Sturm Ruger (RGR) shares were fired up Tuesday after the gun maker reported better quarterly earnings than expected, and new CEO Christopher Killoy declared that reports of a post-election sales slump were “greatly exaggerated.”
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In the wake of President Donald Trump’s November victory, industry analysts cautioned that sales of new firearms would likely cool off as consumers become less concerned about new gun-control regulations from Capitol Hill. However, while it saw a slight dip from healthy pre-election levels, Ruger suggested that sales remain strong. The National Shooting Sports Foundation said background checks for gun purchases showed a slight increase of 0.04% in April, compared to a decline in the FBI’s raw data.
Ruger also noted that consumer demand typically spikes in December and slows down during the first half of the year, whether it’s a presidential election year or not.
“The demise of the firearms industry was likely greatly exaggerated,” Killoy said at Ruger’s annual meeting. “We’ve seen ups and downs before.”
Killoy, who succeeds Michael Fifer as Ruger’s top executive, added that Ruger’s customer base remains strong, and the industry has seen an influx of first-time buyers and younger customers.
Ruger reported that net sales fell 3% to $167.4 million, while earnings slipped 4.5% to $22.2 million. On a per-share basis, the Southport, Conn.-based company earned $1.21 per share to match its year-ago results. Wall Street analysts expected weaker earnings of 98 cents per share.
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Shares rallied 13.2% to $64.93 in recent trading. Ruger’s comments also lifted shares of competing gun makers. American Outdoor Brands (AOBC), the parent company of Smith & Wesson, jumped 6.1%. Vista Outdoor (VSTO), which owns Savage Arms and ammunition brands like Federal Premium, was up 3.2%.
Fifer attributed the declines to a tough comparison to a campaign-fueled surge in demand that manufacturers saw in 2016. The veteran CEO, who led Ruger for the past decade, said first-quarter shipments tapered off because retailers stocked up on rifles and other firearms before the November election.
Last week, hunting and outdoors retailer Cabela’s (CAB) reported a drop in first-quarter sales of firearms and ammunition, partly citing the election. Cabela’s, which agreed to sell itself to Bass Pro Shops, has seen a broader sales decline in its stores.