Smith & Wesson Brands ( NASDAQ: SWBI ) reported a sharp sales drop of 48% in FQ2 with firearm demand normalizing again after last year's spike. The company said consumer demand for firearms was significantly down from a year earlier, coinciding with a broader consumer slowdown driven by persistently high inflation, the beginning of the winter heating season across the northern half of the country, and rising interest rates.
The firearms manufacturer's gross margin plunged to 32.4% of sales vs. 44.3% a year ago. The gross margin rate was still higher than the 28.4% mark for the same quarter two years ago. Excluding relocation costs, gross margin would have been 33.9% for the quarter.
Non-GAAP Adjusted EBITDAS was $25.6M vs. $80.4M a year ago.
"While fiscal 2023 continues to be a year of recalibration and adjustment for our industry and Smith & Wesson, we expect to remain highly profitable and continue delivering on our commitments to customers, employees, and stockholders well into the future," stated CEP Mark Smith.
Shares of SWBI fell 6.95% after the earnings report dropped.
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Smith & Wesson Brands falls 7% after earnings disappoint