| SAN FRANCISCO
SAN FRANCISCO May 11 Shares of Vista Outdoor
Inc rose on Thursday after the company said high retail
inventories of its guns and ammunition should normalize by
mid-year following an "unprecedented" drop in demand after the
election of Donald Trump as president.
Vista Outdoor gave a full-year outlook that was shy of
analysts' average expectations, but some on Wall Street took the
overall report as the latest hint that a slump in gun sales
might be stabilizing.
Its stock rose 1.7 percent, while Smith & Wesson's owner,
American Outdoor Brands Corp, gained 1.5 percent. Sturm
Ruger & Company dipped 1.5 percent, but it remains up 10
percent from Monday, when it reported a lower-than-expected
decline in March-quarter revenue.
The November election of Republican Trump, who opposes
regulations on gun ownership, abruptly undercut demand for guns
as people became less worried the government would curtail their
ability to purchase firearms.
Vista Outdoor said in a press release it expects inventories
at retailers caught out by the drop in demand to stabilize by
the middle of its fiscal year, although it also said it expects
weakness to continue beyond then. Vista Outdoor's fiscal year
ends in March.
"A lot of investors are encouraged by that," said Wunderlich
analyst Rommel Dionisio, who recommends buying Vista Outdoor.
Recent data on firearm background checks also hints at
stabilization. After a sharp post-election drop, background
checks in April were flat compared with April 2016, according to
the National Shooting Sports Foundation.
Data on background checks is collected by the Federal Bureau
of Investigation and the NSSF adjusts it to remove checks for
conceal-carry permits so that it better reflects actual gun
In addition to guns and ammunition, Vista Outdoor sells
archery gear, bicycle helmets, scopes and other sports products.
It has been slammed by a wave of retail bankruptcies, including
those of Sports Authority and Gander Mountain, which sold many
of its products. Its stock remains down 55 percent in 2017.
Vista Outdoor reported March-quarter revenue down 5 percent
at $579 million and adjusted earnings per share of 3 cents. A
write-off of receivables from a bankrupt retail customer knocked
18 cents off Vista Outdoor's EPS.
It forecast full-year revenue of $2.36 billion to $2.42
billion. Analysts on average had estimated $2.42 billion.
(Reporting by Noel Randewich; Editing by Dan Grebler)