Shares in sporting goods retailer Sportsman’s Warehouse dived Tuesday on news the company’s sponsors plan to sell a 12% stake via a one-day marketed stock sale.
Leads Credit Suisse and Goldman Sachs launched the 5m-share all-secondary deal in the pre-open Tuesday against Monday’s close of US$12.21. However, the stock fell 9.3% to US$11.07 in early trading on the news ahead of pricing post-close.
The decline leaves the stock trading below the US$12.25 price at which insiders sold 6.25m shares in September 2015.
That offering was Sportsman’s first organised stock sale in the wake of its April 2014 IPO that raised US$118.8m at US$9.50 a share.
The latest offering will see sponsor Seidler Equity Partners cut its stake from 36.4% to 24.6% and as little as 22.7% if the overallotment option is exercised.
Credit Suisse last week hosted investor meetings with Sportsman’s Warehouse management including chief executive John Schaefer and chief financial officer Kevan Talbot.
The firm’s analysts said Sportsman’s Warehouse was “the best way to play the sporting goods sector”, noting the company offered a “relatively clear” pathway to 20%-plus earnings per share growth over the next few years.
“We see upside opportunities – benefits from industry consolidation, the election, and potentially better seasonal trends that are not in the numbers.”
Founded in 1986, the company now has 67 stores in 20 states and has plans to grow to 300 stores over the longer term. A significant gun retailer, the company’s growth is in large part driven by the increased popularity of hunting with firearms and target shooting.
