Clarus Corp., the parent company of Black Diamond and other brands, had mixed results in the third quarter, with net income dropping by 14.3 percent to $3.5 million on 8.0 percent higher sales of $60.2 million.
The gross margin was down by 1.6 percentage points to 34.1 percent, due to foreign exchange headwinds and the impact from tariffs implemented as part of the U.S.-China trade dispute. Adjusted Ebitda declined by 4.2 percent to $6.8 million.
Revenues continued to be driven in the quarter by the momentum in the Black Diamond brand, with sales up by around 14 percent, led by skis and apparel.
The JetForce avalanche airbag, beacons and snowpacks had a good performance. Black Diamond's apparel segment gained 23 percent, fueled by strong sales of sportswear, technical outerwear, and logowear, while the climb division progressed by 7 percent, with gains from footwear. The brand's operating income improved by around 16 percent to $5.4 million.
Sales were up in the U.S. by around 10 percent, and the direct business performed well, with higher levels of online traffic and higher foot traffic in store. Abroad, sales rose by about 6 percent due to strength in the European operations, specifically in key markets like Germany, France, Austria and Scandinavia. Asia-Pacific also performed well, with Japan, Korea and Australia being highlights.
The management is working to enhance brand awareness ahead of the upcoming 2020 Summer Olympics in Tokyo. It will be the first time that climbing has been an event in the summer Olympics.
However, the continued softness in the bullet and ammunition market weighed on Sierra, which dropped by about 24 percent. This led the Clarus group to reduce its full-year outlook.
It now anticipates sales to grow by about 7 percent to $228 million. Although it still expects Black Diamond to grow by a low double-digit rate, it now forecasts that sales at Sierra will decrease by double digits. Previously, Clarus expected sales to grow by around 8 percent to $230 million and Sierra's sales to decrease by a high-single digit.