Remington Outdoors reported sales declined 27.7 percent in the first quarter, to $157.6 million.

Net sales for the Firearms segment were $84 million, a decrease of $31.3 million, or 27.1 percent. MSR sales decreased $29 million, of which $10.8 million was related to an international shipment in the three months ended March 27, 2016 that did not recur. Sales of handguns, rimfire and centerfire rifles decreased $3.8 million. These decreases were partially offset by increased sales of shotguns and lower accrued discounts of $0.8 million and $0.7 million, respectively.

Ammunition sales were $62.6 million, a decrease of $23.5 million, or 27.3 percent versus the year-ago quarter. Sales of centerfire ammunition, rimfire ammunition and shotshell ammunition decreased $24.3 million. These decreases were caused primarily by market softness.

Consumer net sales were $11 million, a decrease of $5.6 million, or 33.5 percent, as compared to the three months ended March 27, 2016. The decrease was primarily due to lower sales in its other Consumer businesses of $4.1 million and lower part sales of $1.5 million. The decline in consumer sales was primarily due to the sale of a business in 2016. The Consumer segment includes accessories, silencers, other gun-related products, licensed products and lifestyle products.

Remington reported a net loss of $48.5 million against earnings of $9.5 million in the same period a year ago. The loss in part reflected a $33.2 million impairment expense tied to intangible assets in its Firearms segment, consisting of $28.6 of goodwill impairment and $4.5 of intangible assets impairment.

Gross margins declined to 19.8 percent from 27.9 percent. Operating expenses jumped 80.3 percent to $65.1 million from $36.1 million Excluding the impact of the $33.2 million impairment expense, total operating expenses were $31.9 million, a decrease of $4.2 million, or 11.6 percent, as compared to the year-ago quarter.

Adjusted EBITDA declined 70.1 percent to $10 million from $33.5 million in the same period a year ago.

Addressing “Current Market Conditions” in its quarterly report, Remington Outdoor wrote, “Our firearms, ammunition and related accessory products are experiencing an anticipated post-election reduction in demand which started in the middle of our first quarter. We believe the slow-down, especially in the MSR market, in addition to lower expectations of potential legislation, is being driven by increased competitive pressures from:

  • Reduced consumer demand and excess inventories,
  • Increased manufacturing capacity in the industry,
  • Low barriers to entry in the 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 in the market are adjusting their inventories to current market tendencies with lower purchasing volumes, and utilizing advertising and promotional activities to improve sell through rates. We have continued to adjust to these market changes by managing our operating costs, adjusting factory production levels, making selective investments in promotions and introducing new products.

“New Remington firearm product introductions in 2017 include the Model 870 Tac-14 (no tax stamp required). New ammunition product introductions in 2017 so far include the Remington Performance Wheelgun ammunition, the Remington HTP Copper ammunition, the Remington 20 Gauge Sportsman Hi-Speed Steel Line Extension and the Barnes VOR-TX LR Long Range ammunition.”

Photo courtesy Remington Outdoor