After a costly and difficult move of some of its production of climbing hardware from China to Salt Lake City, Black Diamond Equipment is reportedly considering shifting some of it again offshore - probably to Taiwan rather than back to China because of the U.S. tariff situation.
The company is looking for a new supplier of carabiners, crampons and other equipment that it is making in Utah. A report in Snews indicates that Black Diamond has already laid off 70 people, representing more than half of its manufacturing staff near its head office in Salt Lake City.
Meanwhile, the latest figures from Clarus Corp., the parent company of Black Diamond, indicate that its strong momentum is slowing down after a first quarter that saw the company grow by 15 percent, reaching record revenues.
In the second quarter ended on June 30, the group's sales only progressed by 2 percent to $46.9 million - or by 3 percent in constant currencies - weighed down by the recently acquired Sierra Bullet business, which offset some further progress at Black Diamond.
The group's total domestic sales rose by 2 percent to $28.4 million, while international sales were up by 3 percent to $18.6 million. The company said that its growth was affected by a long winter throughout the majority of the group's core markets, which affected sell-through and at-once orders for spring products. However, Europe experienced strong order fulfillment in the key markets of Germany, France, Austria and Scandinavia. Additionally, the company saw strong performance in sales to distributors in the U.K., Korea and Hong Kong.
Revenues from Sierra Bullet declined by 16 percent from the year-ago period, due to the headwinds that are facing the overall bullet and ammunition market in the U.S.
Contrasting with Sierra, Black Diamond's sales improved by 8 percent, with gains across all categories and channels. However, the growth was way under the 15 percent rate recorded in the first quarter, which was fueled by an extended ski season that helped late winter sales. Within the Black Diamond brand, sales of ski hardgoods jumped by 16 percent and apparel gained 10 percent in the latest period, driven by bottoms, logowear and sportswear. The mountain division rose by 6 percent, led by lighting, and climb increased by 7 percent, helped by carabiners and the footwear business.
Clarus' gross margin declined by 0.5 percentage points to 34.0 percent, due to channel and product mix, along with some foreign exchange headwinds. The adjusted Ebitda margin went down by 2.8 percentage points to 3.4 percent. The group's net loss narrowed to $694,000, compared with a loss of $777,000 last year, but on an adjusted basis, excluding non-cash items, the bottom line showed a reduced net profit of about $1.5 million, down from $2.5 million.
For the first six months of this year, the group's Ebitda margin reached 8.2 percent, one percentage point higher than in the year-ago period.
The management expects the second half of 2019 to be fueled by continued product innovation across Black Diamond's product portfolio, with over 150 new items slated to be released in the autumn in the areas of footwear, apparel, snow safety, gloves and skis.
Clarus remains focused on innovation also for Sierra, believing that this will produce market share gains in a difficult market environment, which is expected to continue to affect its results during the second half of this year.
Clarus maintained its full-year outlook for sales growth of 8 percent to about $230 million, including a low double-digit gain for Black Diamond and a high single-digit decline for Sierra. The adjusted Ebitda is expected to increase by 20 percent for the year to around $20 million.