S&W sales down by 47%; misses target; stock drops almost 17%

[westernrover]

In continuing evidence of dropping demand, S&W's sales were off 47% for the quarter year-on-year. This compares to last quarter when sales were down by almost 70% and Mark Smith (CEO) declared a return to "normal" demand.

Today's news: https://www.masslive.com/business/2...s-off-by-47-as-demand-for-firearms-drops.html

SWBI was down $2 or about 17% to 9.80 or the lowest it's been since the onset of the pandemic and Federal Reserve easing efforts (free money). I think this had to do more with the earnings miss than just the drop in sales figures. Investors knew sales would be dramatically down just like they were last quarter, but Smith also missed earnings estimates which means they weren't able to cut costs or keep prices high or take other measures to meet their targets. Last quarter, they were able to report impressive profitability. The sales were way down (~70%), but they were making more profit on every sale.

My own comments as a consumer of S&W products: This is no doubt a reflection of the industry overall and not just one brand or company. It's been a phenomenal run, but scarcely two years. When the booms hit, it seems like gun and ammo makers have a license to print money and we wonder why they don't increase their capacity to meet demand. Had they done so, they'd be idling shop floor space, machines, and workers today, possibly with layoffs looming after Christmas.

I hope the next phase is a period of sustainable growth as more and more lawful persons take responsibility to provide for their security and that of those for whom they're entrusted with care. I'm looking forward to the increased availability of the emergency life-saving equipment I need and reasonable, non-gouging prices on the equipment and supplies I use to acquire and maintain vital life-saving skills. While I hope that every state ceases and desists from its tyranny toward people willing to carry this equipment, I'm anticipating continued resistance from the Pro-Death advocates. Because of that, I will be looking for opportunities to stock-up as I did in 2019.

 

[Styx]

That's a good thing. Return to normal demand means better prices, more rebates, better deals, and a buyers market.

Truth be told, I purchased the majority of the handguns I own during the Trump Slump when manufactures over produced and sales slowed after Trump unexpectedly won. Prices were so low that I could afford to buy guns I wanted and even what I had no real need for but the deals were so good I couldn't say "no." During panic buying, prices were so high and inventory so low that I slowed down on my buying of ammo and firearms.

 

[AlexanderA]

All it would take would be another serious push for gun control at the federal level, and sales would bump back up again.

The odd thing is that the antigunners determine gun sales! Guns are a mature technology, and guns themselves last a long time. Hunting is on the decline. Because of these factors, this would be a dying industry. The only thing that saves it is the periodic panic caused by efforts at gun control.

 

[Styx]

All it would take would be another serious push for gun control at the federal level, and sales would bump back up again.

The odd thing is that the antigunners determine gun sales! Guns are a mature technology, and guns themselves last a long time. Hunting is on the decline. Because of these factors, this would be a dying industry. The only thing that saves it is the periodic panic caused by efforts at gun control.

It would take something that has teeth and people wouldn't think a pro gun SCOTUS would overturn. I agree though. It's been the same cycle over and over again. We are past the point of no return now. If Clinton and Democrats never pushed for gun control, there would be millions less guns and gun owners in the country. It's a double edge sword for them.

 

[dogtown tom]

That's a good thing. Return to normal demand means better prices, more rebates, better deals, and a buyers market....

"That's a good thing" is shortsighted in my opinion.
Sales, rebates and a buyers market means the gun industry isn't healthy. It means layoffs by manufacturers, closing of LGS and reduced production.

Think for a minute what that will do to prices.

 

[.38 Special]

We most likely are headed into some degree of recession - if we aren't already there - so this isn't unalloyed good news.

It still would be nice to see things back on the LGS shelves, of course...

 

[Styx]

"That's a good thing" is shortsighted in my opinion.
Sales, rebates and a buyers market means the gun industry isn't healthy. It means layoffs by manufacturers, closing of LGS and reduced production.

Think for a minute what that will do to prices.

It's a good think IMHO. It means better deals for more affordable ammo and firearms until the next panic buying frenzy. There's no reason why polymer frame pistols and even some aluminum handguns cost $600-$700+ dollars. Some cost more than fullsized rifles that are being sold.

