October 30, 2007 2:48 p.m. EDT





DOW JONES REPRINTS



Smith & Wesson Shares Sink
On Slow Hunting Season
By AJA CARMICHAEL
October 30, 2007 2:48 p.m.

Shares of Smith & Wesson Holding Corp. plunged Tuesday after the gun maker said its fiscal second-quarter results may be hit by softness in the hunting market.

The Springfield, Mass., company said late Monday in its preliminary results that it expects to report fiscal second-quarter earnings of five cents to seven cents a share on revenue of $69 million to $71 million, well below the mean analyst forecast for 12 cents a share on revenue of $82 million, according to Thomson Financial. The quarter ends Wednesday.

"While second-quarter sales growth came in strong at 36% to 40%, our results were impacted by a combination of factors that emerged late in the quarter," Chief Executive Michael F. Golden said in a press release. "Among these factors were softness in the market for hunting rifles and shotguns, driven by lower than expected consumer demand, a buildup of pre-season retail inventories, and unseasonably warm autumn weather, which decreased retail traffic and compressed the fall hunting season."

Merriman Curhan Ford analyst Eric Wold blamed slower-than-expected demand for products from competitors, such as Sturm Ruger & Co. for "hampering Smith & Wesson's ability to gain shelf space midway through the hunting season."

"It is not like there isn't any demand for [Smith & Wesson's] products," he said. "Retailers want them but other manufacturers of firearms are holding up the line."

Mr. Wold said he thought Tuesday's sell-off was overdone, adding that while the issues troubling the company could persist into January, entry into the military and law enforcement markets, along with new product extensions, should boost sales and profitability going forward.

Smith & Wesson's fall comes less than a week after Sturm Ruger saw its share price plummet nearly 40% after the Southport, Conn., company said it swung to net loss of $617,00 in the third quarter.

Smith & Wesson cut its fiscal 2008 earnings estimate to 53 cents a share from its previous guidance of 63 cents a share. The company also expects fiscal 2008 revenue of $325 million, down from its prior view of $330 million. Analysts had forecast 2008 earnings per share of 64 cents on revenue of $334.9 million.

Shares of Smith & Wesson were recently down $7.28, or 36%, at $12.81. Sturm Ruger shares were down 3.8% at $9.28

Write to Aja Carmichael at aja.carmichael@wsj.com1

URL for this article:
http://online.wsj.com/article/SB119375205928976255.html

I am surprised that the hunting market is such a big player. I would have thought that military and LE sales would be much bigger percentage of sales. I wonder if this is just and excuse?
Peter.

I believe it is a sad but true fact that we will never see the firearms industry as one of growth. As such, I would expect results like this to continue to plague the industry.

with ammo and reloading costs going up it does not shock me.

they are both strong companies.

Now is the time to buy. i will be picking up some more of each.

never grab a falling knife!

Maybe they are done falling.

You never know though.

Smith has been chewing up a lot of their profits in R&D for their M&P lines of Rifles and Pistols. I really look for Smith stock to take off early next year and up to elections. People will be buying up equipment right and left. With the Dems probably controlling all 3 branches of Gvt, Exec, Legislative and Judicial, gun control will be coming harder than ever after Nov 2008. After elections all the gun companies on the markets will fall off.

Here is Ruger's letter to shareholders:

http://ruger.com/corporate/

Hey, if we wanna reverse the trend...GO BUY SOME GUNS! Honestly, I don't think either one of these companies are going anywhere, so this might be a good time to buy...

I look for big things for S&W in the future. People who want a revolver and have a bit of cash really don't have a decision -- S&W has the choices and the quality. They are making all their AR-15s in house and doing a good job with it. It will be interesting to see what directon they can move in with regard to Thompson Center.

Ruger is running itself more like a real business since Bill Ruger's son left. They will stay afloat, but they should really try and do more with their castings unit. Ruger does not turn out much product or gross receipts as far as businesses go.

