Industry News: November 2001
By Robert M. Hausman
Gun Buying Slowdown Reflected in Second Quarter Results
The decline in gun sales this year is reflected in the financial results reported by several major manufacturers in their second quarter reports.
For example, Sturm, Ruger & Co. had second quarter net sales of $37.7 million compared to $48.9 million in the second quarter of 2000. Net income for the quarter ended June 30, 2001 totaled $1.8 million or seven cents per share versus $5.9 million, or twenty-two cents per share in the comparable quarter of 2000.
For 2001’s first six months, Ruger’s net sales were $81.5 million and net income $5.9 million or twenty-two cents per share. For the corresponding period in 2000, net sales were $108.8 million and net income was $15 million or fifty-six cents per share.
Chairman William B. Ruger commented, “While the 26% decline in firearms sales during the first half of the year reflects continued subdued demand in the overall firearms market, we are now focused on plans for 2002, including several new or improved firearms products.
“The investment castings segment of our business continues to suffer from sluggish economic conditions as sales decreased by 28% and 20% for the second quarter and six months ended June 30, 2001 respectively. We continue to believe in the potential growth for the titanium investment castings market through diversification of our customer base and expansion into new industries,” Ruger continued.
“In light of what we believe is a temporary market downturn, it is important to note that our financial strength, as evidenced by our debt-free balance sheet, provides the stability which enables us to make the best decisions for the long-term success of the company,” Ruger concluded.
Firearms sales totaled $29,543,000 during 2000’s first quarter, compared to $37,594,000 during the same period in 2000. Castings sales were $8,125,000 during 2001’s second quarter, compared to $11,341,000 during the second quarter of 2000.
For this year’s first six months, firearms sales totaled $65,380,000 compared to $88,689,000 during the first half of last year. Casting sales were $16,152,000 during 2001’s first half, versus $20,135,000 in 2000’s first six months.
Ammo Sales Drop
A second quarter sales decline was also reportedly experienced by the Winchester Ammunition division of the Olin Corp. Second quarter 2001 sales were $62.4 million, a 7% drop from the $67.4 million achieved during last year’s second quarter. Profit for the 2001 second quarter came to $2.3 million, half of last year’s quarterly amount.
For 2001’s first six months, Winchester did $118 million in sales, down $11 million from the $129 million made during the first half of 2000. Operating income for 2001’s first half was $1.6 million, compared to $9.3 million in 2000. Olin Corp. reportedly plans to cut its workforce by 14% at the Winchester and Brass operations divisions.
Slow ammunition sales reportedly caused Remington Arms Co.’s second quarter sales to dip to $86.7 million, compared to $101.5 million during the same period last year. However, the company’s net income of $1.5 million for the quarter was about $500,000 more than that of the same period last year.
For 2001’s first six months, Remington’s sales were $177.3 million, down from $198.1 million for the first half of 2000. Net income totaled $5.1 million, down from $6 million in 2000.
Ammunition sales dropped 24% in the second quarter to $29.2 million from $38.4 million during the same period in 2000. For 2001’s first six months, ammo sales were $56.7 million, versus $72.4 million during 2000’s first half.
Remington’s sales strength came from firearms. Some $46.9 million in guns were sold during the second quarter, down from $51.5 million a year earlier. For 2001’s first half, $96.8 million in firearms were sold, down just a bit from the $100.3 million sold during 2000’s first half. The downturn in gun sales was attributed to weak shotgun demand.
Smith & Wesson has entered a three-year arrangement to produce machined receivers for Remington Arms Co. This was the second deal made between the two companies recently. Earlier, the gunmakers made licensing agreements to share technology each has developed in the electronic firearms arena.
New Pocket Pistol
A new self-defense pocket pistol in the ‘Guardian’ line has been announced by North American Arms. While building its name and reputation on the production of .22 rimfire mini-revolvers, this gunmaker expanded its offerings in the small handgun market in 1998 with the introduction of the original Guardian, a 6+1 capacity high-grade .32 ACP double-action-only pocket pistol. Since this gun has proven to be a popular seller, NAA has now brought out a more formidable .380 ACP Guardian. And this new pistol may just prove to offer the ideal ratio of small size to stopping power.
The 10-round magazine capacity mandate of the federal 1994 Crime Law resulted in a rethinking of handgun design. The trend toward ever-greater magazine capacity has been replaced by a move toward more compact handguns chambered for more powerful cartridges. For those desiring a handgun with very compact dimensions, but in a larger caliber than .32, the .380 Guardian may be the answer. It provides greater punch without sacrificing much in terms of added size. And the Guardian is of quality construction, so it can be counted on should the need to fire in an emergency situation ever occur.
Both the .32 and .380 ACP Guardian pistols share similar design characteristics. Firing from a fixed barrel for enhanced accuracy, double recoil springs with a centered guide rod are set in a grooved, recessed chamber beneath the barrel. The conveniently-positioned 1911-style frame-mounted button magazine release allows the empty magazine to drop free of the gun which aids reloading speed. Pistols in either caliber are designed to reliably feed all commercially manufactured ammo and both guns are furnished with a 6-round magazine.
