Clarus Corp’s Earnings Call: Mixed Results Amid Challenges

Clarus Corp ((CLAR)) has held its Q3 earnings call. Read on for the main highlights of the call.

Clarus Corp’s recent earnings call presented a mixed sentiment, highlighting both achievements and ongoing challenges. The company showcased financial improvements, particularly in its Outdoor segment, and successful cost reduction initiatives. However, it continues to grapple with significant challenges, including tariffs, foreign exchange impacts, and margin pressures in its Adventure segment. Despite positive growth signs, the macroeconomic environment remains a formidable challenge.

Incremental Financial Improvement

Clarus Corporation reported net sales of $69.3 million, marking a 3% increase over the same period last year. The quarterly adjusted EBITDA also saw a 15% rise. This growth was primarily driven by strong outdoor demand in the North American wholesale market and success with new adventure customers in Australia.

Black Diamond Apparel Success

The revamped Black Diamond apparel line experienced remarkable sales growth of 29%. In-line sales surged by 40.5%, while sales of discontinued merchandise fell by 24%. Apparel now represents 23% of the sales mix in Q3, an increase of 490 basis points from a year ago.

Cost Reduction Initiatives

Clarus made significant operational progress in reducing SG&A expenses, achieving a $600,000 year-over-year decrease. Through reorganization efforts, the company removed $1.1 million of fixed costs on an annualized basis.

Adventure Segment Growth

The Adventure segment reported a 15.9% year-over-year growth compared to the third quarter of last year, with organic growth at 7.4%. A strong pipeline, including a new Rhino-Rack customer in Australia, was a major growth driver.

Tariff and FX Impacts

The Outdoor and Adventure segments faced margin and cash flow pressures due to increased tariff costs and significant losses on FX contracts in 2025, resulting in a $600,000 EBITDA impact in Q3.

Adventure Segment Margin Erosion

The Adventure segment’s gross margin decreased significantly from 40.1% in the prior year to 33.2% in 2025 Q3. This decline was attributed to additional tariffs, inventory clearouts, and the cost of freight to customers.

Challenges in D2C Channels

The digital direct-to-consumer (D2C) channels in North America and Europe saw declines of 16.5% and 16% in dollars, respectively. Despite a pullback on pro sales and discounting, which led to decreased sales, margins improved.

Macro and Consumer Headwinds

Despite some progress, macro trade and consumer headwinds, along with a challenging macro environment, continue to cause uncertainty and disruption, impacting near-term financial results.

Forward-Looking Guidance

Looking ahead, Clarus Corporation remains cautious about consumer sentiment and macroeconomic conditions. The company continues to focus on enhancing margins and ensuring sustainable growth. Tariffs are expected to have an unrecovered EBITDA impact of $3.2 million in 2025, with FX contract losses contributing a $600,000 EBITDA impact in Q3. Despite these challenges, Clarus is committed to maintaining its focus on high-margin products and operational efficiency.

In summary, Clarus Corp’s earnings call highlighted a mixed performance with notable achievements in financial improvement and cost reduction. The company faces significant challenges, particularly in tariffs and FX impacts, but remains focused on growth and operational improvements amidst a challenging macroeconomic environment.