The Anti-Obama Gun Craze Falls Off A Cliff

handgun market

Remember 7 or 8 months ago?

A combination of economic fear, and concern over a future of tight gun-control sent people to gun shops in droves, and shares of gunmakers soared.

Well, you can think of that period as being kind of like cash-for-clunkers-for-guns. It was great for the gun industry, but only in the sense that this period was drawing forward future demand, which is now practically non-existent.

You see, eventually, no matter how paranoid you are, you just don’t need to future-proof your weapons cache. You already have enough guns.

John Hempton at Bronte Capital took a look at what the companies are saying:

Obama is (despite the protestations of Rush Limbaugh and his ilk) turning out to be a middle-of-the-road centrist.  [Strong Liberals wanted change they could believe in…  Smith & Wesson just wanted to sell guns.] 

And they have.  Smith and Wesson sales were good but their forward order book took a dive.  To quote Wednesday’s press release

Our firearms backlog was $177.5 million at the end of the first quarter. Cancellations reduced backlog by approximately 10% during the quarter. It is important to note that our backlog always represents product that has been ordered but not yet shipped. As a result, it is possible that portions of the backlog could be cancelled if demand should suddenly drop.

The warning about the backlog not being binding is new – and it is clear from the new disclosure that they are having massive problems during this quarter with order cancellation. 

The backlog dropped from $268 million to $178 million – a drop of 90 million.  10 per cent of that (say $27 million) was order cancellation – but a net $63 million of sales came from the backlog.  Total sales were 102 million – and less than 100 million in firearms.  The rate at which Americans are placing orders for new Smith and Wesson handguns is collapsing. 

The company did not tell us the current forward order book.  At that rate of collapse what they are facing is a disaster.

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