Smith & Wesson Holding Corp. reported earnings from continuing operations fell in its latest quarter amid declining lower long gun sales. The company also gave a down outlook for the year.

Sales for the full year are expected to fall as much as 7 percent in fiscal 2015 to a range of $585 million to $600 million. Analysts had been forecasting sales to slip less than 1 percent to $621 million. It expects earnings per share of $1.30 to $1.40, less than Wall Street’s average estimate of $1.50.

In the fiscal fourth quarter ended April 30, continuing profits fell 13.0 percent to $24.9 million, or 45 cents a share. Revenues declined 4.6 percent to $170.4 million. Excluding Walther products that were sold in the prior, sales declined 1.5 percent.

Gross margins improved to 40.9 percent from 38.3 percent as a result of a favorable product mix, absorption, and manufacturing efficiencies, as well as reduced promotions and the absence of lower-margin Walther product sales. Operating expenses jumped to 15.6 percent of net sales, compared with 12.1 percent, primarily driven by higher sales and marketing expense, ERP implementation costs, and employee-related costs.

On a conference call with analysts, James Debney, Smith & Wesson’s president and CEO, said unit growth in handguns grew more than 30 percent but that was offset by “weakness in long guns as consumer demand in the modern sporting rifles cooled significantly.”

The slowdown was not a suprise and overall results were above internal guidance, which had been adjusted to the weakened market demand for modern sporting rifles.

Debney noted that handgun-related checks decreased 11 percent compared to its unit handgun growth of over 30 percent for the same period. He added, “We view this as extremely favorable since taking market share with handguns is core to our long-term growth strategy. And we believe we took share even when you take into account inventory replenishment that occurred in the channel.”

But he added that while channel inventories remain low for several of Smith & Wesson’s products through the fourth quarter, channel inventories since April 30 for most of these products have now reached optimal levels, largely due to modern sporting rifles. Debney added, “We will continue working closely with our distributors and retailers to help make sure their orders accurately reflect their needs. We believe that channel inventory of modern sporting rifles – and here I am talking about all brands – will work its way through the channel by the end of the calendar year.”

The company expects net sales for the first quarter of fiscal 2015 to be between $130.0 million and $135.0 million and GAAP earnings per diluted share from continuing operations of between 23 and 25 cents a share for the first quarter of fiscal 2015. In the year-ago period, it earned 40 cents a share on sales of $170.2 million.