New Business Year 2015

Engaging Consumers Key To Stabilizing Industry Sales.

Welcome to the New Business Year. Collectively in the industry, there’s relief that 2014 is closed for business. However, residuals — both good and bad — from last year will impact business in 2015.

At this writing, the final bottom line of business conducted last year is still under development. Firearm sales began to increase gradually in November, driven by drastically reduced pricing that attracted consumers, while barely producing profits for dealers. Yet, the right sizing of inventory levels throughout the supply chain is vital to stabilizing sales this year.

While major firearm companies reported significant decreases in sales for much of last year, accessory manufacturers faired much better. Yet, even these companies reported declining sales.

ATK reported its Sporting Group during the 2014 fourth quarter ending March 31, posted a 71 percent year-over-year increase in sales. The company reported a 57 percent increase during its 2015 first quarter, ending June 29 and a 26 percent increase during its second quarter, ending September 28.

Major Victories

On the political front, last year’s midterm election provided a lot of positives for the industry. Republicans gained control of the Senate, increased its power in the House of Representatives and made strong showings in state elections.

“Virtually all the candidates we supported were elected or reelected, which should have a positive impact upon our industry in many ways,” said Steve Sanetti, NSSF president and CEO. “It is safe to say this has greatly diminished the chances for draconian anti-gun legislation to emanate from Washington.”
However, Sanetti points out, there are still opportunities for anti-gun/industry action.

“The President has stated he will use Executive Orders to push through matters which Congress will not enact, so it remains to be seen if that will represent a threat to the industry. Nor does it rule out mischief by state legislatures, many of which are still controlled by urban legislators who don’t understand our industry and dominate one-party governments headed by anti-gun governors,” Sanetti said.

One major shift in state governments occurred in New York.

“The state senate has reverted to the control of a party that has historically not been as receptive to the kinds of anti-democratic, slam-it-through-the-legislature-without-debate tactics such as New York Governor Cuomo engineered after the tragic Sandy Hook shooting,” Sanetti said.

In a major disappointment, Colorado’s John Hickenlooper and Connecticut’s Dannel Malloy won reelection. However, in Maryland, pro-gun Larry Hogan won the governor’s race.

Even before last year’s midterm election, the presidential campaigns for 2016 were underway. Between now and November 2016, there are a number of key issues that will impact the industry.

“During the next two years we’ll likely see attempts to confirm federal judges who will rule on Second Amendment cases, a new Attorney General, a new Surgeon General (important because of efforts by the anti-gun lobby to have violence considered to be a ‘public health’ issue instead of one of crime) and perhaps even a new Supreme Court nominee, who could impact not just the industry but every gun owner in America,” Sanetti said.

In today’s business, anti-gun campaigns are always ongoing, Sanetti said.

“The battle is never won. Those who hate guns, gun owners and the way of life we cherish will never give up. The anti-gun lobby and their willing accomplices in the mass media will ‘never let a crisis go to waste.’ Because of this, we must all be eternally vigilant and stay awake!” Sanetti said.

Goodbye Anti-Gun States

Last year, industry companies sent strong, important messages to anti-gun states. Numerous firearm companies migrated or expanded to the South.
Beretta USA expanded its U.S. operations by building a new firearms manufacturing plant in Gallatin, Tenn.

“Because of new restrictions and the pattern of harassment aimed at lawful firearm owners we have seen in Maryland over the decades, we decided to expand our facilities in a state that shows more respect for citizens who exercise their Second Amendment rights,” said Ugo Gussalli Beretta, Beretta Holdings S.p.A. president and CEO.

Kahr Amrs, while not moving to the South, broke ground in May for its new headquarters and manufacturing facility in Pike County, Pa., a direct response to New York’s new anti-gun laws.

Mossberg, headquartered in New Haven, Conn., announced in July the completion of a major expansion at the company’s Maverick Arms facility in Eagle Pass, Texas.

PTR Industries was the first firearm company to move out of a state based on passage of anti-gun bills in 2013. In January 2014, the company announced it had begun its relocation from Bristol, Conn., to Aynor, S.C.

“We were forced into this position by a state government that preferred easy political points and pandering to actual improvements in public safety and certainly economic development,” said Josh Fiorini, PTR Industries CEO.

Remington expanded its operation to Huntsville, Ala., with the purchase of a former Chrysler building.

Ruger built a new manufacturing facility in Mayodan, N.C.

Also, because of increased anti-gun laws, Magpul relocated from Colorado to Texas and Wyoming, and ProMag moved out of California to Phoenix, Ariz.
Ruger and Smith & Wesson sent California a poignant response to the state’s microstamping law: “No, we won’t participate.”

Keep Consumers Engaged

On the consumer front, there are a number of positives to take into 2015. Americans continue to support the Second Amendment and gun ownership at a high level.

In an October poll, Gallup reports 63 percent of Americans believe having a gun in the home makes it a safer place to live. That’s nearly double the number of American who favored firearms in the home in 2000.

In another October poll, Gallup reports less than half of Americans (47%) favor stricter laws for the sales of firearms. This is a significant drop from the 58 percent reported in 2012, following the school shooting in Newtown, Conn.

In addition, the industry is enjoying an important shift in consumer demographics. Surveys reveal that many more young, urban consumers are purchasing firearms. Many of them are women.

“The surveys we’ve conducted with dealers show within the past 18 months, 42 percent of first-time gun buyers are women. They are primarily buying guns for self- and home-protection and protection of their families,” Sanetti said.

Just as important, many of these women — along with the growing number of young gun owners — are also target shooting and hunting.

“The challenge for the industry and NSSF is keeping the new shooters activated, keeping present shooters shooting and reactivating those who are lapsing,” Sanetti said. “We all need to find ways to keep consumers engaged, to help them understand hunting and the shooting sports are fun, wholesome activities.”

Stabilizing Sales

At the closing of 2013, we labeled that year’s sales as “crazy,” followed by 2014’s “new normal.” Perhaps “stabilizing sales” is the best-targeted goal for 2015.
By Russ Thurman

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