Why can't gun companies make money?

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What are you people thinking? Both Sturm, Ruger and Smith and Wesson have had good and rising profits over their last three fiscal years.




They had great profit growth during the most recent gun buying panic. That they are not doing well as the panic subsides is not unexpected.

When the gun market stabilizes quarterly profit growth will resume. They both know how to efficiently make and market firearms.
This. Also it's unlikely their debt is like debt posters here have, unpaid bills. Their debt is likely in the form of bond offerings, which large corporations do all the time. And millions of Americans rely on for income.

Sure, sales are flat now, but they're just positioning themselves for the Hay Day times ahead when Hillary is elected.
 
Most gun companies are run by non gun people.

And thank goodness for that. Those companies would be run completely into the ground inside of a year with gun people at the helm.

Have you ever seen how irrational we can get over what we love?


Running a successful company requires good business sense, not pandering to people who won't be satisfied with anything short of perfection for a cost of no more than $400.
 
What is it about the gun business that so many companies are having trouble making money? ...

To answer the the poster's original question... What makes you think they are not making money? Sometimes those in stock market field want a little more (or too much). So.... they want to get those on the board who put profits in front of making a "good gun" and fire the founder/CEO who made a "very good gun" and replace with them with someone who is "profit driven". [ i.e. less skilled labor... cheaper materials ... etc. ] Then quality falls... sales drop ... CEO moves on with "nice severance" ... AND layoffs.

It will be hard to sustain the demand for guns and ammo that the the last "grab scare" buying frezny gave us. See part of post by MifflinKid that shows a few who not doing all that bad.

What are you people thinking? Both Sturm, Ruger and Smith and Wesson have had good and rising profits over their last three fiscal years.

http://finance.yahoo.com/q/is?s=RGR+...atement&annual

http://finance.yahoo.com/q/is?s=SWHC...atement&annual
...

Using the NFL quote below, I wonder what team we are talking about? :) I can think of an obvious one near where I live but, I am not a fan. Yet this team is still making $$$$ ... despite not winning games. They are rated at #3 with a current value of 2.4 Billion; see http://www.forbes.com/nfl-valuations/

Why can't a rich businessman buy a NFL team and get them to win??? Can't transfer the success in one area to another. Most gun companies are run by non gun people.
Joe

My point: these guys are not on food stamps; so don't worry about them.

chuck
 
One of the major problems with all corporations is what I call "corporate incest": no executives ever really get fired, they just move from one office building to another and remain within the same "family" of Peter Principle executives. All the bad "business DNA" has been spread among them all and they all suffer from the same bad financial decisions over and over and over.
 
I think a big reason is the CEO's loot the company like GM was looted after having years of it biggest sales
 
This. Also it's unlikely their debt is like debt posters here have, unpaid bills. Their debt is likely in the form of bond offerings, which large corporations do all the time. And millions of Americans rely on for income.

Sure, sales are flat now, but they're just positioning themselves for the Hay Day times ahead when Hillary is elected.

Hillary is not being elected as POTUS.

Not sure why you keep wanting to start a political debate on THR though.
 
In Colt's case, it's because they're trying to market excessively high prices based solely on the name.
Plus, like rcmodel says, business in not like it used to be. Then you get the on going government interference. Government agencies making laws by regulation, increasingly restrictive legislation, etc, etc.
The car makers are having the same issues. Except they design and make products with a specific life span.
 
In Colt's case, it's because they're trying to market excessively high prices based solely on the name.
Plus, like rcmodel says, business in not like it used to be. Then you get the on going government interference. Government agencies making laws by regulation, increasingly restrictive legislation, etc, etc.
The car makers are having the same issues. Except they design and make products with a specific life span.

Which Colts are excessively high prices?

Because the Colt LE6920 ('AR15') is one of the best values in the substantial AR market these past few years or so.
 
Why can't gun companies make money?


...according to their annual report to stockholders, S&W made 88.63 million in income after taxes in fiscal year 2013. Being in debt does not mean you are not making money. How many of us have a mortgage on our home or have a loan on a vehicle and still show income on our 1040s.
 
In Colt's case, it's because they're trying to market excessively high prices based solely on the name.
Plus, like rcmodel says, business in not like it used to be. Then you get the on going government interference. Government agencies making laws by regulation, increasingly restrictive legislation, etc, etc.
The car makers are having the same issues. Except they design and make products with a specific life span.
without big govt the car makers would be out of business and so would Colt without govt contracts
 
Just read the threads on THR. Where is the cheapest x is probably the most frequently asked question. Hardly anyone asks what is the best machined x, or the highest quality materials x, unless it's followed by an absurdly low dollar amount they are willing to pay.

There is no money to be made in a race to the bottom to satisfy the typical consumer.
 
