Smith & Wesson Brands' (SWBI -0.38%) experiment in diversifying into outdoor gear and accessories is officially over after the legendary gunmaker completed its spinoff of American Outdoor Brands.

Housing respected brands such as Crimson Trace, Tipton, and Schrade, the company's stock will begin trading Tuesday on the Nasdaq exchange under the ticker symbol AOUT.

Father and son sitting in tent

Image source: Getty Images.

Rethinking its direction

The gunmaker sought to smooth out the boom-bust nature associated with its firearms business by building an equipment and accessories division focused on the rugged outdoors market, going so far as to even change its name to American Outdoor Brands to reflect this new strategy.

With the industry estimated to be orders of magnitude larger than firearms at $35 billion, the new business promised a path to supplemental growth for the firearms manufacturer.

Yet despite accounting for 25% of Smith & Wesson's revenue as it acquired a bevy of businesses to build out the segment, the outdoor gear business failed to expand as quickly as anticipated, likely due to the company being a very small player in a market with numerous and sometimes much larger competitors.

Smith & Wesson estimated the new American Outdoor Brands will have between $200 million and $210 million in annual revenue and generate anywhere from $25 million to $30 million in earnings before interest, taxes, depreciation, amortization, and stock-based compensation.

Investors of Smith & Wesson Brands stock on Aug. 10 received one share of American Outdoor Brands for every four shares of the gunmaker's stock they owned, with the spinoff structured to qualify as a tax-free distribution for federal income tax purposes.