Winchester Ammunition reported an 11.5 percent drop in earnings due to weak demand and higher material costs in filings last week disclosing first quarter results.
The company’s president and chief executive officer, John Fischer, explained to investors that their buyers have been trying to reduce inventory they built up ahead of November’s presidential election while anticipation different election results.
Low demand has effected sales of pistol, rifle and shot shell ammo. “We expect this impact to continue through the second quarter,” Fischer said about efforts by retailers to reduce current inventory levels.
Filings by Olin Corporation, the parent company for Winchester, show the ammo maker bringing in $162.6 million in sales, down $21.2 million, with $25.1 million in profits, down $3.6 million.
Other gun and gun related companies have reported a slowdown since President Trump’s election victory, despite gun sales maintaining seasonal trends. According to federal data, gun sales January to March totaled 3.5 million, down from 3.9 million, or 10.3 percent, from the year before.
Yet, manufacturing operations at a new facility should offset operating costs. Winchester completed relocation efforts from southern Illinois to Oxford, Mississippi, last year, which should save $5 million a year, Fischer said.
Also, filling contract orders to the U.S. military in the latter half of the year should make up for lower commercial sales, he said, adding military sales will push earnings up 30-40 percent whereas they’re now seeing a 15-20 percent decline in commercial sales, Fischer said.
“I don’t – we don’t necessarily believe that’s going to sustain itself all year. I mean, in the fourth quarter of last year, we saw a pretty significant decline year-over-year,” Fischer said.
“So as we get further out into the year, the comparables get much easier for Winchester on the commercial side. What we did say, we expect commercial demand to continue to be weak in Q2,” he added.