By Tomi Kilgore, MarketWatch
Shares of Vista Outdoor Inc. plunged to record lows in active trade Thursday, after the guns-and-ammunition maker beat fiscal third-quarter profit expectations, but missed on sales and slashed its full-year outlook.
The stock /zigman2/quotes/205852373/composite VSTO -1.67% tumbled as much as 23% in intraday trade, before paring some losses to close down 19% at $20.95, the lowest closing price since it went public on Jan. 29, 2015.
Volume spiked to 10.1 million shares, which was more than six-times the full-day average over the past 30 days, according to FactSet data.
Vista’s share decline also weighed on rival gun makers American Outdoor Brands Corp. /zigman2/quotes/202273249/composite AOBC +1.72% , which was formerly known as Smith & Wesson Holding Corp. The shares shed 3.1% in afternoon trade, and hit a 13-month low of $19.27 in intraday trade.
Vista reported before the market opened a net loss of $377.7 million, or $6.44 a share, for the quarter to Jan. 1, compared with a profit of $43.2 million, or 70 cents a share, in the same period a year ago. Excluding nonrecurring items, such as asset-impairment charges, adjusted earnings per share came to 62 cents, which was above the FactSet consensus of 58 cents. Read more about how weak retail trends forced the company to record a “material” impairment charge to comply with accounting standards.
Revenue rose 10% to $653.6 million from $592.6 million, but missed the FactSet consensus of $671.3 million. Excluding $92 million in revenue from recent acquisitions, organic sales fell 5.2%.
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“The challenging retail environment we experienced in our first and second quarters worsened in our third quarter following a slow hunting season and the national elections,” said Chief Executive Mark DeYoung in a statement. “This resulted in the need for increased promotional activity to support sales and maintain market share.”
Vista now expects full fiscal-year adjusted EPS of $1.95 to $2.10 and revenue of $2.50 billion to $2.54 billion, compared with guidance provided in November of EPS of $2.72 to $2.78 and revenue of $2.65 billion to $2.85 billion.
Vista’s brands include Savage Arms firearms maker, Bushnell scop-and-binocular maker, Federal Premium ammunition maker and Camelbak outdoor-accessories manufacturer.
Analyst Rommel Dionisio at Wunderlich Securities slashed his stock price target by 25% to $30 from $40, as the “difficult hunting season” forced the company to cut prices. He reiterated his buy rating, however, saying he now believes the disappointing retail and promotional trends are now “largely discounted into the share price.”
The stock has plummeted 53% over the past 12 months, while American Outdoor Brands shares have lost 6.5% and the S&P 500 has gained 25%.