What happened

Shares of Vista Outdoor (NYSE:VSTO) traded down more than 20% on Thursday after the maker of outdoor recreation equipment reported a worse-than-expected quarterly loss and lowered its full-year outlook. It's a time of transition for the company, which only recently divested its firearm business, but investors don't seem interested in waiting around to see how the turnaround plays out.

So what

Vista Outdoor on Thursday morning reported a fiscal first quarter loss of $0.08 per share on revenue of $459.77 million, falling short of analyst expectations for a $0.06 loss on sales of $464 million. Revenue was down 13% from the prior-year period, and gross profit was down 16% year over year.

A backpack and hiking poles sitting in a mountainous landscape

Image source: Getty Images.

Following the divestitures, Vista owns a portfolio of about 50 brands including Bell, Bushnell, CamelBak, Giro, and Camp Chef that span bicycling, camping, and hiking, but CEO Chris Metz said in a statement that the company "continued to see softness and challenges in our markets."

With the firearms business now out of the way, the company reset its estimates for the full year. Vista Outdoor said it expects full-year fiscal 2020 earnings of between $0.10 to $0.25 per share, down from a range of between $0.28 and $0.38 per share, and cut its revenue guidance to $1.79 billion to $1.89 billion from $1.94 billion to $2.03 billion. Analysts were expecting something of a cut, with the consensus estimate going into the release calling for $0.20 per share in earnings on $1.85 billion in sales.

Now what

There was some good news in the release. The sale of the firearm division allowed Vista Outdoor to cut its debt by $150 million, bringing the total long-term debt balance down to about $590 million. That's down nearly 50% from the company's peak long-term debt balance of $1.176 billion.

In the statement, Metz called the divestitures "the first phase of Vista Outdoor's turnaround," adding, "I remain confident in our plan to restore our brands to greatness."

Prior to the firearm divestiture, Vista Outdoor was caught up in the national debate on gun control, with retailers including REI last year announcing it would cease buying from Vista following the Parkland school shooting. Vista Outdoor now has a clean slate to pursue new business. But if the results announced on Thursday are any indication, the company has a tough climb ahead of it.