http://www.sec.gov/Archives/edgar/data/916504/000091650...00008/dec310510k.htm

For the year ended December 31, 2005, we had consolidated net sales of $410.4 million and a net loss of $16.9 million.

Hmmmmm - not a sustainable business plan!

Rgds Ian

I hope that Remington doesn't follow Winchester.

I can't say with absolute certainty, but maybe they're selling fewer firearms than let's say 20 years ago. Are there fewer hunters today than 20 years ago? Are there fewer people interested in shooting than 20 years ago? I don't know. My guess is yes.

The cost of doing business has risen (like anything else) and that's also a factor.

I'm sure there are lots of reasons, but how many major businesses that have gotten into the WalMart mentality have survived? Quantity over quality is not a sustainable business pattern either...

Mmagi, not buying it for a second. Today's hunter spends a friggen fortune on hunting compared to 20 or 40 years ago.

The problem is that Remington doesn't offer much that today's hunter wants to spend money on. I was shocked at the lousy 40,000 guns New Haven put out a year. That's 160 guns per working day.

In cars, you win by offering reliability.
In optics, you win by offering brightness
In guns you win by offering accuracy. JMO, Dutch.

It actually looks pretty good. One thing that larger companies like this will do is take charges in certain years as to avoid paying huge sums of taxes. There is actually very good news in this report as I see it. Their sales were up 4.4% for the year and excluding charges were actually quite profitable. One other thing to note is that with the loss of Winchester surley their sales will improve even more.

Their sales (revenue) is up but profits are headed for the sewer.

They are not taking a one year dump, look at the 5 year trends. Remington sales in 2005 were up but their profits and shareholder equity is negative.

In millions of US$

...........Sales......Earnings.......Shareholder
............................................Equity

2001.....366........14..............104
2002.....384........20..............112
2003.....361........-3................12
2004.....393........-4................10
2005.....410.......-17...............-11

Can't say if Remington is following Winchester or not, but I can say I wouldn't invest in a retail firearms manufacturing business. Guys like me have to be a marketer's nightmare. I just bought what may be my last hunting rifle. I'm 38 and the rifle was built on a 1909 Argentine Mauser action. I'm in my prime earning years and have found what I like and have no precieved need for anything else. Being a hunting nut and not a real gun nut, I don't actually want anything else. Well, I do want a few historically significant guns, but these by definition, were made long ago.

The major problem for bulk manufacturers seems to be that their product has no major flaws that need to be fixed and has a service life longer than the lives of the potential buyer and their kids combined. If there is no real need to improve the actions/barrels/stocks that were produced 2 or 4 generations ago, what can they do to induce more people to buy new instead of used or custom guns? Gun nuts will always want to try something new, but I get the impression most people try things until they get the results they want and then stand pat. Those few that use a gun enough to actually wear something out are most likely hard core shooters who will replace it with custom or semi-custom work anyway.

I think bulk manufacturers have only 3 options, reduce the price, offer new cartridges, or offer relatively minor variations. They simply can't compete quality wise with even the semi-custom makers. The minor variations, even including systems that let you change barrels/cartridges on the fly, are at best interesting only to niche markets. Push too hard at price reduction and your quality gets so bad that it increases the demand for used rifles (e.g. pre-'64's and a host of others). As for changing the cartridges on offer, they can invent new ones and revive old ones. Either way there will be a fraction of the hunting/shooting world that will like it, but most won't bother and will continue to use what has been working for them or their relatives for years. The obsolete cartridges and the short mags offer nothing more than more room for personal choice. This is a good thing, but it still leaves the retail manufacturers attracting only a small part of the potential market.

All in all, the only firearms manufacturers I'd bet on growing would be in the custom or semi-custom markets. The current crop of successful retail manufacturers will benefit from Winchester's (and Remington's?) fall, but they still face the same difficult market conditions.

