Shares of Vista Outdoor tumbled by 13.1 percent after the company issued a weak outlook for the coming year and announced plans to divest a number of brands, including Vista's Sports Protection brands, such as Bell, Giro and Blackburn, Jimmy Styks paddle boards and Savage and Stevens firearms.
The management said it faced some challenges over the last 18 months, including a lack of product innovation and some acquisitions not materializing. It added that bankruptcies and consolidations also impacted the outdoor recreation market, which put significant market pressure on both its shooting sports segment and the hunt/shoot-related portion of its outdoor products segment.
Vista has undertaken an evaluation of its overall portfolio. As a result, it will focus on achieving growth through market-leading brands in four categories: ammunition, hunting and shooting accessories, hydration bottles and packs and outdoor cooking products. Vista's major brands in these areas include Federal Premium, CamelBak, Bushnell, and Primos. By refocusing its efforts in these core categories, the management hopes it can achieve growth by deploying capital efficiently, both organically and via acquisitions, and drive operational improvements that will further increase the profitability.
Vista also released results for its fourth fiscal quarter ended March 31 that came in slightly lower than its guidance. Sales dipped by 1 percent from the year-ago quarter to $571 million, weighed down by lower prices across all ammunition categories, due to market conditions in the shooting sports segment and lower sales in hydration, optics and water sports in the outdoor products segment. These declines were partially offset by increased firearms sales due to a product refreshment in the shooting sports segment, along with improved sales in outdoor cooking and sports protection product categories.
The gross margin fell by 5.7 percentage points to 19.1 percent, primarily due to unfavorable pricing in all ammunition categories, increased promotional activity and rebates within the shooting sports segment. These decreases were partially offset by favorable volumes, product mix and cost savings within outdoor products.
The company ended the quarter with a net loss of $15,9 million, against a net income of $857,000 for the year-ago quarter.
For the full fiscal year, revenues declined by 9 percent from the prior year to $2,300 million, and the gross margin dropped by 3.7 percentage points to 22.6 percent. Vista narrowed its net loss to $60.2 million, compared with a net loss of 274.5 million for the prior year.
The management issued a weak guidance for fiscal 2019, arguing that the coming year will be an inflection point for its business. It expects that increased commodity costs and lower volume will pressure both segments in the first half, and higher interest expense and unfavorable tax rate will pressure earnings for the full year. In response to these challenges, the management said it has taken several cost reduction actions and initiated targeted price increases. Sales are expected to be lower than in fiscal year 2018, at a range of $2,205 million to $2,265 million.