Vista Outdoor, the U.S. group of shooting and outdoor brands, acknowledged that it would have to take an impairment charge that could be in the range of $400 to $500 million for the three months until the end of 2016, which was the third quarter of its fiscal year. The group said the non-cash intangible asset impairment charge was caused by weakness in the retail market and increased promotional activity, which affected its hunting and shooting accessories unit.
A few days after the statement on the impairment charge, the company announced the departure of Kelly Grindle, who had been in charge since 2015 of its broader outdoor products division. While Grindle was said to have been appointed chief executive of a boaring company, the news of the impairment charge and Grindle's departure prompted at least eight law firms to file class action suits against the Utah-based company and sent down its stock market value by about 20 percent.
Vista's hunting and shooting accessories entity comprises products for archery and hunting, golf, optics, shooting accessories and tactical products. Vista said there was no indication of any impairment of its intangible assets relating to its outdoor recreation unit, which focuses on camping, hydration and water sports, nor to its sports protection division unit, consisting of cycling and winter sports accessories. All of these units are part of Vista's outdoor products division. The group's financial reporting splits its activities between shooting sports and outdoor products, with brands such as Camelbak, Jimmy Styks, Bell, Bushnell and Camp Chef.
Vista said it has replaced Grindle with Dave Allen as president of its outdoor products division. He joined Vista as senior vice president of sales in 2016, after many years in the outdoor industry. He was previously president of Coleman USA for the Jarden Corporation, and he held domestic and international leadership functions with Alberto Culver and Unilever.
Meanwhile, Thomas G. Sexton, who served as controller and treasurer of Vista Outdoor since its spin-off from ATK in February 2015, has just announced that he will retire as of April 7.
Separately, Vista Outdoor has appointed Jason Vanderbrink as senior vice president of sales, to lead the group's U.S., international, law enforcement and government sales, and trade marketing operations. He joined Vista Outdoor in 2005 and most recently serviced as its vice president for retail sales. They both report directly to Mark DeYoung, Vista's chairman and chief executive.
Vista Outdoor had already said when discussing its second quarter results that its sales and gross margin declined, as retail weakness led to more discounting in accessories. Another factor was a shift in spending from hunting and shooting accessories to certain firearms platforms outside the group's offering. The group said on Jan. 11 that these trends had accelerated in the third quarter, making the charge necessary to comply with accounting standards. Its shares tumbled on the day and they are currently trading more than 35 percent below their value at the same time last year.
Vista Outdoor said it does not expect the impairment charge to have any impact on future operations, nor to affect its liquidity or cash flows from operating activities, or to affect compliance with the financial covenants set forth in its debt instruments. The group added that it continued to expect long-term growth in all its reporting units, including hunting and shooting accessories.Vista Outdoor is scheduled to report its third quarter results on Feb. 9.