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Earnings Results: Smith & Wesson execs admit ‘pandemic surge’ in gun sales is over, stock takes a hit

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Smith & Wesson Brands Inc.’s chief executive admitted that the market for guns “has cooled significantly from the height of the pandemic surge” Thursday, while disclosing a 31% drop in sales that slammed the company’s stock in after-hours trading.

Smith & Wesson
SWBI,
-1.05%

reported fiscal third-quarter profit of $30.5 million, or 65 cents a share, on sales of $177.7 million, down from $257.6 million in the holiday quarter a year ago. After adjusting for discontinued operations, relocation expenses and other costs, the gun maker reported earnings of 69 cents a share, down from $1.12 a share last year.

Analysts on average expected adjusted earnings of 83 cents a share on sales of $198.3 million, according to FactSet. Shares dove as much as 15% in after-hours trading immediately following the release of the results, after closing with a 1.1% decline at $17.89.

Smith & Wesson stock hit an all-time high on July 1 of last year, after gun purchases spiked in the first year of the pandemic, but has suffered since. Through the first three quarters of that fiscal year for Smith & Wesson, it recorded sales of $736.25 million, but that total dropped to $682.68 million in the first nine months of the current fiscal year, with the decline even more apparent in the holiday-quarter figures.

“Although the firearms market remains elevated and healthy with new entrants, it has cooled significantly from the height of the pandemic surge and seems to now be following pre-pandemic historical demand patterns,” CEO Mark Smith said in a statement. “This macro demand pattern is very familiar to us, and is exactly what our business model is designed to accommodate.”

Shares have declined 20.3% in the past six months, as the S&P 500 index
SPX,
-0.53%

fallen 3.3%.

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