Gun maker Sturm, Ruger & Co. said Tuesday a decline in sales dragged on first-quarter earnings, but consumer demand for firearms improved as the period came to a close.
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After a lengthy run of weaker sales, the industry has showed some signs that the consumer gun market may be on the mend.
The FBI conducted 9% more background checks in April, setting a record for the month at 2.22 million. It was the seventh straight month with at least 2 million checks.
Savage Arms owner Vista Outdoor recently said inventories and discounting are on the decline.
Ruger, which booked stronger earnings and revenue than expected, said stronger consumer demand in the latter part of the quarter partly offset a slow start.
The company estimated that sales of its products from distributors to retailers fell 5%. During the same three-month period, background checks were up 1% when adjusted by the National Shooting Sports Foundation, which strips out checks for permit applications and other non-purchase activity.
“Favorable distributor sell-through trends in the latter half of the quarter resulted in significant reductions of inventories at the company and at the independent distributors,” Ruger CEO Christopher Killoy said in a press release.
Gun makers and retailers have struggled with weaker demand for new firearms since the election of President Donald Trump, whose policy agenda eased concern among prospective buyers that congressional lawmakers would push through tougher gun-control laws. Some lawmakers have renewed calls to pass legislation following a shooting at a Parkland, Florida, high school on Feb. 14. In respose to the shooting, Dick’s Sporting Goods and Walmart changed their store policies to restrict gun sales to customers over the age of 21.
Manufacturers faced added pressure from a large buildup in inventories because retailers stocked up before the 2016 election in anticipation of a rush in sales.
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Ruger earned net income of $14.3 million, or 81 cents a share, down from $22.2 million, or $1.21 a share, in the same period a year earlier. Revenue fell 22% to $131.2 million.
Wall Street analysts expected per-share earnings of 80 cents on revenue of $127.5 million.
The Southport, Connecticut, company said a change in accounting standards reduced earnings per share by 4 cents, while the overhauled federal tax code boosted Ruger’s bottom line by 11 cents a share.