US gunmaker sees little hit from Dick's firearms shift
New York (AFP)
US gunmaker American Outdoor Brands said Thursday that retailer bans on assault-style weapons would have minimal impact on profits, but warned that firearms demand remained sluggish amid a gun glut.
Shares of the company, formerly Smith & Wesson, fell sharply after it forecast "flattish" firearms revenues for the next 12-18 months as the industry works off excess inventory that has led to hefty discounting.
"We believe that the new, lower levels of consumer firearm demand we saw (in January) may continue for some time," said chief executive James Debney, describing market conditions as "challenging."
Debney, on a conference call with analysts, said the company currently garners less than one percent of its revenues in sales from assault-style weapons at Dick's Sporting Goods, which on Wednesday banned the guns from stores following a Florida school shooting last month that resulted in 17 fatalities, including 14 children.
"There really isn't any impact," Debney said of the Dick's announcement.
Sales at other "big box" stores of this type of firearm, which the company calls "modern sporting rifles," account for less than three percent of overall company revenues.
The guns in total account for 10 to 12 percent of revenues, Debney said.
Dick's also said it would ban firearms sales to consumers under 21 and ban sales of high capacity magazines as it called on politicians to enact "common sense gun reform." The announcement was part of a wave of moves by companies to pivot on gun policy following the Florida shooting.
On Thursday, supermarket chain Kroger became the latest company to shift policy, saying it would raise the minimum age to purchase a to 21 at its Fred Meyer chain and end sales of assault-style rifles in Alaska, the last market where they were still sold by the chain.
"Recent events demonstrate the need for additional action on the part of responsible gun retailers," Kroger said.
American Outdoor Brands reported third-quarter earnings of $11.4 million, down 65 percent from the year-ago period on much lower revenues.
Gun industry profits have languished following the election of President Donald Trump, a strong proponent of gun rights. Gun sales typically rise when there is increased threat of gun control as more consumers stockpile.
Shares of the company sank 10.7 percent to $8.40 in after-hours trading.
© 2018 AFP