Sportsman's Warehouse Holdings Inc (SPWH) 2020 Q4 法說會逐字稿

Greetings, and welcome to the Sportsman's Warehouse Fourth Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host, Rachel Schacter of ICR. Thank you. You may begin.

Thank you. With me on the call is Jon Barker, Chief Executive Officer; and Robert Julian, Chief Financial Officer.

Before we get started, I would like to remind you of the company's safe harbor language. The statements we make today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding our expectations about our future results of operations, demand for our products and growth of our industry. Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described under the caption Risk Factors in the company's 10-K for the year ended February 2, 2019, 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 today, which is also available on the Investor Relations section of our website at investors.sportsmans.com.

I would also like to note that today's materials include an earnings conference call presentation, which is also available at sportsmans.com in the Investor Relations section of our website. You can utilize this deck to follow along with today's prepared remarks.

Now I'd like to turn the call over to Jon Barker, Chief Executive Officer of Sportsman's Warehouse.

Thank you, Rachel. Good afternoon, everyone, and thank you for joining us today. I hope you, your families, friends, colleagues are all well. Every day, it seems that COVID-19 reaches a new milestone. As such, I'll begin my remarks by addressing the COVID-19 situation as it pertains to Sportsman's Warehouse. I will then review the highlights of our fourth quarter and full year 2019 performance and discuss key trends we are seeing in our business. I will also provide updates on our omnichannel growth strategy. Robert will then review our Q4 and fiscal year 2019 financial results in more detail and provide a framework for how we are approaching Q1 and full year 2020. Finally, we will open up the call for questions.

I'm now on Slide 4 of the presentation and will address the COVID-19 pandemic. First and most importantly, our efforts are focused on protecting the health and safety of our associates, customers and their families. To this end, we have instituted several changes to our store operations, including reduced store hours to allow for sufficient time to restock and perform additional cleaning, limiting the number of customers in our stores at any one time to assist in social distancing protocols and leveraging our e-commerce capabilities like ship-to-home, BOPUS and now curbside pickup. As you're aware, the situation remains fluid, and we are closely monitoring new developments.

I want to share with you the business impacts we've seen so far. With respect to our supply chain, we've seen some interruption out of China, primarily related to camping and fishing products. We've not yet seen a significant financial impact due to these supply chain disruptions. We are working closely with our vendors to limit this disruption, but we may not be able to fully mitigate its impact. On the demand side, there is significant uncertainty on the duration and near-term impact as it relates to whether our stores will be able to remain open during this pandemic. However, we are confident that everything we've done over the past few years has positioned Sportsman's Warehouse to capture significant market share in the long term.

Due to this unprecedented situation, we are not issuing guidance for either Q1 or fiscal year 2020 at this time. But I do want to share a few key points and trends. Our business returned to normal and even accelerated starting in early January as key competitors exited or deemphasized the firearms and ammunition categories. We've experienced further acceleration of sales into Q1 2020. We believe this is driven by fewer competitors, increased demand from COVID-19 uncertainty and the current election cycle, although parsing out the exact contribution of each is not possible. While we've seen significant increases in sales in the first quarter so far, this is likely not sustainable in the long term. The COVID-19 pandemic may result in more store closings due to government regulations, a substantial decrease in store traffic due to social distancing or a significant disruption in our supply chain. But rest assured, we are actively working on contingency plans and are managing our capital, expenses and liquidity with great discipline, given these uncertainties.

Now on Slide 5. I'll review our fourth quarter results, which exceeded the high end of our updated sales guidance and met the high end of our updated EPS guidance. For the quarter, net sales were $258 million or an increase of 6.4% compared to prior year. This sales growth was driven primarily by 3 factors: First, we experienced strong firearm and ammunition sales in January. Second, we added 11 new stores during 2019, including 8 Field & Stream stores acquired at the end of Q3. And third, we've seen significant growth in sales generated by our website, sportsmans.com. While same-store sales decreased 4.8% in the fourth quarter, this performance was better than our updated outlook.

Not only did business trends normalize in January, they exceeded our updated expectations. When Walmart completed its exit of certain ammunition categories and other competitors' promotional behavior returned to normal, we experienced market share gains in our key categories of firearms and ammunition. Also, sales generated from our website increased 90% during the holiday season versus prior year. This strong growth was driven by our expansive online assortment and scale, which provides us with the opportunity to bring products to market that no one else can deliver.

We are also seeing a significant increase in BOPUS orders and have made nice progress on rolling out ship from store for all relevant categories. This capability enables us to reduce shipping time to customers, maximize customer choices online and successfully manage our long tail inventories.

