Vista Outdoor's new chief executive, Chris Metz, announced plans to sell its three brands of sports eyewear – Bollé, Cébé and Serengeti – as part of a review of its brand portfolio that is about to be completed, while the company released a pretty bad set of figures for the second quarter of its financial year, ended Oct. 1.
The three brands, which are part of the group's Sports Protection business, were acquired in 2013 as part of the former Bushnell Performance Optics. They are currently generating total annual revenues of around $130 million, and the group is going to seek out buyers for them over the next few quarters.
Pointing out that these eyewear brands focus mainly on fashion, vision correction and safety, largely relying on different distribution channels than other products in its portfolio, the management said they are not deemed to be part of the group's core business.
Metz also announced that the position of president for its Shooting Sports segment, currently filled by Bob Keller, will be eliminated to help save costs and strengthen the organization with “leaders who have deep industry experience.” Meanwhile, Michael Callahan has been appointed chairman of Vista's board of directors.
Other organizational changes will be announced in due course, said Metz, adding that the group still has a goal to become the largest and best platform in the outdoor sports recreation space. It plans to reposition the group by investing in “exciting” brands that will be retained and in new brands that can be scaled.
Vista's share price fell by 28.1 percent last Thursday after the company reduced its financial projections, slashing down its profit forecast by more than 50 percent for the year ending next March 31, with total sales expected to reach a lower-than-expected level of $2.24 billion to $2.26 billion.
In the latest quarter, Vista booked impairment charges of $152 million on the intangible assets for its Outdoor Products segment, and $75 million of that was related to the Sports Production unit, the rest for hunting and shooting accessories.
The impairment charge was evidently due to the excessively high acquisition prices previously paid for these businesses. In 2013, ATK, which subsequently spun off Vista, acquired Bushnell Group Holdings for $985 million, or about ten times projected Ebitda. As a group, Bushnell generated annual revenues of around $600 million at the time, including its binoculars, its rangefinders and many other products for golf and shooting sports.
The management said the impairment charges were related to challenging market conditions that have put pressure on sales and margins and that have been exacerbated by bankruptcies and consolidations among the group's clients. It added that these conditions are true in particular for the cycling industry, affecting Vista's Sports Protection business.
Vista is also suffering from high inventories in its much bigger Hunting and Shooting Accessories business. They will continue to put pressure on sales and margins for the balance of the financial year.
Besides Bushnell, Vista's Outdoor Products segment also includes Camelbak, Bell, Giro and Jimmy Styks, plus the recently acquired Camp Chef. The segment's sales declined by 9 percent to $292 million in the second quarter, with a drop of about 13 percent on an organic basis and reduced sales in most product lines. The segment's organic gross profit fell by 10 percent to $76 million.
Revenues from shooting sports were down at an even steeper rate of 19 percent. The group's total sales were down by 14.2 percent in the quarter to $587.3 million, including incremental revenues of $12 million from Camp Chef. Organically, sales declined by 16 percent.
Vista reported a net loss of $114.7 million for the quarter against net income of $73.2 million in the corresponding period of 2016. On an adjusted basis, excluding charges and other extraordinary items, net earnings declined by 20 percent to $20 million.