Gander Mountain stores closing was undoubtedly sad news for many people. Finding out that the remaining stores would have a greatly reduced firearm inventory probably didn’t perk up any of those who were gun buffs either.
Unfortunately, the bankruptcy of Gander Mountain is having some serious repercussions throughout the gun world.
After struggling for months to stay afloat, Gander Mountain filed for bankruptcy protection in March, saying it wanted to sell the business and close a number of stores. Recreational vehicle dealer Camping World Holdings (NYSE:CWH) ultimately won Gander Mountain’s assets at auction, which further fueled the problems Cabela’s is experiencing.
While the firearms industry has been in a funk since the election of Donald Trump last November, Camping World’s chairman and CEO Marcus Lemonis exacerbated the situation by liquidating the sporting goods chain’s firearms inventory.
He was highly critical of Gander Mountain’s management team and their decision to become “America’s Firearms Superstore,” and though he wasn’t banning guns from the stores he renamed Gander Outdoor, there were only going to be a few dozen stores operating and they’d have a highly curated selection of guns on hand. All that inventory being sold off at deeply discounted prices has walloped the market.
Gun manufacturers like American Outdoor Brands, which owns the Smith & Wesson firearms brand, and Sturm, Ruger, have been slowly coming to grips with the decline in demand and the weakened pricing environment caused by the election and Gander Mountain’s bankruptcy, which is pulling sales forward.
Sounds bad for the gun industry, right? Well, in a way, it is. The Law of Supply and Demand can be a cruel mistress…one who doesn’t believe in safe words. In this case, we have a decreased demand due to the fact that no one is all that worried about the government banning guns, and we have a surplus of inventory. That drives prices way, way down.
However, for those of us who are still buying whether the government is coming for the guns or not, this isn’t such a bad thing. For consumers, that is.
It’s good news for guns owners, who can expect the rock bottom prices to linger around a bit longer, even as the industry slides back into its historically strongest seasons.
“This will be an amazing time to be a gun owner, but a bad time to be a gun investor,” said Maks F.S., an investment advisor and contributor at Seeking Alpha, in an analysis of gun stocks Friday. “The firearms manufacturers and distributors bet on the wrong horse in the elections and produced a glut of firearms that must now be sold into a market with declining year-over-year demand.”
That means discounts. Serious ones. After all, while I’m not an accountant, I seem to recall that businesses who still have inventory are taxed for that inventory, which means the benefits of selling guns at a reduced price may be greater than simply holding onto them until the market improves.
If you’re looking to pick up some new goodies, this just might be the best time in the world to do it. Plenty of choices, reduced prices, and no real threat of federal gun control. Ah, what a time to live in a gun friendly state.
In fact, even some in gun hostile states can still benefit, so this is something of a win-win scenario.
No, the firearms industry can’t withstand this kind of downturn indefinitely, but I don’t think it will have to. It just needs to weather the storm for a little while longer. Once the excess guns are cleared from the market, things will stabilize back to something fairly normal.
Does that make this a win-win-win or something?
What about you? What are you hoping you can find a good deal on?