Finally, our geographic reach is further enhanced by our growing base of federal firearms license partners, which expanded to over 300 during the quarter. When combined with our store footprint, we are now able to reach 90% of the U.S. population within a 45-minute drive.

Operating expenses for the quarter were slightly higher than anticipated due to additional marketing spend around the holiday season and the new store openings. In addition, we deleveraged in operating expenses due to reduced sales during the 3 weeks leading up to Christmas.

Adjusted earnings per share were $0.21 for the fourth quarter, which met the high end of our updated guidance. For full year 2019, net sales were $886 million or an increase of 4.4%, and adjusted earnings per share were $0.47.

Turning now to Slide 6. We are committed to this industry and will continue to grow online and expand our physical store footprint, while our national competitors are deemphasizing and/or exiting firearms and ammunition. We ended 2019 with 103 Sportsman's Warehouse stores in 27 states. We've already announced 5 new stores for 2020. And today, we are announcing 2 additional new stores for 2020. Included in the 7 total new stores, there are 2 Field & Stream locations located in Crescent Springs, Kentucky and Kalamazoo, Michigan. This brings us to a total of 10 Field & Stream stores acquired in 2019 and 2020. As part of the 7 new stores now announced, we also secured 2 previous Gander stores, 1 in Parker, Colorado that is already open and another, which is a brand-new announcement today, in Marquette, Michigan, which is planned to open this summer.

The second newest store announcement today is the planned opening of our first small-format concept shop of approximately 7,500 square feet, which is located in Laramie, Wyoming. If successful, this smaller store format could offer additional opportunities to penetrate underserved markets that couldn't support a larger format store. We view this concept as an advantage over our national competitors, who build larger stores at higher costs. In addition to the new Sportsman's Warehouse stores, we recently opened our first indoor range and retail facility in West Jordan, Utah. This new retail concept and indoor range is branded Legacy Shooting Center.

In summary, as found on Slide 7, we are closely monitoring the COVID-19 situation in real time to protect the health and well-being of our associates, but we cannot fully predict its impact on our business. Notwithstanding COVID-19, we are very pleased with the momentum of our core business as we begin fiscal 2020, and we remain focused on our growth initiatives. Importantly, long term, we are uniquely positioned to capitalize on market share opportunities, given our growing brand, expanding store base and enhanced reach through e-commerce. We expect to report on Q1 2020 results in June.

With that, I'll turn the call over to Robert to discuss our financial results in more detail.

Thank you, Jon. I'll begin my remarks today with a review of our fourth quarter and fiscal year 2019 results followed by a few remarks about fiscal year 2020. Most of the financial figures discussed on today's call are reported on a U.S. GAAP basis. In the instances where we report non-GAAP financial measures, we have reconciled the non-GAAP measures to the corresponding GAAP measures in our earnings press release, which was issued earlier today.

Turning to Slide 8 of the PowerPoint presentation. Fourth quarter 2019 net sales were $258.2 million compared to $242.7 million in the fourth quarter of 2018, an increase of $15.5 million or 6.4%. Same-store sales decreased 4.8% in the quarter compared to our updated guidance range of negative 6% to negative 7%. The most challenging product categories in Q4 were clothing, camping and footwear. However, our sales performance rebounded nicely starting in early January led by ammunition and firearms. Same-store sales of ammunition and firearms increased 17.6% and 10.0%, respectively, in the month of January. Overall, same-store sales growth in January was positive 1.7%.

Q4 2019 gross profit was $85.0 million compared to $79.5 million in the fourth quarter of 2018, an increase of $5.5 million or 6.9%. Gross margin was relatively flat for the quarter at 32.9% versus 32.8% in the prior year period. Product margin improved 80 basis points, primarily due to the discount we received on the inventory acquired in the acquisition of 8 Field & Stream stores in Q3. Gross margin was negatively impacted by 80 basis points in the quarter due to reduced vendor incentives as a result of lower total purchases.

SG&A expense of $71.8 million for Q4 2019 was an increase of $3.9 million or 14.9% compared to the fourth quarter of 2018. We incurred additional payroll expense of $3.1 million, primarily due to minimum wage and benefit increases, plus new store growth. Rent expense increased approximately $2.8 million, primarily due to new store openings. Other operating expense increased approximately $2.3 million, primarily due to incremental marketing, software support and audit fees. Store operating expense, including utilities, janitorial and security expenses, increased due to new store openings. We also incurred $0.5 million of incremental preopening expenses and transaction costs associated with the Field & Stream transactions. As a percentage of net sales, SG&A increased approximately 200 basis points to 27.8% in the quarter.

