ANOKA, Minn. (BRAIN) — Vista Outdoor’s Action Sports business unit recorded net sales of $496 million in its most recent fiscal year, a 23% increase from the prior year. Much of the sales increase was due to the addition of revenue from recently acquired brands including Fox Racing, which Vista Outdoor bought last July.
Vista Outdoor’s fiscal 2023 ended March 31. Its Action Sports unit includes bike-related brands Bell, Giro, Blackburn, QuietKat and Fox Racing. The company said difficult short-term conditions, including bloated retail inventory, contributed to the organic sales and earnings decline. But it said the integration of Fox Racing within the company, including the consolidation of the Action Sports brands at Fox’s headquarters in Irvine, California, was going well.
On an investor call Thursday morning, Jeff McGuane, the former Fox Racing CEO who is now president of the Action Sports brands, said the difficult market conditions were “an opportunity to enact change and reposition our platform.”
“As of late the cycling industry has experienced pressures exacerbated by lower consumer spending flat retail sales growth, higher import costs and elevated inventory levels at distributors and retailers, which has resulted in increased promotional activity,” McGuane said. “This environment has lowered near-term outlook, but also provided us an opportunity to reposition our platform for expanded growth … At the same time the biking industry is showing signs of relief in certain areas, for example, the inventory supply situation has been improving over the course of the last 90 days. Retailers are still sitting on elevated levels relative to historical norms but conditions are improving as the excess inventory continues to sell through.”
McGuane said the Action Sports division had combined #1 market position in several categories, including helmets and motocross protection. He said Blackburn’s bike light product line was selling out online and in stores; Fox's mountain bike helmet sales were up 25% year over year; and he said the launch of the Giro Aries Spherical helmet was one of the company’s most successful ever, with record sales in the model’s first week of availability.
McGuane also addressed the re-organization of Action Sports, including the recent decision to close the Bell/Giro facility in Scotts Valley and combine the brands at the Fox Racing headquarters in Irvine. The decision led to a significant number of layoffs.
“We’ve already achieved meaningful synergies by developing economies of scale building stronger and more strategic relationships with our suppliers, reducing our facilities footprint consolidating contracts, and beginning to combine our back offices we are still in the early innings and expect more synergies and process improvements as we continue to unite the teams at the current Fox headquarters, which will become a shared brand and design center as the hub of culture, creativity and inspiration, to spark innovation and drive the next chapter of our story."
Audio recording of McGuane’s complete comments.
Company-wide, Vista Outdoor’s fiscal year revenues were up 1% to $3.1 billion, although organic sales (that is, excluding revenue from Fox Racing and other acquisitions), sales were down 10% to $2.7 billion. In its fourth quarter, overall sales declined 8% to $741 million, while organically sales were down 19% to $654 million.
The company recorded a loss of $294 million in the quarter; however, the quarterly revenue was better than market expectations and the company’s stock surged about 17% in midday trading Thursday. The company said it is still on track to spin off its Outdoor Products division (which includes Action Sports) some time this calendar year. Its Sporting Products division, which includes its ammunition business, will be the remaining entity.
