Clarus (NASDAQ:CLAR) executives told investors the company spent 2025 reshaping its portfolio and cost structure amid a difficult consumer backdrop, with fourth-quarter results pressured by weak demand, tariffs, supply chain disruptions, foreign exchange impacts, and unusually poor winter conditions in key U.S. ski destinations.
Management frames 2025 as a year of simplification and cost actions
Executive Chairman Warren Kanders said Clarus stayed focused on “positioning Clarus for sustainable growth over the long term,” prioritizing the most profitable products and styles in the Outdoor segment and making “incremental operational progress” in the Adventure segment. He pointed to targeted cost reductions and tariff countermeasures across both segments intended to enhance profitability on an annualized basis.
Outdoor segment: apparel growth offsets ski weakness; tariffs and FX weigh on margins
Fiske said fourth-quarter Outdoor results were “somewhat softer than our expectations,” driven primarily by adverse seasonal conditions that hurt the ski business. He noted Clarus experienced “the most unfavorable seasonal conditions in 50 years” in key U.S. ski destinations.
On revenue, Fiske said Outdoor segment revenue for the quarter declined 2.1% year over year (down 2.9% in constant currency excluding FX contracts). Ski was down 30% versus the prior-year period due to both deliberate category exits and poor conditions; meanwhile, apparel sales grew 10% in the quarter. Mountain and climb business units increased 0.4% and 4.3%, respectively. Taken together, apparel, mountain, and climb grew 3.7% and represented 86% of Q4 sales and 90% of full-year sales, which Fiske said reflected the company’s simplification strategy.
By channel and region, Fiske said North America wholesale was down 10.4% (excluding FX contracts), while North America digital D2C fell 0.8% compared to Q4 2024. Europe wholesale rose 12.1% in U.S. dollars and 3.2% in constant currency, while Europe digital D2C declined 29.9% (36% in constant currency). International distributor revenue increased 19.3%.
Tariffs and currency were major themes. Fiske said Black Diamond moved quickly in 2025 to mitigate tariffs through pricing, vendor concessions, air freight where needed, and accelerating its exit from China. He estimated the net unrecovered impact from tariffs and duties in 2025 was approximately $3.4 million to adjusted EBITDA. Looking ahead, he said the company has offset nearly 75% of tariff impact entering 2026, leaving a $2.8 million “unrecovered gap” for the coming fiscal year. He also discussed a potential recovery of reciprocal IEEPA tariffs paid in 2025 following a Supreme Court decision, estimating Black Diamond would receive about $6.5 million if recovery occurs, while noting that 50% Section 232 tariffs on steel and aluminum remain in effect.
Fiske also said Black Diamond incurred losses on FX contracts in 2025, creating a $2.2 million year-over-year EBITDA swing. Those contracts have rolled off, and he expects a run-rate pickup of $1.6 million in EBITDA in 2026 at current exchange rates.
On profitability, Fiske said Q4 gross margin rate declined 280 basis points year over year due to unrecovered tariffs, FX contracts, and inventory write-downs related to exiting inventory. He quantified a 390-basis-point tariff impact, 240 basis points from FX contracts, and 80 basis points from inventory exits. Excluding those factors, he said the underlying comparable gross margin improved 450 basis points, reflecting the mix and simplification changes.
Fiske said Outdoor adjusted EBITDA was $2.0 million for the quarter, down $2.1 million year over year, with unrecovered tariffs and FX contract losses amounting to a $2.4 million drag. He also outlined restructuring actions taken in Q4 and January 2026, including streamlining headcount, completing exits of PIEPS, JetForce and bindings, exiting a Canadian 3PL, initiating a Europe logistics and fulfillment restructuring project, closing additional Black Diamond stores, and reducing the athlete roster. These actions led to approximately $0.9 million of restructuring charges in Q4, with another $1.5 million expected in 2026 (reflected in Q1), and he said no further restructuring is anticipated at this point.
Inventory at Outdoor ended the year at $64.9 million. Fiske said the increase versus the prior year (excluding PIEPS) was largely due to a change in inventory recognition from delivered-at-place (DAP) to FOB shipment, which increased in-transit inventory on the books by $7.9 million. He added tariffs and currency inflated inventory value by about $5 million.
Adventure segment: revenue pressured; inventory reserve and tariffs hit Q4 margins
CFO Mike Yates said Adventure segment Q4 revenue declined $2.1 million, or 10.4%, primarily due to reduced demand from two OEM customers, weakness in the U.S. bike market, and customer transitions in Australia and New Zealand. He said European expansion gained traction, aided by a new 3PL warehouse in the Netherlands that improved service levels and lead times, driving growth and new customer wins across several countries. He also said the company added a distribution partner in Japan and multiple partners in Africa.
In Australia and New Zealand, Yates said Rhino-Rack secured a chain-wide placement with a large retail customer across 300 locations and expects that partner to become a top-five customer in 2026. In North America, he cited strengthened relationships with rack specialty retailers and upgraded point-of-sale displays that drove new placements for Rhino-Rack and RockyMounts.
However, Adventure gross profit in Q4 was affected by several one-time and external factors, including a $3.4 million inventory reserve write-down for excess and old inventory (including old packaging for in-house assembled goods), higher customer rebates, and higher impacts from U.S. tariffs. Yates said corrective actions are underway, including price increases on fast-turning RockyMounts SKUs in November, renegotiation of unfavorable contracts in Australia and New Zealand, and price increases across all brands and markets effective Q1 2026.
