Fox Factory Reports $259.7 Million Net Loss Amid Goodwill Impairment and Increased Sales

Fox Factory Holding Corp. reported a significant financial downturn in its latest quarterly results, with a net loss of $259.7 million for the three months ended April 4, 2025, compared to a loss of $3.5 million in the same period last year. This dramatic increase in losses was primarily driven by a non-cash goodwill impairment charge of $262.1 million, attributed to adverse changes in U.S. tariff policies and a decline in the company's stock price. Despite these challenges, the company saw a 6.5% increase in net sales, reaching $355 million, up from $333.5 million in the prior year, largely due to higher demand for aftermarket products and growth in its bike sales.

The company's cost of sales also rose, increasing by 6.6% to $245.4 million, reflecting the higher sales volume. Gross profit for the quarter was $109.7 million, maintaining a gross margin of 30.9%. Operating expenses surged to $360.3 million, a substantial increase from $94.3 million in the previous year, primarily due to the goodwill impairment. Other operating expenses, including general and administrative costs, sales and marketing, and research and development, saw modest increases, indicating ongoing investments in growth despite the financial strain.

In terms of operational metrics, Fox Factory's three segments—Powered Vehicles Group, Aftermarket Applications Group, and Specialty Sports Group—each contributed to the overall sales increase. The Powered Vehicles Group reported sales of $122.1 million, a 3.4% increase, while the Aftermarket Applications Group saw a 9.9% rise to $111.9 million. The Specialty Sports Group's sales increased by 6.6% to $121 million. However, the company faced headwinds from high interest rates affecting consumer demand and inventory recalibrations in the bike channel.

Looking ahead, Fox Factory remains cautious about its outlook, citing ongoing challenges such as high inventory levels at dealerships and the impact of tariff policies on its cost structure. The company is focused on leveraging its existing liquidity and access to its $650 million credit facility to navigate these uncertainties. Management emphasized the importance of strategic investments in product innovation and market expansion to drive future growth, despite the current economic pressures. The company expects that its cash on hand and operational cash flow will be sufficient to support its activities in the coming year.