Earnings call transcript: Clarus Corp Q3 2025 beats EPS forecast, stock slips

Clarus Corp (CLAR) reported its Q3 2025 earnings, showcasing a notable earnings per share (EPS) turnaround with an actual EPS of $0.05 against a forecast of -$0.05, marking a 200% surprise. Despite this earnings beat, the company's stock declined by 5.25% in after-hours trading, closing at $3.43. Revenue also exceeded expectations, reaching $69.3 million against a forecast of $66.43 million, a 4.32% surprise.

Key Takeaways

• Clarus Corp exceeded both EPS and revenue forecasts for Q3 2025.
• Stock price fell by 5.25% in after-hours trading despite positive earnings.
• Black Diamond apparel sales surged by 29%, contributing to product mix growth.
• The company is navigating a challenging macro environment with low consumer sentiment.
• No formal full-year guidance due to market uncertainties.

Company Performance

Clarus Corp demonstrated resilience in Q3 2025, with net sales increasing by 3% year-over-year to $69.3 million. The company's focus on innovation and operational efficiency appears to be paying off, as evidenced by the 29% growth in Black Diamond apparel sales and a slight improvement in gross margin to 35.1%. Despite these positive developments, the company faces a challenging macroeconomic environment, characterized by low consumer sentiment and increased promotional activity in the retail market.

Financial Highlights

• Revenue: $69.3 million, up 3% year-over-year.
• Earnings per share: $0.05, a 200% surprise over the forecast of -$0.05.
• Gross margin: 35.1%, a slight increase from the previous year.
• Cash and cash equivalents: $29.5 million.
• Total debt: $2 million, scheduled for repayment in December 2025.

Earnings vs. Forecast

Clarus Corp's Q3 2025 earnings per share of $0.05 significantly outperformed the forecasted -$0.05, resulting in a 200% surprise. Revenue also surpassed expectations, reaching $69.3 million compared to the forecast of $66.43 million, a 4.32% surprise. This strong performance highlights the company's ability to navigate a difficult market environment effectively.

Market Reaction

Despite the earnings beat, Clarus Corp's stock declined by 5.25% in after-hours trading, closing at $3.43. This movement contrasts with the company's positive financial results, suggesting that investors may be reacting to broader market uncertainties or concerns about future performance. The stock remains near its 52-week low of $3.02, indicating ongoing market challenges.

Outlook & Guidance

Clarus Corp has refrained from providing formal full-year guidance due to prevailing market uncertainties. However, the company expects a seasonal revenue split of 45%-55% in the second half of 2025 and aims to offset approximately 70% of tariff impacts in 2026. The company is also targeting 70% of its inventory in best-selling A-styles.

Executive Commentary

• Warren Kanders, Executive Chairman, emphasized the company's strategic focus: "We've faced the hard truths, we're taking meaningful actions, and we're positioning the adventure business for a much stronger, more innovative future."
• Neil Fiske, President of Black Diamond Equipment, noted the challenging market conditions: "Consumer sentiment remains low. Promotional activity seems to be on the rise as the broader market struggles to balance cash and working capital requirements."
• Mike Yates, CFO, addressed ongoing legal matters: "We are cooperating with the DOJ in responding to its discovery requests and have produced substantially all the documents requested."

Risks and Challenges

• Macroeconomic pressures and low consumer sentiment may continue to affect sales.
• Increased promotional activity could impact profit margins.
• Ongoing trade uncertainties and tariffs pose challenges to cost management.
• Retail partners are showing cautious ordering for Spring 2026, indicating potential future demand issues.
• Legal and regulatory challenges, including cooperation with the DOJ, may pose additional risks.

Q&A

During the earnings call, analysts inquired about Clarus Corp's strategies to mitigate tariff impacts and navigate the promotional retail environment. The company highlighted its efforts to streamline operations, reduce costs, and focus on its core product lines to maintain competitiveness. Analysts also expressed interest in the company's innovation roadmap and its potential to drive future growth.

