American Outdoor Brands posted really lousy earnings Thursday after the gunmaker said its sales fell 32.6 percent year over year in its fiscal third quarter of 2017.
The company, which is famous for its Smith & Wesson brand, reported the decline in quarterly net sales resulted in their profits sinking 65 percent. And as of Thursday, shares plunged 18 percent in after-hours trading, and are down 26 percent year-to-date. They also reported they had eliminated 200 jobs the last quarter.
American Outdoor Brands sells a variety of weapons, including the popular Smith & Wesson line of handguns and military-style semiautomatic rifles. These AR-15-style rifles are referred to as assault rifles by gun control advocates, but the industry calls them modern sporting rifles.
On the earnings call, CEO James Debney addressed the Parkland shooting, saying, “We share the nation’s grief over this incomprehensible and senseless loss of life and we share the desire to make our community safer. Through our membership and work with National Shooting Sports Foundation, we will continue to support the development of effective solutions that accomplish that objective, while protecting the rights of the law-abiding firearm owner.”
Gun makers have been struggling for some time
Interestingly, the Financial Post writes that market dynamics usually play a role in seeing a rise in gun sales after a mass shooting event. When there are calls from victims, gun control advocates and some politicians for restrictions on firearms ownership, investors usually anticipate an increase in gun sales, and stock prices go up.
However, a “pro-gun control” atmosphere has gripped the country right when the “fear trade” in gun stocks should be running in high gear, but it’s not doing that, this time. Since February 14, American Outdoor shares dropped 15 percent, while shares of Sturm Ruger dropped by 13 percent.
Compare today’s figures to the Newtown shooting in 2012. Ruger stock rose over 25 percent in two months. And look at the Pulse nightclub shooting event in Orlando, Fla. in 2017. RGR stock rose the following Monday by almost 10 percent.
Sturm, Ruger & Company has previously attributed tough comparisons to a sales spike during the political campaigns for the 2016 election as causing the drop in gun stocks. Democratic presidential candidate Hillary Clinton was campaigning on tighter gun controls, and this led to a spike in gun sales.
Vista Outdoor, which sells the Savage Arms line of rifles, Estate Cartridge line of shotshells, M-Pro7 Gun Cleaning System, Gunslick Pro line of gun care products, and Force on Force training ammunition, also reported dismal earnings earlier this year.
Remington, the maker of the Bushmaster rifle used in the 2012 Sandy Hook shooting in Newtown, Connecticut, recently said it’s preparing to file for Chapter 11 bankruptcy.
