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

[dogtown tom]

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.

How do you know they made "huge profits"? Do you do their books?

An example: Your LGS bought a Glockchester 1911 for $500 dealer cost, MSRP is $1000. He sells it for $1000. How much profit is he making?
If you believe its $500 you would never survive in business.

You profit is determined by your replacement cost. If he sells that pistol for $1000, goes to reorder and..... oh my, the wholesale cost is now $750 (or horror of horrors...$1000).....that's called bad business skills. He should have been aware of his replacement cost before selling that Glockchester 1911.
Being that he's a small business and likely isn't buying $1Mil a month from his distributor, he may find that product from the distributor is allocated to the larger accounts, meaning he isn't going to replace that pistol for many months, if at all.

In case you haven't noticed, but hundreds of local gun stores fail when there is a gun buying panic. The reason is above. You, like many others see the selling price near or above MSRP and assume the dealer is making "huge profits"....he may be close to shutting down. You don't shut down if you are making huge profits.

 

[rust collector]

Part of this problem is the changing ways of doing business. Just as with younger employees, past concepts of loyalty and empathy are fading away. Now, the emphasis on the bottom line hurts producers, as the offshore options will generally cost less (initially); dealers, especially lower volume ones that get hit with proportionally higher shipping costs and miss out on volume discounts and preference; and us, when we realize that producers have gone out of business, dealers can't make a go of it, and our "last mile" is gone so we can't even buy something when we find it.

I like saving money, but I am not willing to say goodbye to the local dealer/gunsmith to shave $30 off of Bud's price. Getting the big picture can be somewhat painful, but is essential all the same.

 

[Will Munny]

You don't shut down if you are making huge profits.

The pandemic was a very unusual situation. It was possible to sell of stock at prices well above cost and then go out of business as replacement stock would be hard to get.

 

[dogtown tom]

The pandemic was a very unusual situation.

The pandemic had little to no effect on the gun industry. Panic buying did not occur after Obama left office.

It was possible to sell of stock at prices well above cost and then go out of business as replacement stock would be hard to get.

Isn't that what I wrote?

 

[kidneyboy]

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...

If you follow the traditional definition of a recession we have been in one all year.
The LGS's I frequent are well stocked with firearms and the one that sells reloading stuff has at least 2 dozen powders on hand.

 

[welldoya]

I love Smith and Wessons and own quite a few but I won’t buy one with the hole.
Haven’t bought a new S&W in a while.

 

[Zahn]

I think it's noteworthy that S&W sales numbers are being compared to last year's numbers. For the last 24 to 36 months, nothing has been normal about firearms sales. First they sold everything down to bare walls. They sold as fast as they could be made. Now their sales numbers are being compared to the spike? Even if sales numbers went back down to some sort of average, they are going to be smaller than they have been during this huge spike driven by social unrest, uncertainty regarding new restrictive laws and the pandemic.

 

[Will Munny]

The pandemic had little to no effect on the gun industry. Panic buying did not occur after Obama left office.

Isn't that what I wrote?

No effect on the gun industry? That is absurd, there was an enormous effect, record levels of demand. To say there was "no effect" is ridiculous.
No, you said people don't go out of business making large profits. My point is a nuanced version of that. It is possible for someone to make a large profit on an existing stock and then exit the business before bothering to replace the stock. If the claim is that gun stores are going out of business during the pandemic, that explanation fits the data relatively well.

 

[westernrover]

I love Smith and Wessons and own quite a few but I won’t buy one with the hole.
Haven’t bought a new S&W in a while.

I only own their revolvers, but as far as their ledger is concerned, they might as well not even exist. Last year, they broke $1 billion in sales for the first time ever. People weren't panic-buying revolvers. I'm actually hoping that someone buys out what's left of their Massachusetts factory and revolver production and that it gets all-new management that fixes it. If the Model 41 comes with it, that would be ok. I would immediately pay 50% more for a better S&W revolver. If I were convinced that they turned things around, I would pay at least $2000 for a revolver. On the other hand, I have no use whatsoever for junk revolvers. As it is, I'm bidding in the $1500 to $2000 range for Hellstrom-era Smiths. I don't want any more of what they're producing now until they fix it.

