BYRN Q1 2025: Amazon Share Jumps to 32.6% of DTC Sales, Compact Launcher Readies Channel Expansion

April 10, 2025 | By EarningsIQ Research

Berna’s first quarter showcased sustained revenue momentum and a decisive move toward Amazon-centric direct-to-consumer (DTC) sales, while operational focus shifted to the high-margin Compact Launcher (CL) rollout and U.S. supply chain onshoring. Margin resilience and channel innovation position Berna for sequential growth, even as tariff and inventory dynamics reshape the business model for the year ahead.

Summary

• Amazon Channel Surge: Amazon’s share of DTC sales accelerated, now representing nearly a third of volume.
• Tariff Mitigation Playbook: U.S. supply chain shift cushions against tariff shocks and unlocks future margin upside.
• CL Launcher Launch: Anticipated product release and experiential retail partnerships set the stage for multi-channel growth.

Performance Analysis

Berna delivered 57% year-over-year revenue growth in its seasonally slowest quarter, with net revenue reaching $26.2 million. This performance was propelled by channel expansion, notably in Amazon.com and dealer sales, and improving brand adoption. Amazon’s DTC share grew from 19.3% in Q1 2024 to 26.9% in Q1 2025, and has already reached 32.6% in March, reflecting Berna’s strategy to treat Amazon as a dedicated business center with focused management. Dealer sales, particularly to chain stores like Bass Pro Shops, also surged, further diversifying revenue streams.

Gross margins improved to 61%, up from 58% a year ago, driven by design-for-manufacturability and higher production volumes. Operating expenses rose due to increased marketing, selling expenses, and payroll, but net income climbed to $1.7 million from near break-even, demonstrating operating leverage. Inventory increased to $23.2 million, reflecting a deliberate build ahead of the Compact Launcher debut, while cash levels decreased as expected due to working capital needs. Notably, Berna remains debt-free, underpinning financial flexibility.

• Amazon Outpaces DTC: Amazon’s DTC sales growth outstripped Berna.com, with margin structure benefiting from lower ad spend and logistics costs.
• Dealer Channel Expansion: Dealer sales, especially through chain stores, provided a meaningful incremental revenue lift.
• Gross Margin Expansion: Margin gains reflect both operational improvements and favorable channel/product mix.

Sequential sales trends improved through the quarter, with daily DTC sales rising from January through March, hinting at pent-up demand ahead of the CL launch. The business model’s flexibility and multi-channel approach are driving both top-line growth and profitability, even as Berna transitions to full taxpayer status with a 23% effective tax rate for 2025.

Executive Commentary

Strategic Positioning

1. Amazon-Centric DTC Acceleration

Berna’s direct-to-consumer model is evolving rapidly, with Amazon becoming the growth engine. The company’s strategic decision to assign a dedicated Amazon sales manager and treat the platform as a standalone business unit is paying off, as Amazon’s share of DTC sales has surged to 32.6% in March. The margin profile is attractive, with Amazon gross profit margins 2.6% higher than Berna.com, driven by lower freight, advertising, and payment processing costs. The upcoming introduction of Buy with Prime on Berna’s own site is expected to further optimize net margins and logistics efficiency.

2. Retail and Experiential Channel Innovation

The Sportsman's Warehouse “store within a store” pilot and expansion into 54 locations marks a pivotal move in experiential retail. By enabling customers to try products in-store, Berna is leveraging high conversion rates (50% to 68%) observed in its own retail outlets versus low online conversion. This approach, coupled with “Burna genius” staff and shooting experiences, is designed to drive customer education and accelerate adoption, especially as the CL launches.

3. Compact Launcher Ecosystem and Product Mix

The CL launch is a watershed moment for Berna’s product strategy and margin structure. The CL, priced at $549.99 (above existing SKUs), is engineered for concealed carry and appeals to new demographics, especially women. Its proprietary 61 caliber round, exclusive to Berna, creates a closed-loop ammo ecosystem, locking in recurring ammo sales and reducing price competition. Higher CL margins (7-8 points above legacy launchers) and accessory attach opportunities further enhance long-term profitability.

