Vista Outdoor teased investors this week with yet another promise of news on the divestiture of its affordable rifle brand, Savage Arms, in the coming months.
Chief Executive Officer Chris Metz said Thursday the outdoor recreation conglomerate spent the entire third quarter — ending Dec. 31, 2018 — on fielding offers from prospective buyers, though still no word yet on who that might be.
“The process has been very competitive, and we are pleased with the current status of that transaction,” he said. “I’m pleased to report that, as we forecasted, we expect to be in a position to make an announcement on this transaction before the end of the fiscal year [in March].”
Metz, former president of Arctic Cat — a Minnesota-based snowmobile and all-terrain vehicle manufacturer — first hinted at his new vision for Vista just weeks after taking over when he told investors “the company grew too fast and beyond its core” after acquiring more than 50 brands over the last three years. A downturn in sales post-election only compounded the situation, he added.
“We can confidently say that our core lies in the hunting and shooting sports market and in adjacent activities, such as camping and hiking,” he said in May. “Our key consumer is someone who participates in these and other outdoor activities.”
Since revealing its plan to sell off non-essential brands, Vista finalized a $158 million sale of its eyewear companies — Bollé, Serengeti and Cébé — to a private equity firm in Europe in August.
Metz told investors Thursday he spent 200 days on the road visiting brands within the company’s extensive portfolio — a process that ultimately led him to make a “deep cut” in staffing, particularly at the executive level. He released six of Vista’s eight senior vice presidents in the last year.
“Quite simply, we’ve ripped cost out of the business,” he said. “This was a deliberate, intentional focus to reduce cost by eliminating unnecessary layers, waste, and redundancy. This is never easy, but we acted quickly and decisively, and we are delivering.”
The decision likely came as a relief to investors after Vista reported a 19.5 percent downturn in sales during its third quarter. Metz said the ammo market industry-wide tanked as much as 30 percent, though Vista itself saw much smaller losses. Winchester’s manufacturer, Olin, likewise reported a 12 percent slump in commercial ammo sales last quarter.
“This period of soft demand has persisted longer than any previous market cycle in recent history,” he said. “As we’ve seen numerous times most typical correction cycles of last year between 12 and 18 months. We are currently at 24 months. There’s simply no precedent for this trend.”
Mick Lopez, Vista’s chief financial officer, said the sale of Savage will help the company pay down nearly half of its debt, paving the way for smarter future innovation.
“Despite top line challenges, our passion for our brands, our businesses and our employees remains unchanged,” he said. “We are confident that the changes we are making now will translate into increase stability and growth in the future.”