What happened

Shares of American Outdoor Brands (NASDAQ:AOBC) -- formerly known as Smith & Wesson -- crashed in early Friday trading after the gunsmith reported a small per-share loss for its fiscal first-quarter 2018. As of 11 a.m. EDT, the stock was down a good 15.5%.

So what

First-quarter sales plunged 37.7% at American Outdoor Brands, landing with a thump at $129 million. Gross margins fell off a cliff, down an astounding 1,080 basis points to 31.5%. Given the magnitude of these declines, the fact that American Outdoor lost only $0.04 per share almost comes as a relief.

Almost. Four cents still is a pretty big letdown when compared to the $0.62 per share in profit that American Outdoor Brands earned in Q1 of last year. Moreover, analysts had been telling investors to expect no worse than a dip to an $0.11 (pro forma) profit this quarter. Excluding so-called one-time charges, American Outdoor Brands says its pro forma profit for the quarter was only $0.02.

A man pressing a revolver against his shoe as if to shoot it

American Outdoor Brands' earnings were already pretty bad -- and then management guidance shot it in the foot. Image source: Getty Images.

Now what

In a nutshell, this is why American Outdoor Brands stock is down so much: The stock "missed earnings," and it lost money, too. And the news isn't likely to get much better anytime soon.

Compounding the bad news with a gloomy forecast, American Outdoor Brands management warned investors to expect no more than a nickel-a-share in GAAP profit this current quarter ($0.12 per share, pro forma) and quite possibly less than that. For the full year, it expects GAAP earnings to range between $0.77 and $0.97 per share, with pro forma profits of somewhere between $1.04 and $1.24. Meanwhile, Wall Street had been telling investors to expect $1.54 in pro forma profits this year.

If you were hoping for good news out of American Outdoor Brands last quarter, you were disappointed today -- and can expect to receive more disappointment for the rest of this year as well.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.