Vista Outdoor, the U.S. group of shooting and outdoor brands, reported a net loss of $377.7 million in its third fiscal quarter ended Jan. 1, down from a profit of $43.2 million in the same period a year ago.
The company's results were dragged down by a higher-than-expected impairment charge of $449.2 million for its Hunting and Shooting Accessories reporting unit, which comprises products for archery and hunting, golf, optics, shooting accessories and tactical products.
The management said this charge was a consequence of the challenging retail environment, with late holiday shopping and a weak hunting season due to weather conditions. The sluggish market resulted in increased competitive pressures that drove deep discounting. In order to maintain market share and shelf space, Vista engaged in promotional activity that pressured margins and impacted its near-term cash flow.
For the parent company of Camelbak and other brands, sales went up by 10.0 percent over the year-ago quarter to $654 million, including $92 million from the recent acquisitions including that of Camp Chef last year. However, sales were down by 5.0 percent on an organic basis. Vista said it has continued to drive innovation across the portfolio and has launched more than 150 new products.
Revenues in the Outdoor Products segment were up by 24.0 percent to $293 million, including $92 million worth of extra revenues from acquisitions. The segment was down by approximately 15.0 percent on an organic basis, reflecting lower sales across all product lines, including the impact of the increased promotional activities.
In the Shooting Sports segment, revenues were up by 1.0 percent to $361 million, with increased sales of centerfire and rimfire ammunition partially offset by decreases in shock shell ammunition and firearms, along with increased rebates and promotional costs.
The gross margin declined by 2.4 percentage points to 25.8 percent, a result of the products mix and increased rebates and promotional costs.
Vista said that the shooting sports market softened significantly following the U.S. presidential election, as consumer demand was reduced due to a more severe regulatory environment for gun owners under the current administration.
The drop in demand has also led the company to update its financial guidance for the full financial year. It now expects the gross margin to be roughly in line with the third-quarter results and sales in a range of $2,500 million to $2,540 million.
The group saw its stock fall by more than 20 percent after releasing its earnings report.