Questions about new products and inventory levels were the focus of Sturm, Ruger & Company’s investor conference to report second quarter earnings.
Representing $47.7 million, or 17 percent of gun sales, in the first half of 2015, new products drive demand, said Mike Fifer, the company’s chief executive officer. Six months into the year the company has made roughly $275 million in gun sales and $33.06 million in profit.
When a new product is announced, it gets marketed and advertised, which sparks consumer interest and in turn retailers that really want the sale place orders, but it’s tricky for the company because orders may not accurately reflect demand.
“Frankly the old habits of ordering more than I really want or need, hoping I’ll actually get a bigger allocation of the limited guns that are available, so that if I really want 1,000 maybe if I order 10,000 I’ll end up getting 1,000,” Fifer said of retailers placing orders.
“And we have not really quite broken that cycle yet. But I am working hard on these more recent product launches to encourage what I would call a rational order,” he added.
Ruger considers new products to be anything the company introduced in the past two years and has actually gone on sale.
Managing inventory has been challenging for Ruger since there’s been major swings in sales since 2009. Although sales have increased overall, they peaked in 2013 and then dropped considerably before returning to more seasonal patterns. Responding to the demand has been a delicate dance nonetheless.
“There were several years there in a row where we probably increased production more than 30 percent in the year. And in mid-2014, we dramatically cut back production,” Fifer said. “I think we cut it by more than 40 percent from the first half of the year to the second half of the year. And then you will see that here the beginning of 2015 we raised it up.”