Dean

Your argument is sound to a point but I think that you are missing one critcal point. Disposable income. It is something that most of us have at least some of and it is something that was almost unheard of in generations past. These companies started in the mid 1800's when there wasn't any disposable income and a rifle was literally handed generation to generation. I buy a new rifle every year just because I can. They are more of a hobby or toy than the tool that they were in the past.

I see rifles as investments as much as anything, they will last my lifetime. Most people have no problem spending 20 or 30k on a new car that won't be worth a damn in 5 or 6 years, but any decent rifle will at least hold it's value a much longer time.

Looks to me they are trying to become a distributor of cheap imported products. A large portion of their catalog is imported firearms. As a hunter, I would not even consider a purchase. But then again I guess that's why it takes months to get specialty equipment.

The mass market sporting rifle business must be one of the worst businesses imaginable.

• Shrinking market
  
• 99% discretionary purchasers
  
• Huge product liability issues
  
• Little or no product obsolesence
  
• Large entrenched competitors
  
• Distributors and retailers with lots of bargaining power

This is a market where only the best niche manufacturers can thrive.

I think one of the problems with all the major manufacturers is you just don't get something that is worth what you are paying for it. In my opinion it all started with the 'plastic" stock fad. The cheap plastic stocks so many companies use now and the fact it is so hard to get a factory rifle with nice wood draws more people to have a rifle built.

I know many on this forum don't like E.R. Shaw barrels but you can buy an old mauser, have them put a barrel on it, reblue it and then you put it in a nice stock from Richards micro fit and get a rifle that shoots as well as a factory rifle and looks better.

The last factory rifle I bought was my Winchester model 70 in the 80's and it would not shoot worth a darn till it spent some time getting glass bedding and a trigger job.
I hear that from so many guys. If you have to take a new factory rifle and put a couple hundred more dollars into it you might as well look into a barreled action or used rifle and stock it yourself. Or save up for a total custom build. That is my spin on it. I could be wrong though.

Wow, what I find shocking is the lack of cash and liquidity - there are plenty of readers on AR who have more liquidity on their personal balance sheets that Remington! The ratio of cash to AR is like 250.

Debt is what is killing this company right now. Their debt payment is twice their operational profit. Not sure what kind of terms they give vendors, but right now it is killing them. Their working capital is 25% of revenue, which means they turn over their WC 4 times per year. You can rest assured WalMart's is much better. Dell's, last I calculated, was over 60 times per year.

In business, cash flow is king. You can indeed lose money every year and survive if you carry a lot of non-cash costs, such as depreciation. Unfortunately, the cash flow position of Remington doesn't look that great to me, but I am certainly no expert.

Wish one of the old names just says to heck with it.

Then opens a semi custom shop to build to order rifles from $1000-up.

It would be nice to get a decent gun with trigger work, bedded stock, lapped rings, and your choice of stock.


We are getting to a point where quality has hit rock bottom. Thank you big box retail, thank you for driving jobs to China and quality to sh*t.

quote:

Originally posted by Hunt4Life:
Wish one of the old names just says to heck with it.

Then opens a semi custom shop to build to order rifles from $1000-up.

It would be nice to get a decent gun with trigger work, bedded stock, lapped rings, and your choice of stock.


We are getting to a point where quality has hit rock bottom. Thank you big box retail, thank you for driving jobs to China and quality to sh*t.

Hunt4Life:

Just curious...how many rifles have you purchased with price tags over 1k? They are out there. Most guys have not.

Here is the deal: don't blame big box retailers. At the end of day, if people didn't shop at WalMart, there would not be a WalMart.

quote:

think one of the problems with all the major manufacturers is you just don't get something that is worth what you are paying for it.

Very true! Have you seen the Remington 710s? What a joke. Some engineer deserves to get slapped for that one!

Yugos didn't last long here in the States for a reason.

quote:

Originally posted by AnotherAZWriter:
Here is the deal: don't blame big box retailers. At the end of day, if people didn't shop at WalMart, there would not be a WalMart.

