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Sportsman's Warehouse Holdings Inc (NASDAQ:SPWH)
Q1 2020 Earnings Call
Jun 4, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Sportsman's Warehouse First Quarter 2020 Earnings Conference Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions].

I would now like to turn the conference over to Caitlin Howe of Investor Relations. Thank you. Please begin.

Caitlin Howe -- Vice President of Corporate Development and Investor Relations

Thank you. With me on the call today is Jon Barker, Chief Executive Officer and Robert Julian, Chief Financial Officer of Sportsman's Warehouse.

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 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 1, 2020 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 sportsmans.com. I would also like to note that today's materials include an earnings conference call PowerPoint presentation, which is available at sportsmans.com in the Investor Relations section of the website. You can utilize this steps to follow along with today's prepared remarks.

I would now like to turn the call over to Jon Barker, Chief Executive Officer of Sportsman's Warehouse. Jon?

Jon Barker -- Chief Executive Officer

Thank you, Caitlin. Good afternoon, everyone and thank you for joining us today. I hope you and your families are safe and healthy during these challenging times. I will begin my remarks by addressing the COVID-19 situation as it pertains to Sportsman's Warehouse. I will then discuss key metrics from the first quarter and will also provide updates on our omni-channel growth strategy. Robert will then provide a summary of our Q1 2020 financial results, as well as some commentary on full year 2020. Finally, we will open up the call for questions.

I'm now on slide four of the investor presentation and will address the COVID-19 situation. While the last few months have been challenging for many retailers, we have been fortunate to keep the majority of our stores open throughout the crisis. I could not be prouder of the Sportsman's Warehouse team in navigating both the global pandemic and the search in our business during this time. While remaining open, we have taken many steps to help protect the health and safety of our associates, customers and their families, including additional cleaning and sanitizing, plastic barriers at registers, and face masks for associates. We have also leveraged our e-commerce capabilities like ship-to-home and BOPUS and using our own platform recently launched curbside pickup, which allows us to serve customers while limiting person to person contact.

With respect to COVID-19's impact on our supply chain, we did see some interruption in Q1 with products sourced from China, primarily related to camping and fishing. As China related interruption has largely subsided, however, the disruption to our supply chain due to COVID-19 has continued into the second quarter within certain pockets of our business. This disruption has been compounded by surging demand, creating shortages in firearms, ammunition and fishing. Our merchandising and demand planning teams continue to do an exceptional job of working with our vendors help limit the disruption.

While we have seen significant increases in sales to date, there is tremendous uncertainty and variability in the economic environment. Therefore, we will not be providing forward guidance today. Given the uncertainty surrounding COVID-19, we will continue to invest in our frontline associates and their safety. Additionally, we will remain financially disciplined as we limit discretionary expenses, reduce our debt load and preserve our liquidity to effectively navigate these uncertain times.

I'm now on slide five. The surge in demand resulted in very favorable financial results in the first quarter of 2020. Net sales were $247 million, an increase of 42% year-over-year. We believe the exceptional demand to date is been driven by multiple factors, including the COVID-19 situation, the exit of competitors in our core categories and the current election cycle. However, parsing out the exact contribution of each factor is not possible.

Same-store sales for Q1 increased 28.6%. Firearms and ammunition were up 65% and 90% respectively, while NICS checks were up 56% for the quarter. Our sales increased significantly exceeded the NICS checks, which gives us confidence that we are not only growing sales, but we are continuing to take market share in our core categories. Additionally, during the Q1 surge in demand, many customers entered our stores or ordered from our website for the very first time. This gives us the opportunity to expose newcomers to Sportsman's Warehouse brand and to our extensive product offering. We believe this bodes well for developing repeat customers by reengaging across new categories, building our loyalty program and customer database and ultimately growing our business.

In contrast to firearms and ammunition, apparel and footwear were down materially in the first quarter. During the height of the COVID-19 crisis in Q1, customers, what I referred to as questing. They were far less likely to browse the store and as a result, we did not experience traditional sales mix across categories. The combination of surging demand for firearms and ammunition and soft sales in apparel and footwear materially impacted our gross margins in Q1, which Robert will discuss in greater detail during his prepared remarks.

Turning now to slide six, the tools and capabilities we have built over the last 2.5 years, along with our extensive assortment, enabled us to capitalize on the increased online traffic during Q1. Before the crisis, we were already seeing robust adoption of our e-commerce platform, including BOPUS and ship-to-home. As the crisis created the need for social distancing and require people to stay-at-home, customers embrace these services even more, accelerating our online penetration. Sportsmans.com saw a massive surge in demand during the quarter with our e-commerce channel sales growing over 200% year-over-year.