Gun companies are like any other manufacturing industry. The US is a hard country to be profitable as a manufacturer. High labor costs, stringent environmental regulations, and taxes all eat into the bottom line. Firearm manufacturing adds even more stringent regulations and liability to the mix.
The overall economy and political situations change demand wildly in relatively short time periods. Some companies "bet the farm" on government contracts, and let their civilian offerings dwindle to a few models. Others bought out and merged with other companies, and found themselves competing with their own products.
Overall, I think there is still plenty of profit to be made for a company that is well managed, innovative, and willing to listen to its customer base.
 
I think Glock has an interesting business model.

Their first gun revolutionized the field with the 17. Super high capacity, light weight polymer, police contracts, cheap to produce. If you notice, they sit on a model for a while and let customers grumble about shortcomings for a few years, then BEHOLD...a new model that 'fixes the glitch', ie the 19.

This goes on for the next 25 years. Even now, they throw out the 42 single stack which is a Star Wars "Oh yeah? Watch this!" moment, making it a 380 instead of a 9mm. Here comes the G43, and every Glock fan loses their minds and drops that credit card.

Pretty slick way of doing things.:scrutiny: it's probably why Glock has done so well all these years.

Kind of in the same vein, no matter what the latest thing is that manufacturers crank out, ultimately, we are still dealing with launching a projectile, propelled by gunpowder, down a tube. This basic premise hasn't changed, since 100 years before Columbus bumped into the Bahamas, while going the wrong way to get to China.

A new functional method for doing this hasn't been introduced to the market since the early 20th century. Ultimately, the reason gun companies aren't making money is that they have been marketing pretty much the same thing, for the last 100 years or more. It is, and has been for a long time, a buyer's market.

Very well said!
 
I think Glock has an interesting business model.

Their first gun revolutionized the field with the 17. Super high capacity, light weight polymer, police contracts, cheap to produce. If you notice, they sit on a model for a while and let customers grumble about shortcomings for a few years, then BEHOLD...a new model that 'fixes the glitch', ie the 19.

What the heck are you talking about? :confused:

Offering different size pistols isn't "fixing the glitch"...it's offering different size pistols!
 
Which Colts are excessively high prices?

Because the Colt LE6920 ('AR15') is one of the best values in the substantial AR market these past few years or so.

They are the highest priced among the guns sold at local stores in my area. Colt SAs are very expensive and above most folks' budgets, as is their 1911.
 
They are the highest priced among the guns sold at local stores in my area. Colt SAs are very expensive and above most folks' budgets, as is their 1911.

I can't speak to what your local store has, and how cheap most of it is, but the Colt M4 is one the best deals in the AR15-type rifle market quite often these days.

I'm not surprised their 1911 is expensive. It seems most of the really good 1911s are above most people's budgets, but then I'm not a 1911 guy (and that's part of why!)
 
In the case of Colt, they are suffering from a diluted market. Their two main consumer products are AR-15s and 1911s. They are middle of the pack in both - there are many cheaper competitors at nearly the same quality, and many superior competitors at the higher end. I proudly own two Colt 1911s, but both were used bargains. When I wanted a new "legacy" 1911, Colt was not in the running - I went with a Baer in the $2500 range. When I wanted a 9mm 1911-style, RIA provided me with a great one at a far lower price. It was good enough that I bought two more before they become unobtainable here.

ARs are the same way. In addition, loss of government contract will hurt Colt.

S&W is profitable. They can service their debt, and seem to be doing pretty well.
 
They can, they do, they will...and it's all in a name. Names build trust, and trust gets marketshare. That's really the only reason any of the big names are still around because they all have totally screwed up at one point, and that's not just the gun industry. Toyota killed people with runaway cars, but we're known as a good company who would in good faith fix the mess they made...kinda like Remington with the r51 debacle. Now the key is getting your name into the vocabulary of every person in a marketplace, and attaching a positive connotation. Perfect example is George Kelgren who was involved with several very successful designs while employed by the big names. He started Grendel with his name drawing investor interest and sold a lot of cheap guns, went out of business because they never were known as high quality weapons but more saturday night specials. He used his machine shop as a regular business before trying the gun game again with Keltec, and marketed the company more effectively this time. They are known for decent guns for a good price, and are now known as innovators in the stagnant long gun market. His success is built on his name being a household name.
 
Guns are no different than other durable goods. Why can't Chevrolet make a profit?
Look in the gun case and see how many pistols look nearly EXACTLY alike. Competition is stiff so prices have to be low.
I own a bit of Ruger stock and believe me, they are making money. Companies assuming more debt is nothing new. Sometimes it works and sometimes it flops. Either way the CEO makes his money.
Last week Sears posted a $548 million quarterly loss and for the same period last year they posted a $529 million loss (numbers are an approximation but close). The CEO said that this is a "positive trend". I am no economist but that doesn't look like a positive trend. Maybe in 2012 they lost $600 million?
Does anyone know where I can get a golden parachute?
 
