Interesting story here. The financial outlook for the majors seems to be pointing towards a buyers market for firearms for the next 12-18 months.
Market analysts backed away from gun makers last week after Smith & Wesson executives slashed the company’s forecasted annual earnings by $100 million.
Maksim Netrebov, founder of New Jersey-based Maks Financial Services and contributor at Seeking Alpha, slammed the gun maker’s holding company, American Outdoor Brands, in a Dec. 11 article for evading questions regarding why the lowered guidance came only now — and not a year ago when President Donald Trump’s electoral victory left the industry flush with inventory and short on demand.
“If we are on the Titanic, the Iceberg is now visible, it is too late to stop the ship and the deck chairs are arranged,” he said. “The industry demand is deteriorating both significantly and quickly, the companies bet wrong and are now sitting on massive inventories, even larger manufacturing capacities which they spent billions on, and are playing ‘chicken’ with each other seeing who will blink first and cut their production.”
Those companies — American Outdoor Brands, Vista Outdoor and Sturm, Ruger and Co. — have all reported diminished earnings over the last year, citing a return to seasonal sales patterns after lingering promotions die down, presumably by the year’s end.
As 2018 fast approaches, however, American Outdoor Brands CEO James Debney told investors the rock-bottom pricing will stick around awhile longer — a sentiment echoed by top executives at Vista and Ruger in November.
“We are not yet seeing the recovery that we expected to see,” said Vista Outdoor Chief Financial Officer Stephen Nolan during a conference call with investors Nov. 9. “Shooting sports has always been a cyclical industry with periodic downturns lasting anywhere from 12 to 24 months. While we may not be at the bottom as of yet, we believe that we are very close and we anticipate that the market will show returns to growth over the next 18 months.”