Clarus (CLAR -12.36%), a maker of outdoor equipment and adventure gear best known for its Black Diamond, Rhino-Rack, and other specialty brands, released its second quarter 2025 earnings on July 31, 2025. The most notable news: Clarus posted an adjusted net loss per share of $(0.03) for Q2 2025, a narrower non-GAAP loss than analysts had expected, and revenue (GAAP) of $55.2 million, topping the consensus by 3.2 %. While revenue (GAAP) was down compared to the prior year period, both revenue (GAAP) and adjusted earnings (non-GAAP) outperformed expectations. Despite these bright spots, profitability remains pressured and management withdrew full-year guidance, signaling ongoing uncertainty driven by persistent demand headwinds and new tariff risks. The overall assessment of the period is mixed: operational improvements are evident, yet sustainable profitability remains elusive amid ongoing industry and macroeconomic pressures.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $(0.03) | $(0.12) | $(0.03) | $(0.00) |
| Revenue (GAAP) | $55.2 million | $53.5 million | $56.5 million | (2.3 %) |
| EPS (GAAP) | $(0.22) | $(0.14) | (57.1 %) | |
| Adjusted Gross Margin | 36.5 % | 37.4 % | (0.9 pp) | |
| Adjusted EBITDA | $(2.1 million) | $(1.9 million) | (10.5 %) |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Recent Strategic Focus
Clarus designs and sells equipment and accessories for outdoor, adventure, and overlanding activities. Its brand portfolio includes technical gear such as climbing hardware, mountaineering apparel, and vehicle roof racks. The company operates mainly in two segments: Outdoor and Adventure.
Recent business efforts have concentrated on streamlining operations, simplifying its product lineup, and focusing on higher-profit and faster-moving products. Central to its strategy are product innovation, inventory and channel rationalization, and targeted investment in core brands. Past acquisitions such as Rhino-Rack and RockyMounts expanded distribution in key categories like vehicle racks and recovery gear. Clarus’s key success factors are consistent brand innovation, disciplined cost management, and adapting quickly to shifts in consumer trends and trade policy.
Quarter Highlights: Segment Performance and Operational Actions
The period showed mixed results across Clarus’s business lines. Revenue in the Outdoor segment, which covers climbing hardware, headlamps, and mountaineering apparel, rose modestly by 1 % to $36.7 million. This increase was mainly due to a shift in sales timing for international distributor goods, with pre-orders for fall/winter rising 50 % in the US for the fall/winter 2025 order book Apparel is now approaching one-quarter of segment sales. However, this growth in the Outdoor segment was partially offset by declines in the direct-to-consumer channel in North America and Europe.
The Adventure segment, which offers products for vehicle-based outdoor travel such as roof racks and bike racks, saw revenue fall 8 % to $18.6 million. The decline reflected lower demand from global original equipment manufacturers (OEMs) and a challenging wholesale environment for Rhino-Rack in Australia. The acquisition of RockyMounts, a US-based specialty bike rack company, provided some lift in US sales and expanded distribution doors from 300 to 800, but promotional sales and softness at key accounts continued to drag on results.
Gross margin (adjusted, non-GAAP) narrowed to 36.5 % from the prior year’s 37.4 %, as more promotional activity and an unfavorable product mix—especially in Adventure—put pressure on profitability. Outdoor delivered higher volumes and benefited from more favorable product mix, but that was not enough to offset headwinds in Adventure. Adjusted EBITDA, a measure of earnings before interest, taxes, depreciation, and amortization, slipped to a loss of $2.1 million, with adjusted EBITDA margins deteriorating further into negative territory
Corporate cost controls advanced, with selling, general, and administrative expenses falling to $26.9 million, about 4 % below the same period last year. Management credited lower employee and marketing costs and ongoing expense reduction initiatives. The company also completed the divestiture of its PIEPS snow safety brand just after Q2 2025, for approximately $9.1 million, part of its strategy to streamline the portfolio and focus on better-performing businesses. Inventory levels rose to $91.5 million as of June 30, 2025, up from $82.3 million as of December 31, 2024, but management said inventory rationalization and clearance of discontinued products remain priorities.
Looking Ahead: Guidance, Cash, and Key Watch Points
Management withdrew previous financial guidance for fiscal 2025, citing continued uncertainty around consumer demand and the impact of tariffs. There was no firm outlook issued for revenue, earnings, or cash flow. The company said tariff-related cost increases have been partially offset through price increases at Black Diamond, but 25 % of merchandise still comes from China and will be transitioned away over the next six to nine months.
The Adventure segment is less exposed to US tariffs, as over 80 % of sales are from outside the United States, based on FY2024 revenue, yet channel changes and soft international demand are ongoing concerns. Free cash flow was negative for the period and cash on hand fell to $28.5 million at quarter-end, although PIEPS sale proceeds will add roughly $9.1 million post-Q2 2025. Debt remains minimal at $1.9 million.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
