Sportsman’s Warehouse (SPWH) down 19% on failed merger
By Robert Davis
20:41, 3 December 2021
American sporting goods retailer Sportsman’s Warehouse saw its stock tumble more than 19% to $13.64 after the company pulled out of a merger with Great American Outdoors Group, which owns Bass Pro Shops and Cabelas.
Including Friday’s drop, the stock for the West Jordan, Utah-based company has lost more than 22% so far this year.
Merger details
Both Sportsman’s Warehouse and the Great Outdoors brands sell specialty apparel and outdoor sporting gear. They carry many of the same brands, which generally helps stabilise prices of some popular products.
According to a regulatory filing from the Federal Trade Commission, Great Outdoors was seeking to purchase Sportsman’s Warehouse for $785m (£593m).
The deal was initially announced in December 2020.
FTC Competition director Holly Vedova said that an 11-month-long investigation found Sportsman’s Warehouse “competes closely” with Great American Outdoors Group. On those grounds alone, Vedova said she could not support the merger.
The FTC review also found that the combination would have “increased prices, reduced product offerings, and diminished quality and service” for Sportsman’s Warehouse customers in at least 24 local markets in the US.
Retail crossroads
The annulled merger comes as the retail industry prepares to face a crossroads in 2022.
Analyst Dylan Carden at William Blair wrote in a note to investors on 16 November that apparel retailers may find themselves fighting the same supply chain battles they’re in now.
“Supply chain issues will not abate in the near term, with several companies and sources confirming that disruption could last well into 2022,” Carden wrote. “While that has kept inventories in check, allowing for higher pricing and fewer promotions, we see the situation turning into more of a risk moving past the holidays.”