A Remington sign at SHOT Show in January 2017. (Photo: Daniel Terrill/Guns.com)
Remington Outdoor Company has had its corporate rating downgraded due to a forecasted weak performance amid uncertainty in the gun market, according to a Moody’s Investors Service report.
“We feel that Remington’s capital structure is becoming unsustainable due to the uncertainty over its ability to refinance debt that comes due in less than two years,” said Kevin Cassidy, a Moody’s senior credit officer, last month in a statement about the report.
Cassidy added that Remington’s revenue dropped 30 percent in Fiscal Year 2017’s first quarter and the service predicts it will continue on the downward trend when compared to last year. Closing out its first quarter, Remington reported $157.6 million in sales, down from $218 million the year before.
November’s election of President Trump and Republicans winning both chambers of Congress hurt gun sales. Although federal data shows a short drop of 7.6 percent, last year was the biggest year on record for gun sales. Still, gun makers overproduced in preparation of different election results, causing a surge in inventory but weak demand.
Given weak market conditions and high levels of debt, Moody’s raised the probability that Remington will default on loans. According to the service, Moody’s owes payments on an $800 million loan in April 2019, and payments on $250 million secured notes in May 2020. Yet, the rating could change if Remington refinances its debt obligations.
Moody’s current rating outlook for Remington is “stable,” as it still has strong brand recognition and an expanded consumer base. The service downgraded Remington’s corporate rating a notch below its 2015 assessment.