How bad will the current gun industry slowdown get?

[atek3]

Based on this interesting thread from last month I wanted to take a survey.

By any metric, the gun industry has seen a torrid boom over the last 10 years (and especially over the last 3).

Smith and Wesson generated $236.6M in sales in Fiscal Year 2007 (the last year before the credit crisis). In Fiscal Year 2014, they did $626.6M (a 165% increase). Over the next twelve months, Smith and Wesson is expected to sell $597M, a decrease of 5%.

Given all the discussion on this forum and elsewhere:

• Customers have maxed out their credit cards
• Everyone that wants an AR-15 already owns two
• The threat of another AWB is over

Is it possible that S&W (and Ruger for that matter) will see a drop in sales far worse than 5%?

atek3

 

[MikeS.]

Middle of the road

I figured a 5 to 10% drop, nothing drastic. The next crisis is just around the road. Another whack job will do a mass shooting and things will skyrocket through the roof once again.

Fortunately firearms, ammo and most reloading supplies are back around normal supplies. Powder especially hand gunpowder is the big exception from what I'm seeing. As well as .22LR...

 

[akarguy]

Real question is... When will the .22LR panic end?

 

[BSA1]

Even so they are still ahead. S&W has said they expect to make up their lost sales in California with increase in the sale of revolvers.

Remember that the sale of guns, accessories & ammunition is being politically driven. Gun control on a Federal level is d.o.a. but restrictions in some States are possible (or likely).

We know that Obama intends to use Executive Action to bypass Congress and advance his agenda. After the November elections there is always the possibility he will use Executive Actions to restrict / ban firearms, accessories and ammunition. Remember he isn't running for office anymore.

 

[barnbwt]

Any company that was deficit financing its operations during this boomtime, deserves to get whacked on the downswing. By which I mean companies whose business model was irresponsibly based upon sales remaining as peaked as they were recently (considering all the new names that came out in the last two years, there's bound to be a lot of closures)

TCB

 

[AlexanderA]

The gun industry has certain inherent problems, most of which revolve around the nature of guns themselves. That is, guns seldom wear out, and they become obsolete very slowly. Therefore, unlike the car industry, there's no significant replacement market. Sales growth has to come from new shooters, or current owners who want to increase the number of guns they own.

Normally, these new shooters, etc., mean a steady but moderate demand for new guns. But the periodic buying panics, caused by threats of legislative restrictions, skew this normal market. People accelerate their planned buying, and then, when the panic passes, there's a vacuum in demand until the next panic. These crazy ups and downs mean that gun businesses cannot rationally plan their plant investment, production, buying, marketing, etc.

It's hard to see how even a well-run company can be profitable under these conditions.

 

[FROGO207]

Things are pretty up in the air still. I see a soft landing IF and that is a big IF we tail off as much as some think. Some will use the price fall as an excuse to stock up on more firearms as they can afford it. I estimate the number will be a good sized one WRT people who do this.

 

[Schwing]

I remember during the early stage of our most recent panic that people were grumbling and asking why many of the manufacturers were not exponentially ramping up production. You still hear this same grumbling about powder manufacturers and it is a common complaint about .22 production.

This is EXACTLY the reason why many of the manufacturers have not added new facilities and production lines. Those of us who have been shooting for decades have seen these panics before... Maybe not quite as bad as our most recent one but they have been pretty bad before. Manufacturers would not last long if they added facilities and staff to handle every peek in sales.

In the near future, I believe that everyone's pantry will be fully stocked with .22 ammo and powder. When that happens, sales will slump significantly and those producers who HAVE ramped up production, adding facilities and staff, will be cutting back to pre-panic levels.

 

[blarby]

There is a gun industry slowdown ?


There has been a lot of growth in gun-industry business of late.

A great number of them center around :

A.Profiteering
and
B. Fearmongering
and
C. Absolutely terrible "service"

The firms that will survive are those that produce quality products, provide fantastic customer service, and have realistic growth plans without unrealistic product claims.

 

[Mosin Bubba]

This slowdown won't last for long. People are going to go nuts as soon as Hillary declares that she's running for president, which will probably be shortly after midterms. Things might cool off for a while, but as soon as a few dire Gallup polls and a few choice sound bites come out in election season 2016, we'll be in another full blown banic. And for good reason.

 

[Bobson]

This slowdown won't last for long. People are going to go nuts as soon as Hillary declares that she's running for president, which will probably be shortly after midterms. Things might cool off for a while, but as soon as a few dire Gallup polls and a few choice sound bites come out in election season 2016, we'll be in another full blown banic. And for good reason.

Agreed on all points.

• Customers have maxed out their credit cards.
• Everyone that wants an AR-15 already owns two.
• The threat of another AWB is over.

I disagree with the second and third points in this list, and I fail to see how the first point would be relevant even if it were true (and I don't believe it is).

 

[KansasSasquatch]

Most of the big manufacturers don't make most of their money from these panics. They make money off of military and government (local, state, and fed) contracts. They won't be raking in the money like they did during the panic, but they're going to survive. It's the small companies that have to be worries about sales dropping off. The ones who have been somewhat innovative, provide good quality products, and have good customer service will stick around.

