Black Diamond returned to growth in the fourth quarter as parent company Clarus Corp. fell short of its revenue expectations for the year but improved margins.
Company executives warned of continued softness in the outdoor market because of trade policy uncertainty and pressure on consumers.
“Throughout the year, our businesses continued to deal with significant market headwinds, but we’ve been pleased with our team’s emphasis on managing the factors within our influence,” said Clarus Executive Chairman Warren Kanders on the company’s full-year and fourth-quarter earnings call on Thursday.
“In looking at our goals that we set during our investor presentation back in March of 2024, we missed our top-line objectives by $10 million. At the operating company level, we achieved 99% of net sales in our outdoor segment and 90% of net sales in our adventure segment.”
For 2024, Clarus reported that:
- Overall sales were $264.3, a 7.6% decline compared to the previous year.
- Outdoor sales, which includes Black Diamond, declined by 10% to $183.6 million, which Clarus attributed to both softness across all selling channels and to its product line simplification strategy. Clarus projected revenue of $185 million in its outdoor segment in November 2024.
- Adventure (Rhino-Rack, MAXTRAX, TRED) sales declined by 1.5% to $80.7 million.
While Clarus anticipated year-over-year revenue declines, Kanders said its strategy to improve profitability is still showing signs of working. Gross margin was 35% compared to 34.1% in 2023, which Clarus attributed to a favorable product mix in its outdoor segment and a favorable adventure segment channel mix due to lower OEM sales.
Net loss, which includes the impact of discontinued operations, was $52.3 million, or a loss of $1.37 per diluted share, compared to a net loss of $10.1 million, or a loss of $0.27 per diluted share in 2023.
“While we fell short of certain financial metrics, I am pleased with the progress we have made towards achieving our longer-term strategic goals that we highlighted in our investor day,” Kanders said.
Black Diamond Returns to Growth in Q4
In the fourth quarter, Clarus reported that:
- Company-wide sales were $71.4 million, a 6.6% year-over-year decline. Clarus attributed the decline to challenges with two large accounts in its OEM and Australian wholesale channels in its adventure segment. The decline was offset by growth in North American wholesale channels and international distribution channels in the outdoor segment.
- Outdoor sales were $51.1 million, a 2% increase from the previous year.
- Adventure segment sales decreased 22.9% to $20.3 million.
Gross margin in the fourth quarter was 33.4% compared to 28.9% in the same period last year, which Clarus said was due to lower PFAS inventory reserves. Product simplification also contributed to the improvement, and the outdoor segment’s adjusted gross margin improved to 36.9% in Q4 compared to 32.8% the previous year.
Adjusted EBITDA from continuing operations in Q4 2024 was $4.4 million with an adjusted EBITDA margin of 6.1% compared to $1.6 million with an adjusted EBITDA margin of 2.1%.
“For the fourth quarter, we saw a return to growth for [Black Diamond], a much healthier gross margin rate, lower costs, lower inventory levels, with a better quality of inventory and a big lift in adjusted EBITDA,” said Black Diamond President Neil Fiske, adding that the brand gained market share in most of its important categories and among its most important retailers. “We enter 2025 in great shape.”
Inventories are in a better position, Fiske said, and feedback from specialty retail partners has improved.
North America wholesale, Black Diamond’s largest market, grew by 6.5%, he said. North America digital DTC declined 3.2%.
Prices to Increase Because of Tariffs
Clarus’s efforts to shrink in order to grow appear to be paying off, but company executives warned that macroeconomic uncertainty and other factors beyond their control could hinder those growth efforts this year.
“There’s tremendous uncertainty and chaos in the market right now, following the initial Trump tariff outlines. At the levels most recently proposed, there is no question prices will have to go up,” Fiske said.
“For consumers, the outdoor industry has absorbed inflationary pressures for too long. Prices will simply have to go up. It’s difficult at this point to understand what impact that may have on consumer sentiment and demand. Our focus remains on controlling what we can and in that regard, I feel confident both about our progress and our position for the year ahead.”
Executives also reiterated that in addition to ongoing securities litigation issues the company is pursuing, it is also cooperating with a Department of Justice investigation into Black Diamond’s response after some avalanche transceivers distributed by the brand were found to be faulty. In February, Clarus warned investors that it faces legal, reputational, and financial risks after receiving subpoenas last month as part of the investigation.
Clarus expects company-wide fiscal year 2025 sales to range between $250 million to $260 million and adjusted EBITDA of approximately $14 million to $16 million, or an adjusted EBITDA margin of 5.9% at the mid-point of revenue and adjusted EBITDA.
Clarus has not yet provided net income guidance.
Kate Robertson can be reached at kate@shop-eat-surf-outdoor.com.
