US Gun Control: Retailers Cannot Keep Ammunition On Store Shelves During ‘Massive Civilian Arsenal Buildup’

Ammo manufacturers are keeping mum about how they’re dealing with the bullet drought, which was caused in large part by the surge of gun and ammo purchases that occurred amid a nationwide gun control debate that followed several high-profile mass-shootings last year. Some industry watchers believe these manufacturers must be running double shifts to keep up with the demand.

"You're talking about a massive civilian arsenal build up," Brian Rafn, a research director who specializes in ammunition manufacturers for Morgan Dempsey Capital Management, told CNN in a report published on Tuesday.

Recent months have seen retailers scrambling to keep up with this arms buildup. Wal-Mart Stores Inc. (NYSE:WMT) has been limiting ammo purchases to three boxes per customer per day. Sporting goods retailers Cabelas Inc. (NYSE:CAB) and Academy have also been grappling with the rush.

And as the law of supply and demand dictates, producers have seen a boom in business.

Alliant Techsystems Inc. (NYSE:ATK) of Arlington, Va., which makes ammunition for military and civilian use, reported an 18 percent increase in sales in its last full quarter from its Sporting Group, while its larger defense division, possibly hurting from federal cutbacks, saw an 18 percent decline in the same period.

Olin Corp. (NYSE:OLN), based in Clayton, Mo., owner of the Winchester brand, reported that its fourth quarter 2012 profits rose 85 percent, in large part due to ammunition sales. The company’s unit that makes ammunition unit saw a 27 percent rise in sales, to $155.8 million in the quarter ended Dec. 31, according to Olin’s Securities and Exchange Commission filing.

The recent interest in weapons by American consumers picked up after the Sandy Hook Elementary School shooting in Newtown, Conn., and the ensuing national debate on what to do about the more than 30,000 gun-related fatalities (including about 19,000 suicides) that occur in the country every year.

Here’s a list of stock appreciation data for Olin, Alliant and two major publicly listed gun manufacturers since the Dec. 14 Sandy Hook Elementary School shooting:

- Olin up 13 percent to $24.26 a share.- Alliant up 8.6 percent to $66.84 a share.- Sturm, Ruger & Company (NYSE:RGR) up 23 percent to $56.08 a share.- Smith & Wesson Holding Corp. (Nasdaq:SWHC) up 5.48 percent to $9.63 a share.

So is this recent spike countering a trend in declining gun ownership?

According to the General Social Survey, which has been conducted by the University of Chicago’s National Opinion Research Center since 1972, gun ownership has declined from 54 percent of U.S. households in 1977 to under a third of them in 2010, the last time the survey results were published. However, more recent data suggests that gun manufacturing is on the rise. Between 2007 and 2011, the number of weapons manufactured each year rose from 3.7 million to 6.1 million.So either gun owners are also gun hoarders, or more households have been arming themselves recently. Either way, ammo manufacturers have barely been able to keep up with demand.