Their profit margins might shrink, but they will still make a profit and have to stay more innovative and competitive if they want to survive. That's a good thing.

This is all history repeating itself.

 

[Riomouse911]

Lots of folks are preparing for an economic slump, so a lot of discretionary spending is being cut back around the world. I will bet that every gun maker sees a substantial drop from the madcap pandemic numbers, and also a year over year drop 2021-2022.

If Viejo Tio Jose in the white house keeps fumbling the economic football the next two years as badly as he has the past two years, I expect a lot of people selling off assets like firearms to fill their fuel tanks and keep roofs over their heads as they weather the storm. (Been there, done that in years past.) If that happens en masse, expect new gun sales to fall even further.

Stay safe.

 

[unclenunzie]

Profit happens when sales are above costs - and with enough of a margin to make the capital and time invested worth it. Similar to cars, but a much smaller market. New models will always sell, but maybe not in the volumes you'd need to overcome fixed costs. And as has already been said, fear is a strong motivating factor. Manufacturing what is essentially a commodity product is not easy, and the strategy is usually to eat your competitors by lowering your fixed costs as much as possible to drive sales to you and away from them.

 

[Styx]

Think for a minute what that will do to prices.

I work as an technician (Extrusion and Injection Molding) for decades in the manufacturing and retail industry. You go through ups and down. It's common to hire temporary workers, let them go, and to rehire them again as needed. It's common to cut hours by going from 12 hour shifts to 8 or cutting a work day while maintaining the same workforce during slow periods. Knowing this trend, when we are busy and getting mandatory OT and voluntary OT to keep up, we put money aside knowing that it's not sustainable or going to last for ever. It's the same cycle that happens in just about all retail markets that don't have to do with necessities.

 

[westernrover]

"That's a good thing" is shortsighted in my opinion.
Sales, rebates and a buyers market means the gun industry isn't healthy. It means layoffs by manufacturers, closing of LGS and reduced production.

Think for a minute what that will do to prices.

I agree that the volatility is bad overall. It's unhealthy for the businesses that supply this market to be forced into weathering extreme volatility. It forces them to focus on short-term survival. Were it less volatile, they could anticipate a steady flow of revenue that would enable longer-term capital investments. It would also make it more viable for newcomers to the market by reducing risk. That would improve competition among suppliers and increase options for consumers.

For individual consumers like myself, there is nothing to do but ride-out the swings in the market. I stocked up in 2019 and haven't bought supplies since. I'm anticipating a buyers' market in 2023. It will be good for me but only in the short-term.

 

[Styx]

I agree that the volatility is bad overall. It's unhealthy for the businesses that supply this market to be forced into weathering extreme volatility. It forces them to focus on short-term survival. Were it less volatile, they could anticipate a steady flow of revenue that would enable longer-term capital investments. It would also make it more viable for newcomers to the market by reducing risk. That would improve competition among suppliers and increase options for consumers.

For individual consumers like myself, there is nothing to do but ride-out the swings in the market. I stocked up in 2019 and haven't bought supplies since. I'm anticipating a buyers' market in 2023. It will be good for me but only in the short-term.

Yup... I seen LGS and horders sell above MSRP and make huge profits, and then the pendulum swings. IMHO, it all equals out in the end.

 

[bubbaturbo]

OKC is awash in guns. I don't think I've seen so many used guns on the shelves in a long time. Sales and rebates are becoming common. Ammo is still pretty high but coming down.

 

[Frulk]

Sounds like Smith and Wesson should build a primer plant

 

[BreechFace]

Smith and Wesson hasn't produced a firearm that has interested me since the Shield first came out. Their revolver's inclusion of the 'Hillary Hole' is a non-starter for me, I never cared for their hinged trigger on their M&P series but put up with it with the Shield as it was pretty innovative for the time due to it's size and shoot-ability and their AR's while a good price point get lost in a sea of AR's nowadays. And another of their most recent blunders is their ripoff Keltec KSG that they put out that somehow decreased the appeal and feel from Keltec. In handling both of those shotguns, Keltec is the clear winner.

