Shares of Vista Outdoor Inc. (NYSE:VSTO) plunged a whopping 31.1% in November, according to data provided by S&P Global Market Intelligence, after reporting a disappointing loss for the fiscal second quarter.
Quarterly results weren't bad on the surface, but they included some shocking numbers. Quarterly revenue was down 14.2% to $587.3 million and adjusted earnings of $0.34 actually beat expectations. But a $152.3 million impairment of goodwill and intangible assets resulted in a $114.7 million, or $2.01 per share, loss for the quarter on a GAAP basis.
What really caught investors attention was guidance that sales for the full year are expected to be $2.24 billion to $2.26 billion, lower than previous guidance of $2.39 billion. That shows a worse than expected deterioration in the business and it's not surprising that shares reacted negatively.
Spending on outdoor sports activities, particularly gun-related products, are lower this year partly due to a less threatening political environment. It may seem counterintuitive, but people just spend less money on guns and ammunition when gun policy is favorable in the U.S. and that's hurting gun-related stocks. The weak results show a much wider decline in spending, which is a concern and I don't see a quick recovery on the horizon.