The so-called “Trump slump” coupled with the decision by Dick’s Sporting Goods to stop selling guns forced firearms distributor United Sporting Cos. to file for Chapter 11 bankruptcy protection.
USC subsidiary Ellett Brothers LLC bought another struggling company last year when it acquired AcuSport, a Bellefontaine, OH-based distributor of shooting and hunting products, in a May 2018 asset sale.
According to a Monday report from Reuters, USC “said it plans to liquidate, hurt by falling sales after President Donald Trump was elected and as Dick’s Sporting Goods Inc. began moving away from firearms.”
The report said other disruptions including Bass Pro Shops’ 2017 purchase of Cabela’s and Gander Mountain’s bankruptcy played a role in the decision, while even hurricanes in the southeast U.S. stymied demand.
Reuters wrote, “In a court filing, Chief Executive Officer Bradley Johnson said USC boosted inventory before the 2016 White House race, expecting the higher sales that historically follow a Democrat’s election. But he said the Republican Trump’s unexpected win over Democrat Hillary Clinton was a factor in net sales falling to $557 million in 2018 from an average $885.3 million from 2012 to 2016, with an accompanying glut of inventory.”
Firearms industry analyst Brian Rafn told SGB last year for a report that financial collapses such as these were expected. Companies up and down the firearms supply chain that weren’t pursuing a merger or a sale to a larger buyer with enough capital to withstand a downward sales cycle or tightened credit market could see a similar fate.
“You’re probably going to see more consolidation and you’re probably going to see others that are on shaky standing say, ‘Hey, we’ve got to start [M&A] negotiations before we end up walking down the bankruptcy aisle,’” Rafn said.