Income from operations was $13.2 million in Q4 2019 compared to $17.0 million in the prior year. Interest expense in Q4 2019 was $1.4 million compared to $2.7 million in Q4 of 2018, a reduction of $1.3 million. This improvement is a result of lower total borrowings, primarily attributable to working capital improvements. We recorded an income tax expense of $2.1 million in Q4 2019 compared to $3.7 million in Q4 2018. This $1.3 million reduction is the result of several discrete items impacting the Q4 2019 tax provision, including R&D tax credits, state inventory tax credits and changes in state deferred tax rates.

Net income for the quarter was $9.7 million or $0.22 per share based on a weighted average share count of 43.3 million as compared to net income of $10.6 million or $0.25 per share based on a weighted average share count of 43.0 million in 2018. Adjusted net income was $9.3 million or $0.21 per diluted share based on a diluted weighted average share count of 43.8 million in the fourth quarter of 2019 compared to adjusted net income of $10.6 million or $0.25 per diluted share based on a diluted weighted average share count of 43.1 million in 2018. Adjusted EBITDA for the fourth quarter of 2019 was $19.6 million compared to $22.0 million in the prior year period.

Turning to Slide 9. I will now comment on our full year 2019 results. Fiscal year 2019 net sales were $886.4 million compared to $849.1 million in 2018, an increase of $37.3 million or 4.4%. Same-store sales decreased 0.9% in fiscal year 2019. This compares to our updated full year guidance of negative 1.3% to negative 1.7% for the year. We ended the fiscal year with 103 stores operating in 27 states. Total square footage grew 13.6% in fiscal year 2019 compared to 2018.

Full year 2019 gross profit was $296.6 million compared to $284.9 million in 2018, an increase of $11.7 million or 4.1%. Gross margin was relatively flat at 33.5% versus 33.6% in the prior year period. Product margin improved 30 basis points for the year, primarily due to the discount we received on the inventory purchased in the Q3 acquisition of 8 Field & Stream stores. Gross margin was negatively impacted by 40 basis points for the year due to reduced vendor incentives as a result of lower total purchases.

SG&A expense of $263.2 million for fiscal year 2019 was an increase of $22.3 million or 9.2% compared to 2018. We incurred additional payroll expense of $8.3 million, primarily due to minimum wage and benefit increases, plus new store growth. Rent expense increased $5.8 million, primarily due to new store openings. Other operating expense increased approximately $5.6 million, primarily due to incremental marketing, software support and audit fees. Store operating expense increased due to new store openings. We incurred $1.4 million of incremental preopening expenses in transaction costs associated with the acquired Field & Stream stores. Depreciation expense increased $1.1 million in 2019 compared to prior year. As a percentage of net sales, SG&A increased approximately 130 basis points to 29.7%.

Income from operations was $33.5 million for fiscal year 2019 compared to $44.0 million in the prior period. Interest expense for fiscal year 2019 was $8.0 million compared to $13.2 million in 2018, a reduction of $5.2 million. This improvement is a result of lower total borrowings, primarily attributable to inventory reduction and other working capital improvements. We recorded income tax expense of $5.3 million for fiscal year 2019 compared to $7.1 million in 2018. The year-over-year reduction is primarily attributable to the discrete Q4 tax benefits addressed in my earlier remarks.

Net income for fiscal year 2019 was $20.2 million or $0.47 per share based on a weighted average share count of 43.2 million as compared to net income of $23.7 million or $0.55 per share based on a weighted average share count of 42.9 million in 2018. Adjusted net income was $20.6 million or $0.47 per share based on a diluted weighted average share count of 43.5 million in fiscal year 2019 compared to adjusted net income of $25.9 million or $0.60 per share based on a diluted weighted average share count of 43.0 million in 2018. Adjusted EBITDA for fiscal year 2019 was $59.0 million compared to $68.5 million in the prior year.

Turning now to Slide 10 and our balance sheet. Fiscal year 2019 ending inventory was $276 million compared to $277 million at the end of last year, a $1 million reduction. This result was achieved despite adding 11 new stores in 2019. On a per store basis, inventory was down 11.0% compared to prior year.

We incurred $7.5 million of capital expenditures in the fourth quarter of 2019 compared to $2.7 million in Q4 2018, an increase of $4.8 million. This increase was primarily associated with the build-out of our new corporate headquarters and our new Legacy Shooting Center. Full year 2019 capital expenditures were $20.9 million compared to $17.9 million in 2018.

