Guns and Weapons

Firearms industry seeing 'Trump bump' in some areas but not California

Key Points
  • U.S. gun demand turned positive in March and April after dips earlier in 2017
  • California retailers see tough times ahead and blame state regulations
A gun store sales associate looks on as a customer tries out a semi-automatic pistol in Las Vegas, Nevada.
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For many gun stores in California, business is soft and getting tougher due to state regulations making it harder to sell firearms.

Outside California, however, the firearms market appears to be holding up better despite some dire predictions of a plunge in demand following the election of President Donald Trump, who opposes gun legislation.

"Reports of our demise are greatly exaggerated," said Lawrence Keane, senior vice president and general counsel of the National Shooting Sports Foundation, a trade association for the firearms industry based in Connecticut.

Even so, Keane conceded that California is in a different situation due to "very, very restrictive" gun laws.

California is considered one of the most regulated gun markets in the nation and new legislation scheduled to go into effect over the next two years is raising concerns in the industry that it could force some stores out of business.

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"If anybody says they're optimistic in the gun world in California, they're lying," said Patrick Jones, manager at Jones' Fort in Redding, California. "We're just one state but we have a ton of legislation that just passed last year and probably more is coming."

Last year, California Gov. Jerry Brown signed six bills that add more regulations to the gun industry, including ammunition restrictions. Retailers say ammunition sales sometimes can represent 20 percent or more of total sales.

One of the new state laws will mandate a background check for anyone buying ammunition, while other rules include restrictions on online orders.

"The laws are affecting what we can sell and what we can't," said Jones. "It's going to make it so that only the strongest survive," said Jones.

Guns Direct, a store in LA's San Fernando Valley, said novelty firearms purchased by collectors remain popular but other gun sales have slowed. A manager at the store, who didn't wish to be identified by name, predicted: "You'll probably see a bunch of stores close by the end of the year."

In fact, the number of firearms dealers closing in California has been climbing in recent years, according to the state's attorney general. Nearly half of the firearms dealers in the state have gone out of business since the start of 2014.

At the same time, neighboring Nevada has seen softness too but store owners don't blame that state's gun regulations.

"With Trump in office, I think it will be quiet for the next four years," said Sharon Oren, owner of Maccabee Arms in Reno, Nevada. He explained that buying prior to the election was driven by fears of gun regulation but he said there remains demand for firearms because "people are afraid of rising crime and terrorism."

Meantime, national gun demand slowed in January and February, but March and April reversed to positive.

The FBI's National Instant Criminal Background Check System data, when adjusted to exclude concealed carry weapon permit background checks, showed March and April with positive background check growth of about 5 percent and just under 1 percent, respectively.

In contrast, December through February adjusted NICS data was down double-digit percentages on a monthly basis compared with a year ago. The adjusted NICS data is supplied by the NSSF.

"We're starting to see an industry rebound and we tongue-and-cheek refer to it as the Trump bump," Keane said.

According to the NSSF executive, the industry has returned to normalized levels where they were in 2015 before major political or terrorism events led to spikes in demand.

The San Bernardino terrorism incident in late 2015 led to a surging domestic demand for guns for protection, reflected in the adjusted NICS rising nearly 40 percent during the month of December 2015.

"We see long-term growth as actually better for the industry," Keane said. "Slow and steady wins the race and sustained growth in a more normalized market allows the industry members to manage their inventory better, manage their cash flow."

A check of nine gun stores nationally confirmed business was slower in January but started to pick up in mid-February and March, although in the early part of May, there's been some markets reporting softness that they attribute to mostly seasonality.

"January was a little light and February, March and April were probably about average," said Jeff McIntyre, president of Nebraska Gun, a retailer located near Lincoln. "The market stayed pretty strong through April this year although things really tailed in May."

In North Carolina, meanwhile, firearms retailers say business slowed after the election but appears to be trending today at a more normal pace.

"We're actually doing pretty well here," said Gorman White, manager of Carolina Guns & Gear store in Asheville, North Carolina. "We've got a fairly loyal and steady clientele."

Added White, "It just seems like normal business for us."

He said best sellers include the AR-15, Smith & Wesson Shield 9-millimeter pistols as well as compact Glocks. Also, he added that guns from Sturm Ruger "are perennially a good seller."

Shares of Sturm Ruger soared about 10 percent on Tuesday after the firearms maker on Monday posted better-than-expected earnings. The stock is up more than 19 percent so far this year.

Also, American Outdoor Brands (formerly Smith & Wesson) shares are up 8 percent year-to-date.

Last week, Cabela's said its same-store sales were down in the quarter ending April 1, partly reflecting weakness and tough comparisons for its firearms and ammunition business. Cabela's stock is down nearly 5 percent year-to-date.

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