American Outdoor Will Split From Smith & Wesson Gun Business

American Outdoor Brands said it will split into two publicly traded companies, one focused on firearms and the other on outdoor products, in an effort that may help it boost values that have flagged under pressure for gun reforms in the U.S.

The resulting companies—Smith & Wesson Brands and American Outdoor Brands—will be achieved through the spinoff of the outdoors and accessories business as a tax-free stock dividend to its stockholders, the Springfield, Mass.-based company said in a statement Wednesday.

American Outdoor has been working to recover from the weak full-year profit forecast it issued in late August, when it said earnings would trail even the lowest analyst estimate at the time. The shares have gained 40% since hitting a 52-week closing low of $5.62 on Oct. 3.

Gunmakers are finding more resistance from retailers as mass shootings in the U.S. make it politically sensitive to sell firearms and ammunition. Earlier this week, firearm manufacturers’ stocks fell after the U.S. Supreme Court refused to block a lawsuit against Remington Arms by family members of some Sandy Hook victims.

Dick’s Sporting Goods moved away from gun sales after last year’s school shooting in Parkland, Fla. Walmart said in September it would discontinue sales of short-barrel rifle ammunition, as well as handgun ammunition. The retailer had faced renewed calls to stop selling guns and ammo after an Aug. 3 mass shooting at one of its stores in Texas.

Trading in American Outdoor was halted at the close after a 2.9% gain to $7.90 in the regular session.