American Outdoor Brands' Q1 2026: Key Contradictions Emerge on Retail Inventory, Innovation, Supply Chain, Tariff Strategy, and Retailer Behavior

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 4, 2025

Financials Results

• Revenue: $29.7M, down 28.7% YOY (vs $41.6M prior year); Q4+Q1 combined up 4.2% YOY
• EPS: GAAP ($0.54) per diluted share vs ($0.18) prior year; non-GAAP ($0.26) vs $0.06 prior year
• Gross Margin: 46.7%, up 130 bps YOY

Guidance:

• Q2 FY26 net sales expected to decline ~15% YOY.
• No full-year guidance; management remains optimistic given strong POS and new products.
• Inventory targeted at ~$125M in Q2–Q3, declining to ~$120M in Q4.
• FY26 CapEx expected at $4.0–$4.5M.
• FY26 diluted share count expected ~12.9M (ex buybacks).
• Actions on pricing, sourcing shifts, and cost control to preserve gross margin; long-term EBITDA contribution targeted at 25%–30%.
• Debt-free; total available capital up to ~$108M.
• BUBBA/MLF SCORETRACKER LIVE planned in FY26 to support recurring revenue.

Business Commentary:

• Revenue Trends and Tariff Impact:
• American Outdoor Brands reported net sales of $29.7 million in Q1 2026, a 28.7% decrease from the previous year.

• The decline was due to retailers accelerating orders into Q4 2025 to avoid tariff-related price changes, and adjustments in purchasing patterns by a large e-commerce retailer.

• Supply Chain Adaptation:

• The company proactively managed its supply chain, shifting production of certain products outside of China to countries like Southeast Asia.

• This was in response to changing tariff rates and the need to maintain product quality and protect margins while ensuring supply continuity.

• Retailer Order Patterns and Inventory:

• There was a 35.2% year-over-year decline in e-commerce channel net sales for Q1.

• This was attributed to a large e-commerce retailer adjusting its purchasing patterns to align with ongoing tariff impacts.

• Positive POS Performance:

• New products represented nearly 29% of net sales in Q1, driven by strong consumer pull-through and brand momentum.
• The company's innovation engine and enduring brand appeal contributed to this positive POS performance during a seasonally light period.

Sentiment Analysis:

• Net sales decreased 28.7% YOY to $29.7M, with e-commerce down 35.2%. Management expects Q2 net sales to decline ~15% YOY and withheld full-year guidance due to tariff and macro uncertainty. Offsets include gross margin of 46.7% (up 130 bps YOY), strong POS across key brands, and actions on pricing, sourcing, and costs.

Q&A:

• Question from Douglas Lane (Water Tower Research LLC): Do retail partners still have excess tariff-related inventory, or has it been worked down?
  Response: Not excess; Q4 orders were pulled forward in key categories where retailers had open-to-buy, not an overstock issue.

• Question from Douglas Lane (Water Tower Research LLC): How much pricing have you taken and will increases be one-and-done or layered through the year?
  Response: They’ll balance supplier concessions, product redesigns, selective pricing, and new-product mix; pricing will be calibrated over time, not one-and-done.

• Question from Douglas Lane (Water Tower Research LLC): Is product innovation more or less important in this environment, and is the spend paying off?
  Response: Innovation is critical; they time launches to avoid promotional noise, sometimes pausing, to maximize impact and margin mix.

• Question from Matt Koranda (ROTH Capital Partners): When might order choppiness normalize and return to a steady cadence?
  Response: Retailers are cautious amid tariff uncertainty; as inventories normalize and tariffs stabilize, orders should align with strong POS—timing uncertain but visibility should improve through FY26.

• Question from Matt Koranda (ROTH Capital Partners): Which brands have the strongest POS and which are softer?
  Response: Caldwell (ClayCopter), BUBBA (Smart Fish Scale Lite, subscriptions), BOG, Grilla, and MEAT! Your Maker lead; other brands beat their categories despite overall weakness.

• Question from Matt Koranda (ROTH Capital Partners): Update on the M&A pipeline and appetite?
  Response: Fewer quality targets and more distressed assets; they’re patient, prioritize IP fit, and may launch new brands organically instead.

• Question from Alex Sturnieks (Lake Street Capital Markets): Are buyers trading down to value, or still choosing premium innovation?
  Response: Premium/enthusiast customers continue buying higher-priced products; lower/mid-income consumers are under pressure and buying less—segments where AOUT has limited exposure.

• Question from Alex Sturnieks (Lake Street Capital Markets): Key factors that could push gross margin up or down?
  Response: Tariffs are the main swing factor; they’ll defend margins via vendor cost concessions, measured category-by-category pricing, and other levers.

• Question from Alex Sturnieks (Lake Street Capital Markets): How much production has moved from China and what are the trade-offs?
  Response: Some sourcing shifted to Southeast Asia; complex, tech-heavy products remain in China for quality/cost; further moves depend on tariff stability and supplier readiness.

• Question from Alex Sturnieks (Lake Street Capital Markets): How are you diversifying e-commerce beyond the largest online partner?
  Response: Traditional retailers’ online sales are growing and taking share; the strategy is omnichannel—be present wherever consumers shop.