Was Smith & Wesson's diversification the wrong move?
courtesy CNBC
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You have to think the move will work out in the long run. Right now, though . . . Did Smith & Wesson Make a Big Mistake Chasing the Outdoor Market?

There was logic behind abandoning Smith & Wesson as the corporate name, even if it seemed foolhardy to take down such a well-known brand from the marquee. American Outdoor was seeking to diversify its revenue streams away from firearms, and the outdoors market was considerably larger and offered greater growth prospects.

Ever since acquiring Battenfeld Technologies in 2014, the firearms manufacturer sought to downplay the role guns had in its business while pointing out the outdoors market was orders of magnitude larger.

Gun sales always have their ebb and flow. Particularly when events cast a shadow on the industry and the potential for stricter gun laws seems greater, gun sales surge and then fall back as the crisis fades. Entering a new, parallel market that both supports its primary firearms business, but can also grow independently of it, gave American Outdoor the opportunity to smooth out many of the hills and valleys.

For now, Smith & Wesson American Outdoor and Vista are having a tough go while the pure play, Sturm Ruger, is doing relatively better. But diversification is a long term move. Which strategy will turn out better over time? We’re not stock brokers and we definitely don’t play one on TV.

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  1. Because the “outdoor” lifestyle is not something you can buy, or artificially replicate.

    These Umbrella Corps (hehe) have a tendency to wreck brands that were previously pretty good.

    And if the market loses faith in said brand.. well, it’s going to be rough.

  2. Battenfield, Caldwell, Crimson Trace — all nice acquisitions. Smith & Wesson’s guns — I love them. Smith & Wesson’s senior management — incompetent.

    After finally getting out from under the hundred million dollar fiasco known as Smith & Wesson Security, the company flushed away one of the world’s great brands for no reason that makes sense.

    • “… the company flushed away one of the world’s great brands for no reason that makes sense.”

      Oh, come on now Ralph: you know that it totally makes sense in the minds of Progressive executives and investors. Their Progressive desire to achieve utopia demands virtue signaling which takes the form of “diversifying” and reducing the brand. Their Progressive desire to pocket as much cash as possible means keeping the brand alive in muted fashion.

  3. Those SportsCenter-type finance shows on tv drive me nuts. There’s just no way to hype up the S&P500 THAT MUCH.

    And moving to an outdoor-based approach is definitely a smart move in the long run. But finding their niche in the same way that L.L. Bean, North Face, and Patagonia have theirs is going to be the key to how smart a move it’ll be.

  4. They flushed the brand name down the toilet when they collaborated with the city and state anti-gun lawsuits years ago. They HAD to change the name in the hope that people would forget that S&W sold out the second amendment. Haven’t touched an S&W since and never will… you shouldn’t either. In fact, stop writing about them and giving them press. Like Government Motors the company needs to die so truly righteous gunmakers can flourish in their absence.

  5. All the big players know that government contracts keep you going, civilian sales are the cream. Beyond that, ammunition and aftermarket parts are two areas that a big corporation could make bank. High quality, low cost. Words you don’t hear often in ammo and parts.

  6. Harvard ain’t crankin’ out MBA’s to run nacent operations. You gotta grow, grow, grow. You have a goose that lays golden eggs but you need bigger eggs; more eggs. You are gifted. You have vision. You can put together a diversified team. You have a contract that will make you rich even if you fail.

    Is it too late to start over?

  7. The umbrella brand is trading at $13.33 this morning. Ruger is at $56 and some change. Speaks for itself.

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