Bingo! I hear the union faithful everyday complain about WalMart and Chinese goods. After work, were do they go? They are lined up at the Walmart checkout with a whole cart full of ChiCom merchandise. I go to Walmart but you usually have a choice between price and quality there and I'll pay a little extra not to support a country who's leaders threatened to nuke L.A. (Not that I'd miss it.)

As far as Remington goes, I bought an $800 rifle from them last spring and it went to the gunsmith before I even mounted the scope. You couldn't pull the trigger with a John Deere. I know about the product liability problems with a light trigger, but Savage has figured something out. Tikka has an adjustable trigger. You'd think Remington, with all it's resources, would be able to put a decent trigger in a gun. I've been happy with my Contender and Encore triggers too.

By the way, don't blame WalMart for gun manufacturers problems. They sell more guns than any other retailer.

quote:

By the way, don't blame WalMart for gun manufacturers problems. They sell more guns than any other retailer.

Not for long, they're stocking up on the yuppy sports stuff and shutting down the gun departments in a couple thousand stores.

So if you want a spandex bicycle riding thong with a testicle guard made in China, Walmart will be Johhny on the Spot for all your needs. Just don't ask for firearms anymore.

The way I understand it they are not going to carry firearms in the stores where they don't sell well. The stores that sell enough volume will still sell them. I know one of the gun stores I deal at would love to see Wal Mart stop selling guns.

Take a look at Ruger's stock performance and it will tell the same story. For all sorts of reasons those CZ imports and other imports are, and will continue to, have an effect...

Every walmart I've been in locally has a smaller sporting goods selection then when they opened originally.

The problem a business like remington has with dealing with shitholes like walmart. Is walmart is notorious for operating off the manufactureres money. One of their common tactics is to order with a stipulation that they not pay for 90 days or longer on the product and they can return unsold product whenever. In the meantime walmart runs sales on remington rifles that are built extra cheap for them. At the end of the aloted time period,they pay for the rifles they've sold and keep a certain amount of extra goods which they'll then pay for,plus return a great deal of product they don't want. Remington takes the greatest loss.

The same thing happens with stores like home depot and lowes. Stihl likes to run full page ad's in USA Today and spew shit about only selling to pro shops,while husky sells to anyone. The truth of the matter is,stihl makes more money off of small pro shops because they don't have to deal with contract stipulations like the one's mentioned above with walmart and the other big box stores. Remington and winchester both got greedy with the large box store contracts and its cost them in the long run or at the very least,done nothing to help them..

Cz and other foreign manufactures have made inroads,because they have free trade with this country which is bullshit and secondly they can provide a hand made product cheaply,because they pay out starvation wages.

If you take the time to read through the notes to the financial statements, it becomes pretty clear that the lenders have the upper hand already. It looks like Remington has passed the tipping point, and will require an infusion of new capital - or face bankruptcy. I just don't see a way for them to earn their way out of their current predicament. Remington is just one recession away from Chapter 11.

quote:

Originally posted by sledder:
Every walmart I've been in locally has a smaller sporting goods selection then when they opened originally.

The problem a business like remington has with dealing with shitholes like walmart. Is walmart is notorious for operating off the manufactureres money. One of their common tactics is to order with a stipulation that they not pay for 90 days or longer on the product and they can return unsold product whenever. In the meantime walmart runs sales on remington rifles that are built extra cheap for them. At the end of the aloted time period,they pay for the rifles they've sold and keep a certain amount of extra goods which they'll then pay for,plus return a great deal of product they don't want. Remington takes the greatest loss.

The same thing happens with stores like home depot and lowes. Stihl likes to run full page ad's in USA Today and spew shit about only selling to pro shops,while husky sells to anyone. The truth of the matter is,stihl makes more money off of small pro shops because they don't have to deal with contract stipulations like the one's mentioned above with walmart and the other big box stores. Remington and winchester both got greedy with the large box store contracts and its cost them in the long run or at the very least,done nothing to help them..

