Smith & Wesson Reports Record Gun Sales During Quarter Dominated By Civil Unrest

Gun Rights

Smith & Wesson reported on Thursday that its revenue more than doubled, compared to the year-ago quarter, as the gun industry benefited from frenetic demand prompted by fears of civil unrest.

Smith & Wesson (NASDAQ: SWBI), one of most prominent gun companies in America, reported a 128% gain in quarterly net sales compared to the year-ago quarter, to $278 million.

The venerable gun company, based in Springfield, Mass., also reported a significant increase in net income to $55 million for the quarter, or 97 cents per diluted share, compared to $1.7 million in the year-ago quarter, or 3 cents per diluted share.

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Chief Executive Office Mark Smith attributed the company’s record sales to a growing number of first-time gun buyers, and the company’s ability to expand its manufacturing capacity to handle the unprecedented surge in demand.

“This achievement clearly demonstrates our ability to rapidly respond to increases in demand,” said Smith during a call with investors. He said the company’s “flexible manufacturing model” allows the company to ramp up manufacturing without adding infrastructure that would sit idle during downturns.

Smith & Wesson outsources some of its manufacturing to roll with the ebb and flow of demand, without expensive commitments to expanding capacity. Gun companies remember all too well the massive increase in demand they experienced during the Trump-Clinton campaign, only to suffer a steep drop-off in sales when President Trump won the White House. Gun advocates’ fears of gun control, which drove sales during an epidemic of mass shootings, evaporated with the victory of the National Rifle Association-endorsed president.

Smith & Wesson reported its earnings after the market close. The share price for Smith & Wesson made slight gains in after-hours trading, after dropping nearly 10% during the session, as the Nasdaq

fell about 5%.

Smith did not mention civil unrest, but it is a probable catalyst for driving Smith & Wesson sales. Gun manufacturers have been riding a wave of consumer fear, and the desire for self-protection. The perception that America is unraveling is fueled by images of Kenosha, Wisconsin, and Portland, Oregon, wrestling with deadly protests and police brutality.

Handguns, particularly the compact user-friendly semiautomatic pistols like Smith & Wesson’s 9EZ, are particularly popular, because they’re designed for personal protection. Smith & Wesson and other gun companies attribute this popularity to first-time gun buyers. The National Shooting Sports Foundation, the gun industry group, said the industry was buoyed by 5 million first-time buyers in the first seven months of the year.

Smith & Wesson also reported a bump in sales for its outdoor products and accessories, a non-gun portion of the business that was spun off as a separate company just days ago. Smith & Wesson reported on Aug. 24 that it had completed the spin-off of its company American Outdoor Brands

, which is now trading on the Nasdaq under the symbol AOUT. That company’s brands include knives, meat processing equipment for hunting, equipment for reloading ammunition, flashlights and the Crimson Trace line of laser sights.

“With the successful spin-off of our Outdoor Product & Accessories segment last week, we have now returned to our heritage as a pure-play firearms company,” said Smith, in a company statement. He said that Smith & Wesson was initiating a quarterly cash dividend of 5 cents per share.

With the spin-off, Smith & Wesson promoted insider Deana McPherson to the position of Chief Financial Officer.

Gun sales have surged industrywide since the Covid-19 pandemic shut down major cities and triggered millions of layoffs in March. Federal background checks conducted by the Federal Bureau Investigation surged during the spring and summer, breaking a monthly record with 3.93 million background checks in June. Most recently, background checks surged past 3.11 million in August.

FBI background checks are not the same as sales, but they serve as the closest nationwide proxy, aside from revenue reports from individual gun companies like Smith & Wesson and its publicly traded rival, Sturm, Ruger, and ammunition manufacturers Vista Outdoor and Olin.

Smith suggested that sales could have been better for the industry, if manufacturing had been better equipped for the intense demand. AR-15s were flying off the shelves in the early days of the pandemic, followed by handguns, and ammunition became hard to come by, as retailers struggled with shortages.

“If anything, I think figures would be higher if there was more inventory,” said NSSF public affairs director Mark Oliva. “Manufacturers and distributors [are] working hard to fill orders. Distributors are literally pushing inventory out the door the same day it comes into their warehouses.”

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