American Outdoor Brands Inc reported a first quarter of fiscal 2026 (Q1’26) with a meaningful top-line decline but notable margin discipline and strategic investment activity. Net sales were $29.7 million, down 28.7% year over year, largely driven by retailer order timing (roughly $10 million accelerated into the prior quarter) and weakness in the e-commerce channel (down 35.2% YoY). When adjusting for the Q4 revenue acceleration, management indicated that Q1’26 would have declined ~5% YoY, with traditional channel sales up about 15% absent order-pull effects. The mix of new products remained robust, representing nearly 29% of net sales in Q1, underscoring the company’s ongoing product velocity and the channel-driven replenishment dynamics observed across retailers.
Despite the revenue compression, gross margin expanded by 130 basis points to 46.7%, supported by proactive margin management, product-origin diversification, pricing actions, and ongoing optimization of product velocity. GAAP operating expenses declined modestly to $20.7 million, while non-GAAP operating expenses were $18.2 million, reflecting disciplined cost control in a volume-down quarter. EBITDA for the quarter was a loss of $3.1 million and net income was a loss of $6.83 million ($0.54 per share on a fully diluted basis). The company ended Q1 with $17.8 million of cash and no debt per management commentary, though accompanying balance-sheet data shows total debt of $33.3 million and net debt of about $15.5 million, highlighting a notable discrepancy between reported debt metrics in filings and management’s debt-free assertion. Inventory rose by $21.1 million during the quarter, with a target inventory level of roughly $125 million for Q2–Q3 and about $120 million for Q4 to support the hunting/holiday season and tariff-related resilience.
Management signaled cautious near-term demand dynamics with an expected Q2 net sales decline of approximately 15% YoY, while maintaining an optimistic longer-term view anchored by POS strength, a growing subscription revenue stream, and strategic product initiatives including ScoreTracker Live (MLF ScoreTracker Live integration via Bubba app) launching in spring 2026. The leadership emphasized continued emphasis on innovation, retail partnerships, and cost discipline as levers to preserve gross margins and drive longer-term EBITDA contributions in the 25–30% range as the model matures. Conversely, macro tariff volatility, retailer ordering behavior, and international exposure remain key risk factors that could influence margin trajectory and demand visibility.