Last Friday, a friend who happens to be in the gun business sent me a link to an advertisement with a simple question: how low can they really go?
When I clicked the link on the ad, after a double take, I realized why he was asking. The link took me to an Ammoland advertisement offering a Bear Creek Arsenal BC-15 5.56 NATO Right Side Charging Handle rifle for…$299.99 with “FREE Shipping Options.”
The ad went on to explain that it was a special deal at 37% off the $475 MSRP, a savings of $175. I was instantly skeptical. But I know that Ammoland wouldn’t be offering anything that wasn’t legit. Consequently, it appeared I had evidence for a friend saying, “You can’t give away an AR-style rifle right now.” Granted $300 isn’t free, but it’s certainly a long way from prices in the not-too-distant-past.
Curious, I went to the Bear Creek Arsenal website and lo-and-behold, there was the same rifle, “Limited Time Only” priced at $299.99. It was what I’d describe as bone stock and didn’t include a magazine or optic, but it looked to be fully capable of putting protein in the stew pot or discouraging unwelcome guests, whether they came calling on two or four feet.
It’s one thing to talk with industry folks about how difficult it is for companies that specialize in AR-style rifles to stay in business. It’s another to see proof that while there are still expensive models available, there are new base guns priced so low as to almost be disposable.
As Pete Brownell advised dealers Monday, it’s time to go through their inventories and “Cut to the Core…look at your inventory with a cold eye. If a product has not turned in 90 days, it is time to discount, bundle or move it.”
His advicce is simple and solid: “Free up cash.” The followup suggestion for retailers was also simple: “Stick with products that earn their place on the shelf. Remove anything that relies on wishful thinking.”
Right now, AR-style rifles sales appear to be one of those “wishful thinking” items. So, too, are many of the higher priced items with increasingly slower sales. They’re all confirming signs that the moribund market’s here for the foreseeable future.
With few orders for modern sporting rifles hitting manufacturers desks, a lot of smaller companies are feeling the squeeze. Majors aren’t immune to the sales drop (to wit, the hammering public companies have taken over the past week in the markets), but they have something the niche players lack: diversity in their product lines. They’ll get whacked, but they’ll be able to continue.
Last Friday, for example, Smith & Wesson Brands shares dropped nearly 20% after the company’s Q1 revenues missed market expectations. The 11.6% drop in sales and non-GAAP profit of $0.20/share was thirteen percent lower than analysts expected.
The explanation offered by S&W CEO Mark Smith was that despite disciplined cost management, the company simply couldn’t overcome “reduced consumer demand and changes in product mix.”
He also cautioned that there were “persistent headwinds,” listing inflation, tariffs, and subdued consumer spending. It didn’t help that continued pressure on margins due to promotions and increased inputs costs — particularly steel — would prevent further speculation on full-year results.
Like others, Smith & Wesson says they’re focusing on inventory management, cost controls, and the launch of new products to support its market position in a “challenging environment.”
For other companies, the challenge simply has proven too tough to overcome. Smaller companies are increasingly shuttering, albeit quietly. Other more fortunate ones are passing their businesses on to other stronger groups.
The latest example happened on Monday, as a longtime provider of gun parts like 1911 pins, grip bushings and screws, plungers and AR pins Performance Engineering of Hillsboro, Missouri formally became part of Wilson Combat’s Lehigh Defense.
In a letter to customers, Performance Engineering’s owners Russ and Darla Narzinski shared news that effective June 23,” all inventory, purchase orders along with blanket orders will be turned over to the new buyers.”
They also passed on some reassuring news for their customers: “All pricing will remain the same until the end of the year.”
Speaking with Bill Wilson about his latest acquisition, it was obvious he was more than happy to keep a company that has been supplying parts and pieces to the industry for more than 50 years going. He also told me the Performance Engineering lines would fit right into Lehigh/Wilson’s wheel house because of the ability to “economically manufacture any round part up to 5/8″ diameter anyone would need with our 19 Star, 2 Tsugami single spindle and one high speed Tornos multi spindle Swiss machines.”
As always, we’ll keep you posted.
‘Performance Engineering’ … are you sure you have the correct link? What you linked to is at 425 Industrial Park Dr St. Clair, MO and seems to do ‘racing’ parts for cars – but the ‘Performance Engineering’ that became part of Wilson Combat’s Lehigh Defense is located at 9667 Hwy 21, Hillsboro, MO … (unless there are two different locations for the same company)
“listing inflation, tariffs, and subdued consumer spending.”
“inflation, tariffs” – maybe some inflation still being dealt with. It takes a little while for changes for stopping or decreasing inflation to have an overall effect for all companies. The effect of inflation from the Biden stupid is still affecting us even though Trump is putting the ‘brakes on’ to stop it and some areas have already seen lower prices as a result. But in a way stopping or decreasing inflation effect is like stopping a bike, you apply the brakes but you still roll a little more forward before coming to a complete stop or decrease in speed – but for the inflation part time will tell. And tarrifs have not materialized to be the price-increase-apocalypse thing the left-wing screamed it would be in their TDS melt down with even one of the most outspoken TDS ‘tariff-apocalypse’ ranters CNN recently admitting that basically overall no effect on prices due to tariffs but here too time will tell. But I tend to think right now its more subdued consumer spending, after all, a lot of people were very much affected by Biden putting the economy in the toilet.