Word yesterday that Vista Outdoor (NYSE: VSTO) has completed another phase of the reformation plan announced in late 2017.
This time, it’s the sale of their eyewear holdings. According to a release you can read in today’s news section, the “legal entities” operating the Bolle’ Cebe’ and Serengeti eyewear brand are now the property of “an entity controlled by a significant European private equity firm” (can’t help you with this, no one’s talking on either side of the pond).
Ultimately, whomever the players behind the “entity” curtains are, what this transaction means is Vista gets out of the eyewear business and adds approximately $154 million to their capital funds.
It also means Vista can move on to the next phase of its “transformation plan” -and continue to seek buyers for brands outside their core markets of “ammunition, hunting and shooting accessories, hydration bottles and pack, and outdoor cooking products.”
And it’s worth noting - even a few days after the fact- that another of the industry’s major players, American Outdoor Brands (a/k/a Smith & Wesson) reported a very good first quarter for fiscal year 2019. AOB reported net sales of $138.8 million for the first quarter, an increase of $9+ million (7.6 percent) over the same period in 2018. That increase also included a jump in gross margin to 37.8% - a big jump from the 31.5% in Q1 2018.
Those improvements, according to AOB’s James Debney, came from “new products, reduced promotion versus the previous year,” and “solid progress on expense reduction initiatives.”
Debney credited new product introductions across the company’s diverse holdings, but singled out their M&P Shield 380 EZ pistol sales as one of their most successful introductions. But the best news might be the fact the company’s beefed up its balance sheet by reducing debt from nearly $200 million in 2018 to $135.9 million today. According to CFO Jeff Buchanan, AOB paid their line of credit down to zero in the quarter-leaving them with an unused $350 million line that’s expandable to $500 million.
There’s another interesting retail tidbit today. Seems Black Diamond, a higher-end skiing and mountain climbing equipment company, is very much displeased with WalMart. The “retail beast from Bentonville” has been buying up other companies, apparently in an effort to “upscale” some of their offerings.
Included in those acquisitions was Moosejaw, a retailer that sells Black Diamond products. And that’s where the wicket gets sticky. Buying a retailer is different from buying a brand or manufacturer (like Bonobos- a men’s brand analysts describe as “slightly more upscale” than typical Walmart offerings).
Black Diamond sells products to Moosejaw- but has gone into conniptions over Walmart’s apparent use of Moosejaw to augment the walmart.com offerings ala the “Premium Outdoor Store Created by Moosejaw” on the walmart.com website.
So…Black Diamond has sent a cease-and-desist letter to Walmart, telling the retail giant to “cease and desist use of the Black Diamond® and diamond logo trademarks in a manner likely to confuse consumers into believing that Walmart is an authorized dealer of Black Diamond or that the new outdoor Walmart.com site is otherwise associated with or sponsored by Black Diamond.”
Black Diamond’s position is simple: buying a retailer doesn’t guarantee you official distribution or retail rights to their products across your other properties. It’s significant story because Black Diamond’s position seems justifiable - and it has the potential to impact the idea of corporations changing product mixes and retail positioning via acquisition.
As always, we’ll keep you posted.
—Jim Shepherd
