After Betting Big on Guns in 2016, United Sporting Companies Files for Chapter 11

As Reuters reports,

United Sporting Cos, a large firearms distributor whose roots date to the Great Depression, filed for bankruptcy protection on Monday and said it plans to liquidate, hurt by falling sales after President Donald Trump was elected and as Dick’s Sporting Goods Inc began moving away from firearms.

United owns longtime distributor Ellet Brothers, which is embroiled in a lawsuit over allegations that the parent company drained it of cash. United also bought some of the remaining assets of bankrupt distributor AccuSport a year ago.

In addition, United reportedly made a big bet based on the outcome of the 2016 election. According to Bloomberg . . .

Firearms distributor United Sporting Cos. loaded up on guns ahead of the 2016 U.S. presidential election, expecting a surge in sales that would likely follow the election of a Democrat. Then Hillary Clinton lost.

The miscalculation sparked a multi-year decline that has reached the courthouse steps in Delaware, where United filed Chapter 11 bankruptcy on Monday.

When Republican Donald Trump emerged victorious in the election, United posted lower-than-expected sales as well as high inventory carrying costs, Chief Executive Officer Bradley P. Johnson said in a court declaration.

A number of distributors have had a difficult time in the last few years as a result of lower-than-expected gun sales as well as changing trends in the industry which have seen some manufacturers move away from the traditional distribution system toward more direct sales with large and medium-size retailers.

 

comments

  1. avatar frank speak says:

    capitalism at work…it happens…

  2. avatar American Patriot says:

    They were trying to cash in on America’s demise.
    I wonder if they were supporting Hitllery too.

    1. avatar Shire-man says:

      This. I get the feeling an awful lot of businesses actively work to destroy the country and our liberty as looking as they see a payday at the end. I guess when enough money essentially buys you liberty why should they care? We’re the poor fools getting fined and doing time while they fire up machine guns on their personal ranges and walk literally everywhere armed or with bodyguards.

      1. avatar Cartman says:

        A lot of shooters are unknowingly working for the demise of freedom and the 2nd amendment. They say they’re disappointed by Trump, or he let them down over bump stocks, so they won’t vote at all for president, or will vote for a Democrat.
        I understand that they are sick of making choices of the lesser of two evils, but there’s no excuse for being blind to leftist, activist judges who interpret the law to constantly pressure the 2nd amendment, and several others. I don’t always vote for a president specifically, but I have the common sense to try to elect people who will appoint judges who will not be activist against my right to own firearms. They may be fed up with Trump ( I’m not here to defend him), but I’m also fed up with the foolishness of a lot of people who claim to be pro second amendment. They either lie or are very ignorant.

        1. avatar J says:

          Forget about the bump stock issue and pull your collective heads out of your backsides. Trump was wrong in this case, but the alternative would have been more draconian laws enacted by the demoscum for re-election purposes. However, to not vote for him would be playing directly into their naziistic game plans of controlling our freedoms. Think clearly because NONE of the demomaggots are worth even considering for office, especially the office of the presidency.

          It is vitally important that we all get out and vote to keep these scumocrats out of any political office. They only want to have complete control and will do everything they can to repress us into becoming their subservient subjects by taking away our rights if they are allowed to take over. The choice is clear and WE ALL MUST STOP THE REPRESSORS with our votes AGAINST THEM. Standing on the sidelines in this case is NOT AN OPTION!

    2. avatar jwtaylor says:

      This isn’t cashing in on America’s demise. This is stockpiling for non-compliance.

      1. avatar American Patriot says:

        It would have been if Hillary had won! Now it just post-poned till the Socialist left get in charge…..and it will happen, then it will be each man for himself.

        1. avatar HellBilly says:

          *Stalinist left.

      2. avatar CA ST says:

        Kel-Tec may not make the finest guns in the world, but their buisness model is a bit smart. Make two fewer guns than the demand creates and your factories will run at their peak 24/7 making you a nice healthy profit.

        1. avatar Joe in San Antonio says:

          They also don’t grow through financing and rather pay cash for all capital improvements, at least that’s how they used to operate. I like the company and have a few of their guns.

        2. avatar Chet says:

          “Kel-Tec may not make the finest guns in the world, but their buisness model is a bit smart. Make two fewer guns than the demand creates..”

          Their manufacturing capabilities do have production limitations. If they could make more firearms at a given profit level then I’m sure they would. Producing firearms is cost intensive, you can tie a lot of money up before you realize a return.

    3. avatar HellBilly says:

      There was a certain TTAG writer who no longer writes here, (can’t remember the idiots name) who was a gun store owner that supported Hillary because continuous panic was good for his business or someshit. He really was so stupid he couldn’t put the two and two together that the meager gains he’d make during panics wouldn’t mean shit, when his entire inventory and profession would’ve been banned. His last article was him crying about how mad he was Hillary lost. Boo hoo!