Cz and other foreign manufactures have made inroads,because they have free trade with this country which is bullshit and secondly they can provide a hand made product cheaply,because they pay out starvation wages.

Walmart has been the ruin of many manufacturers firms and distributors that thought volume was answer.........seen this first hand over many years.

The reason is much more simple.

A gun will last 200 years. It is good for many generations and is not realy disposable. Once you flood the market out there is not much demand for new ones. We have reached the saturation point for the number of hunters and shooters.
Gun owners are dieing faster than thier rifles.

I flew back from JoBerg a few months ago and chatted with some guy who was #2 (or thereabouts) at Ruger. He said exactly what AZWriter said, that Remington had been solid, then bought and sold several times with each owner taking on debt and cashing out, hence their shakey position now.

quote:

Originally posted by Republic of Alberta:
The reason is much more simple.

A gun will last 200 years. It is good for many generations and is not realy disposable. Once you flood the market out there is not much demand for new ones. We have reached the saturation point for the number of hunters and shooters.

EXACTLY! The sale of a gun today reduces a companies ability to sell a gun in the future to either the current or future generations. What makes it WORSE than you describe is the constant reduction in locally available hunting and shooting areas and that means less incentive to be buying rifles for their intended purpose. In short, we see a reduction in product demand caused by endogenous and exogenous factors.

The only solutions to gun company woes would be dramatic increase in the availability, and thus a reduction in costs, of hunting areas abroad...the standard free trade argument...OR an amazing set of technological innovations that would make obsolete previous forms of weaponry allowing the extant companies to have a first mover advantage in a new weapons sector of the economy. I don't see either happening.

JMHO,

John

Savage, Beretta, Howa, CZ, T/C, Browning, NEF, Ruger, Marlin, Mossberg... You can go to the WalMart sporting goods desk and order just about anything from any of 20 or so manufacturers. If WalMart negotiates a good deal for themselves, then I guess they win. If Remington can't work under their terms, then they shouldn't deal with them. My brother-in-law is a manager for a large chicken producer. They sat down with WalMart to negotiate a deal to supply their super centers. He said Walmart was too demanding, so they walked.

Remington HAD a good enough reputation, they didn't have to cut their own throat to deal with anyone. Stagnate market, marginal products and poor business practices kill companies.

quote:

Originally posted by AnotherAZWriter:

quote:

Originally posted by Hunt4Life:
Wish one of the old names just says to heck with it.

Then opens a semi custom shop to build to order rifles from $1000-up.

It would be nice to get a decent gun with trigger work, bedded stock, lapped rings, and your choice of stock.


We are getting to a point where quality has hit rock bottom. Thank you big box retail, thank you for driving jobs to China and quality to sh*t.

Hunt4Life:

Just curious...how many rifles have you purchased with price tags over 1k? They are out there. Most guys have not.

Here is the deal: don't blame big box retailers. At the end of day, if people didn't shop at WalMart, there would not be a WalMart.

To answer you question, I have over a grand in two different guns. Mostly by getting them up to spec on triggers, bedding, a stock I like, and the rings properly lapped.

My next gun will be custom, this website has gotten me intrigued with Waffenfabrique Hein(sp). I am currently waiting to see if I get a moose tag for Maine, if not, that hunting money will probably go to savings for a .375 from those guys.


Answer to your second question. I think that these big boxes have done more harm than good. They have gotten so much power(through the consumer) that they dictate through leverage the prices it takes to do business with them and at the same time have put all of the competition out of business(almost).

The day that manufacturers could no longer set the retail price of their own products was the beginning of the end. That day quality took a hit forever. Capitalism? maybe, but remember that most American manufacturers have had Unions forced on them by the gov't. While the retailer driving costs down have no such handicap. This in essence has driven our nations life blood, manufacturing, to the Orient.