Operationally, Yates said Adventure is streamlining its footprint: the company closed a high-cost Wellington, New Zealand facility and transitioned to a 3PL in Upland, and also closed Brendale in Queensland on March 1, 2026, consolidating MAXTRAX operations into Eastern Creek headquarters alongside Rhino-Rack.
He also highlighted product development, saying 2025 delivered a record year for vehicle fitments, with more new vehicle fits completed than any of the prior 10 years, and said multiple new innovations and product platforms are expected to launch over the next 18 months.
Consolidated Q4 results, cash flow, and 2026 outlook
On consolidated results, Yates said fourth-quarter sales were $65.4 million versus $71.4 million a year earlier. Consolidated gross margin was 27.7% compared with 33.4% in Q4 2024, impacted by higher inventory reserves at both segments ($3.4 million at Adventure and $0.5 million at Outdoor), tariffs, lower Outdoor volumes related to the PIEPS divestiture, and unfavorable FX at Outdoor. Consolidated adjusted gross margin was 33.6% versus 38% a year earlier.
Outdoor actual gross margin was 32.3% compared with 35.2% in Q4 2024; Yates said tariffs and FX represented about a 630-basis-point headwind versus last year. Adventure actual gross margin was 16.0% versus 28.9% in Q4 2024; excluding the $3.4 million inventory reserve, Yates said Adventure gross margin would have been 34.5%.
SG&A expenses were $25.5 million versus $27.8 million, down 8%, primarily due to lower employee-related costs, lower PIEPS costs due to divestiture, and other cost reduction efforts. Adjusted EBITDA for the quarter was $1.2 million (1.8% margin), with segment adjusted EBITDA of $0.3 million at Adventure and $2.0 million at Outdoor, and adjusted corporate costs of $1.2 million.
Free cash flow in Q4 was $11.6 million versus $14.4 million a year earlier, with Yates attributing the change primarily to timing of inventory receipts at Outdoor. Clarus ended 2025 with no debt and $36.7 million in cash and cash equivalents, compared to $45.4 million at the end of 2024.
For 2026, Clarus guided to full-year sales of $255 million to $265 million and adjusted EBITDA of $9 million to $11 million (3.8% margin at the midpoint). Yates said the “key for us this year will be improving gross margins,” noting SG&A is under control but gross margin targets are needed to achieve guidance. Segment sales guidance was $80 million for Adventure and $180 million for Outdoor, with adjusted corporate costs around $8 million and capital expenditures of $6 million to $7 million. The company forecast free cash flow of $3 million to $4 million for 2026 and first-quarter sales of $60 million to $62 million. Yates noted the outlook does not include expenses related to ongoing Section 16(b) litigation matters or the CPSC/DOJ investigation.
Pricing actions, balance sheet posture, and legal updates
In Q&A, management detailed pricing actions aimed at tariff mitigation. Fiske said the gross tariff impact to Black Diamond would be about $11 million to $12 million annually, and that pricing and sourcing work offsets all but $2.8 million. He said investors can assume “about $7 million to $8 million” of pricing actions at Black Diamond, reflecting both May 2025 and early 2026 increases. Yates said Adventure took roughly a 5% price increase on certain RockyMounts SKUs in November and implemented price increases on key Rhino-Rack categories in Q1 2026, expecting $2 million to $3 million of price benefit during 2026.
Asked about the use of cash for M&A, Kanders said the company is focused on execution in its two businesses and intends to “sit on our cash for at least the first half of the year.”
On Black Diamond category mix, Fiske said ski is less than 10% of sales, with the mix expected to drop by a couple more percentage points as the company completes the rotation out of PIEPS, JetForce and bindings. He said mountain, climb, and apparel could approach 93% to 95% of the business going forward.
On retail conditions, Fiske said he believes the industry is through the heavy post-COVID destocking period and now in “fine-tuning” inventory rebalancing, adding that apparel has the most momentum and management expects double-digit apparel growth in 2026.
Yates also provided legal updates. He said the company’s Section 16(b) litigation against Half Trading, LLC and Harsh A. Padia is on appeal following a district court summary judgment for defendants, with oral argument held February 12, 2026, and the Second Circuit inviting the SEC to file an amicus brief by April 17, 2026. He said Clarus settled its lawsuit against Caption Management, with Caption paying an undisclosed sum on March 2, 2026, in exchange for mutual releases and dismissal with prejudice. On the CPSC/DOJ matter, Yates said the DOJ has not pursued a civil lawsuit to date but has served grand jury subpoenas tied to a criminal investigation related to avalanche beacons; he said the company has cooperated and produced substantially all requested documents, and that the DOJ has issued target letters to two former Black Diamond executives and subpoenaed testimony from a current and a former employee.
About Clarus (NASDAQ:CLAR)
Clarus Corporation (NASDAQ: CLAR) is a global designer, manufacturer and marketer of outdoor recreation equipment. The company’s portfolio of brands serves enthusiasts across climbing, skiing, trail running, paddling and snow safety, combining purpose-driven innovation with in-house manufacturing capabilities. Clarus focuses on high-performance gear developed to meet the demands of professional athletes and recreational users alike.
The company’s flagship brand, Black Diamond Equipment, offers climbing protection, apparel, ski bindings and accessories engineered for backcountry and alpine environments.
