Smith & Wesson Stock Slides as 4Q Sales, Profit Fall

By Nate Wolf

The U.S. gun market has been sluggish for several years and could be in for another dismal 12 months, said executives at Smith & Wesson Brands, as the firearm manufacturer reported disappointing fiscal fourth-quarter earnings and sales.

The company posted adjusted earnings of 20 cents a share on $140.8 million in net sales for the quarter, below analysts' forecasts of 23 cents and $152.4 million, respectively. Overall sales for the fiscal year fell 11.4% from the year prior.

Smith & Wesson stock was down 15% to $9.28 after the opening bell Friday, bringing shares into the red this year.

Demand for American guns has been weak ever since sales surged in the early days of the Covid-19 pandemic, when fears of civil unrest drove people to stock up on firearms. Smith & Wesson sales plummeted roughly 50% between its 2021 and 2023 fiscal years, and they have flatlined since.

Management said the decline — at least over the past year — was down to economic trends, namely inflation, high interest rates, and tariff-related uncertainty.

"Looking at the overall firearms market, we continue to see consumers generally being cautious due to macro-economic factors pressuring discretionary spending," CEO Mark Smith said in a statement. "While new products and lower price point offerings are still performing well, overall conditions suggest headwinds will likely persist in the near term."

The company also acknowledged on a conference call after the earnings release that some components and raw materials were sourced from overseas. Tariffs on these supplies will narrow the company's margins, said Chief Financial Officer Deana McPherson.

However the shifts in the industry's supply chain shake out, companies like Smith & Wesson face an uphill battle in boosting the demand for guns anywhere close to its heights at the beginning of the decade.

Smith & Wesson stock has fallen 44% over the last 12 months and more than 70% from its all-time high on July 1, 2021. Shares of competitor Sturm Ruger & Co., which also have sharply declined since 2021, were down 2.2% Friday.

Write to Nate Wolf at nate.wolf@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

US equity futures were cautiously higher ahead of Friday's opening bell as traders monitored a potential direct US involvement in the Israel-Iran conflict.

Dow Jones Industrial Average futures were up 0.3%, S&P 500 futures were 0.2% higher, and Nasdaq futures were up 0.3%.

President Donald Trump will decide on a potential military action against Iran within the next two weeks, White House Press Secretary Karoline Leavitt said during a press briefing Thursday.

Oil prices were lower, with front-month global benchmark North Sea Brent crude down 3.1% at $76.42 per barrel. The US West Texas Intermediate crude was 0.04% lower at $75.11 per barrel.

The Philadelphia Fed Manufacturing Index, released at 8:30 am ET, came in at minus 4 in June to match the prior month's reading, compared with estimates compiled by Bloomberg for an improvement to minus 1.5.

In other world markets, Japan's Nikkei closed 0.2% lower, Hong Kong's Hang Seng ended 1.3% higher, and China's Shanghai Composite finished 0.07% lower. Meanwhile, the UK's FTSE 100 was up 0.4%, and Germany's DAX index was up 1.7% in Europe's early afternoon session.

In equities, GMS shares were 28% higher pre-bell after the company confirmed Thursday that it received an unsolicited takeover proposal from QXO . Jeffs' Brands shares were up 15% after the company said the TSX Venture Exchange has approved the pending acquisition of the company's Fort Products subsidiary by Impact Acquisitions.

On the losing side, Smith & Wesson Brands shares were down 14% after the company reported late Wednesday lower fiscal Q4 adjusted earnings and sales.