Organic sales of the Vista Outdoor group's outdoor products were down by 6.5 percent for the first quarter to July 2, but the turnover of the outdoor division was up by 0.9 percent to $290 million due to the acquisition of Camp Chef. The supplier of cooking utensils added $21 million in sales for the three months, which form the first quarter of Vista's fiscal year.
The U.S. group said that organic sales were down for most product categories in its outdoor division, which includes brands from Camelbak and Bushnell to Bell, Giro, Bollé and Jimmy Styks for stand-up paddling products. Vista Outdoor increased its promotional activity, which also had an adverse impact on its gross margin. The group's gross profit dipped by 13.5 percent on an organic basis and it was down by 6.4 percent to $77 million in reported terms. As well as the lower organic sales and more discounts, the gross profit was affected by an unfavorable product mix, but all of this was somewhat mitigated by the Camp Chef acquisition and cost reduction measures.
The shooting sports division was under more intense pressure, with sales down by 18.7 percent to $243 million and gross profit off by 22.6 percent to $70 million. As a result, Vista Outdoor group ended the three months with a sales slump of 9.8 percent at $568.7 million, equivalent to an organic sales drop of 13 percent. It managed to reduce operating expenses by $5 million to $107 million, but its net income plunged by 42.8 percent to $16.6 million.
Vista came under fresh leadership after the departure of its chairman and chief executive, Mark DeYoung, who agreed to accelerate his retirement and leave in July. He was replaced on a temporary basis by Michael Callahan, Vista's lead independent director and a former executive at Cabela's. DeYoung had led the creation of Vista Outdoor through its spin-off from ATK.
Vista's results were somewhat better than anticipated by analysts, and the group acknowledged that sales worth about $20 million to $30 million had been pulled from the second to the first quarter. Callahan said in a conference call that the company launched about 150 new products this summer, to support growth in the months ahead. Vista added that the U.S. retail environment remains promotional, but that inventory levels appear to have normalized in the larger stores and that the favorable winter conditions in North America last year helped to deplete inventories. This is leading to strong sell-in of winter product, and the company further pointed to encouraging pre-orders in the cycling market. Vista Outdoor reaffirmed its guidance that underlying sales for the full fiscal year should reach between $2,360 million and $2,420 million, and adjusted earnings per share of $1.10 to $1.30.