Full transcript - Clarus Corp (CLAR) Q3 2025:

Conference Call Moderator, Clarus Corporation: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Clarus Corporation's financial results for the third quarter ended September 30, 2025. Joining us today are Clarus Corporation's Executive Chairman, Warren Kanders, CFO, Mike Yates, President of Black Diamond Equipment, Neil Fiske, and the company's External Director of Investor Relations, Matt Berkowitz. Following the remarks, we'll open the call for your questions. Before we go further, I would like to turn the call over to Mr. Berkowitz as he reads the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Matt, please go ahead.

Matt Berkowitz, External Director of Investor Relations, Clarus Corporation: Thank you. Before we begin, I'd like to remind everyone that during today's call, we will be making several forward-looking statements, and we will make these statements under the safe harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements reflect our best estimates and assumptions based on our understanding of information known to us today. These forward-looking statements are subject to potential risks and uncertainties that could cause the actual results of operations or financial condition of Clarus Corporation to differ materially from those expressed or implied by the forward-looking statements. More information on potential factors that could affect the company's operating and financial results is included from time to time in the company's public reports filed with the SEC. I'd like to remind everyone this call will be available for replay starting at 7:00 P.M. Eastern Time tonight.

A webcast replay will also be available via the link provided in today's press release as well as on the company's website at claruscorp.com. Now I'd like to turn the call over to Clarus's Executive Chairman, Warren Kanders.

Warren Kanders, Executive Chairman, Clarus Corporation: Good afternoon, and thank you for joining Clarus's earnings call to review our results for the third quarter of 2025. I am joined today by our Chief Financial Officer, Mike Yates, who will cover our third quarter results, including adventure segment performance, as well as Neil Fiske, who will discuss our outdoor segment. During the third quarter, despite a difficult global consumer market, we made progress executing against our strategic plan. Our quarterly results reflected incremental financial improvement as we continue to reshape our organizational structure, product offering, and go-to-market approach, while also balancing the real-time evolution of global demand trends and consumer sentiment. Clarus generated net sales of $69.3 million in line with our expectations, which was a 3% increase over the same period last year, and quarterly adjusted EBITDA increase of 15%.

Mike and Neil will detail the segment figures, but at a high level, these increases were driven by strong outdoor demand. In North American wholesale, our largest channel, and success with a new adventure customer in Australia and sales from Rocky Mounts. A key highlight in the outdoor segment has been the success of the revamped Black Diamond apparel line, which saw sales growth of 29%. Apparel is critical to our growth strategy, and we continue to be encouraged by positive signs that our new approach to apparel and enhanced creative direction is resonating with customers in both the retail and direct-to-consumer channels. Neil and his team have done an outstanding job prioritizing our best customers and our most profitable products and styles, evident in the stronger quality of revenue.

Full-price product sales increased, sales from discontinued merchandise declined significantly, and the highest margin A styles represent approximately 70% of our inventory, which is a figure that has continued to trend upward in recent quarters. Now turning to our adventure segment, we continue to make operational progress during the third quarter and have been pleased with the direction of the business under the new leadership team. There is significant work to do, but our simplified organizational structure is a step in the right direction. Of note, Q3 SG&A was down $600,000 year-over-year, driven by the reorganizations we completed in November 2024 and July 2025, as well as other expense reduction initiatives. On an annualized basis, we have taken out $1.1 million of fixed costs from the business in our most recent reorganization.

Counterbalancing these positive developments, macro, trade, and consumer headwinds continue to weigh on near-term financial results across both segments. While the latest trade deal should ease some of the tariff burden, outdoor and adventure margins and cash flows were again pressured by increased tariff costs and cash outlays in the third quarter. Our outdoor segment also dealt with significant losses on FX contracts in 2025, which amounts to $600,000 EBITDA impact in the third quarter. When these contracts roll off in 2026, we will see a lift in product margins. At adventure, margins came in below expectations, primarily due to a combination of tariff-related headwinds on products sold in the United States, higher freight costs to customers, and aggressive pricing of slow-moving inventory as we work through SKU rationalization and overall inventory simplification.

