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corresp

Gregory R. Binkley

President/CEO

May 9, 2005

Confidential

Mr. Michael Moran, Accounting Branch Chief

Mr. Brian V. McAllister

Ms. Donna Di Silvio

Securities and Exchange Commission

Division of Corporation Finance, Mail Stop 3-8

Washington, D.C. 20549

Via EDGAR and Facsimile

    Re:

    The Sportsman’s Guide, Inc.

Draft Form 10-K/ A for the year ended December 31,
2004

File No. 0-15767

Dear Messrs. Moran and McAllister and Ms. Di Silvio:

On behalf of The Sportsman’s Guide, Inc. (the
“Company”), set forth below is our response to the
Staff’s comment letter dated May 5, 2005 regarding the
above-referenced draft Amendment No. 1 to the
Form 10-K/ A (the “Draft Form 10-K/ A”) and to
our April 29 letter responding to the Staff’s second
comment letter dated April 25, 2005, which followed our
April 15 response to the Staff’s original comment
letter dated March 31, 2005 concerning the Company’s
Form 10-K for the year ended December 31, 2004, filed
with the Commission on March 17, 2005. To facilitate your
review of our response, this letter sets forth the headings,
item numbers under each heading, and text of each of the
Staff’s additional comments provided in its May 5,
2005 comment letter.

Consolidated Balance Sheets, page 30

    1.

    We note your response to prior comment 1. Please expand
    your disclosure to clarify your basis for reducing the purchase
    price as a result of revising your escrow liability and why the
    escrow is issuable pending the outcome of a contingency. In this
    regard, disclose why the escrow amount is considered contingent
    consideration, the nature of the claims or specified events upon
    which the consideration is contingent and why the consideration
    can not be determined as cost of the acquired entity at the date
    of acquisition See paragraph 26 of SFAS No. 141. If, on the
    other hand, the amount held in escrow can be determined at the
    date of your acquisition, that is, the nature of the
    representations and warranties you refer to in your response are
    such that their outcome is determinable beyond a reasonable
    doubt, the consideration should be included in the cost of the
    acquired entity and recorded at the date of acquisition. You
    should also reflect a revision in your statement of cash flows
    for the entire cost of the acquired entity as a single cash
    outflow. Please revise accordingly.

As stated in our April 29 letter, the purchase price
consideration for the acquisition of The Golf Warehouse was not
contingent upon any future event, earnings or security price.
Because the sellers required the acquisition to be structured as
a purchase of limited liability company interests rather than a

411 Farwell Avenue • So. St. Paul, MN 55075-0239 •
Ph.: 651-552-5103 • 651-552-5349

purchase of assets and assumption of specified liabilities, and
the limited time provided to conduct our due diligence, as a
conservative measure we negotiated the escrow arrangement to
offset the remote possibility of a breach of the sellers’
representations and warranties (which were customary for a
transaction of this nature) or the existence of any undisclosed
liabilities. There have been no claims filed against the escrow,
nor are we aware of any pending or potential claim. Given the
facts at the date of the acquisition, we believed payment of the
amounts in escrow to the sellers was highly probable and
therefore included these amounts in the purchase price.

Due to the lack of contingencies set forth in the terms of the
acquisition, lack of claims filed against the escrow and lack of
pending or potential claims identified, we believe beyond a
reasonable doubt that the escrow amounts will be paid to the
sellers without significant claim. Accordingly, we believe it is
appropriate to retain these amounts in the purchase price and
remove the escrow cash from our balance sheet as well as the
offsetting escrow liability (approximately $3 million each
as of December 31, 2004). We feel this appropriately
reflects the total unconditional consideration paid for the
acquisition as contemplated by SFAS No. 141
paragraphs 25-27. Payments from the escrow account, which
is held by a third party escrow agent, will be made in
accordance with the purchase and escrow agreements and, we
believe, will have no further impact on the purchase price.

Current disclosure in Note D of our consolidated financial
statements as set forth in the Draft Form 10-K/ A will be
modified to indicate that the escrow amounts have been included
in the cash paid for the acquisition as of December 31,
2004. Note D will also include a description of the escrow
arrangement per paragraph 26 of FAS No. 141. The
proposed revised disclosures in Note D are set forth in
Appendix A to this letter.

In addition to removing the escrow restricted cash account and
related escrow liability from our balance sheet, our statement
of cash flow will be revised to disclose that $30,442,000 of
cash has been paid for the acquisition as of December 31,
2004, which includes the escrow amounts. Disclosures will be
added in Note D as required by paragraphs 36 and 37 of
APB No. 20 describing these changes.

