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Gun Manufacturers Idea Proposal (AOBC, RGR)

Gun Manufacturers Idea Proposal (AOBC, RGR)

How significant is the decline in gun sales brought on by the Presidential election? When will gun sales rebound?

Report Available:May 26, 2017


Blueshift’s initial research shows fears that gun sales will fall significantly with a pro-gun President and Congress, setting up low expectations for manufacturers RGR and AOBC. While FBI background checks have dropped in the last five months, the decline slowed in March and April leaving some to believe the doom and gloom may be abating.



  1. RGR’s Q1 EPS was flat and revenue declined 3% year to year, though both exceeded low expectations set based upon the election of a more gun-friendly President. Unit sell-through declined 7%, but background checks fell 11% in the quarter, suggesting share gains for RGR. New products represented 25% of sales and RGR cut costs during the quarter.
  2. AOBC fiscal Q3 earnings beat expectations, but revenue fell short despite increasing 11% year to year. Gross margins increased to 42.5% of sales and expects Q4 revenue of $200 million. AOBC experienced an inventory build-up during the quarter due to what it called a softening of the consumer firearms market.
  3. Donald’s Trump’s election has led to doom and gloom for the firearms industry given the expectation that his looser gun control policies would lessen the urgency to buy up guns for at least the next four years. Since Trump was elected, the FBI has performed 1.6 million fewer firearm background checks compared to the same period a year ago, implying slower sales, the second biggest drop-off since 1998 when statistics were initially kept. This is also a significant change from before Election Day, when FBI checks increased for 19 consecutive months.
  4. Still, the news has gotten better of late as monthly FBI checks fell at a slower rate in March and April compared to January and February. It is also notable that FBI checks in March were higher than February, reversing the sequential trend from 2016.
  5. Sources in Blueshift’s Sept. 26, 2013, report said demand and sales for guns and ammunition cooled from the “panic buying” that occurred during 2013’s first two quarters when stricter gun-control measures were being discussed by the government. Sources expected sales growth of guns and ammunition to remain strong, but not as explosive, during the fourth quarter and into 2014. Gun inventory improved, and shelves were starting to have more stock. Our Feb. 14, 2014, report said guns and ammunition sales would remain more muted in 2014 based on the diminished threat of gun control legislation that sparked the surge in 2013.


How is end customer demand? Where is it coming from? How much of the demand was pulled forward before the presidential election? What is the saturation number on guns per household? How are inventory levels? When will they change? How are prices? What is customer receptivity to these prices? What ability do manufacturers have in shutting down capacity and controlling costs? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Wholesalers, Supply Chain, Gun store owners and executives, and Industry specialists.


Companies: American Outdoor Brands Corp. (AOBC), Cabelas Inc. (CAB), Sportsman’s Warehouse Holdings Inc. (SPWH), Sturm Ruger & Company Inc. (RGR), Vista Outdoor Inc. (VSTO)


Research Begins: May 15, 2017