While the “Trump Slump” may be a myth, the financial woes of the firearm industry aren’t. It seems the industry as a whole is on the precipice of collapse based on the tidbits we get here and there.
The latest example comes from Remington.
Remington — facing doubts about its ability to refinance its debt next year amid sluggish sales and loss of investors — has turned to Lazard to examine options for boosting its finances, according to Reuters.
Reported sales for Remington are trailing the year before’s by some $177 million, according to November’s financial filings by the North Carolina-based company, which puts the gun maker at a $60.5 million loss.
Nine months into the year, Remington’s sales fell by 27 percent. In that same timeframe, national gun sales fell by 12 percent. Following the surprising election victory by Donald Trump in 2016, the gun industry as a whole has struggled due to high inventory levels and soft market conditions. Many expected Hillary Clinton to win and prepared for continued politically-driven sales, which they saw throughout the entirety of the Obama Administration.
Although Remington produces guns, ammo and accessories, the company’s executives explained to investors in November that the biggest hits were to firearm sales, specifically AR-style rifles. Eight months into the year, firearm sales fell 33.4 percent, or by $107 million.
Remington has some $964.5 million in debt and repayments are due next year and 2020. Given the weak market and looming debt payments, notable financial analysts have downgraded the company’s performance. In December, Moody’s Investors Service raisedthe probability that Remington will default on the loan. And, in the month before, S&P Global lowered Remington’s rating to a “negative” outlook.
To say this isn’t good may be an understatement. If Remington is unable to handle its debt, the company may be forced into bankruptcy. While that doesn’t necessarily mean the company we all know as Remington would cease to exist, it does raise that as a possibility. Frankly, that would be a shame.
Remington has some interesting firearms out there at the moment, some that I think can make a definite market impact down the road. The problem, of course, is keeping the company afloat until then.
If they can restructure their debt so they can keep out of bankruptcy, then so much the better for everyone. While I’m sure their competitors would like to see their market share increase without having to do anything new because Remington isn’t around, let’s be honest. That’s not likely to happen. What would happen is that someone would buy Remington and increase their market share as a company.
In the meantime, fewer companies mean less competition, which won’t do good things for the industry as a whole.
However, by staving off such doomsday scenarios through debt restructuring, Remington keeps themselves in the game. Sounds like a win for pretty much everyone.