During the first quarter, we also completed the rollout of ship-from-store and we are now utilizing our stores as fulfillment nodes for orders placed online. We have made great progress, but we must continue to invest on our capabilities to remain relevant in the increasingly e-commerce driven retail environment. With respect to our physical store footprint, we have opened three new Sportsman's Warehouse stores year-to-date, including two prior Field & Stream stores located in Crescent Springs, Kentucky and Kalamazoo, Michigan. Additionally, we closed a store in Milpitas, California during Q1. In a typical year, Sportsman's Warehouse will open eight to 12 new stores. As we are all aware, this year is not typical. With recent permitting and construction delays, our store expansion strategy has been impacted. We now expect to open five to seven total new stores in fiscal year 2020.

Turning to slide seven, in summary, we couldn't be more excited with the momentum in our core business coming out of Q1. In the near-term, we view the upcoming election cycle as a potential catalyst for our business. Furthermore, we believe COVID-19 is changing consumer behavior and motivating people to spend more time outdoors. Our products did exceptionally well in an environment in which consumers are spending more time fishing, camping, hiking and hunting. We will continue to work with our vendors to ensure we have our stores and websites stocked with the products our customers demand. In the medium-term, there is significant uncertainty in the economic environment and we are monitoring this evolving situation very closely. In the long-term, we believe we are uniquely positioned to capitalize on market share opportunities and changing consumer behavior to become a larger and more profitable company.

With these factors as the backdrop, we continue to make progress on our growth initiatives, including enhancing our online platform and expanding our store footprint. We look forward to speaking to you again in early September when we report our second quarter results.

With that, I will turn the call over to Robert to discuss our financial results.

Robert K. Julian -- Chief Financial Officer

Thank you, John. I will begin my remarks today with a review of our Q1 2020 financial results. As John mentioned earlier, we are not providing forward guidance at this time. However, I will provide a few parameters for thinking about our expected full year 2020 financial results.

Turning now to slide nine of the presentation. First quarter 2020 net sales were $246.8 million, compared to $174.0 million in the first quarter of 2019, an increase of $72.8 million or 41.8%. Same-store sales increased 28.6% in the quarter led by firearms and ammunition. Starting in April, camping and fishing also rebounded nicely for the quarter, increasing over the prior year period by 16.6% and 8.5%, respectively on a same-store basis.

Q1 2020 gross profit was $74.8 million, compared to $54.2 million in the first quarter of 2019, an increase of $20.6 million. Gross margin was 30.3% for the quarter, a decline of 80 basis points versus prior year. This decline can be attributed to several factors. Product and channel mix caused a 250 basis point decline in gross margin due to a higher proportion of revenue coming from firearms and ammunition and more sales volume coming from our e-commerce channel. This was partially offset by higher vendor incentives and improved product margins, which positively impacted gross margin by 120 basis points and 50 basis points, respectively.

SG&A expense of $75.2 million for Q1 2020 was an increase of $15.7 million or 26.3% compared to the first quarter of 2019. As a percentage of net sales, SG&A decreased approximately 370 basis points to 30.5% for the quarter. During the quarter, we closed one store that resulted in a non-cash impairment charge of approximately $1 million in Q1 2020. We incurred additional payroll expense of $6.5 million versus prior year, including $1.1 million of hero pay for our frontline associates. The remaining increase is primarily due to minimum wage increases and new store growth.

Rent expense increased approximately $1.6 million, primarily due to new store openings. Other operating expenses increased approximately $5.4 million versus prior year. We incurred incremental marketing expense of $2.2 million. Credit card fees increased $1.3 million due to the increase in sales volume and insurance expense increased $0.3 million. Store operating expenses, including utilities, janitorial and security, increased by $0.6 million due to new store openings and additional cleaning performed due to the COVID-19 situation. We incurred $0.4 million of pre-opening expenses and transaction costs associated with the acquisition of two Field & Stream stores. Loss for operations was $0.4 million in Q1 2020 compared to a loss of $5.4 million in the prior year period.

Interest expense in Q1 2020 was $1.5 million compared to $2.1 million in Q1 of 2019, a reduction of $0.6 million. This improvement is a result of lower total borrowings and lower interest rates. We recorded an income tax benefit of $0.8 million in Q1 2020 compared to a benefit of $2.0 million in Q1 2019. The $1.2 million reduction in this benefit is primarily the result of our improved financial performance year-over-year.