      1. avatar Dan in CO says:

        His name is “Firearms Concierge”, I couldn’t believe the crap I was reading then.

        1. avatar ED says:

          He posts on redddit subs now and then. most pompous sounding prick ever, glad I have no idea where his shop is.

        2. avatar ozzallos says:

          Yeah, it was that guy that truly made me question the professionalism and posting standards TTAG maintained. There have been several such incidents, but that one was truly a WTF moment.

      2. avatar Cash Putly says:

        “There was a certain TTAG writer who no longer writes here…..He really was so stupid he couldn’t put the two and two together”

        Maybe he made his million and retired.

    4. avatar Kyle says:

      Almost every firearms manufacturer, dealer, gunstore, etc is kinda split personality on this.

      They hate the democrats and wish they’d fall off the planet.

      And at the same time, they love the democrats because they create demand for firearms and all the little goodies that come with them like nobody else ever could.

      So yea, they probably wanted Hillary to win, and probably hate her all the same.

      1. avatar Cartman says:

        They may have hated Hillary and just been hedging their bets after reading the polls which always showed her far ahead.

      2. avatar Marty says:

        So they thought only of themselves. They could care less about what the bitch would have done to the rest of the country. People like that can kiss my arse.

  3. avatar Green Mtn. Boy says:

    You rolls your dice and take your chances.

    1. avatar Grumpy F'er says:

      A regional Big Box store told me a “funny” story about the last panic. People were running in and buying ALL the ARs they could carry. Mostly on credit cards.

      Last unit, 6.8. Sir, do you realize that this ISN’T a standard AR ammo, and it’s a premium price?

      JUST SELL IT TOO ME>

      Within 6 months most of these panic units were showing up at the gun shows at a loss. Guess they needed to pay their bills.

      I have never taken to panic buying. I think ahead, or look through / past the current issue and plan accordingly. That PLUS having plenty of future boating accidents inventory helps.

      1. avatar Rad Man says:

        Agreed, most folks here are methodical, regular, reasonable purchasers of gunstuff.

      2. avatar hillhunter says:

        yeah, walked into lgs during panic with a used wasr ak that i paid $250 for. store mgr literally accosted me before i got all the way in and wanted to know what i wanted for rifle. I swapped even for belgian made browning blr complete with leupold base and rings. sometimes i feel a little guilty. c’est la vie.

      3. avatar Cartman says:

        @Grumpy

        Ah, thank God for the boating “accident” inventory. I love that one. Lot of incompetent fishermen out there anymore.

  4. avatar former water walker says:

    Golly wait till the Donald ban’s silencer’s er suppressor’s. Odumbo wasn’t chit. Mr. “I don’t like them at all” and hangin’ with Pierced Organ. Mebbe you can make a comeback USCos😄

    1. avatar guest says:

      Maybe grammar can make a comeback.

      1. avatar Ing says:

        Maybe you can be a disappearing act.

        1. avatar jwm says:

          Moist Nugget! ( a random moist nugget was overdue)

      2. avatar Dd says:

        Spelling too, I hope.

    2. avatar Thadeus says:

      Hoo yah! And when the fremadions come bang walkin up the cinder rows wit da pogo leads in de hands, then you knows you be stretching the mugu meisters ’bout as fer as dem will project. The Don he be suppressin things you no want to hear bout but dats how the game gets done. And so the doolow just dont bang wit the same cache of tricks. Just sayin.

  5. avatar OBOB says:

    Any bets on how much$$$$$$$$$$$$$$$$$$$$$$$$$ they gave to the Hitlery campaign???

    My money is on 100k plus!

    they bet on ‘blue’ and lost!!!!!!!!!!!!!!!

  6. avatar RCC says:

    Don’t bet against the parent company having transferred all the debts into and taken all the cash out of it either. Not moral or particularly legal but have seen it done in a few different industries.

  7. avatar Greg says:

    Serves them right for wanting to take advantage of folks. They gambled and lost no sympathy from me.

    1. avatar D says:

      Who said anything about them trying to take advantage of people???????? Might want to check your reading comprehension.

      Them buying inventory is no different than me buying extra mags before the elections.

      1. avatar Greg says:

        Jacking up prices due to political climate is taking advantage of folks. Plenty of shops were selling bottom end ARs for high end priced. Distributors were gouging shops. Don’t give me that BS.

        Same as machine gun owners not wanting the NFA repealed. God forbid their “Investment” gets de-valued.

        1. avatar Anymouse says:

          I call BS. Most machine gun owners want more, but they can’t afford them at today’s prices. Most bought a couple decades ago. The increase in value does nothing for them until they actually sell, and then they wouldn’t have a machine gun. They plan to keep their guns and have plans to give them to their heirs when their die.
          Maybe a small minority have bought more recently as investments, but they’d be ones who hide them away and never fire them for fear of damaging their investment.

