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Vista Outdoor: Cabela’s-Bass Pro merger spurring uncertainty

This article was originally posted on Guns.com

Vista Outdoor told investors last week the complexities of Bass Pro Shops acquiring Cabela’s leaves some uncertainty in its wake, but stopped short of tying the merger to the company’s dismal third quarter results.

CEO Chris Metz said Thursday the acquisition spurred “a little bit of contraction” in sales during Vista’s third quarter ending Dec. 31.

“They’ve got a challenging merger on their hands,” he said. “They are working as diligently as they can to make one plus one equals three.”

Bass Pro finalized a $5 billion deal to buy Nebraska-based Cabela’s in September. Details regarding how the retailer will consolidate its administrative workforce at Bass Pro’s Missouri headquarters remain scarce, though CEO Johnny Morris has encouraged former Cabela’s executives to help fund severance packages for the hundreds of employees on the verge of unemployment. So far, none of the 89 Cabela’s stores will close.

“The flipside of that (merger) is for folks like us that serve them it just a period of uncertainty and not quite the order pattern we’re used to,” Metz said.

Vista owns more than three dozen companies in firearms, ammunition and shooting accessories, including Savage Arms, Stevens, Federal Premium, Speer and American Eagle. It also holds brands in the outdoor lifestyle market.

After three “challenging” quarters, however, Vista detailed plans for a price increase on some of its ammo products in April. The company quietly upped prices in January, according to Metz.

“We are putting forward price increases that we think are realistic and so far what we’ve seen from buying behavior is no real changes,” he said. “So they’re restricting in the marketplace and they are being received well.”

Vista’s third quarter sales topped $581 million, dipping 11 percent over last year as weak shooting sports performance drags down its gains in the outdoor market, Metz said.

Shooting sports sales dropped 21 percent while the category’s gross profit tanked 47 percent, according to regulatory filings.

Still, Metz expressed little concern about the impact of price increases on consumer demand or Vista’s bottom line. He believes competitors will soon follow suit.

“I think some are a little bit slower to it than we’d like to see,” he said. “It’s impossible for me to see how competitors are not going to take price increases. They’re going to have to.”

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