Sturm, Ruger & Co. has just released its second quarter financial results. The numbers reveal the extent of the so-called “Trump slump” and the cost of the gunmaker’s recall of the Mark IV pistol.
In the second quarter of 2017, net sales decreased 22% and earnings per share decreased 53% from the second quarter of 2016. The decrease in earnings is attributable to the sales decline, the unfavorable de-leveraging of fixed manufacturing costs due to the decline in production volumes, and the $2.5 million expense related to the recall of Mark IV pistols.
Don’t take our word that Hillary Clinton’s failure to assume the highest office in the land has put a damper on gun sales (which remain strong, historically speaking), leaving the distribution channel stuffed with product, leading to lower prices, leading to lower profits all ’round.
The decrease in estimated sell-through of the Company’s products from the independent distributors to retailers is attributable to:
– Decreased overall consumer demand in 2017 due to stronger-than-normal demand during most of 2016, likely bolstered by the political campaigns for the November 2016 elections,
– Reduced purchasing by retailers in an effort to reduce their inventories and generate cash as they head into the typically slower summer season, and
– Aggressive price discounting and lucrative consumer rebates offered by many of our competitors.
The report also highlights the importance of Ruger’s Unique Selling Point: a steady flow of new products (or at least variations of existing products):
Sales of new products, including the Mark IV pistols, the LCP II pistol, and the Precision Rifle, represented $84.9 million or 29% of firearm sales in the first half of 2017. New product sales include only major new products that were introduced in the past two years.
Ruger remains a highly profitable company offering quality, affordable U.S.-made firearms for Americans exercising their natural, civil and Constitutional right to keep and bear arms. While TTAG will never compromise our editorial integrity, we salute Ruger’s employees for their industry, creativity and customer service. Just sayin’.