Net loss for the quarter was $1.1 million or $0.03 per diluted share as compared to a net loss of $5.5 million or $0.13 per diluted share in the prior year. This represents a year-over-year improvement of $0.10 per diluted share. Adjusted net income in Q1 2020 was positive $0.4 million or $0.01 per diluted share compared to adjusted net loss of $5.2 million or negative $0.12 per diluted share in 2019. This represents a year-over-year improvement of $0.13 per diluted share on an adjusted basis. Adjusted EBITDA for Q1 2020 was $8.2 million, compared to $0.4 million in the prior year period.

Turning to slide 10, I will now comment on our balance sheet and liquidity. Q1 2020 ending inventory was $301 million, compared to $291 million at the end of Q1 2019, a $10 million increase. We have added 14 new stores and closed one store during this time period. Inventory is down 9.6% on a per store basis compared to prior year. We incurred $4.8 million of net capital expenditures in the first quarter of 2020, compared to $3.1 million in Q1 2019, an increase of $1.7 million. This increase was due to new store construction and maintenance on our existing stores. First quarter 2020 operating cash flow was $31.3 million versus $3.4 million for Q1 2019. This $27.9 million improvement in operating cash year-over-year is primarily due to higher accounts payable associated with increased sales volume.

Our liquidity remains strong as we ended the quarter with $118.4 million in net outstanding borrowings on the line of credit, compared to $141.6 million at the end of Q1 2019, a reduction of $23.2 million. This reduction was achieved while holding an incremental $20 million of cash on our balance sheet in order to provide maximum flexibility during these uncertain times. At the end of first quarter 2020, we had approximately $60.3 million of availability on the revolving credit facility. The outstanding balance on our term loan was $25.7 million at the end of Q1 2020, compared to $33.7 million at the end of Q1 2019, a reduction of $7.9 million. Our total liquidity, including cash on hand at the end of Q1 2020, was $82.4 million, compared to $41 million in the prior year.

Turning now to slide 11 of the presentation. As I mentioned previously, we will not be providing forward guidance at this time due to the significant uncertainty surrounding the current economic situation. However, I would like to provide some data points and commentary on how we are thinking about expected full year 2020 results. Starting with new store growth, we anticipate opening a total of five to seven new Sportsman's Warehouse stores in 2020. With respect to gross margin, we expect a continued higher proportion of revenue to come from firearms and ammunition and a higher volume of sales to be conducted through our e-commerce platform. Both of these factors will continue to put pressure on gross margin. We expect our fiscal year 2020 effective tax rate to be approximately 27%. Fiscal year 2020 interest expense is estimated to be approximately $6.5 million to $7.0 million.

Finally, full year 2020 capital expenditures are anticipated to be approximately $23 million to $28 million. It is important to note that the current economic situation is fluid and could change very rapidly. Therefore, we will continue to take a relatively conservative approach to managing our inventory, expenses and liquidity in 2020 and beyond. We look forward to updating you on our business and financial results during our next earnings call in early September.

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

Questions and Answers:

Operator

Thank you. At this time we'll be conducting a question-and-answer session. [Operator Instructions] Our first questions come from the line of Daniel Hofkin of William Blair. Please proceed with your questions.

Daniel Hofkin -- William Blair -- Analyst

Good afternoon, folks. Just wanted to maybe just ask a little bit about sales trends and maybe differences by types of market or anything -- additional color that you can share, as well as trends over the -- you may have said something about the trends over the course of the quarter end since and just sort of how that's developed. And then if there is anything that suggests what -- whether some of the increase in demand and some of the categories that have strengthened recently has been pent-up demand versus more maybe representative of trends we might expect going forward? Thanks very much.

Jon Barker -- Chief Executive Officer

Happy to do it. Hey, Dan, it's Jon. Hope all is well. Let me give just a little bit of color on what we saw in Q1 from a trend basis and curve. Started off February, the business was right on track with where we expected. We were seeing a nice uptick in some of the categories that others had exited. Following Super Tuesday, we started to see a surge in firearms and ammunition, primarily around our core categories, our core customer. And I attribute that to the fact that the ASP and the actual SKUs we were selling were right in with normal. When COVID-19 started to become a major issue in the country in mid-March, we started to see the types of products change across the business. We saw heavy, heavy demand on personal needs such as water storage, water filtration, generators, dehydrated foods. On the firearms side, we did see a transition to a lower price point firearm mid-month. There were a lot of new firearms buyers in the market for personal protection and we were able to serve them well having the full extensive assortment that we keep in place.

