Key Takeaways
- Black Diamond drove an 8.5% sales increase at Clarus Corp.’s Outdoor segment in the second quarter, extending its apparel growth streak to a fifth consecutive quarter.
- The Department of Justice closed its criminal investigation into Black Diamond and two former executives on June 4, removing a legal overhang tied to the company’s avalanche transceivers.
- A $6.1 million tariff refund and the resolved legal matter pushed Clarus’s full-year adjusted EBITDA forecast up to $12 million to $13 million.
Black Diamond extended its apparel growth streak to five consecutive quarters, and the Department of Justice closed the door on a years-long federal investigation into the company, as Clarus Corp reported second-quarter results shaped heavily by a tariff refund.
Strategic Review to Explore Company Options Continues
Clarus reiterated that its review of strategic alternatives, first announced in May, remains ongoing, with Jefferies continuing to serve as financial advisor.
“We continue to explore a range of potential actions aimed at unlocking value more effectively than the market is currently recognizing today,” Warren Kanders, Clarus’s executive chairman, said on the earnings conference call.
Potential alternatives could include the sale of all or part of the business or other strategic or financial transactions, Kanders said, adding that the company will not answer questions or comment further on the process until additional disclosure is appropriate or required.
Black Diamond Drives Outdoor Growth
Clarus’s Outdoor segment, anchored by Black Diamond, grew sales 8.5% to $39.8 million in the second quarter, compared with $36.7 million a year earlier.
Neil Fiske, president of Black Diamond Equipment, said on the call that revenue was up 9.1% when excluding the divested PIEPS business for a more comparable view, with the “big three” categories of mountain, climb and apparel driving 95% of segment revenue and growing 9.5% on that same basis.
By category, mountain grew 7.4%, climb grew 13.5% and apparel grew 7.4%.
Within apparel, full-price sales grew 22.9% while clearance and discontinued merchandise fell 61%, which Fiske called evidence of “a much healthier full-price business and fewer markdowns.”
Kanders said on the call that apparel remains central to the company’s strategy.
“Apparel is a key pillar of our long-term strategy,” Kanders said. “Our product continues to resonate with the consumer as we delivered apparel sales growth for the fifth consecutive quarter.”
Outdoor’s segment gross margin was 52%, compared with 34.9% a year earlier, lifted by the tariff refund. Excluding that refund, Fiske said segment gross margin still improved 160 basis points to 36.5%, which he attributed to cleaner inventory, a focus on the most profitable categories, less discounting and a shift toward full-price selling.
Regionally within Outdoor, European wholesale sales rose 25.3% in dollars, or 16.7% in constant currency. North America wholesale grew 0.5%, on top of 4.8% growth in the first quarter, while North America digital direct-to-consumer sales rose 5.7%.
The company’s international distributor channel grew 10.6%.
Outdoor Consumer Holding Up into the Back Half
Fiske struck a confident tone on the call about the back half of the year.
“Our strategy is paying off. Execution continues to improve. Product and marketing are resonating with the consumer. Our relationships in the wholesale channel have never been stronger. Our big three categories have real momentum,” Fiske said, adding the company remains “mindful that the conflict in the Middle East remains a major geopolitical and business risk.”
Asked on the call whether a potentially warm winter could prompt retailers to trim wholesale orders, Fiske said the risk was manageable.
“There may be a little bit of a dampening effect from last year, but not a major concern for us at this time,” he said. “We feel good about our fall order book and the sales outlook for the second half and feel good about our product lineup.” He said any impact so far has been modest and offset by the strength of the product lineup heading into the back half.
Tariff Refund Reshapes the Quarter
Clarus received a refund of approximately $6.1 million tied to previously paid International Emergency Economic Powers Act tariffs, which was recorded as an offset to cost of goods sold. The refund lifted consolidated gross margin to 48.9% for the quarter, compared with 35.6% a year earlier. Mike Yates, Clarus’s chief financial officer, said on the call that excluding the refund, consolidated gross margin would have been 38%.
“The IEEPA tariff refund we recognized during the quarter lifted earnings and gross margin, but our underlying performance was solid and we continue to see encouraging signs of progress across both segments,” Kanders said in a statement.
Net income for the quarter was $4.7 million, compared with a net loss of $8.4 million in the same quarter last year. Consolidated adjusted EBITDA was $7.6 million, or an adjusted EBITDA margin of 13.6%, compared with an adjusted EBITDA loss of $4.4 million a year earlier.
By segment, adjusted EBITDA was $9 million at Outdoor and $0.5 million at Adventure. Fiske said that setting aside the tariff refund and a related legal cost benefit, Outdoor’s underlying adjusted EBITDA was $1.5 million, compared with $0.3 million in the same quarter last year.
On the broader inflation picture heading into next year, Fiske said the company is watching closely but hasn’t yet seen the scale of cost pressure once feared.
“It’s something we’re watching very closely and are concerned about,” he said. “There has been some inflationary impact already. I think the potential that we all feared when this conflict broke out hasn’t yet fully materialized. Everybody’s watching and waiting,” on whether the Middle East conflict prolongs or oil begins flowing again.
Adventure Segment Under Pressure
The Adventure segment, which includes Rhino-Rack and MAXTRAX, saw sales fall 11.9% to $16.4 million. Yates said on the call that new customer initiatives in North America “have not met expectations,” while RockyMounts remained a bright spot in that market and is expected to keep growing behind a new product introduction.
In Australia, sales came in better than forecast despite consumers dealing with higher fuel prices and elevated interest rates, with RockyMounts again showing traction. Europe and Asia delivered double-digit growth in France, Germany, the U.K. and Japan, though not enough to offset weakness in the larger North American and Australian wholesale markets.
Adjusted EBITDA for the segment was $0.5 million, up from $0.3 million a year earlier. In June, Rhino-Rack USA completed the acquisition of ONWRD Supply Co., a brand making modular storage and organization systems for vehicles, which has been integrated into Rhino-Rack USA’s Colorado operations. The company also pointed to new product momentum heading into the fall, including a Rhino-Rack leg series launching in September and a MAXTRAX integrated shovel that Yates said has outsold forecasts in every market.
DOJ Investigation Closed
Yates provided a legal update on the call covering a matter that had been outstanding since the Consumer Product Safety Commission referred unresolved questions about Black Diamond’s avalanche transceiver reporting obligations to the Department of Justice.
On June 4, Yates said, the DOJ advised Clarus and Black Diamond that it had closed its criminal investigation into the company. The same day, the DOJ separately advised former Black Diamond President John Walbrecht and former Director of Quality Rick Vance that it had closed the investigation as to each of them individually. Yates said the company has heard nothing further from the CPSC or DOJ on the matter since.
Separately, Yates said the CPSC closed a related investigation without further action on January 28, 2026, concerning whether Black Diamond had sold products subject to a recall.
With the investigation closed, Clarus said it now expects to save roughly $2 million in legal expense in the second half of the year that it had previously assumed it would incur. Yates said that benefit, combined with the tariff refund, is the primary reason the company raised its full-year adjusted EBITDA forecast to a range of $12 million to $13 million, up from its prior forecast of $3 million to $5 million.
Clarus Corp. Outlook
The company ended the quarter debt free with $28.9 million in cash.
Clarus continues to forecast full-year 2026 sales between $245 million and $255 million, with Outdoor expected to contribute approximately $182 million and Adventure approximately $68 million. For the third quarter, the company forecasts sales between $66 million and $68 million and adjusted EBITDA of approximately $3 million.