I don't know precisely what portion of their sales comes from revolvers, but I know that Ruger passed them in revolver sales in 2014. While their revolver sales had to be up in absolute numbers last year with everything else, it's probably shrunk in proportion to their overall production. Ten years ago, revolvers accounted for only about a quarter of their handgun production. They've since stopped reporting the production figures broken out by type. But by 2018, the NSSF reported revolvers accounted for less than 15% of US gun makers' handgun production, and remember most of that was Ruger.

S&W produces more Colts than revolvers.

 

[dogtown tom]

No effect on the gun industry? That is absurd, there was an enormous effect, record levels of demand. To say there was "no effect" is ridiculous.

Horsehockey. Record sales occurred during the Obama years. Gun sales have been no where close to pre Trump.

No, you said people don't go out of business making large profits. My point is a nuanced version of that. It is possible for someone to make a large profit on an existing stock and then exit the business before bothering to replace the stock. If the claim is that gun stores are going out of business during the pandemic, that explanation fits the data relatively well.

Yet, they didn't.

 

[westernrover]

This one is the gross sales figures:



This second one is deviation from predicted sales. It does not show the raw sales figures, but unpredicted deviations from sales trends due to factors outside seasonal variations and the general, long-term growth trend. You can see the seasonal variation in the FBI NIC's chart above where there is a regular bump in December and a repeated slump in June and July of every single year.

My read on the first chart is that we can see the market grew the most during the Obama years when we look at the trendline for those June/July sales. I think a lot of concealed carry guns sold in those years and a lot of AR-15's as those things became markedly more popular. The panic-buying spikes have been attributed to Sandy Hook and San Bernardino. I would not do that. I attribute them to Obama's re-election and concern that he would have a mandate to infringe. I wonder how much of 2015's spike was due to the expected election of Clinton -- let's face it, Trump's win wasn't expected by everybody and the only person who would have sold more guns than Obama was Clinton. Instead, we had the Trump Slump that can be seen in the leveling off of those baseline month-to-month sales. The events of 2020 were phenomenal for raw sales figures, but I'd like to see more data before characterizing the effect on the long-term trend.

 

[dogtown tom]

This one is the gross sales figures:
.

Read the "source" at the bottom of the chart.
"Authors calculations based on data from the NICS database on background checks conducted."

1. NICS checks don't equal gun sales.
2. NICS checks are run for reasons other than a firearm sale....state carry permits/LTC/CHL/CCW/etc.
3. In states where a state firearm permit qualifies as a NICS exemption, dealers don't contact FBI NICS.
4. An FBI NICS check doesn't include how many firearms are being sold.
5. NO ONE. Not the FBI, not ATF, no one knows how many guns an FFL sells during a year unless the dealer tells them.

Using NICS to calculate firearm sales is like estimating automobile sales by how many drivers licenses were issued in a given year.

That said, elections do have an impact on gun sales as did the "social unrest" aka riots. After a specific shooting tragedy, there are often calls to "ban gun ____". That may drive sales of that firearm for the short term. An example is the Ft Hood shooting where an FN FiveseveN pistol was used. People thought it was likely to be banned and sales of that gun increased as did prices. Same with shooting where an AR was used.

After the death of George Floyd in May 2020, there were an estimated 7,000+ demonstrations from May -September 2020, many of them violent. That sure as heck will spur gun sales even if the buyer is nowhere near one of those demonstrations.

 

[Frank Ettin]

A slight digression FYI.

How do you know they made "huge profits"? Do you do their books?....

A company whose stock is publicly traded is required to make public filings of financial and other business information with the Security and Exchange Commission. These filings include fairly detailed annual and quarterly filings.

So if anyone is interested and wants to spend the time, SEC filing for Smith & Wesson, for example, may be found here and for Ruger, here.

 

[dogtown tom]

A slight digression FYI.