When the stimulus checks came out as the next component, we saw our core customer, core products start to sell again with firearms ASPs increasing and the type of firearm being purchased slightly different or returning to the core. We are not providing any update on May's performance or post first quarter performance. But what I can share with you, it gives us confidence about the long-term as we are seeing a lot of new participants into outdoor activities and not just shooting and hunting, but camping, fishing and hiking has seen a significant surge across the industry. We are seeing a lot of new customers that we are educating on this products and we are seeing a lot of folks coming into the stores that haven't fished for decades, maybe and all of a sudden are getting back to it. I believe that, that's an indicator as folks think about how to spend their money, how to spend time with their families. The outdoor is a great way in a cost effective manner to make memories and to stay safe from the social distancing. So we are very upbeat about what that can bring for us in the long run.

Daniel Hofkin -- William Blair -- Analyst

That's great. And maybe just one quick follow-up, obviously, with some of the additional civil unrest in the last 1.5 weeks. Anything that you can see just in terms of trends or whether you think that's been an additional factor very recently in terms of people wanting to spend less time in more crowded areas than even before?

Jon Barker -- Chief Executive Officer

Yes. Dan, I think that it's a good call out. I don't know how to think about whether it's a trend or not, but certainly for a few days we have seen an increase in personal protection equipment being needed. And again, kind of returning back to more of a entry level personal protection than a core user of firearms. But again, that's only been a few days. So I would be uncomfortable indicating that might be a long-term opportunity for the industry at Sportsman's Warehouse.

Daniel Hofkin -- William Blair -- Analyst

Understood. Thanks very much. Best of luck.

Jon Barker -- Chief Executive Officer

Thanks, Dan.

Operator

Thank you. Our next questions come from the line of Seth Sigman of Credit Suisse. Please proceed with your question.

Seth Sigman -- Credit Suisse -- Analyst

Hey, guys. Thanks for taking the question. I appreciate a nice job navigating through what I'm sure was a very dynamic environment. I just want to follow-up on one of the last points around new customers coming in and sort of more active activities and things outside of the home. Should we interpret from that, that you are seeing a pickup in some of the non-firearm categories, maybe late April and into May? So if you could comment on some of those category trends that would be helpful? And then just related to that, can we also assume if that's true that the margin performance could look a little bit different, a little bit more favorable into the second quarter? Thanks.

Jon Barker -- Chief Executive Officer

Yes, Seth. Good afternoon. I will try to hit on the categories. And just to be clear, we did start to see a pickup in categories outside of the shooting sports in late April and early May. As COVID restrictions started to be reduced across the country, we saw a significant uptick in participation across camping, fishing and hiking. We expect that will continue throughout the year. And I think that's multiple parts. One is, there is uncertainty about the economic situation in the country, where some people maybe investing less in their vacation and traveling and maybe spending more time outdoors with their family. I also think the social distancing effect has happened in the way people are thinking is likely to have more people seeking outdoor activities farther away from large masses and groups. Robert, I will let you hit on the margin, if you will.

Robert K. Julian -- Chief Financial Officer

So Seth, your question about margins. Certainly, our margin is greatly impacted by sales mix and we talked about 250 basis points of pressure in Q1 due to the much higher proportion of firearms and ammunition in our total revenue. So, it is true, if our mix would return to more typical or normal levels, you would see the equivalent improvement in our overall gross margin just on mix alone.

Seth Sigman -- Credit Suisse -- Analyst

Got it, OK. And then can you just follow-up on the promotional activity in the industry, what are you seeing competitively? And related to that, I think you had one competitor that was expected to fully exit the category in a significant number of stores this year. I think they got part of the way through, but maybe deferred that into next year. You can comment on that, does that have any impact in your view? Let me know it. Thanks.

Jon Barker -- Chief Executive Officer

Yes, I'm happy to do so. Promotional activity during Q1 and into May has been limited. Some -- certainly, some activities were already preplanned by our competition and even Sportsman's Warehouse and we have maintained that cadence. But from a margin standpoint, the promotional activity has been very limited and helped margins on a per department per category basis.

Seth Sigman -- Credit Suisse -- Analyst

The other question is about the competitor, I think you probably...

Jon Barker -- Chief Executive Officer

You are probably representing Dick's Sporting Goods, they had announced I believe it was early March or late February, they were going to exit 440 more hunting lounges, which we knew there was a potential for that to happen. When they announced it we certainly were interested to see how they might execute on that from an inventory reduction standpoint and whether that would lead to promotional activity. Immediately after they announced it we went right into a COVID situation, which I suspect helped move some of that inventory out of those hunting lounges within even a few weeks before they shutdown because of COVID.

I think on their earnings call this week, they may have mentioned the plan is still in place to exit the 440, but maybe delayed for some amount of time as they navigate through the reopening of the stores and just the time it will take to make that transition. So we expect that still to happen and provide again more market opportunities for Sportsman's Warehouse in the hunting and shooting sports.

