Sturm, Ruger sees big drop in sales as income falls over 50 percent
Second-quarter results come amid disappointing gun sales industry-wide, rising costs
Unlike previous years, there was no big jump in gun sales after the latest horrific mass shootings in May, so firearms are piling up at Sturm, Ruger & Co., even though the company tamped down production.
Second-quarter sales were off 30 percent, to $140.7 million, the Connecticut-based manufacturer with a major facility in Newport reported, and profits fell by more than half, to $20.8 million, compared a record quarter in 2021.
A year ago gun sales were robust, with the nation in the aftermath of an election that resulted in a president and Congress that favored gun control, and yet another mass shooting (in Colorado at the end of March, 2021, that left 10 dead). In addition, the racial unrest of the previous year and the attack on the capital also contributed to a run on guns, as potential gun buyers were fearful that federal government would impose restrictions on their sale.
This year, at the end of June – after two more mass shootings in May, a Buffalo supermarket massacre that left 10 dead and a Texas elementary school shooting that resulted in the deaths of 19 students and two teachers – Congress enhanced background checks for those under 21 and strengthened laws against straw purchasing and trafficking of guns. But this time, gun sales fell. Nationwide, criminal background checks for the second quarter showed a 17 percent decrease in sales and at Ruger, which measures estimated unit sold from distributors to retailers, there was a 31 percent decline.
Ruger’s new products, including the Marlin 1895 lever action rifle, only accounted for 11 percent of sales. The Marlin was “the belle of the ball” at the National Rifle Association annual meeting in July, according to Chris Killoy, during an Aug. 4 earnings call.
Supply chain issues and inflation hurt profit margins, Killoy said.
“Things like stainless steel, up 7 percent from last year, carbon steel up 15 percent and aluminum up 20 percent. So some of those are tough to stomach and are a factor in not only us trying to drive efficiencies through our lean business practices in every aspect of Ruger, but also looking at potential price increases.”
But the key reason Ruger slowed production was because “we see what they’re selling to retail and what’s going on in the marketplace. We proactively take those production rates down.”
Inventory is up to 372,500 units, more than six times what it was during the same quarter last year. Orders are down 23 percent, and backlog, which was 1.6 million units last year, dipped below a million for the first time in a while
Despite the results, stockholders will be rewarded 47 cents-a-share dividend at the end of the month.