The issue as I see it, is that the firearms industry for the longest (1890's to 1950's) time did not do what would keep them going in lean times, diversify. Some like Remington, Winchester, Springfield Armory did get into the ammo business besides just making guns. But many did not and suffered during slow sales periods. Unlike the powder manufacturers like DuPont, who expanded into the chemical field and moved away from their main product line which diversified there income streams, so when one product is down another can take up the slack.

Rugger is one of the companies that I have no doubt will be around for a long long time, they manufacture tons of parts for the gun industry as well as for non-firearm related companies, it is my understanding they are the largest maker of MIM parts.

You have to have multiple skills so when the construction industry is down, you can repair washing machines or be an electrician. For me it was computer science and finance, when the market dropped on computer jobs (2003), I went back in financial management (Corporate Controller). (22 years in computers and 25 years in financial management)

Those companies that will survive will be like Beretta (500 + years), Remington, Fabrique National, Winchester (who is actually out of business now but will be around a long long time), and yes Colt.

After all who's going to make our 10 megawatt blasters in the future?, General Electric who is more into financing and banking than washing machines and jet engines. Or Proctor and Gamble who's into making kitchen appliances than soap for those washing machines. And maybe Rugger will be making electric cars in the future since most of the parts in your fuel injectors come from them now.

Diversify or die.
Jim

Why can't Chevrolet make a profit?

They only make cars & trucks, they sold off their financial arm (GMAC)
 
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S&W's "problems"......

First, I'm not Dr Doom about Smith & Wesson or its business practices. :rolleyes:
They can & more than likely will be able to get more profits & contracts.
They had some tough years in the 1990s(AWB era) & early 2000s(where the gun company had approx 4 different owners, :confused: ).
I personally think S&W does way too much. They have a glut of DA revolvers pistols & ARs that I doubt really sell.
The PC or performance center handguns never seem to be on gun shop shelves. :rolleyes:
S&W should stream line what they produce & get more QC on the most popular, big selling items: J frame .38spl, M&P shields, M&Ps, 1 or 2 ARs.
Another idea would be to drop or modify the stupid "lawyer lock" revolver SOP.
Even if they put out a 686+, a model 10, a model 66, and a model 629/29 without a lock: they'd see a huge demand.
Smith & Wesson increased the MSRP for stainless & carbon DA revolvers buy 40/50% in the last ten years. :(
That to me made no sense.

Rusty
PS: Id add that the carbon steel & stainless model 100 are way to small for avg US male wrists. The QC is less than ideal too compared to Peerless, Hyatt & ASP.
 
Seems like there is a problem with short-term memory for many contributors to this thread. Wasn't it just two years ago that these companies were running at capacity, 7x24 and could not keep up with demand? They had record quarters and the big argument is that they should expand so they could fulfill the influx of orders? Again, record profits.
The wise ones did not expand noting that it can be a cyclical market. Those that did are probably suffering more at the moment.
And the bubble two years back hid a lot of sins in the sector. Even bad companies, bad being defined as having an out of date product mix, out of date and high cost manufacturing techniques and bad marketing and sales channels were all prospering. But when business is tighter it becomes apparent which company's are well positioned and well structured and which are not.
Yes there is OSHA and legal issues in this market. But those are a constant while the ups and downs of the buying public, of market saturation, and of the changing economy altering consumers buying habits are all part of the complexities of running any business. My biggest disappointment, and perhaps because they are some of the oldest company's, but U.S. gun manufacturers seem like the most out of date and more likely to suffer when the market is soft.
No news here.
B
 
True....

I agree with part of the last post.
In the last 2 or so years(post Sandy-Hook/Newtown incident) the US gun industry & shooting sports in general(to include CCW/protection) had sky high profits. Even local gun shops & ranges felt the push. $$$ was everywhere.
Now as we near 2015, the dust has settled & the rush has reduced.
Major firms like S&W, SIG Sauer, Beretta USA, Glock, Kahr Arms, HK, Walther, etc can scale back or be more realistic.
The US gun & shooting sports industry was never equipped or designed for the huge panic it just had.

In 2015, some gun firms or smaller shops might go under or shut down but the firearms industry will level out.
 
RustyShackelford said:
I personally think S&W does way too much. They have a glut of DA revolvers pistols & ARs that I doubt really sell.
The PC or performance center handguns never seem to be on gun shop shelves.


From S&W 2014 Financial Results:

http://ir.smith-wesson.com/phoenix.zhtml?c=90977&p=irol-newsArticle&ID=1941268

Full Year Fiscal 2014 Financial Highlights
Net sales for the full fiscal year were a record $626.6 million compared with $587.5 million for the prior fiscal year, an increase of 6.7%. Excluding Walther products that were sold in the prior year pursuant to an agreement that has since ended, net sales increased 13.8% over the prior fiscal year. Firearm unit production for fiscal year 2014 increased by 16.2%.
Gross profit was 41.3% compared with 37.1% for fiscal 2013.

With a gross profit of over 40% on sales of over 600 million, I wouldn't change much ....
 
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