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Gun Maker says sales are plunging

Rival Sturm Ruger & Co. fell after the close on Thursday. Remington Outdoor Co., the iconic arms maker controlled for years by Stephen Feinberg’s Cerberus Capital Management, went bankrupt last month.

Public review

The gun industry has come under closer scrutiny since last month’s shooting in Parkland, Fla., Even though the potential for tighter gun restrictions appears weaker than when Obama was President.

A social media move against the National Rifle Association has led many companies to sever ties with the gun rights group, including Symantec Corp., Hertz Global Holdings Inc., Avis Budget Group Inc. and MetLife Inc .

Dick’s Sporting Goods Inc., Walmart Inc. and Kroger Co. said this week that they will no longer sell assault rifles such as the AR-15, the weapon used in the Florida shooting and manufactured by American Outdoor. Retailers have also said they will increase the purchase age for guns and ammunition to 21 in their stores.

Despite Trump’s support for gun rights under the Second Amendment, he tweeted this week about the potential restrictions. In a meeting with lawmakers Wednesday night, he said some politicians were “petrified” by the NRA. Senator Chuck Schumer, a Democrat from New York, called on Trump to support tighter restrictions on Thursday, saying the gun rights group has had Republicans in a “decades-long standoff.”

On Thursday, the president tweeted about a “Good (big) meeting in the Oval Office tonight with the NRA!” The discussion with the NRA’s chief lobbyist suggested that Trump may once again change his position in a gun safety debate that has stalled for years.

“Given the more fluid political environment, it is difficult to read demand going forward, especially given the growing grassroots pressure to control sales” of assault rifles, said Cai von Rumohr. , analyst at Cowen & Co., in a note to investors. Friday.

Decreased profits

Some forms of gun control, including magazine restrictions and tightened background checks, are unlikely to have much of an impact on the manufacturer, Wedbush Securities analyst James Hardiman said in a report from the 27th. February. Yet the buying frenzy seen in recent years, when gun rights were seen as under threat under Obama, did not materialize under Trump.

The most important problem is the drop in demand. It’s not just politics. There are also fewer hunters and a lesser sense of urgency when it comes to personal protection at a time of declining crime rates.

American Outdoor cut its profit forecast for the third consecutive quarter. The company forecast earnings of 31 cents to 33 cents per share for the current fiscal year, which ends April 30. This is lower than the lowest of six analyst estimates compiled by Bloomberg. Wall Street was expecting 60 cents a share.

The arms maker also lowered its sales target for the year to a midpoint of $ 599 million from a projection of $ 662.5 million in December. Analysts had predicted $ 655.6 million.

Firearms discounts

“We have adapted to this difficult market environment and obviously we have worked very hard internally to align with this market demand,” said CEO Debney.

Debney warned of falling sales in December, saying the fear-based buying of years past is no longer happening. Low demand and an overabundance of inventory were forcing gunmakers to cut back sharply, Debney said.

Firearms background checks compiled by the Federal Bureau of Investigation, an indicator of gun sales, fell 8.4% last year after increasing in 13 of the past 14 years. January’s checks were the lowest in six years on an adjusted basis, Debney said.

American Outdoor, bracing for a prolonged downturn, has repaid $ 75 million in recent months and extended the maturity date of $ 75 million of tickets until August 2020.

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