In addition, pricing in several of our markets, particularly Australia, has not kept pace with inflation or our cost base, which has contributed to margin erosion. We will continue to take proactive steps to address these issues, including price increases in our US Rocky Mounts line and a planned pricing reset in ANZ to restore profitability. Overall, in the face of a challenging macro environment, we continue to take decisive actions to enhance margins and set the stage for sustainable growth and profitable growth over the long term. With that, thank you for being with us today, and I will turn the call over to Neil.

Neil Fiske, President of Black Diamond Equipment, Clarus Corporation: Thanks, Warren. Turning to slide six, I will review the outdoor segment's Q3 performance and our expectations for the remainder of 2025. Overall, we delivered solid results for Q3 in the face of stiff macro, trade, and consumer headwinds. I'm pleased with our continued progress, the strengthening of the Black Diamond brand, and reshaping of the business to be more focused, more profitable, and more competitive. Revenue, gross margin, and EBITDA were all up for the third quarter compared to prior year's third quarter, excluding Peep. Costs were down, and inventories ended the period in great shape. As with my last update, I'll address tariffs and currencies at the top of my remarks. My remarks exclude the Peep brand, which we divested on July 11, 2025, in the year-over-year comparisons. First, tariffs.

In early May, we initiated the first phase of our tariff mitigation plan, which included raising prices, negotiating vendor concessions, air freighting products where necessary, and accelerating our exit out of China. On our last call, we estimated that in 2025, we could offset roughly half of the tariffs that were in place at the time, which included 50% on steel and aluminum, 54% on China, and a 10% reciprocal tariff on most other countries. Since then, reciprocal tariffs have increased from the original 10% to a range of 20%-35% or more. We estimate the unrecovered impact of tariffs on EBITDA will be $2,500,000-$3,500,000 in 2025. With the second round of tariff mitigation actions going into effect in 2026.

We expect to offset about 70% of the annualized tariff impact next year, approximately $7.8 million out of the $11 million in tariffs, leaving us again with approximately $3.2 million in unrecovered tariffs. We believe that $3.2 million represents the downside as we see it today. Further reductions in the tariff burden will come over time from sourcing, product reengineering, and new product introductions, but those initiatives will take time to fully materialize. Next, let me address currency. While we've benefited from the translation of the higher euro to the dollar, we also incur significant losses on FX contracts in 2025. Year to date, these losses, which amount to $1.3 million. Of $1.3 million swing year-over-year, float through and suppress product margins. We roll off these contracts at the end of 2025. Now, let's turn to operating results. Revenue for the quarter was ahead of the prior year by 0.7%.

Breaking that number down further, we showed a solid growth of 4% in our full-price inline business and a 37% reduction in sales from discontinued merchandise, again reflecting a healthier business and stronger quality of revenue. By region and channel, North America wholesale, our largest channel, had a very strong quarter, up 15.6% from the prior year period. North America digital D2C, which represents 13.6% of the region's revenue, was down 16.5% as we continued to pull back on per-channel sales. We also saw some sales pull back from our price increases as we were generally ahead of the market in implementing tariff-impacted prices. Margins, however, lifted 820 basis points, and we were actually ahead of the prior year period on channel contribution margin dollars, reflecting a much-improved profitability equation for the channel. In total, North America was up 9.1% versus prior period.

Europe wholesale, without the impact of FX contracts, was up 2.9% in dollars and down 3% on a constant currency basis. Europe digital D2C, which is 5.8% of the region's revenue, was down 16% in dollars and 21% in constant currency. Here again, we pulled back on pro sales and discounting, which resulted in a 570 basis point improvement in margin. In Europe, without the impact of FX contracts, the region was down 1.9% in revenue, 4.0% in constant currency. Our international distributor channel was down 28.9%, reflecting the timing shift discussed on our last call. Wherein we have realigned our deliveries to better suit the needs of our international markets. We have now fully cycled those two shifts from Q1 into Q4 and from Q3 into Q2. We expect normalized comps going forward.

