American Outdoor Brands stock plummets after $2.2 million first quarter loss

Stock prices for American Outdoor Brands plummeted 17 percent last week after the company reported a $2.2 million first quarter loss.

The rugged outdoors conglomerate counts Smith & Wesson as its top-earner in a portfolio of more than two dozen brands including Gemtech, Crimson Trace, Bubba Blade and Old Timer.

“Our financial results for the first quarter reflected lower than anticipated shipments in our firearms business, consistent with a softening in wholesaler and retailer orders, partially offset by increased revenue from our outdoor products and accessories business, which grew organically at 11.4 percent and which more than doubled inorganically,” said CEO James Debney in a press release Thursday. “Total revenue for the quarter also faced a challenging comparison to last year’s heightened level of firearms demand, which we believe was driven by concerns for personal safety and the potential for increased firearm legislation.”

The company’s $129 million revenue fell 39 percent over 2016, according to AOBC’s financial filings. The firearms sector fared worse, declining by nearly half to $99.4 million. Debney said promotions coupled with the historically slow summer selling season ate into the company’s bottom line. Chief Financial Officer Jeff Buchanan said AOBC expects annual earnings of no more than $740 million — far behind the record-breaking $903 million raked in last year.

“While these conditions may be challenging in the short-term they are not new to us,” Debney told investors Thursday as he predicted a stronger third and fourth quarters for the company. “It’s a very dynamic environment right now. You do not know what a competitor is about to do next in terms of their promotional activity. You walk into an independent retailer or some of the bigger box stores right now and sometimes it’s tough to see the top-of-the-glass counter because of the so many promotion cards out there.”

Both Debney and Buchanan agree the worst is in the past as promotional activity winds down and customers return for the hunting and holiday shopping seasons. Debney cited a 12.6 percent uptick in federal background checks for the month of August — not yet published on the FBI’s National Instant Criminal Background Check System website — as proof of his cautious optimism.

“Now there is always risk. I can’t predict the future,” he said. “I have got a crystal ball that’s not that great though sometimes. So as we think about September, October and November, those are three key data points for adjusted NICS checks that will really tell us the strength of the return of the shopper.”

In the meantime, Debney says AOBC will focus on a slew of new product launches planned for the next eight months, including the new M&P M2.0 compact series pistol shipped out Friday. The next product announcement, he said, will come Nov.1.

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