While U.S. President Donald Trump's vow to "totally" protect the Second Amendment has eased gun owners' worried minds, his lax stance on firearms is causing a negative impact on the outdoor retail industry.
The F.B.I. said it conducted 2.23 million background checks in February, representing a 14% decline from February 2016. Background checks were down 20% in January and 17% in December, as gun owners no longer feel the need to rush to stock up on firearms as they did when former President Barack Obama was pushing for stricter federal gun laws.
During his campaign, Trump was even endorsed by The National Rifle Association (NRA).
But, as gun sales drop, outdoor retailers across the board are feeling the pressure.
Dick's Sporting Goods (DKS) said on its recent fourth-quarter earnings call that its outdoor category was particularly pressured, "driven in part by a decline in hunting."
"We did say that the hunting business was difficult," Dick's CEO Edward Stack said in response to an analyst's question on individual categories. "That hunting business...it continues to struggle and struggled in the fourth quarter, both firearms and a bit from an ammunition standpoint."
Olin (OLN) , owner of Winchester Ammunition, reported a 20% slip in ammo sales in its recent fourth quarter. In a December report, Wunderlich Securities analyst Rommel Dionisio estimated that firearms sales will "likely slow" in 2017. Looks like consumers are proving his prediction right.
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Gander Mountain, one of the largest outdoor retailers in the U.S., filed for bankruptcy protection under Chapter 11 on Friday, listing $500 million to $1 billion in assets and liabilities.
Gander Mountain, which touts itself as being "America's Firearms Supercenter," blamed its filing on slowing foot traffic. The company operates about 110 stores in 26 states in the U.S.
To combat its own slipping gun sales, American Outdoor Brands (AOBC) is trying a different tactic in separating itself from the firearms industry. For instance, it changed its name from Smith & Wesson, a brand too associated with guns.
At its investor day in January, American Outdoor said it would be expanding on acquisitions of companies that are not so heavily focused on firearms to create long-term value. The move follows its recent acquisitions of knife maker Taylor Brands and Ultimate Survival Technologies, the manufacturer of survival, rescue, life support and disaster preparedness equipment.
Shares of American Outdoor have fallen about 15% since Trump was elected to office.
Editors' pick: Originally published March 14.