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American Outdoor stock rises 20% after topping earnings expectations

American Outdoor Brands (NASDAQ:AOUT) shares rose nearly 20% on Friday after quarterly profits pushed past expectations.

For its fiscal second quarter, the Missouri-based company posted $0.29 in adjusted earnings per share, $0.11 above the consensus estimate, while revenue essentially met analyst expectations. Management noted that sales topped pre-pandemic levels, driven by strong e-commerce performance.

"Our direct-to-consumer business, which is largely comprised of our outdoor lifestyle brands, remained strong in the second quarter, delivering year-over-year growth of over 119%,” CEO Brian Murphy noted. “We consider our direct-to-consumer sales to be one gauge of how well our brands are resonating with consumers, since those sales are not typically impacted by issues that have hindered retailers, such as inventory levels or limited open-to-buy dollars.”

CFO Andrew Fulmer added that the company moved to clean up its balance sheet and inventory levels during the quarter. He noted that inventory fell $9M from the prior year quarter.

"Turning to our outlook, we believe that retailers and distributors remain cautious regarding their inventory levels, and that consumer spending patterns going forward are still undetermined. That said, we believe our brands are performing consistently with long-term, positive consumer outdoor trends,” Fulmer said. “As a result, we continue to believe our net sales for fiscal 2023 could exceed pre-pandemic fiscal 2020 levels by as much as 25%.”

He added in comments to analysts during the company’s earnings call that management continues to pursue a $10M share repurchase program, scooping up 84K shares at an average price of $8.97 during Q2.

Shares shot 19.27% to the upside into Friday afternoon.

Read the earnings call transcript.