To me they need to get some new R&D staff, people to engage customers on forums and social media to gain insight as to what the consumer want's and listen to their feedback.

Not a surprise that S&W is the 'canary in the coal mine' for a future downturn in the 2A industry.

 

[rust collector]

Smith and Colt had a good deal going for many years providing virtually all the small arms for police agencies nationwide. Glock was a shock to the system. Now, with many Turkish manufacturers in to fill the demands of the past two years and CZ actually purchasing Colt, the future will be what they make it. They will have to up their game, because they are competing with their own legacy products as well as a sea of others who have entered the field. I hope they have the vision and commitment, and if they produce a superior product I will be happy to buy even if it costs a bit more.

 

[crestoncowboy]

Wonder how much of that was having nothing to sale. Ive not seen a store with more than 2 or 3 new smith revolvers in a while. Same for ruger. And the polymer Smith are everywhere and discounted.

A lot of time when you make updated models every 3 days, you make profit but you also make the older ones still on shelves unsaleable. When Ford went from the 300ish hp 4.6 in the mustang to the 425 hp 5.0, the msrp was barely higher. You couldn't give away the left over 4.6 cars. I wonder if all the new smith guns i read about don't do that for the left over

 

[AlexanderA]

It would take something that has teeth and people wouldn't think a pro gun SCOTUS would overturn.

In the recent past (since Sandy Hook at least), gun-buying panics were set off by antigun proposals that really didn't have much of a chance of passage. Gun owners (and would-be gun owners) are extremely skittish about such things. (Part of this is due to the self-serving alarmism of pro-gun organizations. They never overlook an opportunity for fundraising.)

 

[CoalCrackerAl]

A lot of people are strapped financially too these days.

 

[Charlie98]

Lots of folks are preparing for an economic slump, so a lot of discretionary spending is being cut back around the world. I will bet that every gun maker sees a substantial drop from the madcap pandemic numbers, and also a year over year drop 2021-2022.

If Viejo Tio Jose in the white house keeps fumbling the economic football the next two years as badly as he has the past two years, I expect a lot of people selling off assets like firearms to fill their fuel tanks and keep roofs over their heads as they weather the storm. (Been there, done that in years past.) If that happens en masse, expect new gun sales to fall even further.

Stay safe.

That's very close to what I think. Now that the market is starting to right itself... that is, product is actually on the shelves, the idea of panic buying will quell. Mix that in with a down economy and those that bought firearms on speculation, or for TEOTWAWKI that hasn't happened, and we are going to see a market soon flooded with 'like new' firearms.... it's already happening. Last time I was at my LGS, he had at least 30-40 AR's of various flavors on the consignment rack... where he had 5 a year prior. I think we have reached the tipping point.

"That's a good thing" is shortsighted in my opinion.
Sales, rebates and a buyers market means the gun industry isn't healthy. It means layoffs by manufacturers, closing of LGS and reduced production.

Think for a minute what that will do to prices.

I would tend to agree with that, with a view towards the long term. The firearm industry is an extremely competitive, yet extremely volatile industry, when you mix in state and federal Government regulations, Government contracts, local contracts, and then the whole supply/demand see-saw from the retail market.

 

[Elkins45]

They should retool their unused production capacity to make primers LOL.

 

[NIGHTLORD40K]

Demand will skyrocket just prior to the '24 election, when the "mostly peaceful" riots start again and a new virus mysteriously appears out of nowhere.
Or if Putin drops a nuke, whichever happens first.

 

[CoalCrackerAl]

Maybe by the spring the 9mm EZ will be a decent price. I love my 380EZ.

 

[Wolfshead]

I have to wonder in states like NY how the newer guns laws are effecting sales.
I mean I have a new S&W but it sits in my safe as I’m basically a felon if I take it anywhere other than the range.

 

[rust collector]

That is the catch 22 in this era. If you exercise your right to bear arms in unapproved ways, your right to bear arms is extinguished. Those laws concern only the law-abiding citizen. They assist criminals, however, who are enabled to do what they do with little concern for encountering anyone able to defend themselves. There is little point in buying guns if they make one a target, so legitimate manufacturers not only lose sales, but are the subject of lawsuits if they dare advertise.