‘Trump Slump’ hits gun manufacturers
Firearm sales have direct link to political stance of President of United States
In the run-up to the 2016 presidential election, when pollsters predicted a win for Democrat Hillary Clinton, sales of guns skyrocketed, because Clinton’s views on guns were widely seen as even more restrictive than those of sitting president Barack Obama.
“(Obama) did a pretty good job for our industry — he definitely motivated people to go out and purchase guns, that’s a fact,” said Matt Seibert, co-owner of Insight Firearms Training in Prescott Valley.
The standard for gun-buying statistics, the FBI’s registration data, showed a 17 percent spike in October 2016, over the same period in 2015.
But that spike was not a harbinger of sales to come.
“Since Trump got in, there definitely has been a slump, industry wide,” Seibert said, adding that sales were down as much as 20 to 40 percent, nationwide.
It’s a characteristic of the firearm market: when a president seen as likely to try to restrict gun purchases is in office, more people buy them, hoping to get them while they’re still available. When a president like Donald Trump, who has been endorsed by the National Rifle Associating, is in office, fears of gun sales being curtailed are lessened, and buyers aren’t in a hurry to purchase guns.
In its Chapter 11 bankruptcy filing, Remington Outdoor Brands, maker of the Bushmaster AR-15-style rifle, among other firearms, suggested that it expected a Clinton presidency.
“Throughout 2016, the (company) was increasing production rates based on inputs from its key markets to meet expected demand for its products in 2017,” the filing stated. “Those demands, however, ultimately did not materialize.”
American Outdoor Brands, formerly Smith and Wesson, has seen its stock drop 67 percent since the presidential election.
And Sturm Ruger and Company, which has a manufacturing facility in Prescott, had its second-best sales year ever in 2016, but then, in 2017, revenue fell 21 percent.
Ruger CEO Chris Killoy said, “2017 was a challenging year for the firearms industry” in a February conference call. He added that sales were “likely bolstered by the political campaigns for the November 2016 elections.”
Ruger has cut jobs and had 1,750 employees as of Feb. 1, the lowest since 2012.
But Brian Rafn, an analyst at Morgan Dempsey Capital Management, said the market for firearms is still solid.
“When you see the major media use words like ‘collapse,’ that’s just anti-gun people,” he said. “The market has not collapsed at all. You’re going to see, after a huge run-up in the Obama years … one would expect it to slow down a little bit, because it is a cyclical business.”
Rafn added that, of the major U.S. firearm manufacturers, Ruger is positioned well to ride out the Trump slump.
“Ruger has a ton of cash, they have no debt, and they’re driving their sales from new gun design, unlike the other (gun makers).”
He said Ruger’s stock is down 40 percent, while other gun manufacturers’ stock has dropped 75 percent.
“Ruger is still best-in-class in the U.S. gun market,” Rafn said.
Representatives for Sturm Ruger did not reply to phone messages and emails for comment on this story.