Stockholders approved Smith & Wesson’s rebranding strategy Tuesday by voting to change the name of the gun maker’s holding company that could result in nearly a billion dollars in earnings by the end of the fiscal year.
As American Outdoor Brands Corporation, the company’s leadership plans to take market share in areas related to firearms such as outdoor goods, hunting gear, and a variety of shooting products like optics and gun accessories.
With operations in full swing, the company estimates closing out the fiscal year with a 29 percent increase in earnings, an increase of $200 million to put total annual revenue around $930 million.
Executives restructured the company into four operating divisions with the intention to maintain revenue in off seasons, categorize new and future acquisitions, leverage manufacturing, and centralize logistics, according to Tuesday’s filings with federal regulators.
Comparing results with last fiscal year, the company showed a 98 percent boost in revenue for outdoor products and accessories in the second quarter, pushing it from $20 million to $39 million. Yet, firearms still made up the majority of sales with $195 million of the total $234 million for the quarter.
Although the plan is clear and pragmatic, investors still raise concerns about the changes — to include an incoming gun-friendly Republican president and Congress — and the stock price slumped significantly despite positive earnings. The company’s chief executive officer, James Debney, told investors in December that firearms will remain the foundation of the company as it offers more products to a broader consumer base.
“I would anticipate over time, a long time for sure, that we should be able to significantly grow inorganically in that rugged outdoor space versus firearms where the market is much smaller and we already have significant market share when it comes to handguns and modern sporting rifles, in particular,” he said during a conference call on Dec. 2.
Smith & Wesson launched the endeavor two years ago when it acquired Battenfeld Technologies, a conglomerate that owns a number of shooting accessory brands, and continued expansion into other areas with 2016’s purchase of Crimson Trace, which supplies laser sights for a wide variety of gun makers.
Analysts have likened the Massachusetts company to competitor Vista Outdoor, which spun off from defense contractor Alliant Techsystems in 2015. Vista is home to nearly 50 brands, but attributes half its revenue to a handful of ammo companies and two gun makers. Vista reported 53 percent of the $684 million in second quarter earnings to shooting sports sales.
Starting Jan. 1, Smith & Wesson Holding Corporation will officially be called American Outdoor Brands Corporation, appearing as “AOBC” on the New York Stock Exchange. The gun maker and other companies that fall under the American Brands umbrella will maintain their original names.
