The leader of Vista Outdoor’s outdoor products category noted ongoing challenges in the outdoor specialty retail space during a conference call with investors today.
Eric Nyman, CEO of the company’s outdoor division, Revelyst, and co-CEO of Vista Outdoor, said “Whereas our inventory with a lot of retailers is in pretty good shape, and our inventory on our own side has also made significant improvements year-over-year, we are certainly understanding of some of the challenges the retail marketplace is facing at this point in time.”
In response to that, Revelyst has “spent a lot of time and energy” on its direct-to-consumer business, Nyman added.
Brands in the Revelyst division include CamelBak, Bell, Giro, Camp Chef, Bushnell, Bushnell Golf, Foresight Sports, Fox Racing, Simms Fishing Products, Stone Glacier, QuietKat, and more.
Revelyst Sales Down, Guidance Holds Steady
Company-wide, Vista reported a drop in earnings and revenue for the third quarter of fiscal year 2024, with sales down 10% to $682 million compared to the prior-year quarter.
Profits decreased 327%, leading to a net loss of $148 million. Gross margin decreased 190 basis points to 29.7% on decreased volume, increased input costs due to inflation, and lower prices.
For Revelyst, sales decreased 10% to $317 million compared to the prior-year period on discounting, lower volume, and consumer headwinds, including high interest rates. Gross margin decreased 287 basis points to 32.4%.
Revelyst reaffirmed its revenue guidance for the full year and expects to see top- and bottom-line improvements in the business. Fiscal 2024 revenue should range from $1.275 billion to $1.325 billion.
“Over the last few months, Revelyst’s culture of innovation drove exciting new product introductions at the brand level, secured incremental revenue opportunities for the segment, and led to the successful launch of our Revelyst Lyst, which brought products directly to consumers at the enterprise level,” Nyman said in a press release.
An Optimistic Outlook
On the call with investors, Vista CFO Andy Keegan said the company is “enthusiastic” about the Revelyst segment as it expects it to return to growth in the fourth quarter and see positive impacts from its Gear Up transformation program, which is intended to simplify its business model, drive efficiency, and increase innovation.
“We expect to drive $100 million in run-rate cost savings in fiscal year 2027 and see a clear path to doubling standalone adjusted EBITDA in fiscal year 2025,” Keegan said.
Keegan also noted that Vista has made significant progress in improving its inventory position, decreasing total inventory more than 15% year-over-year and 5% sequentially from the previous quarter.
“Revelyst in particular has had success moving through high-priced inventory, decreasing by approximately 25% year-over-year and just under 10% sequentially,” he added.
Keegan said the company expects growth in the action sports category with stronger order books.
“We have observed marketplace retail and wholesale inventory becoming healthier in recent months,” he added. “We are seeing more optimistic purchasing patterns and are starting to see conversion on POS and sell-in within certain categories.”
Vista also sees inventory costs improving as freight costs return to more normal levels, Keegan said.
Nyman emphasized the strength in DTC for the Revelyst group and its “uncluttered” backstock.
“We’re optimistic about that going forward,” he said. “That destocking challenge in the market is receding at a good pace. We still have some things to clean up. We don’t want to minimize that. In specialty, there’s still a few headwinds. But by and large, we’re certainly more optimistic today than we were at the end of last quarter.”
The company also said the planned sale of the Kinetic Group, which makes up Vista’s ammo business, for $1.91 billion, is on track.
Weather Challenges
Nyman said there was a slow start to the winter season this year, across much of outdoor specialty retail.
“I hate to blame anything on the weather, but there certainly was not a lot of snow in the early part of the year, across the United States in particular,” he added. “That led to slower POS than expected.”
The weather has picked up in recent weeks, but Nyman said they will continue to monitor it for the rest of the quarter.
