SCOTTS VALLEY, Calif. (BRAIN) — About two months after announcing that it planned to reinvest in its bike helmet and accessory brands, Vista Outdoor has layed off 14 people at its Scotts Valley facility, which houses the Bell, Giro and Blackburn headquarters. The layoffs represent about 10% of the work force at the facilty.
According to sources at the company who spoke with BRAIN, the layoffs were across departments at Bell, Giro and Blackburn, including employees in engineering, design, testing and marketing. The layoffs included several long-serving manager in those departments, the sources said.
Rocky Krivijanski, the vice president of strategic communications for Vista Outdoor, told BRAIN, “I think the best way to describe it is that we’re right sizing our workforce in a tough market.”
In May, Vista Outdoor announced that it recorded sales of $2.06 billion in its most recent fiscal year, which ended March 31. That represented an 11% sales decline. The company said the decline was across most of its major product categories, including ammunition and in its Outdoor Sports division, which includes its Action Sports bike-related brands, Bell, Giro, Blackburn, Copilot, and CamelBak. The sale of its eyewear division last summer also contributed to the smaller annual sales figure.
Vista plans to release its first quarter financial report Aug. 8.
Vista first announced in early 2018 that it would sell off its firearms business and the bike brands — but not CamelBak — as part of a brand portfolio realignment. In November 2018 it said it was in no rush to sell the bike brands.
Then in May, CEO Chris Metz said the company had re-evaluated the bike brands’ potential and current status.
“We came to the conclusion that those brands (Bell and Giro) can return to growth and display the leadership economics we expect from the brands in our portfolio,” he said. “However today with the current state of that business we don’t believe we’d get the offers we’d want to see, so we’re going to spend some time to improve the brands’ performance to get them to where they rightfully should be.”
In answer to an analyst’s question on the May 8 call, Metz gave some indication of the time frame.
“We came to clear conclusion as a team and as a board that we are much better off holding this asset and continuing to improve it for a period of time. That will be a multiyear period of time. We see that much upside in the business. At this point in time we’re excited about holding it; we think it’s the best thing to do for driving shareholder value.”
Vista Outdoor announced July 8 that it had sold its firearms brands for $170 million. It said it used the proceeds from the sale to pay down debt to enable it to better support its remaining brands. A day later, REI announced that it would resume purchases from Vista Outdoor, which it had stopped following the Parkland, Florida, high school shootings in early 2018.
The REI boycott, combined with the Performance Bicycle bankruptcy last year, had a significant impact on sales within the Action Sports division, recently laid off employees told BRAIN. While the REI announcement this month was good news, it could take months before new sales to the coop show up on the balance sheet, they said.