U.S. firearms industry today: following record sales, industry adjusts to "normal" market.

Author:Thurman, Russ

The U.S. firearms industry is experiencing a bit of whiplash in the summer of 2014. The slowdown of firearm sales, compared to 2013, is requiring a bit of "getting used to," along with adjustments to sales projections, promotions and marketing and product development.

Very few business executives projected that 2014 would match the sales of 2013. During the latter part of last year, many executives spoke of adjusting to the "new norm," while pondering just what the new normal was compared to previous sales years.

Prevailing wisdom focused on 2012 as the best hoped-for level of business for 2014. That provided plenty of opportunity, given that 2012 was a pretty good year for firearm sales.

And, according to a number of indicators, firearm sales for the first five months of 2014 have exceeded 2012 levels.

Normalized Levels

During May, NICS conducted 877,655 (NSSF-adjusted) background checks. While this was a 9.9 percent decrease, compared to May 2013, it was the second highest May in NICS history. More importantly, it was a 4 percent increase over May 2012. This trend--a decrease in background checks compared to 2013, but an increase compared to 2012--is reflected in the early months of 2014. Thus, at least through May, it appears wisdom has prevailed in using 2012 sales numbers as the "new norm."

In February, Ruger reported a 40 percent growth in sales for 2013. In May, the company reported its 2014 first-quarter sales.

"Our earnings increased 2 percent from the first quarter of 2013 on a 9 percent increase in sales. The main driver of the reduced operating margins was a product mix shift away from unusually strong sales of higher-margin firearms accessories that we enjoyed one year ago. New products represented $41.3 million or 24 percent of firearm sales in the first quarter of 2014," said Mike Fifer, Ruger CEO.

In March, Smith & Wesson reported that its 2014 third-quarter sales, which ended Jan. 31, increased 7 percent. Excluding Walther products sold in the prior year as part of a distribution agreement, S&W's net sales growth was 16.7 percent.

"We maintained our focus on increasing market share of our Smith & Wesson M&P polymer pistol family of products, and thereby delivered handgun revenue growth of nearly 30 percent, a solid result when we consider the year-ago quarter reflected a surge in consumer demand," said James Debney, S&W Holding Corp. president and CEO.

In March, Remington Outdoor Company reported that its firearms sales for the three months ending March 30 decreased 30.7 percent compared to the quarter ending March 31, 2013.

"In late 2013, we began to see sales returning to more normalized levels in most categories, in particular the MSR and 1911 lines, although demand is still above historical levels. Although sales for the three months ending March 30, 2014 are lower than the three months ending March 31, 2013, our sales are still higher as compared to quarters prior to the first quarter of 2013," according to the company's financial report.

What brands are top sellers? According to consumer purchasing data from Southwick Associates, Ruger and Smith & Wesson shared the top-selling handgun position for 2013. Savage, Southwick reports, was the top-selling rifle brand in 2013, while Remington dominated 2013 shotgun sales.

U.S. Firearm Production

U.S. firearms manufacturers set a number of production records in 2012, according to the "ATF's 2012 Annual Firearms Manufacturing and Export Report"--the latest data available.

It was the second year in a row U.S. manufacturers set new high marks for total firearm production. In 2011, U.S. manufacturers reported making six million firearms (6,351,479) in a single year for the first time. In 2012, U.S. manufacturers set an even higher mark, producing 8,872,456 firearms. That's an impressive increase of 2,520,977 firearms, a 40 percent jump over 2011.

During 2012, U.S. manufacturers posted increases in all firearm categories, with rifle production posting the most significant increase. U.S. manufacturers made 3,168,206 rifles during the year, an increase of 37 percent over 2011.

Handgun production also saw an impressive increase, with 4,155,240 guns built in 2012, a 31 percent increase. Shotgun production increased by 10 percent in 2012, with 946,010 guns made--the first time more than 900,000 shotguns have been built since 1999.

In addition, three U.S. manufacturers each built more than a million firearms in 2012: Ruger, Remington and Smith & Wesson--another first, according to our research.

In 2012, Ruger manufactured 1,651,975 firearms; the second year in a row the company built more than a million guns. Ruger's 2012 production, a 48 percent increase over 2011, placed the company as the number one U.S. firearms manufacturer for the fifth year in a row.

Ruger was the top producing U.S. manufacturer of pistols and revolvers in 2012. The company posted significant growth in pistols (+41%) and revolvers (+31%); however, its most dramatic increase was in rifle production, with an impressive 73 percent increase in 2012.

Remington, also for the second year in a row, built more than a million firearms. In 2012, the company's production of 1,162,774 firearms was a 13 percent increase over 2011. Ranked as the second top producing U.S. firearms manufacturer, the company was the top rifle maker in 2012.

Smith & Wesson, the third top producing U.S. firearm manufacturer, also hit the million-gun-production level in 2012, building 1,123,767 firearms, a 31 percent increase over 2011. In 2012, Smith & Wesson's posted impressive growth in pistols, with a 31 percent increase over 2011.

2012 U.S. Production

The top U.S. firearms...

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