American Outdoor Brands, Inc. (NASDAQ:AOUT) Q2 2023 Earnings Call Transcript

John Kernan: Got it, then maybe my final question is just on gross margin, there was a nice inflection in terms of just the year-over-year change in gross margin of 100 basis points. Maybe talk to how we should think about gross margin, not just in the back half of this year, but long term. What are the levers to kind of take you back to that 46%, 47% gross margin you’ve been had in the past?

Andy Fulmer: Yes, no worries. I would say in the long term, certainly the freight costs coming down will help. Like I talked about before, and you probably have heard elsewhere, the container costs were up four or five times what they a couple of years ago. Now those are back down to normal. Outbound freight, unfortunately, is not yet. There are still some really high fuel costs out there that are keeping those costs higher, which that’s OpEx. But on the gross margin side, certainly freight in the long term, I would say probably starting in fiscal €˜24, we should see that start to cycle through. And that should be — that will help us get to those levels that you talked about, John.

Brian Murphy: I’ll jump into, this is Brian, really quick. Certainly new products are a major way that we look to expand margins. So that’s obviously a big initiative, this last quarter, it was about 30% of our total net sales. And then also direct to consumer, being very careful, of course not to step on our retailers toes, we are very careful about not competing with them. But with are more direct to consumer only brands and in looking at other businesses to either acquire or to form organically presents a good opportunity for us to continue to take margin on the gross margin side.

Operator: Our next question will come from Mark Smith with Lake Street Capital.

Mark Smith: Hi, guys, realizing that you guys are pretty diverse outdoor company. Can you talk about what you are seeing in consumer trends kind of today clientele and such jab come from Black Friday and moving into hunting season. We’d love to hear your thoughts kind of on the split between maybe hunt shoot products versus kind of fish and camp and everything else.

Brian Murphy: Sure, Mark. Yes, this is Brian, I would say just real quick on Black Friday and Cyber Monday. Speaking for the direct-to-consumer side of the business, we saw some really impressive numbers. Really impressive increases year-over-year, for both Grilla and MEAT, so the teams did a great job there, which again, just speaks to one of the earlier things we spoke to consumers, at least a portion of consumers are still willing to spend higher ring volumes, higher bundling, things like that. So that’s encouraging to see. And then as it relates to the breakdown hunt, shoot versus fishing. I would say that across the board. I don’t recall seeing anything that jumped out at me in terms of fishing being higher than something else.

We did see some good trends with BOG. BOG is our hunting brand and so we sell a lot of tripods under that brand, death-grip is our marquee IP protected product there. And so we did see some nice trends on that side related to hunting but nothing else Mark that caught my attention.

Mark Smith: Okay, as we look in particular at kind of the shooting sports products, any additional insight, we’re seeing some mixed data today that looks pretty positive. For the most work for November, assuming that we’ve got more kind of centerfire rifles that are part of that rather than hand guns. Anything that to call out where you’ve seen kind of direct tie, perhaps to any increase or better firearm sales that are tied to kind of your accessory sales?