Key Takeaways:
- Black Diamond’s mountain and climb categories led growth, with a Norda Footwear collaboration lifting mountain sales.
- Black Diamond Equipment President Neil Fiske says the company deliberately added inventory behind its best-selling styles to fill at-once orders.
- Clarus Executive Chairman Warren Kanders says the review of strategic alternatives, which could include a sale, continues with Jefferies advising.
Clarus Corp.’s Black Diamond Equipment grew sales 12.4% in the third quarter, with gains across its regions and major categories, as the Salt Lake City-based parent company continued a review of strategic alternatives that could include the sale of all or part of the business.
Clarus reported total sales of $71.2 million for the quarter ended Sept. 30, up 2.7% from $69.3 million a year earlier. Gross margin rose to 41% from 35.1%, including a benefit of about 80 basis points from roughly $0.6 million in refunds of tariffs previously paid under the International Emergency Economic Powers Act.
Net income was $3.3 million, or 9 cents a share, compared with a net loss of $1.6 million, or 4 cents a share, a year earlier.
“We delivered strong third quarter results, reflecting the continued progress we are making to strengthen our businesses and drive sustainable, profitable growth,” Clarus Executive Chairman Warren Kanders said on the company’s earnings call Thursday.
Black Diamond’s Big Three Categories Lead Growth
Black Diamond sales rose to $54.7 million from $48.7 million. Mountain, climb, and apparel, which Black Diamond calls its big three categories, made up 92% of revenue and grew 13.1% combined.
“It’s great to see the momentum from a strong Q2 build into an even better Q3,” Black Diamond Equipment President Neil Fiske said on the company’s earnings conference call Thursday afternoon.
Mountain sales rose 15.2%, lifted by a collaboration with Norda Footwear that launched at the UTMB event in Chamonix in August. Asked by Mark Smith, an analyst with Lake Street, about new products, Fiske said the collaboration included special trekking poles, a mountain running pack, and a carabiner.
The Norda launch “was far and away above our expectations and Norda’s,” Fiske said.
Climb sales grew 15.1%. Black Diamond brought back its Magnetron carabiner, which sold out immediately, took back orders and sold out again, Fiske said. In footwear, where the company has narrowed its focus to rock shoes, the Momentum climb shoe introduced this year is doing well.
Apparel sales rose 3.3%, the category’s sixth consecutive quarter of growth. Franchise styles such as the Dirtbag Pant have sold out multiple times, Fiske said, adding that Black Diamond has a three-year product roadmap.
Investing in Inventory Behind Proven Styles
Black Diamond ended the quarter with $73.8 million in inventory, up from $62.8 million a year earlier.
“This was a deliberate effort to invest in growth and identify the potential upside in our key categories and style franchises,” Fiske said.
He said the investment paid off in historically high sales from at-once orders. The company expects to bring inventory down to about $67 million by year-end, with less discounted merchandise and a concentration in proven styles.
“We’re investing in inventory really to find out how high is high on some of these key franchise styles,” Fiske said.
Full-Price Model Lifts Margins
Excluding about $70,000 in tariff refunds, Black Diamond’s gross margin was 40.4%, up 440 basis points from a year earlier. Fiske tied the gain to better inventory quality, a focus on the most profitable categories, less discounting and “a more full-price premium business model.”
Black Diamond’s operating expenses rose 9.6%, reflecting the costs of moving its Salt Lake distribution center, among other factors.
By channel, North America wholesale grew 10.7%. North America digital direct-to-consumer sales, which make up 14.3% of the region’s revenue, rose 15.7%, with gross margin up 350 basis points on less discounting. North America retail comparable store sales rose 23.6%, with gross margins up 580 basis points.
European wholesale rose 13.1% in dollars and 10.3% in constant currency. European digital direct-to-consumer sales, 5.1% of the region’s revenue, rose 0.7% in constant currency as Black Diamond pulled back on promotions and less profitable transactions.
Distributor Markets Post the Fastest Growth
Sales through Black Diamond’s international distributor channel rose 31.9%. Fiske said the independent global distributor group, or IGD, which covers most markets outside North America and Europe, is growing ahead of expectations.
“If I look in particular at IGD, I think by the beginning of September, we had done more at-once orders than we have ever done in any other year,” Fiske said.
He said Korea is one of Black Diamond’s biggest and best international markets, while China is growing but probably below its potential. In Japan, the prior distributor’s owner retired and handed the business to his management team, and Fiske said the market has more upside.
“I think we are just at the beginning of realizing a lot of growth in those markets,” he said.
Watching Winter Weather and Material Costs
Laurent Vasilescu, an analyst with BNP Paribas, asked about the risk of a warmer El Niño winter. Fiske said there has been no change yet in the order book or the pace of at-once orders, and the company will know more in late November and December.
Better snow in Rocky Mountain West and West Coast ski areas could help, he said, but a warm winter in heavily populated regions could slow sell-through of cold weather categories such as gloves and insulated outerwear.
“The thing to watch out for is just if it is a warmer winter in the Northeast and Midwest and areas of a lot of population density,” Fiske said.
Vasilescu also asked about raw material inflation in 2027. Fiske said Black Diamond is seeing higher costs for oil-based materials such as polyester and nylon, along with freight and metals, but that improved product margins and changes in how tariffs are applied could offset them.
“We do not think there will be a drag on margins in 2027,” he said. “If anything, there might be a little bit of upside as we look ahead.”
Strategic Review Continues
Clarus announced its review of strategic alternatives in May and has retained Jefferies as its financial advisor. Kanders said potential outcomes could include the sale of all or part of the business, or other strategic or financial transactions involving the company.
“We continue to explore a range of potential actions aimed at unlocking value more effectively than the market is recognizing today,” Kanders said.
He said the company would not answer questions or comment further on the process until additional disclosure is appropriate or required. In its earnings release, Clarus said the review has no deadline or definitive timetable and may not result in a transaction.
Clarus ended the quarter debt-free, with $20.8 million in cash, compared with $36.7 million at the end of 2025.
Adventure Business Sales Fall on Australian Results
Sales in the adventure business, which includes Rhino-Rack and Maxtrax, fell 20.2% to $16.5 million from $20.7 million, mainly on weak consumer demand in Australia, though gross margin rose 640 basis points excluding tariff refunds.
Clarus CFO Mike Yates said he expects the business to grow in 2027, citing new products such as the P7 platform rack and a new Maxtrax recovery board.
Full-Year Outlook
Clarus raised the low end of its full-year sales forecast and now expects 2026 sales of $251 million to $255 million, compared with its prior forecast of $245 million to $255 million. That includes about $188 million from Black Diamond and $65 million from the adventure business. The company forecast fourth quarter sales of $62 million to $66 million.
Fiske said Black Diamond is on track to achieve or exceed its goals heading into the fourth quarter, while remaining mindful of cautious consumer sentiment and macro factors.