I have stock in both, and am better for it. If I had money to invest at present, I would definitely buy S&W over Ruger. Ruger jumped this past year, but has a history of treading water with their product and stock value.
I wish to heck Ruger would redesign things that have obvious flaws in their line-up, namely the hanger arrangement/forearm on the No.1 and beef up the stocks on their safari grade rifles. Ruger seems married to the investment cast process for their products, and I think they ought to consider investing some R&D into a line that does use the process.

Ruger does not seem willing to get out of the box -- the hawkeye and 375 cartridge are good, but I seem them as keeping up with the competition instead of providing innovations.

quote:

The Springfield, Mass., company said late Monday in its preliminary results that it expects to report fiscal second-quarter earnings of five cents to seven cents a share on revenue of $69 million to $71 million, well below the mean analyst forecast for 12 cents a share on revenue of $82 million, according to Thomson Financial.

Show me where the losses are. They made a profit. Stock owners get a dividend. Since when do analysts' projections not met equal losses? I'm confounded.

Rooger could go belly up on the morrow and I wouldn't care one whit.

Seems to me that, other than the dedicated shooter/gun enthusiast, the retail market is saturated.
Peter.

quote:

Originally posted by onefunzr2:

quote:

The Springfield, Mass., company said late Monday in its preliminary results that it expects to report fiscal second-quarter earnings of five cents to seven cents a share on revenue of $69 million to $71 million, well below the mean analyst forecast for 12 cents a share on revenue of $82 million, according to Thomson Financial.

Show me where the losses are. They made a profit. Stock owners get a dividend. Since when do analysts' projections not met equal losses? I'm confounded.

Rooger could go belly up on the morrow and I wouldn't care one whit.

Even if you don't like their products you should care. The shooting sports are under constant attack from many sides and need all the strength in numbers they can get to fight back. If a large manufacturer like Ruger went belly up it would seriously impact prices of all the other makers out there and would also give credence to the idea that guns are no longer relevent in todays economy and political landscape.

quote:

Originally posted by The Slug: If a large manufacturer like Ruger went belly up it would seriously impact prices of all the other makers out there...

How come that didn't happen when Plymouth stopped making cars? Or Oldsmobile? Or when Winchester shut down its New Haven plant?

As no financial info was actually shown for Rooger, I'll again ask this simple question about the topic headline: where are the losses? S&W showed a profit.

Whether Rooger stays or goes depends on guys like you who buy their product, not me. I didn't buy when I hardly had 2 nickels to rub together. I certainly wouldn't buy now. My last shotgun is a Rizzini. My last rifle a Blaser. My last handgun a 90 year old german luger. Roogers are just gussied up tomato stakes, IMO. Boat paddle, anyone?

And I do care. See below, life member of the NRA, charter member of their Second Amendment Taskforce. I vote. I write letters to my elected officials. Guns won't be outlawed because Rooger goes out of existence. And I'm not wishing that they do; just that I can't stand their products offered for sale. If you don't like it, sue me. None of your chatter will change my mind.

S&W does not issue dividends (yet).

I like Rugers, despite their corporate efforts, not because of them. I've owned all kinds or Rugers except their shotguns... own or have owned their rifles, pistols, and machineguns.

Still I am not at all surprised they are losing money. You can't treat your customers like dirt and expect extended long-term success.

I had paid gfor a particular Ruger rifle and waited 20+ years to get it but never did. Sent in several Ruger pistols for repair (which in itself says something as they were all virtually new) only to have them KEEP the guns aginst my wishes or, in one case, send it back from refinishing with a part missing...which they never did replace.

Have had enough trouble trying to find a nice shiny new No. 1 in 9.3x74-R I have just said "To hell with it".

I thought with both the "Bills" gone, maybe the company would get some professional management that actually knew how to attract and keep customers by providing both product and service. Looks as if I may have been deceiving myself.

You know what they say about dealing with such companies, "Hope springs infernal."

quote:

Originally posted by 390ish:
S&W does not issue dividends (yet).

I'm no wall street shark, but what does this mean if not dividend?

The Springfield, Mass., company said late Monday in its preliminary results that it expects to report fiscal second-quarter earnings of five cents to seven cents a share...