Within our business units of apparel, mountain, climb, ski, and footwear, we saw breakout growth in apparel and solid sales in mountain, offset somewhat by softness in climb, a strategic pullback in ski, and narrowed focus in footwear. Decline is consistent with broader industry trends based on point-of-sales data. I want to call out in particular the strong momentum we are seeing in apparel across channels and regions. Apparel was 23% of our mix in Q3, up 490 basis points from a year ago. Total apparel sales were ahead by 29% versus the prior period, with inline sales up 40.5% and discontinued merchandise down 24%. Margins, meanwhile, were up 650 basis points for the apparel business unit. Overall, a great story upon which we expect to build. Turning to gross margin, our results reflect the progress we are making in building a healthier full-price premium brand.

Gross margin was ahead of prior year by 320 basis points. Excluding the impact of FX contracts, comparable gross margins were up by 410 basis points. Operating expenses, excluding restructuring and legal costs from both periods, were down 4.6%. Adjusted EBITDA came in at $4.7 million for the quarter, up 9% to prior year period. Inventories ended the quarter in great shape. We were up 2.1% compared to the prior period at $62.8 million, largely due to increases in capitalized duty from higher tariffs. Inventories of discontinued merchandise is down $2.1 million, or 25% at quarter end. We are now near our target of having 70% of our inventory against our best-selling A styles.

Operationally, we've made great strides in rebalancing our supply chain in response to the current tariff environment and expect to see new country of origin production up and running in 2026 for headlamps, climbing helmets, and other categories historically sourced from China. We have also deployed a new state-of-the-art sales and operation planning capability, which is expected to better match supply and demand globally and within each channel. Organizationally, the company is leaner, more focused, and more productive. Lastly, I want to give a big shout-out to our creative teams. We have elevated the creative expression of the brand through our new website, recently launched catalog, and refreshed marketing assets. While our product line exudes that rare alchemy of beautiful design and superior engineering that has always set BD apart. The brand looks better than ever, and our creative just keeps getting stronger: fresh, original.

Progressive, and true to who we are. Looking ahead to the fourth quarter, our outlook is more cautious. Consumer sentiment remains low. Promotional activity seems to be on the rise as the broader market struggles to balance cash and working capital requirements. Macro factors continue to cause uncertainty and disruption. Tariff impacts are not yet fully understood nor manifested. Retailers are taking a conservative stance. Against this backdrop, we'll continue to simplify, reduce costs, and stay laser-focused on the fundamentals of our strategy. In closing, I'd like to thank our teams around the world for their incredible perseverance, creativity, and drive in the face of this turbulent, often chaotic, and certainly unpredictable global environment. With that, I'll turn it back to Mike.

Conference Call Moderator, Clarus Corporation: Thanks, Neil. Good afternoon, everyone. On today's call, I'll provide brief comments on the adventure segment, and we'll then conclude with a summary of the third-quarter financial results followed by the Q&A session. Let's take a closer look at adventure. Our team delivered 15.9% year-over-year growth versus the third quarter of last year. Excluding the Rocky Mounts acquisition, organic growth was 7.4%, which is a solid step forward. Consistent with our strategic focus on expanding our customer base, a strong pipeline filled with a new Rhino-Rack customer in Australia drove much of the growth, which was partially offset by declines in the recovery product line. Adventure's adjusted EBITDA came in at $349,000, which is about $100,000 ahead of last year. Gross margin in adventure continues to be pressured, mainly due to additional tariffs in the U.S., inventory clearouts, and cost of freight to customers.

