Vista Outdoor: Competitor prices will rise in 2018

Vista Outdoor

Vista Outdoor top executives predict the lingering post-election market conditions will finally lift in 2018. (Photo: Vista Outdoor/Facebook)

Top executives for Vista Outdoor said last week the industry’s widespread promotional activity will end in 2018 as competitors discuss price increases.

The forecast comes after the company admits lingering post-election market conditions haven’t lifted as quickly as anticipated.

“We are not yet seeing the recovery that we expected to see,” said Chief Financial Officer Stephen Nolan during a conference call with investors Thursday. “Shooting sports has always been a cyclical industry with periodic downturns lasting anywhere from 12 to 24 months. While we may not be at the bottom as of yet, we believe that we are very close and we anticipate that the market will show returns to growth over the next 18 months.”

Vista Outdoor’s second quarter earnings declined 25 percent, according the company’s most recent filing with the Securities and Exchange Commission. Sales likewise dipped 16 percent, the company’s second double digit loss so far this year. Its shooting sports segment generated $296 million, a 19 percent decline over 2016 — the biggest on record for gun sales. Net profit for the segment nosedived 38 percent, Nolan said.

“A number of our competitors have talked about price increases in calendar 2018,” he told investors Thursday. “So, we do see the end of the promotional intensity that we’ve seen of late on the horizon, but we’re certainly not there yet and we do not expect that recovery in pricing to have that significant impact on fiscal 2018. We look for benefits from that in fiscal 2019 and beyond.”

Vista owns more than three dozen companies in firearms, ammunition and shooting accessories, including Savage Arms, Stevens, Federal Premium, Speer and American Eagle. It also holds brands in the outdoor lifestyle market — three of which new CEO Chris Metz said will be divested to better align the company’s core business with its product offerings.

Metz, former president of Arctic Cat — a Minnesota-based snowmobile and all-terrain vehicle manufacturer —took the helm at Vista last month. He announced Thursday shakes-ups in the company’s firearms sector, starting with the elimination of Shooting Sports Segment President Bob Keller.

“While I’ve only been here a short time, I realize we have much to do: we must make significant changes, act decisively, and move quickly to reposition and stabilize the company,” he said. “We will take an aggressive position on profit improvement through both margin expansion and cost reductions across all areas of the core business.”

Vista revised its financial outlook for the remainder of the year, anticipating sales will not exceed $2.26 billion.

“The market contraction and competitive environment … will have more of an impact in the second half of the year than it did in the first half, including the full impact of the ammunition pricing action, which we took in the first and second quarters,” Nolan said. “While we have taken actions to reduce costs, these initiatives have been more than offset by persisting market conditions.”

Latest Reviews

revolver barrel loading graphic