Now that Wal Mart is 17-19% of China's manufacturing economy. I am a little worried. My generation has several messes left for us to clean up, this is one of them because there is too many people in the US to become a service economy, which ironically is socialist in nature.

On Winchester and Remington, they both are already manufacturing elsewhere. Winchester closed shop in the US while Remington is more subtly outsourcing to its partners Baikal and Zastavia. Ironic that Wal Mart gets somewhat out of the gun business to mark this sad day. However, Bass Pro and Cabelas are growing fast enough to fill their shows.

quote:

Originally posted by Rich Cale:
My brother-in-law is a manager for a large chicken producer. They sat down with WalMart to negotiate a deal to supply their super centers. He said Walmart was too demanding, so they walked.

We did the exact same thing. Many people are addicted to gross sales as an indicator of how well they are doing. There is lots of business out there not worth having.

On another note, I don't care if a rifle can last 200 years. They do when you put them in the closet. But, when used as hunting arms every year, they get wet, rust, get run over by the pickup, etc.

The advancement in materials and manufacturing methods have been astonishing. Still, today's Sako is but a shadow of the Sako of three decades ago. Someone needs to design, ground up, a rifle specifically to take advantage of the materials and methods of manufacturing that will be available 5 years from now. As opposed to using last decade's manufacturing to monkey with last century's design. JMO, Dutch.

Dutch:

Certainly I agree with you that hunters spend a fortune today compared with hunters of years ago. ( I'm 76) However I'm afraid that IMmagi has put his finger on it by asking if there are fewer hunters. If we use purchases of hunting licenses as a guide, I'm afraid the answer is YES. We may not want to face it (particularly in a magnificent hunting state as yours) but the political and media attitude in this country is anti-hunting. {"Hunters use guns. Guns bad. Therefore hunting bad"} I won't be around to see it but I have the uneasy feeling that American sport hunting and gun ownership is headed the way of the blacksmith shop and horse shoe manufacturing. I hope it's just an old man's pessimism but I just see the anti-gun and anti-hunting types educating more and more 3rd graders who are the voters of tomorrow. Just my thoughts.

quote:

Originally posted by Dutch:
...get run over by the pickup, etc.

I thought I was the only that did that!

The population of hunters is decreasing and I believe that many purchase now only a few "long weapons". For example, within Michigan, one of the states with significant hunting, many hunters have only one shotgun, with an additional slug barrel. With this they can hunt waterfowl and upland game and also deer with the slug barrel. Perhaps they might also have a 30-06 pump or semi auto matching their shotgun style.

Last weekend I was at a local gunshow and over heard a dealer, who had a nice array of hunting rifles, comment that "he should have just brought handguns as he could have sold a hundred of them and that selling handguns is the only way he stays in business."

Obviously in the Chicago area these handguns are not being bought for "hunting".

quote:

Originally posted by Don In Colorado:
The population of hunters is decreasing

Are you really sure about that? Every year, deer kill permits that are bought, filled, etc. are increasing. Out of state permits are all but impossible and most big game licenses are going by way of lotteries that offer only slightly better odds than Powerball or craps tables.

Proportionately to the total population, hunters are declining, but in real numbers, I wonder if they aren't actually increasing. Certainly, hunting opportunities are not as great as they used to be and partly because of access issues. Nonetheless, the number of hunters doesn't seem to be hurting around here.

Brent

Hi Brent,

I have frequently heard and read that, in addition to a decline in percentage of population, the absolute number of hunters is declining. This was specifically noted on CNBC about a year ago when they had a report on Cabelas.

Something that was also especially evident at the recent gunshow that I mentioned in my posting was that the average age of the attendees was probably pushing at least 50 and maybe 60. Ever year the "average" age of the hunter population seems to get a little older. As we "old hunters" slowly die off there is a decreased number of younger hunters taking our place.

