America’s largest gun maker saw sales rise last quarter despite evidence of an ongoing firearms industry slump.
Smith & Wesson reported late last week that it did $159.1 million in net sales between February and April. That was a $14.4 million, or 9.9 percent, increase over the same quarter last year. The company’s gross margins also increased from 29 percent to 35.5 percent.
The American gun maker was able to do that despite evidence the overall firearms market was down during the period. Industry analysis of FBI background checks, which serve as a key indicator of gun sales, found sales are down significantly from the record 2020 levels and even from last year.
Mark Smith, Smith & Wesson CEO, attributed the company’s ability to buck the market trend to its focus on its long-term focus.
“We delivered yet another strong quarter to close out fiscal 2024,” he said in a press release. “I am very proud of the team’s continuing discipline and execution against our strategic initiatives of strong brand messaging and marketing, best-in-class innovation, operational excellence, and business process efficiencies.”
The numbers suggest the market-leading brand may be better positioned to weather downturns than other members of the firearms industry. That’s good news for the company since the firearms market has yet to find a true demand floor as sales continue to decline four years after the record levels of 2020.
Smith & Wesson’s strong performance extends beyond the last quarter. Its full-year numbers were up as well. Net sales increased $56.6 million, or 11.8 percent, to $535.8 million.
It isn’t all good news for Smith & Wesson, though. Gross margins declined from 32.2 percent to 29.5 percent. Additionally, the year’s sales were only just above half of what they were during its best year ever. The gun maker’s first and only billion-dollar sales year came in 2020, and it hasn’t come close to matching that total since then.
Despite the positive earnings report, Smith & Wesson’s stock took a dive after it was released. The company’s grim outlook for the upcoming quarter, which will take place during the usually-slow summer season, may have spooked investors. With gun buyers unmoved by the presidential election thus far, investors may also worry about how long Smith & Wesson can outperform the overall gun market.
In its earnings call, the company sought to assuage investors’ concerns about the future. Deana McPherson, Smith & Wesson’s CFO, said, “We expect to grow both net sales and gross margin in fiscal 2025.” Smith admitted the gun maker faces significant challenges heading into next quarter but insisted it can overcome them.
“While the summer months will be highly competitive as we navigate the traditionally slower season for firearms, we continue to expect healthy demand overall for firearms in fiscal 2025, and Smith & Wesson is well positioned to deliver another solid year of growth,” Smith said. “With our deep pipeline of new products, leading brand, new state of the art facility now fully operational, strong balance sheet, and, most importantly, world-class dedicated employees, we are excited to continue delivering value for our stockholders.”