        2. avatar Someone says:

          Jacking up prices due to high demand and a low supply is not gouging. That’s called free market. It is different story when Lower Than Dirt cancelled confirmed and paid for orders just to post the goods back for sale for new and improved prices.

  8. avatar Mark N. says:

    I hope that they liquidated all of that excess inventory at fire sale prices–and that the savings get passed down to the consumers.

  9. avatar Dude says:

    “falling sales after President Donald Trump”
    They love to use this excuse for poor business management.
    2013 NICS 21.1 M
    2014 NICS 21.0 M
    2015 NICS 23.1 M
    2016 NICS 27.5 M
    2017 NICS 25.2 M
    2018 NICS 26.2 M

    So NICS checks haven’t even fallen back to 2015 levels since Trump. What’s that? You made some bad bets? You made some large acquisitions? Business relationships changed, executives are accused of lining their pockets to the detriment of the company? So what was the status of company debt after the surge in sales in 2016??

    Excuses…and the end result is the same. The little guy loses their jobs and the executives (folks like Mitt Romney’s old company) run up the debt, leave the company in ruins, and retire rich.

  10. avatar NORDNEG says:

    Dicks sucks, in my neighborhood they took over G I JOES, ( which was a great company) & screwed the whole city with outrageous prices & didn’t really have any thing a sportsman would want, can’t find help when you need it and over priced when you did find it… this is what happens when a P C company takes over a great company.

    1. avatar Murph says:

      I thought they are based in Pennsylvania. So where is the P C from there?

  11. avatar The Pontificator says:

    I’m guessing that this would help explain why one has been able to purchase M&P Shields (and other Smith pistols) on the cheap for the past 2 years? PSA, SOS, SMGA, Bud’s, and other retailers seem to have an almost endless supply of them for very little money.

    Of course I have been only too happy to buy some of them 🙂

    1. avatar Rad Man says:

      We’re probably at the nadir of gun prices now. You might see a minor ramp up as we get closer to 11/20 and leading Democrats start really running their mouths.

      1. avatar American Patriot says:

        When the Democraps start really running their mouths. Please tell me when have they ever shut the f*ck up?

  12. avatar barnbwt says:

    Huh; still no story about the investigative piece on the NRA’s finances by Washington Post. Now I’m worried…

    1. avatar Dude says:

      Is there a free copy or summary to read somewhere?

      1. avatar barnbwt says:

        It’s been linked on Drudge all day…

  13. avatar kap says:

    Glad the money whores are bankrupt! Democrats will be Dancing

  14. avatar Darkman says:

    Never heard of them. Waiting for Dick’s to follow.

  15. avatar GaryH says:

    Wouldn’t the same thing have happened if Hillary had won the election? Sure, there would have been a spike in sales at first, but once the bans came into law, sales would have dropped dramatically to a point even lower than today.

  16. avatar Ronald West says:

    Don’t see anything that point’s to any one person to blame on them wanting to shut the doors, if a few companies don’t want to do business with u ,find some that does, don’t let the democratic people speak louder then a red blooded true American.

  17. avatar Nedd Ludd says:

    Might have nothing to with ‘demand’…

    “In September 2012, Ellett Brothers and its subsidiaries received a $280 million loan from Prospect Capital Corporation and other lenders, including Bank of America, Wells Fargo, Regions Bank and Summit Partners Credit Fund. Prospect gave $100 million of the total loan, according to the lawsuit.

    Part of the loan was used to pay down existing debts, according to the lawsuit. But the remaining $134 million was redirected to Wellspring and its partnerships, executives, investors and shareholders. Ellett Brothers received no investment from the deal.”

    https://www.thestate.com/news/business/article231381818.html

    1. avatar Anymouse says:

      The same article says that the lawsuit claims that they overbought inventory to make it look like they were higher valued to get another loan. The got a $60M loan, of which $55M went to the holding company. Looks like corporate raiding, not betting big on Hillary.

      1. avatar DWW says:

        This…

        Reading between the lines makes me think this was more of a case of a VC firm purchasing a majority stake in a well capitalized and established firm, stripping it of every bit of available cash, loading up on debt, then initiating bankruptcy proceedings.

        It’s been a common practice for a while, but I think that only in the last 10 years or so have any of the firearms related companies gotten big enough (or generated enough sales) to attract the attention of any of the bigger VC firms.

  18. avatar Paul Hurst says:

    They did not bet big on guns, they bet big on Hillary Clinton.

    Good Riddance.

  19. avatar Will Drider says:

    Buy low before the Presidential election and sell HIGH after hillery gets in office and gun grabbers get busy. It was a greedy but all too well known and common business strategy. Large and small companies got spanked.

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