We made price adjustments to the Rocky Mounts line in the US at the end of the third quarter, which will help offset the tariff impact and protect our gross profit dollars moving forward. In Australia, we have not done a good job capturing price on an annual basis. The lack of price capture has meaningfully contributed to margin erosion, and we are implementing an updated pricing strategy for ANZ that will be one of our near-term actions to recover profitability. With that said, we do expect gross margin percentages to stay below historical levels as these changes work through our P&L. On a more positive note, we reduced SG&A by $600,000 versus the third quarter of last year. That improvement came from the reorganizations we completed in November of 2024 and July of 2025, as well as tighter control over travel, marketing, and event spending.

As Warren noted, on an annualized basis, we've taken out $1.1 million of fixed costs from the business from our most recent rightsizing actions. Under the new leadership of Trip Wyckoff, there's a renewed focus on executing the next phase of the adventure growth strategy. As detailed in prior calls, we've previously identified investment opportunities to expand adventure's global presence. While making these investments, we have experienced declining sales and profitability trends. We are not abandoning these initiatives. However, as we balance growth objectives and operational improvements, our focus is on serving our existing customer base with better products and more fitments that should drive improved profitability. The past few months have been about getting clear on our challenges and resetting our direction, both in the short term and on the longer-term horizon. We're focused on getting leaner, more efficient, and setting ourselves up to grow the right way.

In August, we opened our 3PL warehouse in the Netherlands. We started conservatively with the inventory position, and we anticipate new customer orders shipping from the facility in the fourth quarter of this year. The new facility helps us serve customers more effectively in the Nordic, U.K., and European markets, and it opened doors with smaller and mid-size accounts that previously could not import full containers from Australia. This is exactly the kind of strategic growth we want to see. On the U.S. tariff front, while the added costs are a headwind, we have determined it still makes sense to maintain production in Australia and China for now. About 75% of our total volume is not impacted by these tariffs, so it would not make sense to increase FOB costs across the board just to avoid tariffs on a smaller portion of our sales. We have been constantly challenging our supply chain.

To move production when it's financially sound to do so. In the meantime, we've invested in sourcing some high-value MaxRack traction board production in Salt Lake City, a big step towards greater control and reliance. Our Asian supply partners have also stepped up, helping offset some tariff costs with unit price reductions. We'll be adjusting Rhino-Rack pricing in the US on December 1 to stay ahead of further pressure. Right now, we're in the high season of our core Australian market, and we're seeing healthy early spring sell-through. For the rest of the year, our priorities are clear: drive profitable top-line growth while keeping SG&A and personnel expenses tightly managed. Looking ahead, our biggest opportunity lies in product innovation. This has been an underperforming area for a few years, and it's where we're focusing our energy.

We're adding resources, expanding our vehicle fit team to move faster, and bringing in experienced product developers with deep category knowledge. We've built a three-year innovation roadmap that we're confident will disrupt multiple product categories and help us maintain leadership in the Australian market while breaking through with share gains in the Americas and rest of the world. This has been a challenging year for adventure, there's no doubt about that, but it's also been a pivotal one. We've faced the hard truths, we're taking meaningful actions, and we're positioning the adventure business for a much stronger, more innovative future. With that, now let me turn to the consolidated and segment financial review on slide 8. Third-quarter sales were $69.3 million compared to $67.1 million in the prior year third quarter.

The 3% increase in total sales was driven by the increase in the adventure segment of 16% and a decrease in the outdoor segment of 1%. However, as Neil noted, outdoor revenue was actually up 1% when you exclude peaks from both periods. The consolidated gross margin rate in the third quarter was 35.1% compared to 35% in the prior year quarter. Gross margin was impacted by higher sales volumes at adventure and a favorable product mix at outdoor. These increases were partially offset by an unfavorable product mix within adventure, primarily driven by higher Rocky Mounts sales in North America, US-imposed tariffs impacting both segments, and lower volumes at outdoor after the sale peaks in July. Along with the headwinds caused by losses on the foreign exchange contracts at outdoor. Adjusted gross margin was 35.1% for the quarter compared to 37.8% in the year-ago quarter.