Note A-3 Revenue Recognition, page 31

    2.

    We note your response to prior comment 3 that
    deferral of the membership fee is appropriate as described in
    SAB 104 and Question 1 of SAB Topic 13A.3.f.
    Please explain how your recognition of the membership fee in
    income in an amount equal to the related discount earned by the
    customer on orders represents a systematic method over the
    period that the fees are earned. In this regard, explain why the
    membership fee does not represent a service delivered over the
    membership period. See Question 1 of SAB
    Topic 13A.4.a. Please include in your response reference to
    the accounting literature supporting your revenue
    recognition.

We believe that recognizing the Buyer’s Club fee into
income by individual customer as discounts are taken is the
appropriate accounting method for the following reasons:

    •

    Under the terms of the membership arrangement, the fee becomes
    nonrefundable in an amount equal to the discount given to a club
    member on each order. At that point in time the portion of the
    fee that is nonrefundable becomes fixed and determinable and may
    be recognized in income in accordance with SAB
    Topic 13A.4.a.

    •

    Our membership fee arrangement is different from the example in
    Question 1 of SAB Topic 13A.4.a. Our refund privilege
    applies not to the entire fee, but only to that portion of the
    fee for which specific discounts have not been applied. Our
    accounting method properly defers recognition of refundable
    membership fees until the refund privilege has expired
    consistent with Question 1 of SAB Topic 13A.4.a.

    •

    Our computer systems track deferred revenue and orders on an
    individual customer basis, which allows us to track the status
    of each member and to properly recognize revenue related to the
    membership fees. Therefore, we believe that our method of
    revenue recognition better matches the revenues related to the
    membership program to the expenses incurred (discounts given)
    and is a

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    more appropriate method of accounting for membership fees than
    recognizing revenue ratably over the term of the agreement. A
    straight-line revenue recognition method, while systematic,
    would not accurately reflect our potential liability for refund
    of program fees at any point in time. A straight-line method
    could put us in the position of being required to refund a
    customer’s unearned fee that we had already recognized in
    income.

    •

    While members are entitled to specified discounts throughout the
    membership term, no other services are provided to members.
    Members receive a monthly catalog, but the associated cost is
    nominal (about $0.70 per catalog). We believe the true costs of
    the program are the discounts given to individual customers.

    •

    Given the uncertain buying patterns of Buyer’s Club
    members, we believe it is appropriate to recognize in income a
    portion of each member’s club fees as the member orders
    merchandise and earns discounts even though this method can
    result in us recognizing in income the entire membership fee
    before expiration of the membership period. Discounts on
    merchandise purchased by club members after the full membership
    fee has been earned are offset and matched with sales revenue
    from those subsequent purchases and thus have a related revenue
    component.

We note that our accounting policy for Buyer’s Club fees
has been consistently applied since the program was created and
was discussed with the Staff in our response letter to a Staff
comment letter in December 2000. (Copies of both the
Staff’s December 4, 2000 comment letter and our
December 19, 2000 response are being supplementally
furnished to the Staff with the faxed copy of this letter. See
comments 6 and 7).

Buyer’s Club membership fees account for about 5% of our
total consolidated revenues. Given that members join throughout
the year and have varying buying habits, it is our belief that
the associated revenue recognition occurs throughout the year
and is reflective of our overall revenue results and
seasonality. The difference in our Buyer’s Club fee revenue
if recognized on a straight-line method versus our current
method would be approximately $183,000 (greater) in 2003
and $114,000 (greater) in 2004. We do not believe our
Buyer’s Club fee revenue recognition methodology creates
any unusual or misleading results in any one of our reporting
periods.

    3.

    Notwithstanding the above comment, in future filings
    include the following disclosures for the Buyer’s Club
    program:

    •

    Amounts for unearned Buyer’s Club fees and refund
    obligations, if any, as of the date of your most recent balance
    sheet;

    •

    A roll forward of unearned Buyer’s Club fees and
    refund obligation balances from the beginning to the end of each
    income statement presented; and

    •

    Your policies as they relate to the length of time a
    member receives merchandise discounts and/or other benefits and
    the corresponding period you recognize Buyer’s Club fees
    may range from one day to the length of the membership period
    depending on the volume of member purchases.

In your response please show us what your revised
disclosure will look like.

