Americans Make Smith & Wesson's Day

Surprise! Some companies are actually benefiting from the recession. Times are tough, but hopefully Smith & Wesson (SWHC) customers will be returning customers...

From Smith & Wesson Holding Corp.'s FQ209 conference call:

Second quarter... was a stark contrast between strong, solid performance in parts of our handgun and tactical rifle products, offset by very tough, ongoing challenges in the hunting business.

Many of you have seen the media reports on the surge in gun sales, as indicated by the NICS background check data… Those background checks were up 45% in the month of November, an historical record.

At Smith & Wesson we are certainly seeing the benefit. It is important to note that the bulk of the surge did not begin until just after the election and is largely not reflected in the revenue gains for the quarter we are reporting.

From our perspective, the surge is affecting handguns and tactical rifles and our weekly read on distributor inventories indicates that these shipments are flowing immediately through to retailers. I want to point out that there is no way to know how long this surge will last. But for at least the short term, this growth in orders and shipments will help offset some of the costs we will incur as we take the proper steps to lower our inventories and costs.

Q: Based on your own Smith & Wesson records, and your own work you have done with your customers, going back to the 90s and the early months or quarters of the Clinton administration, can you give us any kind of history lesson there? What happened? I know there wasn’t NICS data back then, but I am sure you have done some work on how that went at that time for sales at the retail level.

A: These are industry numbers on handguns: Back in the mid-90s there was a surge in firearm sales. I think that’s what you’re talking about. And it was a pretty interesting phenomenon. The surge lasted about, ballpark, 18 months and the years after the surge there was a little bit of a dip but not much. It kind of came right back down to the trend line and just started back on the GDP growth level.

Now, circumstances, are they different today? We’ve got a pretty severe recession going on. That’s hard to guess.

Comments

[Gedankonomist:]

I guess people are worried about an Obama gun grab.

2008 Dec 17 08:23 PM

[deefree:]

why not just tax them higher? extra taxes on cigarettes and liquor, they can raise the taxes on guns next.

2008 Dec 18 07:52 PM

[Socialism c...:]

"I guess people are worried about an Obama gun grab."

And not just that, but also:
a) His "Civilian National Security Force". Um...we used to call that a militia in this country...and they were always formed by the people, for defense against both foreign and domestic governments gone awry.
b) Civil disorder caused by economic, political, and social collapses.
c) Ability to hunt for food, given economic circumstances and implications for affordability and availability of food.

Jan 05 04:07 PM

[Socialism c...:]

Cigarettes are inherently destructive...guns are not. The vast majority of gun owners use them within moral and legal boundaries, for hunting and defense purposes. Tell me how that applies to smokes?! Guns *can* be used wrongly...and are...but they are not inherently harmful, but rather inherently *good* when used as intended!! There should only be sin taxes on *inherently* harmful products.


On Dec 18 07:52 PM deefree wrote:

> why not just tax them higher? extra taxes on cigarettes and liquor,
> they can raise the taxes on guns next.

Jan 05 04:09 PM