It’s not a secret that the firearms industry has struggled lately. The so-called “Trump Slump” has hit everyone and no one is particularly happy about it.
On the other hand, there’s not a push by the president to dismantle their entire industry, which is probably why they’re not likely to back any of his opponents in 2020. Bad business will always trump no business.
However, American Outdoor Brands, the company behind the Smith & Wesson brand, has a different reason to point toward when it comes to decreased revenue.
The maker of Smith & Wesson firearms said gun control activism poses a risk to its business, according to a company filing.
American Outdoor Brand Corp., which on Wednesday reported a 25 percent decline in fiscal fourth-quarter revenue compared with last year, listed the “actions of social activists” as a risk factor in its annual report.
Wait…don’t gun control efforts tend to cause increased gun sales?
Yes, it does. This is acknowledged, apparently. However, the argument is that the spike in sales was shortlived, then things got interesting.
Investors in American Outdoor faced backlash following the Florida shooting as students who experienced the attack led the charge in calling for a protest of the firearms industry. Asset manager BlackRock Inc., the gunmaker’s largest shareholder, with more than a 12 percent stake, demanded answers to its questions related to gun safety and the risks associated with selling firearms.
“We do not believe that our stockholders associate the criminal use of a firearm with the company that manufactures it,’’ American Outdoor responded. There would be greater risk “if we were to take political positions with which consumers of our products do not agree.’’
Though American Outdoor has in the past referred to threats from a “variety of economic, social, and political factors,” the company specifically referred to social activists as a risk in its latest report.
“Certain activists could pressure our financial institutions, our customers, our vendors, or other businesses and institutions with whom we maintain relationships to adopt actions that are not in the best interests of our company,” the company said.
This kind of activism could impact stock price, financial relationships, and could lead to consumer boycotts, according to the report.
I’m not entirely sure I agree with this one.
While I’m quite sure that anti-gun activists have pushed to try and apply pressure to anyone peripherally involved with companies like Smith & Wesson, the question is whether that pressure was particularly effective in any meaningful way.
To be sure, there has been a lot of pressure on the financial industry to sever ties with customers involved in the firearm industry in any way, shape, or form and it’s worked in many cases. I’ve written multiple stories about various entities suddenly finding their financial services shut down. It’s happened.
But is it enough to create that much of an impact on earnings, or is it more likely that while there was a surge of buying in the wake of Parkland when it seemed inevitable we’d end up with another assault weapon ban, that soon subsided as it became clear that Congress wasn’t really interested. Even with the House swinging blue in 2018, there’s still not enough support for gun control for anything to really be done.
As a result, people stopped worrying about yet another ban and stopped rushing to buy firearms.
Either way, it’s not a great sign for AOB. Here’s hoping it rebounds in the next quarter.