Under our current accounting policy, the amount of unearned
Buyer’s Club fees and refund obligations are the same and
are disclosed at each balance sheet date as deferred revenue. A
roll-forward of these amounts for 2004 is as follows (in
thousands):

    Deferred revenue at beginning of year

    $
    4,623

    Membership fees received, net of refunds

    11,707

    Membership fees earned (discounts taken)

    (10,810
    )

    Deferred revenue at end of year

    $
    5,520

Given that the deferred amounts are disclosed, and revenue from
the program is about 5% of our total consolidated revenues, we
do not believe the above disclosure would be particularly
meaningful in our

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financial statements. We believe it would be beneficial to
disclose the total membership fee revenue recognized for each
period presented and we have added this disclosure, along with
other revisions per the Staff’s comment to provide greater
transparency, to our revenue recognition accounting policy as
shown in Appendix B.

We hope the foregoing adequately responds to the Staff’s
comments. Following resolution of the Staff’s comments, we
would propose to file the Draft Form 10-K/ A as cumulatively
revised above and as may be necessary to reflect any other
changes resulting from any further Staff comments.

If you desire clarification of the above responses or require
additional information relating to the Company, please call
Charles B. Lingen, Chief Financial Officer at
(651) 552-5106.

    Sincerely,

    Gregory R. Binkley

    President and Chief Executive Officer

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Appendix A

NOTE D—ACQUISITION

On June 29, 2004, the Company acquired 100% of the
outstanding membership interests of The Golf Warehouse, L.L.C.
from Falconhead Capital LLC, a private investment firm, and
members of TGW management pursuant to a Membership Interest
Purchase Agreement dated as of June 29, 2004. The purchase
price for TGW was approximately $30.5 million and was
funded from the Company’s working capital and borrowings
under the Company’s credit facility with Wells Fargo Bank,
National Association. The purchase price for TGW of
$30.5 million consisted of $30 million for 100% of the
outstanding membership interests and $0.5 million of
transaction costs. No amounts of the purchase price are
contingent upon future specified events, earnings or prices of
securities.

The acquisition of TGW has been accounted for using the purchase
method of accounting. The fair market value of the net assets
acquired resulted in the following purchase price allocation (in
thousands):

    Net assets acquired, including:

    Current assets

    $
    6,674

    Property and equipment

    1,013

    Liabilities assumed

    (5,371
    )

    Net assets acquired

    2,316

    Trade and domain name

    10,200

    Customer lists and non-compete agreements

    750

    Goodwill

    17,176

    Total purchase price

    $
    30,442

The acquisition transaction had the following net effect on the
accompanying 2004 consolidated statement of cash flows (in
thousands):

    Fair value of net working capital acquired

    $
    1,303

    Fair value of property and equipment acquired

    1,013

    Purchase price assigned to:

    Goodwill

    17,176

    Identifiable intangibles

    10,950

    Cash purchase price

    $
    30,442

Pursuant to the Membership Interest Purchase Agreement dated
June 29, 2004, $4.0 million of the estimated purchase
price was deposited into an escrow account to provide for
post-closing adjustments, any breach of the sellers’
representations and warranties, or undisclosed liabilities. In
accordance with and subject to the escrow agreement, the escrow
agent shall distribute amounts (net of claims) from the escrow
account to the Sellers as follows (in thousands):

    90 days after closing date

    $ 500

    180 days after closing date

    500

    360 days after closing date

    1,500

    540 days after closing date

    Remaining Funds

As of December 31, 2004, there were no claims identified or
pending with respect to the escrow funds, nor was Company
management aware of any potential claims or escrow refund
issues. Accordingly, the amounts deposited in the escrow account
have been included in the total purchase price as management
believes these amounts will be paid to the sellers without
significant claim.

Previously, the Company recorded the amounts in escrow related
to the acquisition as a liability and restricted cash.
Additionally, the accompanying cash flow statement has been
changed to reflect cash paid

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in the acquisition of $30,442 as indicated above. These changes
had no effect on net earnings or net earnings per share as
previously reported.

The following unaudited pro forma summary represents the
consolidated results of operations as if the TGW acquisition had
occurred at the beginning of 2003. This presentation does not
purport to be indicative of what would have occurred had the
acquisition been made as of that date or of results which may
occur in the future.

For the years ended December 31:

    2004

    2003

    Net sales

    $
    259,542

    $
    237,129

    Net income

    8,079

    6,646

    Basic net earnings per share

    1.14

    .93

    Diluted net earnings per share

    1.01

    .84

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Appendix B

NOTE A — SUMMA