MARYVILLE, Tennessee - Smith & Wesson Brands, Inc. (NASDAQ:SWBI) saw its shares tumble 15% after the firearms manufacturer reported second-quarter earnings that missed analyst expectations and provided a reduced outlook for the second half of fiscal 2025.
The company posted adjusted earnings per share of $0.11 for the quarter ended October 31, falling short of the $0.17 consensus estimate. Revenue came in at $129.7 million, slightly below analysts' projections of $132.42 million, but up 3.8% YoY.
Smith & Wesson cited normalizing demand and inflationary pressures impacting consumer discretionary spending as key factors behind the weaker-than-expected results. The company now anticipates third-quarter revenue to be approximately 10-15% lower than the same period last fiscal year.
"Second quarter results came in below our expectations as overall demand for firearms normalized late in the quarter," said CEO Mark Smith. "We believe that the primary driver of the demand pressure continued to be inflation."
Despite the headwinds, Smith & Wesson reported gaining market share, with new products representing 44% of sales in the quarter. Gross margin improved to 26.6% from 25.4% in the year-ago period.
The company's board authorized a new $50 million share repurchase program and maintained its quarterly dividend of $0.13 per share. Additionally, Smith & Wesson secured a new $175 million unsecured credit line, increasing its total available borrowings by $75 million.
The disappointing results and outlook prompted downgrades from Lake Street Capital Markets and Craig-Hallum, contributing to the sharp stock decline.
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