U.S. firearms industry today: The downturn has been harsh, but the market is stabilizing.

Author:Thurman, Russ

The downturn in the U.S. firearms industry has been, to put it gently, unpleasant. Yes, the industry has experienced numerous ups-and-downs in its history, but perhaps no decline has been as rapid or as steep. Last year's slowdown created a painful whiplash: Companies--manufacturers through dealers--struggled to adjust to the new normal. The impact has been harsh.

Yet, there's a glimmer of hope. Following aggressive marketing to rightsize overloaded inventories and to draw consumers back into gun shops, there are indications the market is stabilizing. That may seem difficult to grasp, especially at the dealer level, where parking lots haven't been full in many months. And there are still the summer months to navigate on the way to a hoped-for healthy hunting and holiday buying season. It's then, most experts say, the industry will experience modest growth.

Encouraging Signs

During May, NICS conducted 918,707 (NSSF-adjusted) background checks, a 4.7 percent increase compared to May 2014. It was the second highest May on record. Not surprising, the highest May was in 2013, with 974,457 (NSSF-adjusted) background checks.

In May, Ruger reported sales for its 2015 first quarter, which ended March 28. The company posted sales of $137 million, a 19 percent decrease compared to the first quarter of 2014. However, Ruger's performance during its first quarter this year was 12 percent higher than the fourth quarter of 2014--an encouraging sign.

"Demand for the company's firearms in the first quarter of 2015 increased from the fourth quarter of 2014 due to the successful annual sales promotions in effect during the first quarter of 2015, coupled with a reduction in the aggressive price discounting by many of our competitors that was prevalent in the latter half of 2014," said Mike Fifer, Ruger CEO.

In previous financial reports, Fifer noted "the lack of significant new product introductions" contributed to the company's drop in sales. Ruger responded with numerous new product introductions, with positive results.

"New products, including the AR-556 modern sporting rifle and the LC9s pistol, represented $22.8 million or 17 percent of firearm sales in the first quarter of 2015," Fifer said.

In March, Smith & Wesson reported its 2015 third quarter sales, which ended Jan. 31, decreased 10.5 percent, compared to 2014. Firearm sales during the third quarter were down 14.7 percent. However, S&W's overall sales during the third quarter were 20 percent higher than the previous second quarter.

"Our third quarter results reflect the successful navigation of a normalizing firearm market following an earlier consumer surge in firearm purchases, combined with the ongoing focused execution of our long-term strategy. Sales in our firearm division exceeded our updated expectations, reflecting solid orders from distributors and key retailers at the start of our annual industry show season in January," said James Debney, S&W Holding Corp. president and CEO.

In April, Smith & Wesson announced it was updating expectations for its fourth quarter and full 2015 fiscal year. The company indicated orders throughout its fiscal fourth quarter were stronger than originally anticipated.

In March, Remington Outdoor Co. reported its firearms sales for the three months ending March 29 decreased 27.5 percent, compared to the quarter ending March 30, 2014.

"Our firearms sales experienced declines across all our major product categories. MSR and centerfire sales decreased $16.2 million. Sales of shotguns decreased $15.7 million, primarily due to softness in demand for tactical shotguns and certain brand rationalization initiatives. In addition, sales of handguns decreased $3.5 million, while sales of rimfire rifles decreased $1.5 million. These decreases were partially offset by increases in sales of our other firearm products of $2.8 million," according to the company's financial report.

What brands are top sellers? According to consumer purchasing data from Southwick Associates, Smith & Wesson was the top-selling handgun in 2014. Southwick reports Remington and Ruger shared the top-selling rifle title for 2014, while Remington dominated 2014 shotgun sales.

U.S. Firearm Production

In 2013, U.S. firearms manufacturers set impressive production records, according to the ATF's "2013 Annual Firearms Manufacturing and Export Report"--the latest data available.

For the first time, U.S. manufacturers produced more than 10 million firearms in a single year (10,349,650), an increase of 17 percent over 2012. It was the third year in a row that U.S. manufacturers set records for total firearm production.

During 2013, U.S. manufacturers posted increases in all firearm categories. Interestingly, shotguns --a category usually lagging behind handgun and rifle production --posted the highest category increase with a 27 percent increase over 2012. It was the largest increase in shotgun production since 1994.

Within the handgun category, pistols also posted a 27 percent increase in 2013, with 4,441,726 units built. Overall, handgun production increased 24 percent in 2013, this after a notable 31 percent jump in 2012.

Rifle production in 2013 increased 26 percent, this after a 37 percent increase in 2012. Overall, the rifle category posted the largest percent of increase of all categories from 2011 through 2013, with 71 percent.

Ruger continues to dominate U.S. firearm production, capturing the top manufacturing spot for the sixth year in a row. In 2013, the company built 2,180,780 firearms, setting a new production record. For the second year in a row, two other U.S. manufacturers--Smith & Wesson and Remington--produced more than 1 million firearms.

In 2013, Ruger firearm production increased 32 percent over 2012. The company's largest increase was in rifles, with 768,284 units built, a 44 percent jump over 2012. Ruger was the top handgun manufacturer in 2013, producing 1,114,535 pistols (+29%) and 295,643 revolvers (+17%).

Smith & Wesson, the second top-producing U.S. firearm manufacturer in 2013, manufactured 1,505,963 firearms, a 34 percent increase over 2012. In 2013, Smith & Wesson's most impressive growth was in pistols, with a 54 percent increase over 2012.

Remington, the third largest firearms manufacturer in 2013, increased its production...

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