Fear & Loading: Evolving Market Landscape

by
posted on August 16, 2017
bushnell_engage.jpg

Shown: Bushnell Engage binocular

Vista Outdoor
 issued its first quarter of fiscal year 2018 report on Aug. 10, and the figures confirm the “new norm” in consumer purchases of firearms, accessories and ammunition. Despite sales down 10 percent from the previous year, however, “We are pleased with our performance in the quarter," said Vista Outdoor Chief Financial Officer Stephen Nolan. "Our working capital reduction efforts are delivering results, with strong cash performance in a quarter when traditionally the company has had a net cash use.”

One of the reasons the company continues to thrive is because it recognized a slowdown was approaching and responded with the business acumen you expect from a publicly traded firm. “Operating expenses were $107 million, compared to $112 million in the prior-year quarter,” the report explains.  

Streamlining overhead is painful, but Vista’s approach isn’t random budget slashing. Operational efficiency was apparently inspected closely, as evidenced by the plant opened recently in Lewiston, Idaho.

CCI and Federal’s 37,000-square foot facility is already producing .22 rimfires, which is good news for shooters, but probably even better for investors in Vista Outdoor. The system in place churns out fodder faster than the old one and minimizes expensive backlogs/stocks of material that can accumulate during the manufacturing process or when an unexpected market slowdown arrives.

That “inventory,” whether raw materials or completed cartridges, ties up critical funds. Minimizing that cash-flow paralysis maximizes the chances of a firm surviving a market’s peaks and valleys. Efficiency has always been key, but in an industry steeped in tradition, oftentimes overlooked.

And consumers have changed their spending habits. In a conference call last month, Michael Callahan, interim chairman and CEO of Vista Outdoor, said, “The market, as you know, is really evolving right now. I'm not sure I'd call it an apocalypse, but certainly the retail market is in a turmoil. What we're seeing and what a lot of companies have to do is adapt now to how consumers want to shop and where they want to shop.”

With Sports Authority and other large retailers gone—historically big outlets for the diverse array of products Vista’s firms produce—the company is rethinking its approach to reaching purchasers. Websites selling direct to consumers, according to comments made during that analyst’s call, are going to be a component in the future.

Whether that’s true for ammo and accessories has yet to be seen, but there’s no doubt the return to a “new norm,” has started an evolution of thinking for most companies in the industry.    

Latest

Review Heritage Roscoe
Review Heritage Roscoe

Review: Heritage Mfg. Roscoe

Heritage Mfg. is known for its line of Old West-style firearms, but with its new Roscoe revolver, based on Taurus' Model 85, the brand steps into the world of old-school detective work.

New For 2024: Hi-Point Firearms YC380

Hi-Point Firearms is expanding its next-generation "YEET Cannon" line of firearms with YC380 chambered for .380 ACP.

Preview: Winchester Gun Cabinet 18

Steel cabinets like the Winchester Safes GC18 bridge the gap between old wooden gun cabinets that take only seconds for a motivated thief to break into and huge safes that require heavy equipment to move, while also being relatively economical.

The Armed Citizen® July 19, 2024

Read today's "The Armed Citizen" entry for real stories of law-abiding citizens, past and present, who used their firearms to save lives.

Gun Of The Week: Military Armament Corp. MAC 2 Tactical Wood

Watch American Rifleman editors on the range to learn about the MAC 2 Tactical Wood, a semi-automatic shotgun from Military Armament Corporation.

The Flintlock Pocket Pistol: Georgian England's Micro-Compact

The concept of concealed carry is not a modern phenomenon, as evidenced by these flintlock "turn-off" pocket pistols, which were hugely popular at the end of the 18th century.

Interests



Get the best of American Rifleman delivered to your inbox.