Black Diamond Equipment saw strong international and direct-to-consumer e-commerce sales growth in the first quarter ended March 31. However, the continued weak wholesale market in North America weighed down overall results, according to parent company Clarus Corp.
“In North America, we are seeing a soft wholesale market continue to settle into a new normal post-pandemic as retailers work off a backlog of inventory and consumer spending trends toward the middle of the range between pre-pandemic levels and the sharp demand spike in outdoor categories during the COVID period,” Clarus EVP and COO Aaron Kuehne said on a conference call with analysts Tuesday.
The long winter in the region has also meant delays in spring and summer deliveries as retailers push back orders.
Clarus does not break out revenue for Black Diamond, but said revenue in Clarus’ outdoor segment, which is mostly comprised of Black Diamond, totaled $52.8 million, a 5% increase in constant currency.
Clarus did not say how much North American sales declined for Black Diamond. But it did detail some positives for the brand, including:
- Europe sales rose 26%
- International distributor sales rose 35%
- E-commerce sales increased 28%
- DTC store comps lifted 13%
- Apparel and lifestyle sales jumped 50%.
Despite the challenges in the North American wholesale market, Clarus executives remain bullish on the outdoor industry overall.
“We believe the long-term trends continue to favor the outdoor industry, even as the market settles to a new normal post-pandemic,” Kuehne said.
Outdoor Specialty Channel Strong – Larger Chains the Issue
Some channels are not having as much of the inventory overhang issue, however.
“Specialty guys are faring fairly well,” Kuehne said in response to a question from an analyst. “Specialty was a strong driver for us – it performed really well in the back half of the year. Those guys continue to be extremely prudent in terms of how they manage their inventory levels. We anticipate we’ll continue to see strong performance at the specialty level.”
The main channel that is having problems is larger retail accounts that are not publicly traded. The issue is constrained open-to-buy budgets as retailers’ cash is tied up in excess inventory.
‘That’s really where we’ve seen the negative impact over the last quarter, but really for the last six to nine months,” Kuehne said.
After the continued wholesale challenges in North America during Q1, Clarus is taking a conservative outlook in coming quarters.
Big Plans Under New Brand President Neil Fiske
New Black Diamond Brand President Neil Fiske has been on the job three months, and is working on his long-term plan for the brand, according to Clarus Executive Chairman Warren Kanders.
“I’m very excited about how Neil’s thinking about the business,” Kanders said on the call. “There’s going to be a focus on those areas that we feel can grow at a more rapid pace. …Some of those would be apparel, and Neil’s background speaks to that, and also trekking poles, lighting products, packs, etc.”
Black Diamond, based in Salt Lake City, has been expanding its leadership team under Fiske, including hiring Heath Christensen as vice president of sales for North America to rebuild and refine the go-to-market strategy in the region.
In addition, Black Diamond plans to make strategic investments in areas such as product innovation, marketing, digital, and international.
Clarus Corp. Q1 Financial Results
Net sales: $97.4 million, down 14%. In constant currency, sales dropped 12%.
Gross margin: Fell to 37.0% vs. 39.1% in the same period last year.
Net income: Declined 70% to $1.6 million.
Stronger Second Half vs. First Half
Company-wide, Clarus reiterated its guidance for $420 million in annual revenue this fiscal year.
Clarus expects $92 million in sales for the second quarter. That would mean first half revenue should total $190 million, while the second half would reach $230 million.
“Our success in achieving that is really dependent upon us seeing some improvement in North American wholesale,” CFO Michael Yates said.