Seth Sigman -- Credit Suisse -- Analyst

Got it. Alright. Thanks, guys. Good luck.

Jon Barker -- Chief Executive Officer

Thanks.

Operator

Thank you. Our next questions come from the line of Ryan Sigdahl of Craig-Hallum. Please proceed with your questions.

Ryan Sigdahl -- Craig-Hallum -- Analyst

Good afternoon, guys and congrats on the strong quarter.

Jon Barker -- Chief Executive Officer

Thanks, Ryan.

Ryan Sigdahl -- Craig-Hallum -- Analyst

Maybe just to start, you mentioned higher vendor incentives benefited gross margin in the quarter, just curious to guess, what was different this quarter with their particular categories, was it volume driven etc?

Jon Barker -- Chief Executive Officer

Yes, go ahead.

Robert K. Julian -- Chief Financial Officer

Ryan, some of it is just a function of volume. Most of these vendor incentives are tied to purchase orders and our sales activity. So certainly, just on a volume basis alone, there is we have seen an improvement in that. And we work very closely with our vendors in these relationships and to be able to support the marketing activities that we do in advertising and so on. It is to both their benefit and our benefit. And so our team, their marketing team and the purchasing team have been working closely with these vendors to look for ways that we can partner and grow both of our businesses together and the volume has just driven more absolute dollars of incentive.

Ryan Sigdahl -- Craig-Hallum -- Analyst

Got it. Then just on e-commerce really strong quarter there, you mentioned it's a headwind to gross margin. I guess, is there more or less opex needed for the e-commence or said differently, can you compare kind of EBITDA margin of in-store sales versus e-commerce?

Jon Barker -- Chief Executive Officer

Yes, Ryan. Let me see if I can provide some color on that. If you think about the work content that's required throughout the supply chain to fulfill an e-comm order versus the store order, there is more work content required. The difference is, some of the work content falls on the last mile delivery on the parcel carrier USPS. So when we think about the cost structure and the unit economics of an e-comm order versus a store order, it's really not a black and white situation. If you think about an unit economics of an e-comm order that are buy online and pickup in store or ship to store, they are effectively the same as a store unit economics. The difference is, when you start shipping that directly to home that does put pressure on gross margin because of the transportation and packaging related to that item that is not inherent in a buy online, pickup in store order. So, that will put pressure on gross margins. We did see a significant uptick in the percentage of e-comm orders that were shipped to home during the COVID pandemic as customers were staying home and not shopping in the stores.

I suspect that over time we will continue to see an uptick in that percentage of ship-to-home as we have introduced a lot, thousands actually of new customers across the country to Sportsman's over the next few months that are outside of our store regions. So, it's a nice opportunity for us to engage new consumers and grow the business, but it will have some margin pressure as it relates to transportation expenses.

Ryan Sigdahl -- Craig-Hallum -- Analyst

Got it. One last one for me and then I will turn it over. Inventory down 10% on its per store basis, I guess, how do you feel by category? Are there -- you noted guns, ammo strength, are there certain categories that you wish you had more of and is that primarily a function of just demand or are other any other supply chain constraints out there? Thanks and good luck.

Robert K. Julian -- Chief Financial Officer

Yes, Ryan. Ryan, as you can imagine, we feel very good with the forecasting we have put in place and our ability to execute against the increasing demand quickly in March. And I think you can see that in our NICS, our firearms checks compared to the NICS and we absolutely gain significant market share during that period. However, with the type of growth we have seen in some of these categories, the supply chain has been unable to keep up and it's not just specific to Sportsman's Warehouse. Most of our competitors have major holes in firearms and ammunition, in fishing and in some camping-related categories. And that is the single largest focus of the demand planning and merchandising team right now is to get back and stock and make sure that we can serve the customers we expect to -- the way we expect. So, if you think about the 10% down per store that is not our plan. Our plan, we cut quite a bit of inventory out of the system last year. And as I mentioned in my previous calls, as we setup this year we were not expecting additional declines in per inventory -- per store inventory. We would like to be in a better spot than we are today. So that is our focus is getting our receipt flow back in line and getting that product out to the stores. But this isn't as specific to one category or one vendor, this is the overall supply chain as it relates to outdoor products right now are seeing significant pressure on them.

Jon Barker -- Chief Executive Officer

Yes, I will just add to that. We did a really nice job last year of reducing inventory, while actually improving our in-stock performance. We are in a little bit of a different situation now. What we have now is demand outstripping supply and we are just trying to chase it a little bit, but frankly, we are probably doing better than most in staying in front of that, but it's a little bit of a different situation now than what's last year while we were reducing inventory while improving in stock.

