The parent company of Smith & Wesson is generating much higher profit margins from its outdoor products than from its sales of firearms. Like Vista Outdoor, it has been seeking to diversify away from the highly cyclical American gun market, but its management says it is not currently looking for acquisitions because the multiples requested for the candidates' valuation are too high.

American Outdoor Brands reported a 36.4 percent drop in total sales to $148.4 million for the second quarter of its financial year, which ended on Oct. 31, leading to a decline of 7.6 percentage points in the gross margin and to net income of only $3.23 million for the period, down from $32.48 million in the year-ago quarter.

Sales of firearms plunged by 48.1 percent to $101.4 million as compared to the same quarter a year ago, which coincided with peak demand in the market due to pre-electoral concerns. The gross margin fell to 29.1 percent in this segment due to a persistent promotional environment where customers are looking for bargains. The company's own inventories are up by 36 percent, and there are still high inventories also at the retail level.

On the other hand, revenues from Outdoor & Accessories went up by 19.9 percent to $50.8 million. The growth was exclusively attributed to recent acquisitions, yet the segment delivered a healthier gross margin of 44.9 percent.

The group acquired Bubba Blade, a premium brand of fishing knives, during the quarter.

As for Vista Outdoor, which still gets most of its revenues from ammunition, its new chief executive, Chris Metz, has indicated that it doesn't plan any further divestitures after the disposal of Bollé, Serengheti and other sports eyewear operations. Camelbak and other brands in its outdoor division are still regarded as core assets.

Vista says the outdoor market has been growing at an average annual rate of 4 percent in the U.S. over the past ten years, but the participants in outdoor activities have become more casual than committed consumers.

Furthermore, Amazon and other e-commerce players have taken up higher market shares and now account for about 20 percent of Vista's revenues from outdoor products. The company will try to capture more of those sales through its own websites.