From accelerated orders in Q4, and consumers having macro concerns, American Outdoor Brands (AOB) saw a significant decline in their fiscal Q1. They reported yesterday after the market closed that there was a 28.7% sales decrease year-over-year.

The Grilla Grills parent noted that the environment felt just like 2023. If you recall, 2023 was when the whole industry was reeling after the crash from the Pandemic.

Net sales were lower in the quarter, but in many respects, this moment feels much like FY ’23, a period marked by macro uncertainty that I believe ultimately proved that our model works. By staying true to our competitive advantage, repeatable consumer-driven innovation while controlling what we can control by adapting to a shifting environment, we took share, strengthened our brand equity and extended our long-term runway for growth. I believe that we’ll look back at this current period similarly, a time when our long-term discipline was rewarded with growth.

So what does the current dynamic environment look like? It’s an environment shaped by evolving tariff impacts, shifting retailer order patterns and broader macroeconomic uncertainty. Like I said, it’s important to remember that we’ve been here before. We know how to adapt, and we know that innovation is what drives consumer demand, retailer partnerships and ultimately, sustained growth and profitability. That is why we remain confident in our long-term strategy. Diving into consumer pull-through and brand momentum. Our brands continue to resonate with consumers, fueling point-of-sale performance across several of our largest traditional retailers.

Brian Murphy, President and CEO of American Outdoor Brands

American Outdoor Brands operates a portfolio of outdoor brands. They didn’t break out the financial performance of Grilla, but broadly noted that within the portfolio, it’s performing well.

BOG continues to do very well. I think that will do very well in the hunting and holiday season. Grilla and frankly, MEAT! Your Maker, so those are the kind of the core brands, I would say, that have been doing well relative to the rest of the portfolio.

Brian Murphy, President and CEO of American Outdoor Brands

Focus On Innovation

AOB has talked through the years about the importance of innovation as much as any company. It’s a driver of sales even if a difficult market. They noted that in Q1, 29% of their sales came from new products.

They plan to continue to focus on innovation, but when it comes to timing of releases, that’s a little more dependent on market conditions. They were asked if innovation is more, or less, important right now.

So yes, innovation is critical, and I would underline that. And when it comes to innovations, we have the steady stream, the steady pipeline that’s always being worked against. And we have at times actually paused or pulled back from certain launches. We haven’t stopped working on those products, but we paused. And the times where we paused similar to FY ’23 is usually during times of, I’ll call it, a little bit more chaotic, right, where retailers, given some of their own situations may need to discount products, things like that.

We don’t want to compete with noise in the market. And so we found that we have the biggest impact when we have more clear line of sight and having that conversation with the consumer. So throughout the rest of this year, so yes, new products are very important to us and to be able to get better in those higher-margin products. But we’re going to do it at times where we have the loudest voice and the largest share of mind with the consumer.

And when we do that, our marketing dollars go much further, and we’ve got a much better opportunity with that consumer longer term. And you can see it with what — with the chart we have in our investor deck, where we show the stacking of innovation over time. And you look at FY ’23, and we said back then, “Hey, we’re going to be really careful about when we launch some of these new products, we’re not competing for airtime.” And that year, we had less — fewer sales from new products. But then you look at the next 2 years, and that vintage grew significantly because we were able to introduce them at the right time.

Brian Murphy, President and CEO of American Outdoor Brands

Acquisitions

Grilla Grills was an acquisition for AOB, and acquisitions continue to be part of AOB’s growth model. AOB has noted that they are seeing companies come to market under financial stress.

That’s a trend that has continued, and I’d expect to continue. The tariff environment coupled with a stretched consumer is tough for most companies, but especially for outdoor brands that have been reeling since 2022.

Yes. So we’re still very active in looking at targets. I think similar to last quarter, we’re seeing fewer targets coming to market, and we are seeing more distressed assets and brands. In some cases, really good brands that we’re taking a hard look at. But overall, I think similar to some others in our category, it’s just trying to figure out where are they in the cycle themselves, right?

Do they have the right inventory, the right mix? Do they have IP? IP for us is incredibly important. and how well would those fit into our system. And so I would just say candidly, we’re not finding a lot of great targets right now. So we’re being very patient. One thing we alluded to in the past, too, is our ability to launch new brands. And there are categories that are popping to the top for us that I think we could go in for very low cost and low investment, enter some of these categories that we would have traditionally sought to enter through M&A. So during this time period, we’re taking a hard look at that option. So more to come on that front.

Brian Murphy, President and CEO of American Outdoor Brands