Ryan Sigdahl -- Craig-Hallum -- Analyst

Good. If I could sneak one more and actually two just kind of as a follow-up on that. You mentioned NICS. And so May was plus 75% to the industry, you guys nicely outperformed in the quarter. Do you think inventory constraints or is there any reason why I guess you can't perform in line with the industry or better like you have been?

Jon Barker -- Chief Executive Officer

There's no reason why we cannot continue to take market share in firearms in the short term and long term Ryan.

Ryan Sigdahl -- Craig-Hallum -- Analyst

Good. Thanks guys. That's it for me.

Jon Barker -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next questions come from the line of Peter Keith of Piper Sandler. Please proceed with your question.

Peter Keith -- Piper Sandler -- Analyst

Hi, good afternoon guys. Great job. Great results. I was hoping you could talk about your competitive positioning. Certainty the vendor incentive benefit of 120 basis points is intriguing, but may be on a big picture basis, are you finding that you are getting better product margin, even with all the demand do you feel like you may be the first or second in line to get products. Curious how maybe your competitive positioning has evolved so far this year with some of those other competitor exits?

Jon Barker -- Chief Executive Officer

Yes, I think certainly Peter. We have continued to have great relationships with our vendor base, that's always been a core principle of our merchandising department as to make sure that we have a collaborative relationship that everybody wins gross sales and profit as some of the competitors have exited that certainly helped us. We have grown, I think we have opened 15 stores in the last year. There is no one in the outdoor sporting goods market that's opened 15 stores in the last year, I think it's been just the opposite. So I would like to believe from the perspective of the vendors that they would tell you that we approach this collaboratively. We have an exceptional relationship with the vendors and we want them to grow, we want them to be healthy and we want to share together the profit that is available. We're heavily focused on improving pricing and our capabilities around that and making sure that we can be as dynamic as possible to changing market conditions.

Peter Keith -- Piper Sandler -- Analyst

Okay. And for Robert, that 120 basis points that you get in Q1, can that type of run rate continue? It sounds like it is lot driven by collaboration or if sales flow you are not going to get the same type of the benefit?

Robert K. Julian -- Chief Financial Officer

Yes. I think that there's multiple ways that impacts us. One is, we -- part of that -- those incentives go toward marketing. In Q1 we did market as heavily as we would normally would given the activities. And as or if sales would flow it would impact those incentives, but I don't think I would bake in that as a true run rate, but it was a testament to what the team accomplished in Q1 help offset the overall mix margin impact.

Peter Keith -- Piper Sandler -- Analyst

Okay good. And looking just now with some of the category trends. I guess it looks like with the camping and fishing finishing positive for the quarter is pretty good spike in demand in April continuing with May, but I was hoping you could comment little more specifically on the footwear and clothing. Is that something that has inflected positive, is there may be less questing more broader shopping in the store?

Jon Barker -- Chief Executive Officer

Yes. So we have seen a return to a more normal consumer shopping process where they are not just coming in and grabbing an item and getting out as quickly as possible, they are starting to cross shop departments. So all departments are showing improved trends or started showing improved trend. We also reacted pretty quickly to footwear and apparel. The week that we started to see what was happening with COVID-19 and retail potentially getting shut down, we started to pull back on our apparel and footwear purchases. Now having lived through this a downturn in the economic cycle in retail a couple of times that tends to be one of the areas that has the longest lead time in sourcing, and you end up with too much inventory. So we pulled back very quickly, we feel good about our apparel and footwear inventory position. When you think about what's likely to happen, we feel good about the functional apparel that we are in, the camouflage, fishing apparel were in very good spot, hiking on the footwear side is showing some really nice trends. And while it's early, we believe that hunting could see a nice uptick this year as people think more about field to table and outdoor activities. I think that leads into an opportunity on the hunting boots this summer and into early fall.

Robert K. Julian -- Chief Financial Officer

And Peter, I will add one more thing. And I will answer within the context, the financial context in gross margin, it is likely though even while there might be some improvement in footwear and in apparel, I think throughout the year, you should expect the firearms and ammunition will skew more heavily in our total revenue and apparel and footwear will be in lower proportion of our total revenue going forward and on a full year basis this year.

Jon Barker -- Chief Executive Officer

That is correct, Robert. Thank you.

Peter Keith -- Piper Sandler -- Analyst

Fair enough. One last question for you intrigued with the all of the new customers you might be getting. Is there any way that you can give us the total loyalty members at quarter end and how that looks on a year-on-year basis?