Fiscal year 2019 operating cash flow was $77.9 million versus $32.2 million for 2018. The $45.8 million improvement in operating cash flow year-over-year is primarily due to a reduction in working capital.

Our liquidity remained strong as we ended the year with $116.1 million in outstanding borrowings on the line of credit and approximately $44.3 million availability on the revolving credit facility. The outstanding balance on our revolving line of credit was $28.2 million lower at the end of 2019 compared to the same period last year, even while utilizing this facility to fund the acquisition of 8 new Field & Stream stores in Q3 2019. The outstanding balance on our long-term debt was $29.7 million at the end of fiscal year 2019 compared to $35.6 million at year-end 2018, a reduction of $5.9 million.

Finally, I would like to make a few comments on fiscal year 2020. As Jon noted in his remarks, we are not providing forward guidance at this time due to uncertainties surrounding the impact of the COVID-19 pandemic.

In the short term, we have certainly experienced unusually high demand for many of our products, including generators, dehydrated food, water filtration, propane, first-aid supplies, firearms and ammunition. Most of our stores remain open at this time so that we can provide our customers access to these essential items. However, we recognize that this situation is fluid and could change very rapidly. Therefore, we are also actively developing contingency plans and manage our cash, inventory, expenses and liquidity very closely. We feel confident that we have sufficient financial flexibility to weather the potential for negative impact to our business in the future due to COVID-19. We will update you again and hope to provide more clarity on our next earnings call in June.

With that, I will now turn the call back over to the operator for questions.

(Operator Instructions) First question here is from Ryan Sigdahl from Craig-Hallum.

Jon, you mentioned significant sales growth quarter-to-date as well as later mentioning a bunch of categories. Robert, are you able to quantify what same-store sales and e-commerce performance was quarter-to-date in Q1?

Ryan, thank you for the question. What I can say is we've seen unprecedented demand in our stores quarter-to-date for the products that Robert mentioned. The last few weeks has caused us to take a lot of actions within our stores to service as many of our loyal customers as we can given the significant demand for those products. We've turned off all of our third-party shipping to third-party partners to protect customers in our stores. We've limited firearms and ammunition quantities per customer per day to meet those needs. We've taken some of the product that we ship to home off of our website and made it ship to store only. And in a handful of stores, Ryan, where we're unable to serve customers directly, we're using our website to do curbside pickup where necessary. So we're not providing exact numbers today, but we can tell you that it's been unprecedented the demand we've seen so far quarter-to-date in certain categories.

And then maybe from a supply chain, you mentioned some stuff coming from China. But what are you seeing from the major gun and ammo manufacturers? Or I guess said differently, I guess why are you limiting purchases of those? Is that a demand or supply issue constraint?

It began as a demand issue, primarily. Now as we look at the supply chain, we have a mix of activity happening across the manufacturers, and I'm speaking of the U.S.-based manufacturers. We have some manufacturing and distribution facilities that have been impacted by a limitation of operating by government requirement. We've had some factories that are on reduced output due to attendance, and we have a few factories that are outputting more than they have in many years as they've ramped up. It's really a mix. I would tell you, most of our manufacturers have been able to ramp up production and keep up, but this is a fluid situation, which we are keeping an eye on. The flow of new product in these key categories, and again, this is not just firearms and ammunition, but I'll call it primarily firearms and ammunition, is happening in our DC. We've had good attendance in our DC, good throughput. The trucks are arriving with that product, and we are re-dispersing those out to the store. So we're optimistic that the manufacturers can keep up with this.

Our position and market share that we have already, Ryan, has given us the ability to work with these vendors for many years. They had forecast from us. And as we saw demand ramp up, we're having top-to-top conversations on a regular basis to ensure that we can secure as much inventory as possible to service many of the Sportsman's Warehouse loyal customers as we can.

That's awesome. One more for me, and then I'll turn it over to the others. So you acquired 4 stores from Field & Stream and Gander. It appeared to be at a nice discount. But anything you can share about the terms of those deals and then potential to acquire any more of those stores from them?

Yes. So Ryan, this is Robert. The 2 stores that we acquired -- the 2 Field & Stream stores that we acquired were very similar deals to the first 8. So we did receive a discount on inventory. In this case, it was a little bit less than the previous transaction. We did acquire the assets of those locations for very little investments. And so the deal -- that transaction was very similar to the first 8. The Gander...