We did not adjust gross margin in the third quarter of 2025, but I want to note that actual gross margins include significant headwinds from tariff and FX, a couple of items that have been outside of our control. The significant efforts at outdoor under Neil's leadership to improve gross margins are being realized, but were partially offset by the tariffs and FX this quarter. Gross margin at outdoor was 36.0% for the third quarter of 2025 compared to 33.2% in the prior year. This performance is outstanding and is exactly what we were expecting to see prior to tariffs and the change in the euro rate. The results at adventure are much more challenging due to the gross margin headwinds I just discussed. Adventure's gross margin was 33.2% for the third quarter of 2025 compared to 40.1% in the prior year. Now on to SG&A.

Third-quarter SG&A expenses were $26.2 million compared to $27.9 million, or down 6% versus the same year-ago quarter. The decrease was primarily due to lower employee-related costs, lower costs from Peep due to the divestiture, and other expense reduction initiatives to manage costs across the segments and at corporate. Adjusted EBITDA in the third quarter was $2.8 million for an adjusted EBITDA margin of 4.0%. Our adjusted EBITDA is adjusted for restructuring charges, transaction costs, stock compensation expenses, contingent consideration benefits, and other inventory reserves. Additionally, as noted in prior quarters, beginning in the first quarter of 2024, we adjusted legal costs associated with the Section 16(b) litigation and the Consumer Product Safety Commission DOJ matter known as the CPSC and DOJ matters. These legal costs were $1.0 million in the third quarter of 2025 and $3.5 million in total for the first nine months of 2025.

The third-quarter adjusted EBITDA by segment was $349,000 at adventure and $4.7 million at outdoor. Adjusted corporate costs were $2.3 million in the third quarter. Let me shift over to talk about liquidity in the balance sheet. Free cash flow defined as net cash provided by operating activities less capital expenditures for the third quarter of 2025 was a use of cash of $7.0 million. This compares to a use of cash of $9.4 million for the three months ended September 30th, 2024. Total debt on September 30th, 2025, was $2 million. As a reminder, this debt is related to an obligation associated with the Rocky Mounts acquisition and will be paid in December of 2025. We have no other third-party debt outstanding. At September 30th, 2025, cash and cash equivalents were $29.5 million compared to $45.4 million at December 31st, 2024.

We used $7 million of free cash flow in the third quarter. In early July, we closed on the sale of the Peep Snow Safety brand and realized the cash proceeds from the sale of the brand. I do expect the business to generate free cash flow during the fourth quarter consistent with our historical performance, and I expect our consolidated cash balance to be in the range of $35-$40 million by the end of the year. Let me spend now a brief moment on guidance. Regarding our full year outlook, we have again elected to not provide 2025 guidance consistent with our position over the last few quarters. While we believe we have handled the tariffs with effective countermeasures in place, ongoing uncertainty related to trade, consumer sentiment, and the overall macroeconomic environment make it really difficult to confidently forecast the business.

Currently, based on what we know about our order book and tariffs, we are satisfied that our actions to date are consistent with market conditions. However, due to the ongoing uncertainty, we believe it best to remain cautious and continue to not provide guidance. In addition to my comments about our cash balance, our business historically has been seasonal with a 45%-55% revenue split between the first half and second half of the year, and I believe we will continue to see that in the second half of 2025. Finally, I will add that revenue for the month of October exceeded our forecast for both segments. Let me move on to legal. I'd like to provide an update on the outstanding Section 16(b) securities litigation matters that the company is pursuing, as well as an update on the open matter with the CPSC and the Department of Justice.

We continue to proceed in our lawsuit against Hap Trading LLC and Mr. Arish A. Padilla. In early 2025, the court granted summary judgment in favor of the defendants. We subsequently filed a notice of appeal and are opening appellate brief. Hap has filed its opposition brief, and a reply brief will be filed this Friday, November 7th. Oral arguments will likely be scheduled in the first quarter of 2026. We also filed a lawsuit against Capiton Management and its related entities and controlling persons. The defendants filed a motion to dismiss, which was denied. The case is in discovery phase, with documents having been exchanged and depositions likely to be held during the first quarter of next year. In the meantime, a mediation is scheduled for November 25th of 2025. With respect to the open matters with the CPSC and DOJ.