Construction is largely of surgical-grade 17-4 pH stainless steel. Barrel lengths are 2.185” in .32 ACP and 2.5” in .380 ACP. Unloaded weight of the .32 version is 13.5 oz. and just 19 oz. in .380. Overall length of the .32 ACP version is 4-1/4,” width 7/8,” and height of 3-1/2.” Dimensions for the new .380 Guardian are 4-7/8” overall length, width 7/8” and height 3-1/2.”
While the new .380 Guardian is slightly longer, the most noticeable difference is in the area of weight. Depending on the application, the approximate 5 oz. weight difference may be a deciding factor in choosing between the two models for some buyers, particularly women. Though there is a weight gain, the balancing factor is that the .380 ACP cartridge offers greater terminal ballistics than the .32.
“We’ve found there’s great demand for products like the Guardian line,” says Sandy Chisholm, NAA’s president. “Most of the other entries in its category are greatly compromised by either availability or reliability, or both. We chose to invest a substantial amount of time and engineering resources to ‘do it right’ the first time. And to assure our customers and ourselves these are the finest pistols of their type available.
“I feel confident we’ve set a new standard for small, pocket pistols and I invite the most critical comparisons between the Guardians and any other products on the market,” Chisholm concludes.
For more information, call NAA toll-free at (800) 821-5783 or visit their web site: www.naaminis.com.
Gun Rights Preserved at U.N.Meeting
The United Nations reached an accord on international gun control issues on July 21 with U.S. negotiators winning concessions to protect American gun rights. The non-binding 16-page small arms agreement was approved by more than 160 nations. None of the measures are enforceable under international law, but rather are voluntary agreements.
The U.S. opposed attempts to restrict civilian ownership of “military-style weapons” as the definition could be applied to virtually any firearm. Adopted at the conference was a voluntary firearm marking system listing the manufacturer, country of origin, and a unique serial number requirement similar to that already required by U.S. federal law. The uniform marking effort is hoped to help in tracking of illicit firearms shipments.
News in Brief
Turning our attention to a review of some of the latest industry-related happenings, The Department of Housing and Urban Development (HUD) has announced it is terminating funding of gun buy-up programs that cost the federal government some $15 million since they were begun by the Clinton Administration in November 1999.
The U.S. House of Representatives overwhelming rejected an amendment by Rep. James Moran (D-VA) that would have required the retention of background check records of approved gun buyers for at least three months. The vote was 269-161.
USA Armoring LLC, a designer and manufacturer of armor technologies for military, law enforcement and commercial applications, is changing its name to Pinnacle Armor LLC.
The SIG Arms Training Academy of Epping, New Hampshire has recently undergone an upgrading of its facilities. There are now five ranges within its facility available for civilian and government training. Ranges are available for government agency leasing for as little as half a day.
The mega retailer, Kmart, has resumed selling handguns in Alaska despite its recent dropping of the sale of most handgun ammunition in its stores in the lower 48 states. Kmart stores had stopped selling handguns in the 1970’s, but the Kmart store in Fairbanks was given corporate approval to begin carrying handguns again last year. A store manager gave the reason, “We’re making money in Alaska.”
The state of Michigan’s new shall-issue concealed carry law is proving popular as reports indicate tens of thousands of residents have requested permit application kits. Handgun manufacturers and Michigan handgun retailers, along with range operators will soon be reaping the financial benefits of the trend.
Home improvement retailer, Lowe’s Companies, Inc., has removed anti-gun content appearing on its web site after receiving a complaint from the National Rifle Association. The company said it did not want to take a position on gun issues.
Wholesaler, Zanders Sporting Goods, is distributing a new line of shotshells produced by NobelSport in Italy.
Ohio’s Governor Taft has signed a bill protecting the industry from reckless lawsuits. Critics may challenge the law’s retroactivity provision as unconstitutional as it would likely end the suits filed by the cities of Cincinnati and Cleveland.
Florida’s Governor Bush also recently signed legislation protecting the arms industry from reckless lawsuits. Georgia was the first state to adopt such legislation in February 1999, and since then more than half the states have adopted similar laws.
California’s list of approved handguns continues to grow. The latest total comes to 549 models, including many of the lower-priced handguns the law was designed to exclude from sale.
Consumers may be allowed to attend the next S.H.O.T. Show. Exhibitors were recently polled on their sentiments for opening the show up to the public on its last day.
Smith & Wesson is reported as having received a Department of Justice grant of $1.7 million for so-called “smart gun” research. The company has reportedly spent $5 million since 1993 on such firearm technology.
The Bush Administration views the Smith & Wesson Agreement with the federal government (entered into in March 2000, during the Clinton Administration) as not legally binding, according to published reports. There has reportedly been no contact between S&W and the Department of Housing & Urban Development, the agency assigned to oversee the deal. S&W has not sent out new agreements increasing oversight of retailers or distributors as it had once planned.
While the gunmaker is not making any official announcements, one S&W executive was quoted as saying, “I’m not sure that was ever realistic, telling dealers, ‘If you want to sell our products you’ve got to do this and this.’ We’re not the only game in town,” said the executive.
Handgun Control, Inc.’s chairperson, Sarah Brady, has a new book coming out next year in which she recounts how in 1981 (the year her husband was shot in the assassination attempt on President Reagan) she contacted the National Rifle Association. Brady stated, “You don’t know me, but my name is Sarah Brady and I’m going to make it my life ambition to put you out of business.” The NRA is, however, far from going out of business. It is, in fact, stronger than ever, with a membership of more than 4.3 million.
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