4. Tariff Mitigation and Supply Chain Resilience

Berna’s proactive supply chain onshoring has insulated the business from recent tariff shocks. By raising U.S. content to 87-92% and relocating ammo production to Indiana, Berna avoids the brunt of new tariffs, limiting cost inflation to 16% versus a potential 29%+ if reliant on China. The move also reduces soft costs tied to quality control and inventory in transit, with expected incremental margin benefits as U.S. sourcing matures.

5. Capital Discipline and Inventory Strategy

Inventory build is strategic, not reactive, supporting the CL launch and channel fill. The company’s cash drawdown is deliberate, with ample liquidity and no debt, positioning Berna to capture demand spikes without risking stockouts or customer dissatisfaction. This approach also enables agile channel allocation as real-time demand signals emerge post-launch.

Key Considerations

Berna’s Q1 reflects a company actively reshaping its business model for channel, product, and supply chain agility. The quarter’s dynamics offer several key takeaways for investors evaluating execution risk and upside potential:

Key Considerations:

• Channel Mix Shift: Amazon’s outperformance is reshaping DTC economics and may influence future marketing and logistics investment decisions.
• Product Innovation Leverage: The CL’s higher price point and proprietary ammo position Berna for both margin expansion and recurring revenue capture.
• Retail Experience as a Conversion Engine: Experiential selling at Sportsman’s and company-owned stores is driving conversion rates far above digital-only channels.
• Tariff and Supply Chain Hedging: Early supply chain moves have shielded gross margins and ensured product availability, a differentiator in a volatile trade environment.
• Advertising ROI Discipline: Management is pulling back on new ad spend for the CL launch, relying on a 700,000-strong opt-in email base and pent-up demand to drive initial sell-through.

Risks

Key risks include: potential demand volatility post-CL launch, risk of overbuilt inventory if initial sell-through underperforms, execution risk in scaling retail partnerships, and ongoing exposure to macroeconomic consumer confidence swings. While Berna’s tariff mitigation is robust, any further escalation in global trade disputes could still pressure input costs or supply continuity. The transition to full taxpayer status will weigh on net income, and any operational hiccups in CL production or channel fill could disrupt the sequential growth narrative.

Forward Outlook

For Q2 and the remainder of fiscal 2025, Berna expects:

• Sequential revenue growth as the CL launch drives channel fill and consumer refresh cycles.
• Gross margin stability, with incremental upside from higher-margin CL sales and continued supply chain localization.

For full-year 2025, management projects:

• Effective tax rate of approximately 23% as the company transitions to full taxpayer status.

Management highlighted:

• Advertising spend will remain muted until later in the year, with CL demand driven by existing customer outreach and channel partners.
• Inventory levels are expected to normalize post-CL launch, with cash generation ramping as sell-through accelerates.

Takeaways

Berna’s execution this quarter signals a company leveraging channel agility, product innovation, and supply chain foresight to drive growth and margin durability.

• Amazon Channel Dominance: The rapid increase in Amazon’s share of DTC sales is reshaping Berna’s revenue composition and cost structure, with implications for future channel strategy and marketing spend.
• Product Cycle Inflection: The CL launch is not just a product refresh but a strategic lever for margin expansion, recurring ammo revenue, and customer base diversification.
• Operational Resilience: Proactive supply chain moves and disciplined capital allocation have positioned Berna to absorb shocks and capitalize on demand spikes, but execution on multi-channel rollout and inventory management will remain critical watchpoints.

Conclusion

Berna’s Q1 performance and strategic maneuvers reflect a company with growing channel leverage, margin resilience, and operational flexibility. The upcoming CL launch is a major catalyst, but sustained success will hinge on channel execution, supply chain efficiency, and the ability to convert experiential retail innovation into scalable revenue growth.

Industry Read-Through

Berna’s Amazon-centric DTC acceleration and experiential retail expansion offer a template for consumer brands navigating omni-channel disruption. The company’s proactive supply chain onshoring and tariff mitigation stand out in a sector often caught flat-footed by trade volatility. Competitors in non-lethal personal defense and adjacent consumer hardware categories should note the margin and conversion rate impact of experiential retail, as well as the ecosystem lock-in potential of proprietary consumables. The CL launch’s focus on underserved demographics and channel fill strategy may reshape category expectations for both product innovation and go-to-market agility.

BYRN Consumer Discretionary Personal Defense Ecommerce Retail Partnerships Supply Chain Tariffs Product Launch