Smith & Wesson shares plunge on weak outlook, Q2 earnings miss

MARYVILLE, Tennessee – Smith & Wesson Manufacturers, Inc. (NASDAQ:SWBI) noticed its shares tumble 15% after the firearms producer reported second-quarter earnings that missed analyst expectations and offered a diminished outlook for the second half of fiscal 2025.

The corporate posted adjusted earnings per share of $0.11 for the quarter ended October 31, falling wanting the $0.17 consensus estimate. Income got here in at $129.7 million, barely beneath analysts’ projections of $132.42 million, however up 3.8% YoY.

Smith & Wesson cited normalizing demand and inflationary pressures impacting shopper discretionary spending as key elements behind the weaker-than-expected outcomes. The corporate now anticipates third-quarter income to be roughly 10-15% decrease than the identical interval final fiscal yr.

“Second quarter outcomes got here in beneath our expectations as total demand for firearms normalized late within the quarter,” mentioned CEO Mark Smith. “We imagine that the first driver of the demand strain continued to be inflation.”

Regardless of the headwinds, Smith & Wesson reported gaining market share, with new merchandise representing 44% of gross sales within the quarter. Gross margin improved to 26.6% from 25.4% within the year-ago interval.

The corporate’s board approved a brand new $50 million share repurchase program and maintained its quarterly dividend of $0.13 per share. Moreover, Smith & Wesson secured a brand new $175 million unsecured credit score line, growing its whole obtainable borrowings by $75 million.

The disappointing outcomes and outlook prompted downgrades from Lake Road Capital Markets and Craig-Hallum, contributing to the sharp inventory decline.

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