Responding to a weak performance, financial research company Moody’s Investor Service raised the probability that Vista Outdoor will default on financial obligations.
The downgrade follows the shooting sports conglomerate reporting a weak quarter and deteriorating credit metrics, according to this week’s statement.
The company closed last quarter with a 5 percent drop in sales and ended the year with a 32 percent increase in operating expenses.
From last quarter, the company’s sales followed the national trend, dropping 11.5 percent from third quarter results, which covered the election as well as holiday shopping.
Also, the company projected a weak demand for guns and ammo to continue for the foreseeable future under the current presidential administration.
Kevin Cassidy, a senior credit officer for Moody’s, said the negative look reflects the uncertainty over when gun and ammunition demand trends will stabilize and when Vista’s operating performance will improve.
“A challenging retail market and weak demand for recreational firearms and accessories is pressuring revenue and margins,” Cassidy said, adding Moody’s forecasts by March 2018 that Vista’s debt will outweigh performance and leverage should decrease by December 2018. Vista currently generates around $2.5 billion in annual revenue.