The new leadership team at Black Diamond Equipment continues to make progress in restructuring the brand with the goal of having a smaller, more profitable business that focuses on the highest volume and highest margin styles.
Those initiatives paid off during the third quarter ended Sept. 30, with the brand’s adjusted EBITDA up 25%, while revenue dropped 19% to $49.3 million.
Black Diamond’s North American wholesale sales declined 22%, while North American digital DTC fell 4.4%. In Europe, which is run in-house by Black Diamond, wholesale sales declined 8.1%, while DTC sales rose 11.9%.
Sales in the international distributor markets fell 29.2% and are still correcting from overbought inventories, Black Diamond Equipment President Neil Fiske said.
Black Diamond also made progress on reducing its inventory levels and is on track to reach the low $60 million range by the end of the year, compared to $70 million at the same point last year. Importantly, the quality of the inventory is better, with about 70% comprised of “A” styles, executives said.
Black Diamond’s Full-Year Revenue Forecast
For the full year, Black Diamond is forecasting revenue of $185 million – about $20 million less than the previous year.
Breaking that down further, Black Diamond expects $30 million less in revenue for the full year from its “C” and “D” styles, which will be offset by $10 million in higher revenue from its “A” styles.
“This is intentional and a result of our simplification strategy as we lean into our best products for our best customers,” said Michael Yates, CFO of parent company Clarus Corp., on an earnings conference call Thursday afternoon.
Black Diamond is being cautious about the outlook for 2025, but can react if outdoor market conditions improve.
“We have the ability to respond to a market rebound based on the quality of our inventory position and a stronger operating platform,” Fiske said. “Let me reiterate. The core of the business is much healthier now and capable of delivering double-digit EBITDA margins even without top-line growth.
“That said, we are confident that our growth initiatives in product channels, marketing, and geographies positions Black Diamond for a return to growth as the market stabilizes,” Fiske said.
Clarus Corp. Q3 Results
Total company revenue dropped 17% to $67.1 million.
Gross margin was 35%, compared to 33.6% in the same period last year.
Loss from continuing operations was $3.2 million, compared to a net loss of $2.2 million in the same period last year..
The outdoor business has successfully simplified its operating model to improve profitability and is meeting internal financial targets this year. However, the plan to scale the company’s Adventure segment, which includes brands that make overlanding products for vehicles, to a global footprint is a work in progress.
The Adventure division’s Q3 revenue totaled $17.8 million, a 12% drop compared to the same period last year, coming in short of projections.
Softness in Adventure – which is now expecting $78 million in full-year revenue, down from the $90 million previously planned – was a big factor in Clarus taking down its full-year guidance.
Total Clarus company revenue should range from $260 million to $266 million, down from the previous outlook of $270 million to $280 million.
Clarus Bullish on Black Diamond’s Future
Overall, Clarus executives sounded happy with the profitability improvement in Black Diamond due to the scaled down product offering and other operational improvements, and optimistic about the potential for future growth when the outdoor market rebounds.
“Service levels and fill rates have improved substantially, and much more positive feedback from our retail partners reflects all the progress we’ve made,” Fiske said. “We will enter 2025 with most of the heavy lifting behind us and with a much healthier business from which we can start to grow.”
