[3/15/17] With a decline in the number background checks being performed, the fall in the stock prices of gun makers, the cutting back of workers in the gun industry, and the bankruptcy of a major sporting goods chain, some in the media are suggesting that the boom in the firearms sector is over.
On the surface the evidence is persuasive. Background checks of 2.23 million in February were down 14 percent from a year earlier, following declines of 20 percent in January and 17 percent in December. The stock price of American Outdoor Brands (formerly known as Smith & Wesson) is down 35 percent, while Vista Outdoor (which owns Savage Arms and ammunition makers CCI, Blazer, American Eagle, and Federal) are off by nearly half. Stocks of sporting goods chain Cabela’s is off 28 percent since the election, while Dick’s Sporting Goods is down 20 percent. On Friday Gander Mountain declared bankruptcy and shut down operations at 32 of its stores, while awaiting a potential buyer. On Monday Remington laid off more than 120 workers at its Ilion, New York, plant.
Vista Outdoor’s CEO Mark DeYoung was clear about the primary cause: Trump’s surprise victory in November:
Part of these negative trends can be directly tied to the outcome of the 2016 presidential election. We do believe that one of the key contributing factors is that people built up inventories in advance of the election in anticipation of a Democratic administration. When that didn’t happen, we know that many of our customers had inventory levels that were too high.
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