Shares of Vista Outdoor Inc. tumbled 15% in premarket trade Thursday, after the company posted much weaker-than-expected profit for its fiscal fourth quarter and said demand for guns and ammunition has collapsed since the November election. The company, formerly called Smith & Wesson, said it had net income of $857,000, or 2 cents a share, in the quarter, down sharply from $37.3 million, or 61 cents a share, in the year-earlier period. Adjusted per-share earnings came to 3 cents, way below the 18 cents FactSet consensus. Sales fell to $578.8 million from $612.3 million, ahead of the FactSet consensus of $565 million. "We are experiencing unprecedented decline in demand for ammunition and firearms following the presidential election and softness in the retail environment," Chief Executive Mark DeYoung. "These impacts have manifested themselves in our results." The company is addressing the issue by expanding its e-commerce capabilities, cutting staff, reducing inventory and streamlining operations, he said. "We have also negotiated a long-term agreement with Orbital ATK for the supply of ammunition products produced at the Lake City Army Ammunition Plant through September 2020," said DeYoung. "This new agreement sustains our leadership position in providing these products to the shooting sports market." The company has also amended financial covenants in its credit agreement. Vista Outdoor is expecting fiscal 2018 sales to range from $2.36 billion to $2.42 billion and EPS to range from $1.10 to $1.30. The FactSet consensus is for EPS of $1.74 and sales of $2.43 billion. Shares have fallen 44% in 2017, while the S&P 500 has gained 7%.
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