Gun maker Smith & Wesson grapples with low inventory amid record sales
Sales surged 19.5% year over year to $274.6M
First-time gun buyers driving sales
Jeff Regnier of Kee Firearms & Training discusses how new gun owners are driving sales ahead of President Biden delivering remarks on rising crime rates.
Gun maker Smith & Wesson Inc. says record sales have depleted internal inventories to well below pre-pandemic levels.
Inventory for the three months that ended on July 31 totaled $97.1 million. There is no direct comparison as the inventory numbers from a year ago include the outdoor segment that was later spun off as American Outdoor Brands Inc.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SWBI | SMITH & WESSON BRANDS | 12.99 | -0.21 | -1.59% |
Internal inventory levels remain "well below our target," CFO Deana McPherson said on the company’s first-quarter earnings call.
She added that distributor inventory was at about eight weeks of supply, or the "target level."
Smith & Wesson’s inventory has been drawn down as firearm sales in the U.S. have boomed since the early days of the pandemic due to an increase in socially distant outdoor activities and as people sought protection from the social unrest that followed the death of George Floyd in May 2020.
The Springfield, Massachusetts-based company on Wednesday evening reported sales in the three months through July surged 19.5% year over year to a record $274.6 million.
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Slowing gun demand due to seasonality over the summer months gives Smith & Wesson a small window of opportunity to try and replenish its inventory to help meet record demand.
There have already been 27.841 million NICS background checks performed through the first eight months of this year. Depending on how the final four months shake out, the 2021 total could eclipse last year’s record of 39.695 million background checks performed.
Background checks are indicative of sales trends but don't translate directly to sales. For example, customers can purchase multiple firearms at once and only be the subject of one background check.
Smith & Wesson has so far managed to avoid the supply-chain disruptions that have plagued a number of industries as nonessential businesses were forced to temporarily close their doors to help slow the spread of COVID-19.
However, the company is not ruling out the possibility that supply-chain issues could occur in the months ahead.
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"At this time, we've seen nothing to indicate a concern, but as always, supply chain risks are subject to change," CEO Mark Smith said.
Smith & Wesson shares were up 40% this year through Wednesday, outperforming the S&P 500’s 20% gain.