Americans are buying guns so quickly that retailers are struggling to keep them in stock. Buoyed by that strong consumer demand, Smith & Wesson Holding Corporation, one of America’s leading gun manufacturers, has hiked its sales forecasts for the third quarter and full year.
Smith & Wesson said its retailers are selling guns faster than the company had planned and have fewer in stock to fill orders. A statement revealed “the sell-through rate of its products at distribution has been stronger than originally anticipated, resulting in reduced distributor inventories of its firearms.”
As a result, Smith & Wesson raised its net sales expectations for the three months ending Jan. 31, 2016, from $175 million to $185 million and total-year sales for the fiscal year ending in April 2016 from $650 million to $660 million.
Shareholders enjoyed a healthy bonus too. Earnings per share were boosted to $0.41 from $0.39 for the quarter and $1.41 from $1.36 for the year. The company’s stock price, which closed at $23.28 on Monday, rose by more than a dollar in after-hours trading.
The FBI logged over 23 million background checks for firearm purchases in 2015, which is more than in any other year since the agency started collecting that data, in 1998. Not every background check results in a sale and not every sale requires a background check, but this data is often cited as an indicator of demand. The company was particularly pleased with the number of checks conducted in December, which clocked in at an all-time high of 3.3 million, up from 2.2 million just a month earlier.
Broadly, gun stocks have soared recently following a rash of mass shootings and as the Obama administration on Tuesday announced executive actions to increase reporting of stolen or lost guns and crack down on non-registered sellers. Historically, threats of stronger gun controls have often spurred business for the industry as owners rush to stock up on firearms. That rally withstood a dip in the stock market on Monday sparked by investors’ nerves over slowing growth in China’s economy and the blow it has dealt to global markets for commodities from metals to construction materials.
Smith & Wesson spelled this out in its 2015 annual report, saying, “Speculation surrounding increased gun control at the federal, state and local level and heightened fears of terrorism and crime can affect consumer demand for our products.” The company also saw “strong consumer demand” after the Obama administration took off in 2009.