A company whose stock is publicly traded is required to make public filings of financial and other business information with the Security and Exchange Commission. These filings include fairly detailed annual and quarterly filings.

So if anyone is interested and wants to spend the time, SEC filing for Smith & Wesson, for example, may be found here and for Ruger, here.

Styx and I were referring to local gun stores.

 

[westernrover]

I agree that NICS checks don't equal gun sales. Those charts aren't NICS checks, but estimated gun sales based on several data sources, including NICS checks.
Nobody may "know" the number of sales other than the seller, but it's entirely practical to estimate the number accurately enough for the estimate to be useful. We know it's not 100,000 or 10 million. In fact, those charts are quite likely very close to reality. This data isn't just to fuel anti conspiracies, it's vital intelligence for the industry, investors, and economists and that's why we see similar data published by the National Shooting Sports Foundation (NSSF).

https://www.nssf.org/articles/gun-s...-african-americans-and-first-time-gun-buyers/

https://www.nssf.org/articles/nssf-...te-5-4-million-first-time-gun-buyers-in-2021/

 

[Zahn]

Driving by a LGS and counting cars is about as accurate as NCIS numbers - they are numbers, with little to no meaning. Just as someone could be shopping or using the range when their car is parked out front of the LGS, an NCIS check is about as meaningful. For example, the state of Illinois runs NCIS checks frequently on every FOID holder, looking to revoke the FOID from the results of the NCIS check. Those aren't sales! In many states, the CCW can be used in place of running the NCIS check - so a gun sale, and no NCIS check.

 

[JERRY]

I'd buy an unlocked S&W j frame .32 and .38 for $500 over the comparable Charter Arms versions for $365, but S&W does want to do that...

 

[dogtown tom]

Driving by a LGS and counting cars is about as accurate as NCIS numbers - they are numbers, with little to no meaning. Just as someone could be shopping or using the range when their car is parked out front of the LGS, an NCIS check is about as meaningful. For example, the state of Illinois runs NCIS checks frequently on every FOID holder, looking to revoke the FOID from the results of the NCIS check. Those aren't sales! In many states, the CCW can be used in place of running the NCIS check - so a gun sale, and no NCIS check.

True.

80-90% of my sales and transfers are to buyers who hold a Texas LTC.....no NICS check required.

 

[Will Munny]

Horsehockey. Record sales occurred during the Obama years. Gun sales have been no where close to pre Trump.

https://www.norc.org/NewsEventsPubl...olds-purchased-a-gun-during-the-pandemic.aspx
1 in 5 bought a firearm during the pandemic.

 

[crestoncowboy]

True.

80-90% of my sales and transfers are to buyers who hold a Texas LTC.....no NICS check required.

Same in NC

 

[Ks5shooter]

Quarterly drop of course. COVID boomed gun sales I'm sure all gun sales are down. Not to mention the internal lock may have helped decline sales. Won't own one with the lock.

 

[crestoncowboy]

Quarterly drop of course. COVID boomed gun sales I'm sure all gun sales are down. Not to mention the internal lock may have helped decline sales. Won't own one with the lock.

I don't think the lock hurt their sales. Their sales have gone up. Before the 2000s and the locks the company was struggling. I prefer pre lock but just because fit and finish seemed better. My 500, 460, and 25 oz 44 magnum survive with the lock. Anything should.

 

[dogtown tom]

https://www.norc.org/NewsEventsPubl...olds-purchased-a-gun-during-the-pandemic.aspx
1 in 5 bought a firearm during the pandemic.

You cite a study from the University of Chicago?
Might as well cite Gabby and Bloomburg.

Again, the COVID 19 pndemic had little effect on gun sales. Any spike in sales in 2020 was due to civil unrest/riots/BLM demonstrations. People don't buy guns to protect themselves from a virus.

 

[robin banks]

all any gun maker has to do is send chuck you schumer a few million contribution to propose a bill banning handguns and the boomers will run out and buy millions more handguns to add to their collections

 

[Glockpride]

Remove the lock. The idiocy of this is way past time to go.