In terms of the number of out-of-state hunters I suggest (and it is only my humble opinion as I have no specific numbers to back this up, but) that our declining population is more mobile than in the past and also sufficiently affluent to afford to travel more and hunt in more out-of-state locations thereby adding to the number of licenses being bought but not reflecting a growing population of hunters.

Don,
You might be right. I'm not sure. There once was a formal vehicle to measure these trends. It was an analysis that was supposed to be conducted every 5 or 10 yrs by the Fish and Wildlife service to hunters/fishers/dollars that are involved with fish and wildlife. They had analyses of just about everything you could think of.

I believe Congress shot it out of the water in the mid 90s' however. In any event, I have not seen such a report in many years now. Nonetheless, something rudimentary must be done to dole out Pittman-Robertson dollars and the like. Or else they are just guessing...
Brent

What Remington Rifles are you guys handling? I'll take a 700 any day over a goofy stocked Tikka. Tikka needs an accuracy warrenty, Remington doesnt. Every 700 I have is a tack driver. Savage forgot what a finished rifle is supposed to look like. Heck, they ought to sell cresent wrenches with every savage, because that is what it looks like they used to get the barrel on. Complaining about Remington triggers is rediculous. Any serious rifle owner usually puts a custom on his rifle anyway. You want a custom rifle, fine, go buy one, but dig deep in your wallet, you will need it. Remington like others, produces a "production rifle"...just dont be surprized when that custom rifle is sporting a 700 action and bolt.......

As for Wal Mart, they can sit on it and spin as far as I am concerned.....

Perhaps too much choice is the problem. I really believe the majors have become too heavy with niche market options. Bring it back to the basics. Remington lists 9 different model centerfire rifles on their web site. Bring it down to one each short, standard and long bolt action and keep the auto and pump rifles . Get rid of the 673 and chamber the .264 and .350 in the short action. The 710? what the hell are they thinking? Get rid of the fluff and make a few models with quality and workmanship in mind.

quote:

Originally posted by AggieDog:
What Remington Rifles are you guys handling? I'll take a 700 any day over a goofy stocked Tikka. Tikka needs an accuracy warrenty, Remington doesnt. Every 700 I have is a tack driver. Savage forgot what a finished rifle is supposed to look like. Heck, they ought to sell cresent wrenches with every savage, because that is what it looks like they used to get the barrel on. Complaining about Remington triggers is rediculous. Any serious rifle owner usually puts a custom on his rifle anyway. You want a custom rifle, fine, go buy one, but dig deep in your wallet, you will need it. Remington like others, produces a "production rifle"...just dont be surprized when that custom rifle is sporting a 700 action and bolt.......

As for Wal Mart, they can sit on it and spin as far as I am concerned.....

So in order to be a "serious driver", I should buy a new Ford and put a custom transmission in it?
Remington's "finished rifles" don't look anything like they did twenty years ago. I have some from both eras. I would hate to see Remington go, but if they can't compete... bye, bye. By the way, my Tikka 695 has the nicest wood of any of the 24 long guns I currently have. It also has an adjustable trigger. Then again I'm not a serious rifleman. Brand loyalty is fine but let's not get crazy here.

Good luck.

quote:

Originally posted by Rich Cale: As far as Remington goes, I bought an $800 rifle from them last spring and it went to the gunsmith before I even mounted the scope. You couldn't pull the trigger with a John Deere. I know about the product liability problems with a light trigger, but Savage has figured something out. Tikka has an adjustable trigger. You'd think Remington, with all it's resources, would be able to put a decent trigger in a gun. I've been happy with my Contender and Encore triggers too.

Come on. Anyone with 15 minutes and half a brain can bring that trigger down to 2 1/2 crip lbs without a gunsmith. Barely harder to do than the accu-trigger.

Well, I've never done it and since the manual said not to do it, I didn't. On the other hand the Tikkas and Savages are made for owner adjustments and cost hundreds less. So maybe anyone with half a brain wouldn't screw with it.