What Happened to All the Gun Buyers?

Something has gone wrong in gun land. The frenzy of pistol and rifle purchases has abated, without any easy answer for the trend. Large, publicly traded gun company Smith &Wesson Holding Corp. (NASDAQ: SWHC) announced earnings that were poor, and a forecast that was worse.

All Smith & Wesson CEO James Debney could do to explain the problem was say that inventories were high and that typical slow seasonality was to blame. It seems that seasonality was not part of last year’s results for the company’s first quarter, when revenue was higher by $40 million at $171 million. And improved seasonal sales won’t help as the year wears on:

The company expects net sales for the second quarter of fiscal 2015 to be between $100.0 million and $110.0 million and GAAP earnings per diluted share from continuing operations of between $0.04 and $0.08.

Fiscal 2015 net sales are anticipated to be between $530.0 million and $540.0 million. The company anticipates GAAP earnings per diluted share from continuing operations of between $0.89 and $0.94 for fiscal 2015. The company believes that results within this range would generate a cash balance at the end of fiscal 2015 in excess of $125.0 million.

Those numbers were much, much less than Wall Street expected, and it punished Smith & Wesson by driving its share price down 17%. And the seasonality argument was undercut.

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The fact of the matter is that people are buying fewer guns. Maybe people are tired of target practice at local ranges. Maybe they feel safer in their homes. Maybe they are sick of hunting. Maybe the NRA has been less effective at making people feel they have the right to own and carry arms. Maybe Smith & Wesson’s product line has aged too much.

Whatever the cause, a $40 million drop in sales is so sharp that Smith & Wesson is no longer considered a good investment.