The Gander, we referenced the Gander as facilities that were Gander. They weren't necessarily a purchase agreement. That was more of a real estate opportunity, one in Parker, Colorado, which on a front range, a fantastic fit for us. It is a larger store. It is open and operating. The other one I referenced, which we are announcing today, is Marquette, Michigan. That was a Gander store that's been closed. We've come to terms with the landlord and are opening that later in the year in Northern Michigan.

So those deals are a little different. We're not acquiring inventory and...

Yes. They were not, in any case, more of a real estate...

It's just like a location.

Right. It's a real estate play from a Gander that's been exited at some point in the last few months or last couple of years.

Got it. Got it. Congrats on the solid finish to the quarter and quarter to date.

Thanks, Ryan.

Our next question is from Peter Keith from Piper Sandler.

So Jon and Robert, it sounds like you don't want to give us a quarter-to-date same-store sales. But I guess you did characterize it as unprecedented demand. I think if we go back to certain quarters around late 2012, you guys, at that time, did post same-store sales, I think, around 40% or higher. Are we talking about there is a new kind of quarter-to-date would be above that level as for unprecedented?

Peter, thanks for the question. I don't -- I'm not familiar with those types of same-store growth rates, the 40% that you're referencing. I can tell you that if some of the products that I mentioned earlier in terms of growth rates, some of them are growing double digits. There are product categories that are actually growing in triple digits. The only reason why we're reluctant to give the quarter-to-date number is just how fluid this situation and it can change very quickly. We'd be a little bit concerned about overexuberance, I guess, I would say, but we are seeing very, very -- it's also one of the reasons we're not giving guidance. We could give such a large range for an expectation. I mean if our stores were closed down for the rest of the quarter, we could actually see negative same-store sales growth in the quarter. If things continue the way they're at, we can see significant double-digit same-store sales growth in the quarter. So it's just such a fluid situation, we feel like giving specific quarter-to-date information might be misleading or not particularly helpful.

Yes, it's a much different situation, Peter, than 2012 or 2013. Those were specific events driven -- or political events were driven to certain categories because of concerns of regulatory. This is a different dynamic in the consumer's mind. We are seeing categories, again, up double, triple digits that we would not have seen in 2012 or '13. They're just not -- it's not the same need from a consumer standpoint.

What I can tell you is that we are bringing a lot of net new consumers into Sportsman's Warehouse, looking for goods, not just firearms and ammunition. But there are a lot of new customers seeking personal protection around handguns and ammunition, pepper spray and bear spray, and we believe that in the long-term will be good for the industry and Sportsman's Warehouse.

Okay. That actually does address another question I want to ask about new customers. So it sounds like that's trending pretty well. Curious how the new credit card offering is participating in this environment. Are you able to cross-sell that and get an uptick of new applicants?

We are, Peter. We're in the, I'll call it, the fourth quarter of the integration of that program into our technology at the point-of-sale and the website. The training and the marketing materials, we're making good progress. The acceptance rate from the provider is exceeding our initial expectations. So we're pleased with the performance to this date.

We are bringing a lot, as I said, new customers in to Sportsman's Warehouse, being introduced to the brand and our consumer -- our employees and getting a lot of new customers into our overall loyalty database. So we're pleased with the performance we've seen to date.

Okay. And maybe lastly, just sort of mixing it all together. I think a lot of the categories you're calling out strength might be on average a little bit lower margin. Just fair to say maybe the mix will pressure gross margin quarter-to-date, but is it very simple to say that at least your -- from a gross dollar standpoint, the growth is also quite strong?

Yes. So Peter, that's correct. We are mixing into products that the gross margin is lower than our company average. And so we are seeing a mix effect for that, and it could be fairly significant. It could be 100 to 150 basis points pressure on gross margin. And so in some ways, it could wash to some degree on the gross profit line if we can see higher revenue but sort of similar gross profit dollars had this event not occurred. And we had not seen a shift in mix, at least in the short term. We don't expect that our mix will continue at this level of being so heavy in firearms and ammunition in the long run. But in the short run, that is certainly a dynamic we're seeing in the Q1 results so far.

Robert, if I may add, we are -- we have made incredible strides in our organization over the last year getting our inventory health in great shape. And as we exited 2019, our clearance event in January on apparel was actually much smaller than it had been in prior years because we were at a healthier set of inventory. We've also done a great job in partnering with our vendors in making sure our terms and first cost of goods are in place. In every category in this -- every department or category in this company is up individually in margin -- product margin so far quarter to date. But the heavy mix into the categories we referenced and away from, say, things such as footwear and apparel will put pressure on the overall product margin in the short term. So really proud of what the team has done over the last year to put us in this position. They have all categories up in product margin. The mix is certainly going to be different than we would have ever forecasted going into Q1.

