Smith & Wesson Gun Sales Continue to Decline

Published on: 21 Jun, 2018

Smith & Wesson Corp., an American gun manufacturer, has been facing declining sales in recent years, struggling to improve performance. The company announced that quarterly sales dropped 25% compared to the fourth quarter of last year and profit dropped over 70%. Sales for this year were down 33% from the previous year and profits plummeted 84%.

American Outdoor Brands (NASDAQ: AOBC), parent company of Smith & Wesson, has been declining in sales and profit since the election of President Trump in 2016, who is endorsed by the National Rifle Association (NRA). Gun sales prior to the inauguration of Trump reached record levels due to concerns of president Obama imposing more restrictive gun control measures.

Smith & Wesson plan to spend less on advertising and firearms production in preparation of another expected year of declining gun sales. The company’s sales were just over $900 million, with firearms sales making up about 68.8% of it, in the business year ending April 30, 2017.

Despite declining sales in recent years, Debney does not seem too troubled and believes that sales will rebound,  saying, “Just as a reminder, over 75% of our firearms revenue comes from handguns. So as we think about the market and I will stress, in the long term, we do believe it will return to growth, slow growth over time”

A series of shootings have been under increased scrutiny and pressure following a series of shootings this year. American Outdoor Brands largest investor, BlackRock, Inc., said, "We are fundamentally looking to understand whether the company has the appropriate policies and controls in place and is sufficiently managing the risks associated with these issues.”

Dicks’s Sporting Goods has also distanced themselves from gun companies, saying that stores will no longer sell assault-type rifles and high capacity magazines. The company also raised the minimum age requirement for all gun sales to 21.

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Nelson Cheng

Email: nelson@financialinsiders.com

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