Facing the harsh realities of the summer slump.

Author:Thurman, Russ
Position:INDUSTRY WATCH
 
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The summer sales slump is hitting particularly hard this year. The forecast of slower firearm sales during 2014 many in the industry predicted late last year has become a reality.

Compounding the impact of this year's summer slowdown is its comparison to those of recent years. Summer firearm sales slumps have been fairly modest during the past four years. Thus, this year's slowdown, which many consider a return to "normal," is harsh--or at least, it seems that way.

In discussions with manufacturers and dealers, the dominant question is, "What is happening?" While there is no crystal ball here, there appears to be a perception that firearm sales would continue at last year's pace--or even outpace 2013. That, by all indicators, is a mistake.

As discussed in this issue's "U.S. Firearms Industry Today" report (page 38), the prevailing wisdom is to use 2012 sales numbers at the target for 2014. A hindrance to that approach is the ever-demanding goal to "beat last year's sales." That works, if "last year" was normal. It was not.

"Everyone believes last year wasn't normal," said Tom Taylor, Mossberg VP of sales and marketing, in our January 2014 report: "In Search Of 'New Norm' Strategy."

"Going into 2014, our customers are very diverse in their planning. Some say they are setting 2012 as their new base--basically taking 2013 out of the equation. That isn't all bad, because 2012 was a pretty good year," Taylor said.

Yes, 2012 was a pretty good year. A bit of data history:

In 2011, firearm background checks increased 14 percent (NSSF-adjusted) over 2010. The 2011 business year was the first time NICS conducted 10 million background checks. Yes, I know, the number of background checks does not equal the number of firearms sales, but it is the most reliable indicator of marketplace activity.

In 2012, there was an impressive 28 percent (NSSF-adjusted) increase in background checks. This is the highest year-over-year increase in the history of NICS.

In comparison, in 2013, background checks increased 7 percent (NSSF-adjusted) over 2012. Yes, 2012 was a pretty good year. And, at least through May of this year, the number of background checks is higher than those of 2012. Yes, they are lower than 2013, but, again, 2013 wasn't normal.

Margin Compression

Earlier this year, dealers were reporting that sales were down compared to 2013, but higher than 2012.

"After hearing from most of the dealers in the P-20 network, the March 2014 numbers are between 5 and...

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