American Outdoor Brands suggests promotions propping up NICS, estimated gun sales

Top executives for American Outdoor Brands — Smith & Wesson’s parent company — suggested the gun industry’s promotion-heavy environment could explain the spring’s unanticipated uptick in background checks and, by proxy, gun sales.

James Debney, president of American Outdoor Brands, told investors last month the company broke records, raking in $903.2 million through the end of the fourth quarter — a 25 percent earnings increase overall.

Estimated gun sales in April, when the fourth quarter ended, defied seasonal trends, rising 4 percent over 2016, the industry’s biggest year ever. May sales followed suit, rising 6 percent.

“It’s a pretty promotionally intense environment right now,” Debney said during a June 29 conference call with investors. “What is really difficult to understand is how much is that helping NICS – adjusted NICS, okay, versus the prior year. We just don’t know. It’s tough to understand a lot of noise out there.”

June gun sales plunged 12 percent over 2016 to just over 947,000 estimated transfers, according to the FBI’s National Instant Criminal Background Check System. The gun industry uses the system as a proxy measure for gun sales.

Debney attributed the company’s fourth quarter success, in part, to rebates Smith & Wesson provided directly to customers for popular firearms — like the M&P Shield, Bodyguard and SDVE pistols.

He said Smith & Wesson will continue offering rebates as it — and other gun makers — deal with the surplus left behind after November’s election. With pro-gun lawmakers at the helm in Congress and in the White House, the sky-high demand for firearms witnessed under previous administrations appears muted, for now.

“It’s certainly going to be down over last year,” said Jeffrey Buchanan, executive vice president of American Outdoor Brands. “The last year was definitely an aberration. But if you look at the graph of NICS … we expected just to follow with a typical seasonal pattern last year and did not. But this year that’s what we expect.”

The company’s results continue the drumbeat of mixed messages surrounding the gun industry’s overall health, with Debney forecasting as much as a 17 percent decline in 2018.

“Right now, we’ve got to really wait until the fall to understand how strongly that consumer returns to the retailer and their appetite for buying firearms,” Debney said. “So that’s really where we find ourselves right now.”