I think that in a way the panics help those smaller companies. People who once weren't willing to be the test dummies become more willing to try their products. If they like those products word will get around that they're worth looking into. If the small companies continue to do good by their customers, the companies will find some level of success if they run their business properly. I know of a few companies in my state that took a chance durin the panic and it seems to be paying off for them. Most of their sales came from small forum advertising and word of mouth. But they're getting their names out their and their reputations are very good. In a few years they may be national brands, albeit probably still very small in comparison to the big companies.

 

[BSA1]

KF7LCE,

Your comments are right on.

The only question you overlooked is how many of the whiners and complainers will NOT stock up when dealers, warehouses and stores are overstocked and offering good sale prices and will be back on THR and other forums crying about the shortages again?

 

[BSA1]

atek3,

I also disagree about everybody that wants a AR already owns two (or even one).

I don't. I was planning on buying a S&W Sport in 01/13 after Christmas was over. Well the Banic put that on hold. I am tossing around the idea of buying one later this winter or first of next year depending on how much of a raise and overtime I get from my employer.

While your interest seems to be centered around AR's there is a lot of other guns to choose from and demand for them.

 

[Ragnar Danneskjold]

Real question is... When will the .22LR panic end?

I don't think it will. Not for a very very long time at least. They've realized that they can sell .22lr at 500% of it's price only a few years ago and still sell out 100% of their inventory every time. They're not going to let go of that any time soon. And the cycle is self-perpetuating. The high price makes people think that there's still a shortage, the shortage drives the price up, so the hoarders keep buying all they can thinking that they have to get as much as they can since the high price and the shortage (both things they created) mean it won't be around much longer.

Once every single person who even wants to hoard a million rounds of .22lr has that million, then maybe the lack of selling will cause the price to drop and get us back to a normal sales paradigm. Until then, $50-$100 rounds per box is the name of the game. If you can find it at all.

 

[Sauer Grapes]

Not everyone that wanted an AR has one. Check off one more though.
I figured the prices aren't going any lower. I bought 2 for what I would have for 1 a year ago.

Isn't gun ownership rising? I see a lot of new people with their first handgun at our club.

 

[Walkalong]

Customers have maxed out their credit cards

Some.

Everyone that wants an AR-15 already owns two

Doubtful.

The threat of another AWB is over

No such thing. The antis are always looking for the next opportunity. No time before 2019 I imagine, but never say never.

 

[justice06rr]

It will probably dip a little more towards Thanksgiving, and pickup a little bit when demand goes up around christmas time when people will buy again--firearm related items included.

Real question is... When will the .22LR panic end?

Its not really panic, but more so hoarding and flipping.

I've asked a question on a local forum if people are still seeing bricks of 22lr locally. Most in large cities don't, but those in rural areas do. Which means that the larger populated areas still have people buying up all the 22lr available on the shelf although the panic is over.

 

[CLP]

I think the outcome of the midterm elections will be a factor in gun sales in the near term, but we'll potentially see another huge surge in panic buying pending the results of the '16 elections.

 

[hso]

They have to. The boom is just that, a temporary rapid growth based on popular demand and not on any innovation. That has a curve that goes up and comes back down. No surprises there.

 

[lxd55]

Real question is... When will the .22LR panic end?

from another thread here may give some insight.

http://www.chuckhawks.com/column92_ammunition_shortage.htm

 

[HexHead]

Real question is... When will the .22LR panic end?

According to industry insiders, if only half the gun owners in America bought just one brick of .22lr, it would take the manufacturers 2 1/2 years just to catch up.

 

[Hangingrock]

I have long maintained there is only so much disposable income. That said I could be wrong about the disposable income theory. If the panic/hysteria buying is the new normal then who knows what the future holds for the firearms industry and related businesses.

 

[HRnightmare]

Everyone that wants an AR-15 already owns two
The threat of another AWB is over

There are still PLENTY of people who want an AR and don't own one. I know about 10 people personally. There are always that group of people that wait until the last minute...Perfect example, look at a Home Depot or grocery store in FL the DAY BEFORE a hurricane is supposed to hit. When they had AT LEASt 3-4 days warning, probably more like a week...and not to mention its a threat every year.

The other part is ALOT of people who ran out and panick bought AR's and Glocks and AK's then realized that Sandy Hook induced panic is gone and they need the money more than the gun OR they just don't "need" the gun as much as they thought they did. Next panic (and there will be a next one) the same people will be flooding the gun shops to buy the same $1800 Olympic Arms and DPMS rifles.

The threat of an AWB is NOT OVER, its just that the media has focused on something else, like Kim Kardashian's ass, or Gaza or how everything is bush's fault. Feinstein and Brady and Pelosi and Bloomberg and there roaming band of followers are still out there fighting strong to push AWB's and similar. Wait until 2015 when presidential campaigns stary coming up and someone very liberal leads the polls like Clinton. Another AWB scare will come and panic buying will be the same as they were in 2007-2008.

OR wait until the next school shooting, or movie theater, or military base or political event AND all of the fear will be brought back up.

The threat is not over! It is NEVER over. It may not be as strong or as obvious but IT IS THERE! There are many who seek to take away those rights from us. they do not rest so we cannot rest!

 

[Cee Zee]

When will the .22LR panic end?

I've been able to buy lots of .22LR for months now. The price is still too high but there is .22 ammo around if you look for it. I just bought a brick last week.