Smith & Wesson gunmaker triples profits

• 9 December 2015
• From the section Business

One of the world’s most famous gun-makers, Smith & Wesson, has nearly tripled its profits in three months to October compared to a year earlier.

The firm said its net income was $14.2m (£9.46m), for the period compared to $5.2m, for the same quarter last year.

The US gun maker also said net sales were up 32.1% to $143.2m, with its firearms division contributing $18.4m – an increase of 24.6%.

Its shares rose 4.65% on the news.

The company said its overall results had beaten expectations and that it would now raise its 2016 guidance for income and revenue.

Cash flow for the six months to October was also positive, despite a build up in inventory in the lead up to the Christmas shopping season, the firm reported.

“For the first half of fiscal 2016, we generated $22.8m in operating cash flow and $8.6m in free cash flow despite our seasonal inventory build in preparation for the hunting and holiday shopping seasons,” said chief executive James Debney.

“Our balance sheet remains healthy as we ended the second quarter with cash of $54.1m and no borrowings on our $175m revolving line of credit.”

Some analysts have said the surge in gun sales across the US is due to growing crime rates together with worries over restrictions on gun ownership – particularly in the wake of mass shooting incidents in the country.

Gun ownership

Gun ownership in the US and the exact meaning of the constitutional right to keep and bear arms has been a heavily-debated topic for years.

Following the latest shooting in the US that saw at least 14 people killed after gunmen attacked a community centre in San Bernardino, US President Barack Obama said the country must make it harder for potential attackers to obtain guns.

Demands for tougher legislation, however, are constantly met with much anger from pro-gun civil libertarians. Analysts say the argument is complicated.

“The [number one] driver of firearms sales is fear,” Brian Ruttenbur, an analyst at BB&T Capital Markets, told Bloomberg.

“Primarily, fear of registration restrictions, banning and things like that,” he said.

In addition to being a leader in fire-arm manufacturing and design, Smith & Wesson says it provides “training to the global military, law enforcement, and consumer markets.”

British conglomerate Tomkins owned Smith & Wesson from 1987 to 2001, while also owning baker Rank Hovis McDougall, earning Tomkins the sobriquet ‘buns-to-guns’.

Today, Walmart is the world’s largest retailer and the biggest-seller of guns in the US.