Yes, I'm glad Jon brought that up. Every product category is actually experiencing expansion on a rate basis across our portfolio. And so we're going to have positive product margin and negative mix, and more or less that might be a wash on a rate basis overall.

Our next question here is from Peter Benedict from Robert W. Baird.

First question, just can you guys remind us what the store staffing model looks like at this point for Sportsman's, maybe the number of employees per store, kind of just how is it generally structured? And how are you thinking about the pay plans for the employees where -- I guess, you have a handful of stores that are closed, not many. But in the event that you have more closed, what's the thought process there?

Yes, high level, Peter, our stores vary from 15,000 square feet -- well, actually, 2,500 square feet now with Legacy all the way up to 65,000 square feet. So the quantity of associates varies wildly, from, call it, 10-ish to probably over 60 or 70 in our larger stores. We do have a fairly high percentage of those employees that are part-time to help us balance the demand cycle throughout the week and the month. Right now, we are evaluating all of the options in front of us on the compensation, as you referenced it. I believe that some of the government programs are coming to greater clarity for us, and that will help us build and develop our execution plan around that.

Okay. That's helpful, Jon. I guess, my next question would be just on the liquidity position, the $46 million. Remind us the revolver terms. I know the availability is just a little over $40 million right now. I think it was over $70 million at the end of the third quarter. So just remind us, Robert, maybe how that sets up and what the covenants are, et cetera.

Yes, sure. I'm glad you brought that up, Peter, about the current availability. We just reported availability at the end of Q4 2019. And on a normal seasonal basis, that would be a low point for us. And I can tell you, we are calculating liquidity and availability on our line about every day. And as of today, our availability would be about $82 million. So that's just normal seasonality. And so you saw a little bit of a lower number or kind of a depressed number just on normal seasonality. So our availability, as we speak, is back up to over $80 million. So our facility is a revolving line of credit that has a maximum amount of $250 million. And then we had a term loan of $40 million that we have been paying down, and we mentioned what the balance of that was at the end of 2019.

I would say that the structure, the debt covenants, I would describe as covenant-light. There's a series of affirmative covenants and some negative covenants. And on the affirmative side, it's very simple things like financial reporting and providing notice of certain events, allowing for the inspections of our books and records, compliance with laws and so on. On the negative covenant side, we're not allowed to incur additional liens or to make certain types of investments or to close or liquidate stores or our assets or to pay dividends. And that's pretty much it relative to the covenant, so quite light, actually.

Okay. And then, I guess, my last question, just can you talk about the CapEx budget for the year? I know you're not giving guidance, but maybe you could give us a sense for what's already committed this year in terms of capital spend. That would be helpful.

Yes. We -- I would say that we should expect sort of normal capital expenditures in this year. Some of it is associated with the new store growth. And so we've already announced 7 new stores. There is some basic maintenance CapEx. If you want to consider that committed, it's just something that happens naturally. And we have some flexibility on that. And frankly, we've had some deferred maintenance CapEx, and maybe we will choose to defer some in 2020 as we monitor the situation. But sort of -- our CapEx this year was about $20 million. That's a normal-ish sort of level of CapEx. We might have a little more than that in 2020 if things progress in a positive way or we may cut back on capital, but that's a general range.

I think to get to your question, if I may, Peter, if things were to drastically change because of COVID-19 in our business, we have the ability to significantly ratchet back on capital in that plan. The stores that we're opening or have committed to are much lower per unit in capital expense than the work historically had been partially because of Field & Stream, partially because the Gander stores were already pretty much physically laid out the way we would lay them out. Some of the maintenance CapEx we have in the plan could be deferred and would be deferred. And our new DC, which is part of this year's capital plan for opening in 2020, would or could be -- it would open in '21. We would start spending capital at the end of this year. Those things, we have some flexibility as we would progress and understand whether or not COVID-19 would have a material impact on the economy and on Sportsman's Warehouse.

Peter, one thing I'll mention is, one of our analysts, which will go unnamed, did an analysis recently about the total availability and fixed monthly cash expenses. And I would say, it was done pretty well. It was pretty accurate. And so I would confirm that analysis.

Next question here is from Daniel Hofkin from William Blair.

