American Outdoor Brands (AOUT) gains from rising interest in outdoor activities and personal protection

American Outdoor Brands Inc. (NASDAQ: AOUT) saw its stock climb over 17% in morning hours on Wednesday. The stock has gained 38% over the past three months. The company, which spun off from Smith & Wesson Brands Inc. (NASDAQ: SWBI) in August, reported strong results for its second quarter of 2021 a day ago, beating market estimates and raising its outlook for the full year.

Quarterly performance

For the second quarter of 2021, American Outdoor’s net sales rose nearly 66% year-over-year to $79 million, fueled by growth in both its traditional and ecommerce sales channels. Adjusted EPS rose to $0.77 from $0.20 last year.

Outdoor activities and personal protection

American Outdoor benefited significantly during the quarter from an increase in outdoor activities. The COVID-19 pandemic and related restrictions led to people opting for activities like camping, hunting and fishing to spend time with family. On its quarterly conference call, the company shared data from various sources which indicate strong trends in these areas.

A 2019 study by the Outdoor Industry Association estimated that there were 42 million campers in the US. A recent study by the KOA released in October showed that around 50% of campers surveyed had gone camping for the first time ever in 2020 or for the first time in the past few years. These two studies show that the participation in camping increased significantly in 2020 compared to previous years.

The same goes for activities like hunting and fishing which also saw more number of participants this year. Data from the National Shooting Sports Foundation show that hunting license sales are up over 12% from last year across the country. If this momentum continues through the end of the year, these sales could translate to an increase of 1 million hunters for this year versus last year. In fishing, the number of licenses sold across the country increased by 3 million, or 40%, this year compared to last year, based on information from the Recreational, Boating and Fishing Foundation.

Another factor that drove growth was an increase in people owning firearms or taking part in shooting sports. On its call, the company said that the FBI’s background check data showed that background checks through November 30 totaled 19 million, indicating a significant increase in the purchase of firearms this year. Data from the National Shooting Sports Foundation suggests that around 8 million new customers entered the market this year.

AOUT believes that this newfound interest in outdoor activities could continue in the long-term and that the company is well-positioned to take advantage of these trends along with the increased need for personal and home security.

Strength in ecommerce

During the quarter, sales in the company’s ecommerce channels grew 213.4% year-over-year to $26.2 million. These include direct-to-consumer sales and sales to retailer customers who generate the majority of their sales from purchases on their retail websites. Sales from traditional channels also increased 34.3% to nearly $53 million.

Outlook

AOUT expects the momentum seen through the second quarter to continue in the second half of the year. The company expects net sales for FY2021 to increase 40-46% year-over-year to a range of $235-245 million. Adjusted EPS is expected to be $1.49-1.67.

Click here to read the full transcript of American Outdoor Brands Q2 2021 earnings conference call