Shares of outdoor-sports (and guns-and-ammo) enthusiast Vista Outdoor (NYSE:VSTO) plunged as much as 22.5% in Wall Street trading today, as of noon EST.
Blame earnings season for the blow-up. This morning, Vista reported fiscal third-quarter earnings after missing hugely on sales, and giving poor guidance for the rest of this year.
As Vista explained, "organic" sales for the quarter were down 5% year over year, while total sales (including from businesses recently acquired) grew 10% to $654 million. Gross profits on these sales were roughly flat, but the company recorded a $449 million asset impairment charge in its hunting and shooting accessories unit due to "a challenging retail environment" and "a slow hunting season" that led to both "increased promotional activity to support sales and maintain market share," and -- when that apparently failed -- to "increased inventory in our retail and wholesale channels." (Subtext: better look out, American Outdoor Brands (NASDAQ:AOBC) and Sturm, Ruger (NYSE:RGR) investors!) This charge cratered Vista's operating and net profit margins.
When all was said and done, Vista ended the quarter with a $6.44-per-share loss on the bottom line (much worse than last year's $0.70-per-share profit). Additionally, even if you don't count the impairment charge, Vista managed to earn 12% less profit ($0.62 pro forma) despite growing its sales 10%.
The bad news didn't end there. On top of the miserable Q3 results, Vista updated its guidance through the final quarter of its fiscal year 2017. As of today, management expects to lose as much as $4.57 per share (thanks mainly to the Q3 charge) this year, on $2.5 billion to $2.54 billion in sales. These results, assuming they come to pass, will fall far short of Wall Street's expectations for $2.40 per share in profit on nearly $2.7 billion in sales.
And voila: There's your reason for the sell-off.
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