In late 2024, the company was notified by the CPSC that the unresolved matter involving Black Diamond had been referred to the Department of Justice. In early 2025, the DOJ served the company and Black Diamond with grand jury subpoenas requesting various categories of documents related to Black Diamond's avalanche beacons. We are cooperating with the DOJ in responding to its discovery requests and have produced substantially all the documents requested. Additionally, in early 2025, the company received a letter from the CPSC requesting various categories of documents and information in connection with a new investigation into whether BDEL sold products that were subject to a recall. The company has cooperated with the investigation, responding in full to the CPSC's document request, and has heard nothing further.

In conclusion, turning back to our two core segments, we believe the actions we've taken to prioritize our best customers and our most profitable outdoor products and styles, together with a simplified organizational structure with an emphasis on product and fitment and adventure, position Clarus for long-term success. Supported by a balance sheet with zero third-party bank debt, we are committed to taking a prudent approach to capital allocation and managing our business to drive long-term market share gains while delivering sustainable value for our shareholders. At this point, Operator, we're ready to take questions. At this time, I would like to remind everyone in order to ask a question, press star and then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Laurent Vasilescow with BNP Paribas.

Your line is now open. Please go ahead. Hey, good afternoon. Thanks for taking my question. This is William Dawson on for Laurent. Hello, William. My first question. Yeah, thank you. Thank you. My first question was, with just parsing out the outdoor segment sales, they were flat in the quarter, but Black Diamond apparel was up 29%. Could you just parse out what was the offset to the Black Diamond strength? I'll let Neil expand too, but the Peep was essentially zero in the quarter, so that's a year-over-year headwind. The real challenge, and I think Neil covered in his remarks, was the D2C business. The North American D2C business was down 16.5%, and the European D2C business was also down 16%. The short answer is no Peep, D2C was weak across the globe, and that offset the North American wholesale strength.

The apparel business is part of the North American wholesale. That's where we captured that as part of the wholesale business. Okay. I appreciate that, and congrats on the success with Black Diamond. My other question would be on just how your retail partners are ordering for the spring of 2026 in the outdoor segment. How much more conservative are they going to be in this backdrop? As well, while we're looking forward, just wanted to get any thoughts that you had on the holiday this year. I appreciate it. I can start with that. I think the holiday is always kind of a little bit of an unknown, right? The coming next year. My point was that Neil answered that question. Sure. Yeah. On the first question, William, regarding spring. Our order books look pretty good for spring. Certainly reflects some caution on.

The part of our retail partners. Our order book is up. Of course, ultimately, it comes down to how much of that sticks. I think the indications are quite positive. We feel like we have really good momentum in the wholesale channel, both with our big national accounts, REI and MEC, as well as Amazon. Real strength and specialty. I think looking ahead to spring, we feel as good as we can in this environment about the strength of the wholesale channel. That is part one. Regarding the fourth quarter, I think that we are just cautious. As Mike said, it is too early to tell. We do see the environment being more promotional. We see retailers being cautious and not wanting to take on too much inventory. I would say.

90% of the game is still to be played in the fourth quarter. We are cautious. I think it is prudent to be cautious in this environment. It is really hard to find a trend line at this point for Q4. Definitely understand. Thank you for the color and best of luck this year. Again, if you would like to ask a question, please press star one on your telephone keypad. There are no further questions at this time. I will now turn the call back over to Mike Yates for closing remarks. Okay. Great. Thank you very much. I want to thank everyone for attending the call this afternoon and your continued support and interest in Clarus. We look forward to updating you on our results again next quarter. Thank you. Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Everyone, have a great day. Bye.

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