Recreational products manufacturer American Outdoor Brands (NASDAQ: AOUT) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 28.7% year on year to $29.7 million. Its non-GAAP loss of $0.26 per share was 4% below analysts’ consensus estimates.

Is now the time to buy AOUT? Find out in our full research report (it’s free).

StockStory’s Take

American Outdoor Brands faced a challenging Q2 as revenue and adjusted earnings both fell short of Wall Street expectations, prompting a sharp market reaction. Management attributed the shortfall to shifting retailer order patterns, as partners accelerated purchases into the prior quarter to avoid tariff-related price increases. CEO Brian Daniel Murphy described the environment as one of “evolving tariff impacts, shifting retailer order patterns, and broader macroeconomic uncertainty,” noting that while point-of-sale performance remained strong for key brands, the timing of shipments weighed on reported results.

Looking forward, American Outdoor Brands is focused on navigating continued volatility in retailer inventory strategies and evolving tariff policies. Management expects a measured cadence in retailer orders to persist, with CFO H. Andrew Fulmer highlighting that “the outlook for the health of the consumer is an important unknown as we move toward the upcoming holiday season.” The company is prioritizing product innovation, cost controls, and supply chain flexibility while closely monitoring macroeconomic factors that could influence consumer demand and margins.

Key Insights from Management’s Remarks

Management cited retailer inventory strategies, tariff shifts, and product innovation as the main influences on Q2 performance and future outlook.

• Tariff-driven retailer behavior: Retail partners accelerated orders late last quarter to avoid anticipated tariff increases, leading to a drop in Q2 shipments but supporting strong point-of-sale sales for leading brands.
• E-commerce softness: The e-commerce channel underperformed due to a major online retailer adjusting its purchasing strategy in response to tariffs, resulting in a 35% year-over-year decline for that channel.
• Supply chain and margin management: The company shifted some production outside of China and secured supplier concessions to offset tariff impacts. Management emphasized ongoing efforts to maintain product quality and margin preservation amid shifting costs.
• Innovation and new product contributions: New products accounted for nearly 29% of net sales, with recent launches like the Caldwell Claycopter and Bubba SmartFish Scale Lite supporting retail momentum. Management is leveraging innovation to introduce higher-margin offerings and sustain consumer interest.
• International and segment trends: Sales to Canada and other international markets declined sharply due to trade concerns and broader macro trends, while shooting sports and outdoor lifestyle categories both faced year-over-year declines, reflecting broader industry pressures.

Drivers of Future Performance

Management expects near-term results to be driven by continued retailer caution, evolving tariff impacts, and a disciplined approach to product launches and cost control.

• Retailer inventory strategies: Management anticipates that retailer partners will continue to order cautiously, balancing inventory, pricing, and evolving consumer demand. This measured approach is expected to persist until there is more clarity on tariffs and macroeconomic conditions.
• Tariff and sourcing uncertainty: The company is actively diversifying its supply chain and adjusting pricing to mitigate tariff risks. Management highlighted that further shifts in sourcing or tariff rates could affect both costs and margins, with flexibility remaining a key priority.
• Product innovation pipeline: Continued investment in new product development is expected to drive higher-margin sales and recurring revenue streams, especially through initiatives like the Bubba-Major League Fishing partnership and the integration of hardware/app technology. Management views new launches as critical for offsetting external pressures.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will closely monitor (1) the normalization of retailer order patterns as tariff and inventory headwinds subside, (2) the scalability and adoption of new products and digital features like ScoreTracker Live, and (3) the effectiveness of supply chain realignment in preserving margins. Progress in recurring revenue initiatives and international market stabilization will also be key markers.

American Outdoor Brands currently trades at $8.48, down from $10.39 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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