American Outdoor Brands, Inc. (NASDAQ:AOUT) Q3 2023 Earnings Call Transcript

Brian D. Murphy: Yes, it’s a great question. This is Brian. I think the overarching theme we hear from all of our retailers is again this broader reduction where they have too much of one product and they would like to see overall inventories come down. We are seeing certainly some pockets of more velocity depending on the overall inventory position of certain retailers. But terms of what they need to see, I think it’s just a stabilization with the end consumer because as they look at, this is going to sound a little bit finance, but they’re looking at what the expected POS is going to be. They’re running their own models and then they’re looking back and saying how many weeks of inventory do we want on hand. And for certain products that are more seasonal in nature, there is a little bit more cautiousness because that season may not be here just yet, but they still have product from last year.

And so I think it’s just a little — one little extra bit of complexity for some of those categories. So we wanted to see going into the holidays and so did our retailers robust consumer activity and certainly there was sustained demand. But it probably wasn’t up as much as people would have liked to see. So that just led to little bit higher inventories than expected heading into the first calendar quarter for retail and really just as we get into the new season, we get into fishing, we get into camping, some of those types of things, turkey hunting, really want to see what the consumer does there. So I think that’s a big part of it.

Matt Koranda : Okay. That’s helpful. And then just any disaggregation of the ecomm channel that you guys can provide within the quarter. How much did Grilla contribute? Anything going on in the Amazon channel that we should be thinking about that influenced sales there? Just trying to get a sense for how to unpack that because it did seem to have an organic decline. Its little bit more than we had expected.

Brian D. Murphy: Yes. Hey, Matt, it’s Brian again. So within ecommerce, for others that might be listening, ecomm includes sales to online retailers. You mentioned Amazon, certainly they’re one of our customers and then also direct-to-consumer sales. So we mentioned direct-to-consumer was up, I think it was like 37% or so. Obviously, part of that number includes the acquisition of Grilla. So what I would tell you within that direct-to-consumer number, I don’t want to break it out, but our two direct-to-consumer only brands were up organically over last year. So that’s a very positive trend for us and continues to speak to that direct connection with the consumer and that pull through that isn’t subject to some of the retailer ups and downs with supply chain. And did you have a question about — you mentioned Amazon, Sorry, Matt, you mentioned Amazon.

Matt Koranda : Yes, it was just wanted to see if there’s anything unique going on in the channel there, just in terms of your inventory availability, anything that kind of constrains sales or was it just kind of softer end consumer demand in that channel?

Brian D. Murphy: It’s the continuation really of the theme for all of our online retailers reducing overall inventories.

Matt Koranda : Got it. Yes. So it’s a destocking issue, not necessarily just an end to end issue in that channel.

Brian D. Murphy: Exactly. And just to point to that are the POS inventory that we’re seeing with that we said is down over 30%…

Matt Koranda : Is there — should we think about any material difference in POS in the ecomm channels that you have versus the traditional channel that you mentioned?

Brian D. Murphy: No.

Matt Koranda : Or is that the same in terms of down high single digit? No difference. Okay.