Clarus Corp, the holding company previously registered as Black Diamond Equipment, saw sales in the third quarter jump by 16.2 percent to $45.8 million, boosted by the climbing category and the acquisition of Sierra Bullets on Aug. 21, which added $3.5 million to the quarterly turnover. Excluding the acquisition, revenues still increased by 7 percent. On a currency-neutral basis, they grew by 14 percent.
The quarter benefited from an increase of 12 percent in pre-season orders, while improved fulfillment rates and healthier inventory levels drove an increase of 23 percent in at-once orders. This was partially offset by a drop of 63 percent in the amount of discontinued merchandise sold, reflecting improvements in supply chain and inventory management.
However, the group's net loss widened to $1,580,000 from a loss of $405,000 a year ago. The management attributed this to a 25 percent hike in SG&A expenses to $14.4 million, due to continued strategic initiatives around new product introductions, as well as $630,000 of incremental expenses due to the inclusion of Sierra. Adjusted net income, which excludes the non-cash items as well as restructuring and transaction costs, increased by 70.6 percent to $2.9 million. Adjusted Ebitda rose by 79 percent to $3 million.
The company said the third quarter confirmed that its redeployment and diversification strategy - with a push on climbing - is “right on track”, as the sport is becoming more mainstream. It added that the gains in the climbing category were driven by strong growth in more approachable bouldering and gym statements.
Specific products that performed well included the newly-launched line of Momentum rock shoes as well as ropes, climbing accessories, helmets and harnesses.
The apparel segment grew by 10 percent, driven by strong pre-season bookings for autumn and winter seasons, particularly for its first collection of climbing shoes and its full stretch air perm insulated jacket series. The ski category rose by 9 percent due to increases in snow safety equipment.
By region, North America's growth was supported by strength in climbing and skiing, the further development of Black Diamond's apparel initiative and higher levels of support for specialty retailers. In Europe, the growth was driven by strong autumn bookings, higher-than-expected at-once or replenishment orders, and increased fulfillment rates.
The gross margin went up by 2.1 percentage points to 33.4 percent, primarily due to a favorable mix of higher-margin products and channel distribution and the stabilization of the company's sourcing strategy. Excluding the Sierra acquisition, the gross margin was 33.7 percent.
Looking ahead, Clarus raised its full-year outlook, with sales now expected to grow by between 11 and 13 percent to approximately $165 million to $168 million, which reflects an estimated contribution of $9 million from the inclusion of Sierra. The prior outlook called for sales between $153 million and $158 million. The gross margin for the year is now expected to increase by 2 percentage points to 31.5 percent.
John Walbrecht, president of Clarus' Outdoor Group, said in a conference call that it initiated a new redeployment and diversification strategy with the acquisition of Sierra Bullets. The group paid $79 million in September for this highly profitable U.S. firm, whose proprietary manufacturing process is said to give it the tightest tolerances in the ammunition market.
The Black Diamond brand will have more than 50 new products for spring 2018. The brand has more than 30 new product initiatives in the pipeline, across more than 30 product categories.