Vista to offload its cycling brands following damaging boycott movement

Vista Outdoors has announced that it will seek to sell off Giro, Bell and Blackburn following a damaging period for the brands in the wake of a Florida school shooting.

Calls were made to boycott the bike labels back in February, with Streetsblog writer Aaron Naperstek highlighting Vista’s part sponsorship of the National Rifle Association and PAC donations that fall behind politicians trying to privatise public land in Utah. The kickback online quickly grew to the point each brand had to issue a statement trying to distance themselves from such donations, which many deemed did not go far enough to addressing the problem.

The New York Stock Exchange listed parent company has announced in its first quarter results a strategic review and one where it will explore the disposal of brands that are not part of the firm’s core focus.

“Our review identified product categories that are core to the company’s long-term business strategy,” said Vista Outdoor Chief Executive Officer Chris Metz. “We believe future investment should focus on categories where Vista Outdoor can achieve sustainable growth, maximize operational efficiencies, deliver leadership economics, and drive shareholder value.”

In conducting the strategic review, Vista Outdoor management defined several criteria to evaluate whether individual product categories are part of the company’s core. Vista Outdoor evaluated brands within its current portfolio based on their ability to do the following:

  • Serve the company’s target consumer – the outdoor enthusiast
  • Create cross-selling and other similar synergy opportunities
  • Achieve market leading positions and leadership economics
  • Demonstrate omni-channel distribution capabilities

“Vista Outdoor is excited about the potential of each of our core businesses, particularly ammunition, which is our largest core business.” said Metz. “An increased focus on our heritage ammunition business will manifest itself in more innovative and breakthrough new products introduced over the next few years. We also anticipate that by prioritizing this business, we will be able to invest more capital to further enhance and expand our global leadership position.”

Furthermore, the financial results for the full year ended March 31st, 2018 were presented.

For the fiscal year, sales were down 9% to $2.3 billion. Gross profit fell 22% over the year prior to $521 million.

Fourth quarter sales declined by 1% to $571 million like-for-like. Gross profit declined by 24% to $109 million, primarily impacted by ammunition pricing and rebates in the shooting segment.

“We completed a strong fourth quarter,” said Metz. “For the second consecutive quarter, the company delivered sales and free cash flow above, and EPS within, our Fiscal Year 2018 guidance range. For the year, we generated in excess of $200 million of free cash flow, allowing us to pay down $206 million of debt. Importantly, we are beginning to see evidence that the market for our shooting sports and related outdoor products is leveling out, and we anticipate a return to growth in the second half of our Fiscal Year 2019.”

On the outlook for 2019, Metz expects high pressure on the business and will move to reduce costs and increase prices as a result.

“Fiscal Year 2019 will be an inflection point for our business, and our financial guidance reflects this reality,” said Metz. “Increased commodity costs and lower volume will pressure both segments in the first half, and higher interest expense and unfavorable tax rate will pressure earnings for the full year. In response to these challenges, the company has taken several cost reduction actions and initiated targeted price increases, and we anticipate further actions if commodity pressures do not abate. As we move through the year, we anticipate sequential, quarter-over-quarter improvements in our gross profit percentages as a result of our actions. Our strategic transformation into a consumer-focused, less complex, and more agile business will position us to unlock the true value of Vista Outdoor and its market-leading brands.”