Smith & Wesson Brands ( NASDAQ: SWBI ) reported a sales drop of 69% in FQ1 in what the company called a return to a normal demand pattern for the retail firearms business. Temporary headwinds from inventory corrections within the channel also factored into the weak quarterly results.
Gross margin was 37.3% vs 47.3% a year ago and 37.3% in the comparable quarter two years ago. Excluding relocation costs, gross margin would have been 38.8% for the quarter.
Adjusted EBITDA came in at $15.7M vs. $109.6M a year ago.
CEO outlook: "With a pickup in order rates over the past few weeks and a significant drop in unit inventory levels within the channel, we believe the inventory correction should now largely be in the rearview mirror. We continue to expect strong profitability over the remainder of the year aided by our disciplined approach to cost control and promotional spending."
Shares of SWBI fell 10.65% in after-hours trading to $11.77 following the earnings miss .
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Smith & Wesson slides 11% after weak demand leads to earnings miss