Smith & Wesson Maker Tumbles as Gun Industry Slashes Prices
Smith & Wesson Maker Tumbles as Gun Industry Slashes PricesBy
American Outdoor Brands Corp. dropped to a two-year low after the maker of Smith & Wesson firearms lowered its annual profit target and said steep price cuts would continue for the near future.
Gunmakers aren’t reducing production enough to meet lower demand, Chief Executive Officer James Debney said on a conference call with analysts. Fear-based motivation for purchases has been replaced by the search for bargains, he said.
“We have to defend our position and weather the storm — ultimately until there’s a better balance between those production rates and the consumer demand,” he said after the close of regular trading Thursday. It’s unclear how long the discounting will continue, he said.
The price pressure reflects the changing political environment under President Donald Trump, who has vowed to protect the right to bear arms. Firearm sales often spiked after mass shootings during President Barack Obama’s administration, as some customers feared that lawmakers would respond with tougher gun-control measures.
American Outdoor tumbled 15 percent to $12.74 at 9:34 a.m. in New York after falling to $12.46, its lowest intraday since April 2015. The stock dropped 29 percent this year through Thursday, while the S&P 500 Index climbed 18 percent. Rival Sturm Ruger & Co. declined 3.2 percent Friday morning.
American Outdoor slashed its earnings target for the fiscal year through April to a range of 57 cents to 67 cents a share from $1.04 to $1.24, citing the need for price cuts to maintain market share.
December 8, 2017 at 08:09AM