Remington Outdoor reported a loss of $16 million in the third quarter October 1 against net earnings of $9.5 million a year ago. Sales fell 30.5 percent to $154.1 million.

The company’s brands include Remington, Marlin, Bushmaster, Barnes Bullets, Advanced Armament Corp. and DPMS, among others. 

According to its 10Q filing, net sales of Firearms in the quarter reached $64.1 million, a decrease of $46.1 million, or 41.8 percent, as compared to the three months ended September 25, 2016. Sales of rifles, including MSRs, centerfire and rimfire rifles, decreased $32.4 million, while other product sales decreased $13.7 million.

Ammunition sales were $80.8 million, a decrease of $12.4 million, or 13.3 percent, caused primarily by market softness.

In the Consumer segment, sales were $9.2 million, a decrease of $9.1 million, or 49.7 percent. The decrease was primarily due to lower sales of parts and accessories.

Adjusted EBITDA reached $7.4 million, down from $34 million.

Gross margins eroded to 16.1 percent from 27.3 percent.

In Firearms segment, gross margin was 8.4 percent compared with 22.2 percent. The decrease reflected  the lower sales volumes, unfavorable pricing and higher manufacturing costs. Gross margin in the Ammunition segment eroded to  25.4 percent from 36.3 percent due to pricing, overall product mix and lost absorption from lower volumes in the factories.

Operating expenses were reduced to 16.5 percent from 17.1 percent a year ago. SG&A expenses decreased $8.8 million, or 28.4 percent, primarily due to lower salaries, benefits and travel of $5 million and lower distribution expenses of $1.6 million, as well as lower marketing, sales and legal expenses.

The filing noted that on October 18, the company announced reduced plant schedules as part of its inventory management initiative across many product lines. On November 14, 2017, the company secured an amendment to its revolving credit facility that enabled it to temporarily increase total borrowing availability under the existing ABL Revolver from $225 to approximately $259 from December 4, 2017 to April 2, 2018.

In its “Current Market Conditions” section, Remington Outdoor wrote, “Our firearms, ammunition and related accessory products are experiencing a continued reduction in demand which started in the middle of our first quarter of the 2017 fiscal year. We believe the slow-down is being driven by increased competitive pressures from:

  • Reduced consumer demand and excess inventories,
  • Retail softness resulting from changes in consumer buying behaviors,
  • Increased firearms and ammunition manufacturing capacity,
  • Low barriers to entry in the modern sporting rifle (MSR) segment, particularly for existing firearms manufacturers,
  • Lack of differentiation and true value in the segment, and
  • An increase in import products.

“We believe our customers are adjusting their inventories to current market tendencies with lower purchasing volumes, and utilizing advertising and promotional activities to improve sell through rates. Competitive promotions are contributing to lower levels of product profitability.”

Photo courtesy Remington Outdoor