding:
Basic		43,609		43,230		43,490		43,126
Dilutive effect of common stock equivalents		901		329		770		190
Diluted		44,510		43,559		44,260		43,316
Basic earnings per share	$	0.70	$	0.24	$	1.42	$	0.24
Diluted earnings per share	$	0.68	$	0.24	$	1.40	$	0.24
Restricted stock units considered anti-dilutive and excluded in the calculation		4		16		25		42

(11) Stock-Based Compensation

Stock-Based Compensation

During the 13 and 39 weeks ended October 31, 2020 the Company recognized total stock-based compensation expense of $882 and $2,436, respectively. During the 13 and 39 weeks ended November 2, 2019 the Company recognized total stock-based compensation expense of $619 and $1,567, respectively. Compensation expense related to the Company's stock-based payment awards is recognized in selling, general, and administrative expenses in the condensed consolidated statements of operations.

Employee Stock Plans

As of October 31, 2020, the number of shares available for awards under the 2019 Performance Incentive Plan (the “2019 Plan”) was 2,598. As of October 31, 2020, there were 1,207 unvested stock awards outstanding under the 2019 Plan.

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Employee Stock Purchase Plan

The Company also has an Employee Stock Purchase Plan (“ESPP”) that was approved by shareholders in fiscal year 2015, under which 800 shares of common stock have been authorized. Shares are issued under the ESPP twice yearly at the end of each offering period. For the 13 weeks ended October 31, 2020, no shares were issued under the ESPP and, as of October 31, 2020, the number of shares available for issuance was