Robert K. Julian -- Chief Financial Officer

I don't have that number in front of me. Let me -- let us circle back on that one.

Peter Keith -- Piper Sandler -- Analyst

Okay. Fair enough. Thanks a lot guys. Good luck.

Robert K. Julian -- Chief Financial Officer

Thank you.

Operator

Thank you. Our next questions come from the line of Mark Smith of Lake Street. Please proceed with your questions.

Mark Smith -- Lake Street Capital Markets -- Analyst

Hi, guys. I want to circle back to the inventory a little bit and just look specifically at guns and ammos if we can, can you talk about maybe how that flowed during the quarter? Were there periods in March or April where maybe it was lower than where you ended the quarter? And then any insight you can give us kind of what you are seeing in the supply chain from vendors coming in in May?

Jon Barker -- Chief Executive Officer

So again, let's go back to what we saw in volume, Mark, just to ensure we set the table and this is just on a same-store base. Firearms and ammunition were up 65% and 90%, respectively during the period. So you think about from a forecasting and flow we were very optimistic coming into the year, but I don't think anybody here in the business would have forecasted or expected a 65% and 90% on a same-store, not including the new stores that we put up. So, we started to see some flow issues kind of third, fourth week of March and we have been working intimately with our vendors to try to keep the flow moving. It hasn't been a situation where any one vendor has been perfect and others have been challenged. It's been an overall situation and not specific to vendors. We have had our own bumps in the road along the way with attendance etc in moving products. So I think it kind of started the third week of March, fourth week of March and it continued. I will tell you though it is now branched out as customers are spending more time fishing, camping and hiking. We are seeing other categories in our business and the industry, not just specific to Sportsman's that are looking thin. And I'm sure Mark, you have probably been in the store and you have noticed some of the terminal tackle and the lures and the rod reel combos, it is very thin. And we are working very hard to restock those shelves, both internally and with our vendors.

Mark Smith -- Lake Street Capital Markets -- Analyst

Okay. And then as we look at some of those very picked over categories, what are you seeing as far as pricing that you are paying for, specifically as we look at ammunition and firearms and your ability to pass any price increases on to the customer?

Jon Barker -- Chief Executive Officer

Yes. So again, we have had really good communication with the vendor base on the firearms and ammunition. We historically see a price increase each year early in the year. We have seen some -- some additional increases. And I think those increases are related to the fact that factories are working over time. They have had to pay extra pay for COVID. They are doing extra work within their factories. And in our situation we have maintained or improved our margins across the business and kept up with those changes. I do believe it's important for us as a business and as an industry to ensure that we are providing fair prices to our customers. We will not gauge our consumers in this situation where demand is far outstripping supply, but on the other hand we need to make sure if costs of materials or costs of labor costs of product and the manufactures are increasing we balance that with the elasticity of pricing.

Mark Smith -- Lake Street Capital Markets -- Analyst

Okay. And then I just want to look at the cadence of firearms sales. You did a good job kind of walking through what you saw during the quarter. But maybe just a little different, can you give us any insight into maybe where you trended higher than the next data, was it pretty flat that delta throughout the quarter or when you saw some competitors that closed their doors where you saw an expansion and where you really took market share. Was there anything else that really led to your gains in market share this quarter?

Jon Barker -- Chief Executive Officer

Yes. Again, Mark, I think underlying in the data you would see the personal protection categories where the primary driver of the increase in mix check for the industry. Meaning, hand guns and personal protection shot guns. What we did see there on the cycle that I shared was, little higher price point hand gun early in the process then offset by more entry level firearm or shot gun. And when the entry level consumer, the new consumer came in around in the COVID process that's when personal protection shotguns tended to increase more than handguns. Again I think there was a little bit of, it's my first firearm, I need to protect myself, what's the safest way to do that. And certainly approves personal protection shotgun fits that. As we got into the stimulus checks, we saw a nice return to a more normal mix. I would tell you it's still a little bit heavier on the hand guns than it was prior last year, but the price point has improved. The last few days and again I don't want to call this a trend because I hopefully as a society we are working together to try to limit some of the activity that's been happening, this created a few days of uptick it's been more of a return to the entry level personal protection handgun and shotgun.

Mark Smith -- Lake Street Capital Markets -- Analyst

Okay. Then last one for me, maybe for Robert. SG&A levels as you walk through some of that, can you just give us any more insight into kind of what you viewed as maybe one time in nature that drove maybe SG&A and dollars a little bit higher? And kind of any insight you can give us into the rest of the year and how you think that trends?

