Gun and ammo prices have been pretty decent for the first year of the Trump era, which isn’t all that surprising. After all, Barack Obama was pretty much the gun salesman of the last couple of centuries. A slump was expected, and the firearm industry adjusted prices accordingly and thus have largely avoided a “Trump Slump”.
Unfortunately, it looks like prices may be going up next year.
Top executives for Vista Outdoor said last week the industry’s widespread promotional activity will end in 2018 as competitors discuss price increases.
The forecast comes after the company admits lingering post-election market conditions haven’t lifted as quickly as anticipated.
“We are not yet seeing the recovery that we expected to see,” said Chief Financial Officer Stephen Nolan during a conference call with investors Thursday. “Shooting sports has always been a cyclical industry with periodic downturns lasting anywhere from 12 to 24 months. While we may not be at the bottom as of yet, we believe that we are very close and we anticipate that the market will show returns to growth over the next 18 months.”
Vista Outdoor’s second quarter earnings declined 25 percent, according the company’s most recent filing with the Securities and Exchange Commission. Sales likewise dipped 16 percent, the company’s second double digit loss so far this year. Its shooting sports segment generated $296 million, a 19 percent decline over 2016 — the biggest on record for gun sales. Net profit for the segment nosedived 38 percent, Nolan said.
“A number of our competitors have talked about price increases in calendar 2018,” he told investors Thursday. “So, we do see the end of the promotional intensity that we’ve seen of late on the horizon, but we’re certainly not there yet and we do not expect that recovery in pricing to have that significant impact on fiscal 2018. We look for benefits from that in fiscal 2019 and beyond.”
There’s no mention of just how big of a price increase we may be looking at.
However, if Vista Outdoors is still struggling–and they’re not exactly rolling in cash at the moment–raising prices might make a bit of sense.
After all, if X number of people are going to buy ammo anyway, then you make more money at Y price than at Y-$1 or whatever. And if everyone else’s prices increase as well, you’re not likely to lose customers because of that price increase.
But that’s from an industry standpoint.
For shooters, this is a big old ball of suck. Higher prices are never a good thing for us, and it may lead to shooting less. If the increase is modest enough, no one will really notice, but too high a price and people will shoot less. Sure, the die-hards will grumble a bit, but the more casual shooter will just fire off a few fewer rounds per range trip, which is modest enough as it is.
We’ll have to take a wait and see approach to judge the impact of any decisions. In fact, we’ll have to wait and see if a price increase even happens. As things continue, the gun industry may well figure they’re better served for now to keep things as they are.
Frankly, I think a lot of us would be fine with that.