Nice job. I hope you all are doing well. Just wanted to follow up on something earlier, and I missed a little bit of the call, so I apologize if this was asked already. But to the degree that, obviously, you've had extremely strong recent results. To the degree that, that reverses for whatever reason or you have to close more stores, can you, in addition to the covenants, which I think you discussed just some of the other expense structure limitations fixed versus variable? And then on the flip side, what, in terms of store labor, you can flex up if needed?

Yes. So Daniel, this is Robert, and I was just making reference to an analysis about what would be considered our fixed cash expenses. And the one caveat to that is that analysis does not assume any further actions or any levers that could be pulled relative to our payroll or our occupancy expense, rent, CAM and so on. And then if you include our cash interest and other sort of minimum capital expenditures, it is accurate that fixed cash burn is probably $18 million to $20 million a month for us, again, with the caveat of us not taking other more extreme or further actions. And so we feel pretty good about our financial flexibility to be able to weather the potential for negative impact of COVID-19 in our business.

And so there was an analyst who said, what if you had to shut down all of your stores for some period of time? And that would suggest that we have at least 4 months of liquidity based on that analysis and without taking further actions. However, I would also mention, recognizing that this could change very quickly, the vast majority of our stores are open. Only a handful of stores have been impacted. And in many cases, our governments have identified our business as essential. And not just because of handguns and ammunition, there is a whole variety of products that I've mentioned in my prepared comments, generators and dehydrated food and propane and so on, that we feel makes our business essential even in cases where other companies are being closed. So I hope that answers your question in terms of the worst-case scenario of shutting down stores and kind of how we're viewing that as a potential or a possibility.

Yes. That's very helpful. And I guess, maybe on the flip side, if sales were to remain stronger, I think you addressed this a little bit earlier, but anything besides staffing or other things on the supply chain basis that you could do if sales were to remain above your prior expectations?

Yes, I think we feel like we're in good shape in that regard. It's interesting we've heard some anecdotal stories about companies who are hiring during this time, whether it's Amazon or Walmart and so on. And I think that with regards to staffing, it is possible that, that would be available to us. Maybe there would be folks who would be looking for work. So on the staffing side, I think we feel good.

On the supply chain side, again, I think we feel like things are getting back to normal. There might be a little gap in the supply chain for the time that the China factories were shut down, but our understanding is that's starting to flow again. Maybe there'll be some issues at the ports unloading those ships and so on for some period of time. But net-net, we feel like we would be able to meet our customer needs and have the supply chain flowing and enough labor to take advantage and to service our customers.

I can tell you, Dan, to the point of hiring, we had a few roles. We're hiring more in the DC, and we have 500 applicants in the DC in less than 48 hours with no marketing here in Salt Lake. And historically, that could be weeks of work in marketing and recruiting to get 500 applicants in for our DC. So there's clearly an unemployment ramp-up that's happening. And we are in need of a few people here and there, and we believe we're positioned well to fill those roles as they become available.

The next question is from Mark Smith from Lake Street Capital Markets.

Sorry if I missed this, but can you quantify or talk more about the impact on gross profit margin from those 8 Field & Stream stores and the inventory and what you paid for, how that impacted the quarter?

Yes. So we talked about -- or we disclosed at the time that we purchased those 8 Field & Stream stores that we bought the inventory for $0.88 on the dollar. It had a marginal impact to gross margin in Q3 only because those stores only operated for a week or 2 in Q3. We had a full quarter's worth of selling that discounted inventory in Q4, and it had the impact of lifting our gross margin percent by about 80 basis points in Q4. On a full year basis, which is really basically just Q4 over the full year, the lift was about 30 basis points on the full year.

Okay. And 2 that were recently acquired, do you expect to have similar type of impact at least on a -- maybe on a dollar that you paid for that inventory?

A smaller -- a little bit of a smaller impact, only 2 stores now instead of 8. The discount was more like 8% instead of 12%, and so not as large of an impact, especially overall, and the total gross margin of the business is maybe harder to find in the totals.

Okay. And then can you give us -- can you quantify a little bit more kind of e-commerce mix in Q4? And maybe talk about how that trended in Q1. And then if you can talk at all about it, maybe what you saw pre shutting down some of the online ammo sales? And how ammo typically mixes as a percent of e-comm?

Mark, it's Jon. I'll give you a high level, if I can, on that. We -- last time we disclosed sales from our website, I believe it was 2017, full year was about 1.7%. I've committed and discussed to investors that we would be at 10% of sales in 2021, that's next year, not the year we're in, but next year. I'm still very confident in that 10%. We did discuss, I believe, in a couple of sets of materials that during the holiday shopping season this past year as we saw consumer behavior change materially or even in a greater way away from stores, we saw website sales grow over 90% year-over-year. Some of that was maturity of the website and the team, but it was also an improved shopping experience and a change in consumer buying behavior.