Robert K. Julian -- Chief Financial Officer

Yes. So in Q1 we did incur, as I mentioned earlier, about $1 million of hero pay for our frontline associates, which is certainly one time incremental type expense and the other sort of COVID related are specific unique expenses in Q1 was probably about a $0.5 million between cleaning supplies and other extraordinary items to react to the situation. And so, we saw a tremendous leverage based on the incremental revenue. There's also a one time effect of the closure of the one store which was also about $1 million. So those three items, there's about $2.5 million worth of -- sort of usual expense. I would say that going forward you should see excluding the unusual items, pretty stable environment you will see a lower SG&A as a percent of revenue as we have our normal seasonality in the higher revenue in the quarters to come for the year.

Mark Smith -- Lake Street Capital Markets -- Analyst

Okay. That's helpful. Thank you.

Jon Barker -- Chief Executive Officer

Thanks, Mark.

Operator

Thank you. Our next question come from in the line of Peter Benedict of Baird and Company. Please proceed with your questions.

Peter Benedict -- Baird and Company -- Analyst

Alright, guys. Most of mine have been taken here, but just a couple. First on the 250 basis points of mix within gross margin, was that pretty equal between the categories versus the channel shift? Or was one of those two more material?

Jon Barker -- Chief Executive Officer

Yes. We are estimating that the channel, the e-commerce channel mix is roughly 50 basis points, it's 40 to 50 basis points. The mix created by the higher firearms and ammunition, that was about 200 basis points.

Peter Benedict -- Baird and Company -- Analyst

Hi, Robert. Thank you. And then on the 50 basis point of product margin, is -- how much of that is -- was there still impact from just the Field & Stream inventory that you guys have been going through, was that -- what basically got you to 50 or is that behind us and not really a factor anymore?

Robert K. Julian -- Chief Financial Officer

No, that is completely behind us and not a factor at all. It is a continuation of a trend as we had talked about before in our last quarter that we have been seeing improved product margins really across every category. And so that's been a continuation of that same trend that has nothing to do with the purchase of the Field & Stream inventory at a discount.

Peter Benedict -- Baird and Company -- Analyst

Got you. Good. And then, just the strategy to -- or what's been the shopping behavior of these new customers. I mean, you obviously had the big surge, are these folks coming back? And then, what's your strategy for, I guess, communicating to them going forward. I know Jon you said you maybe get back to those with the loyalty stats, but are these folks signing up for the loyalty program or are they just kind of coming in getting that firearm and then moving on?

Jon Barker -- Chief Executive Officer

It's been a mix, Peter. For a few weeks there at the peak of the COVID situation, these customers were coming in and getting their item and getting out fairly quickly. We have now seen more of a normalcy to where consumers on the fishing, hiking and camping categories that are either reengaging or new, they are signing up for the loyalty program. We are starting to help them with their needs using the expertise in the store to fulfill whatever that need is for the outdoors. That's providing us an opportunity not only to engage the first time, but reengage through our database, our email program and our loyalty program. So, again, the couple of weeks of COVID were somewhat unique and the way people are shopping we are seeing much more of a return to it now.

And as I spend time in the stores interacting with consumers, literally watching people come in and say, I haven't fished in 10 years, I needed a couple of new combos. I'm going drought fishing or I'm bass fishing. It's been interesting to watch that reengagement from consumers that maybe haven't been around a while. So, we see that as really nice long-term opportunity for Sportsman's Warehouse and the overall outdoor industry.

Peter Benedict -- Baird and Company -- Analyst

Yes, now, where I -- good to hear. Thanks and good luck. Thanks, guys.

Jon Barker -- Chief Executive Officer

Thanks Peter.

Operator

There are no further questions at this time. I will now pass the call back over to management for any closing remarks.

Jon Barker -- Chief Executive Officer

Thank you. I want to thank everyone for their time today and a special thanks to all of our associates in our stores, distribution center, care center and our corporate headquarters. We especially appreciate your commitment and perseverance during these extra extraordinary times. Thank you and we will conclude the call.

Operator

[Operator Closing Remarks]

Duration: 53 minutes

Call participants:

Caitlin Howe -- Vice President of Corporate Development and Investor Relations

Jon Barker -- Chief Executive Officer

Robert K. Julian -- Chief Financial Officer

Daniel Hofkin -- William Blair -- Analyst

Seth Sigman -- Credit Suisse -- Analyst

Ryan Sigdahl -- Craig-Hallum -- Analyst

Peter Keith -- Piper Sandler -- Analyst

Mark Smith -- Lake Street Capital Markets -- Analyst

Peter Benedict -- Baird and Company -- Analyst

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