I'll try to give you some color on what we've seen in Q1. We started out Q1 normal operating plan, expecting some nice lift from the exit of the categories by Walmart and deemphasizing by others. We were seeing great trends at the beginning of the quarter. And within a few days, we saw such an unprecedented run in demand for ammo. We actually had to turn it off from the website. So if you find any ammo on the website, it will probably be unique to a store, but we are not shipping any ammunition to home. We started then limiting ammunition in the stores. And I believe today, we're at 2 boxes maximum per day per person. And that's still under review as to whether that needs to be pulled back even greater to serve as many customers as we can.

So I don't believe that any numbers -- first of all, we're not going to provide breakouts of e-comm. That's not in our plan to provide that on a regular basis. And any data I would provide to you, Mark, as anecdotal in Q1 is likely not a good baseline to consider. The numbers just aren't what I would consider sustainable in any business as a growth asset.

Okay. And that brings up a good point as we look at the current situation in demand for firearms and ammunition, and we compare it to 2012 into 2013, this one seems to be led maybe more so by ammunition. You've recently talked about during the holiday season how peers discounting ammunition, that's really like milk in a grocery store for you guys. So as we're seeing high demand for ammunition and traffic in stores, are you starting to see what we saw previously kind of the last go-round with ammunition? People showing up daily or weekly looking for when that truck showed up, constantly checking in on the stores, looking for new supplies of ammo?

Yes, Mark, I think that, generally, I would say that's accurate. There are some different dynamics happening now because of COVID-19. We are doing social distancing in all stores. We are doing appointment-based delivery of firearms in certain stores. So there is a, I'll call it, backlog -- a physical backlog in most -- nearly every store every day. So from a visual, it's hard for me to say that the lines are longer or shorter than they were in 2012 or '13.

To your point, though, customers are calling daily to find out what ammunition is available and what personal protection firearms, specifically handguns and shotguns, are available. We are dealing with that hundreds and hundreds of calls a day, trying to make sure we serve as many customers as we can. So from that perspective, we are trying to manage expectations for our customers. So we don't have every Thursday 200 people waiting on the ammo delivery. We are parsing that out in each store to make sure we serve as many customers with good service as we can each day.

Yes, I was just going to say, our goal -- and again, our goal is to make sure that in the long run, we have consistent flow of goods as consistent as we can, serve as many customers as we can, make sure that they become retained customers in the long run, manage our pricing and our margin to our everyday low price, which has always been the value proposition of this company, and that works well every day of the year.

In today's environment, I'm sure there are some customers that wish we have more ammo and don't understand why we don't have more firearms arriving daily. But behind the scenes, our goal is to get this flowing every day and keep it flowing every day.

Okay. And then last one for me, just looking for an update. Do we still just have, I believe, it was 4 stores earlier this week that were kind of permanently closed. Has there been any change in the last 24 hours? Or any expectations as you look at certain geographies over the next couple of days that you expect to be closed?

Mark, it's hard to say, and I'll give you a couple of examples. We've had situations where we've had government authorities come in and shut us down. And then 2 days later, government authorities come back and open us up, and that's just happening in Fresno. They shut us down 2 days ago. And now I think this morning, they've come back and said they're going to allow us to operate. So we -- you are right, we have, call it, a handful of stores, 2, 3 -- I think we have 3 or 4 stores, Mark, maybe 5, that we're not operating at all. We have 2 or 3 or 4 stores where we're doing appointment-only pick up. I -- every store is on reduced hours for a couple of reasons. One is to make sure we can clean and restock that store before and after and to make sure we can staff it appropriately.

To your point, though, I think we should expect store -- more stores could close, more stores could reopen. Every day, we have a task force, every day that meets twice a day, morning and night, to review the activities by region, by county, by state, by city. And as you know, every one of these 106 locations we have now that are operating have unique elements about their approach to retail, their approach to essentials, their approach to firearms and ammunition. So we are navigating a very complex situation right now. And I think the team has done a great job of keeping us ahead of that curve.

This concludes the question-and-answer session. I would like to turn the floor back over to management for any closing comments.

Thank you. I want to thank everyone again for their time today. Special thanks to all of our hard-working, 5,000-plus Sportsman's Warehouse associates, who contributed to our success in 2019. We especially appreciate their dedication and effort to our start in 2020 and look forward to continuing to serve our customers in the coming months and years ahead.

With that, I will close the call. Thank you.

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