Gun Economics: A Tale of Two Companies

Posted: April 29, 2013 by ShortTimer in Economic freedom, Economics, free markets, Government, Guns, Tyranny

Several months ago, Dick’s Sporting Goods stopped selling black rifles.  It was very noteworthy because they had contracted with Troy Industries and many, many people had rifles on order from Dick’s.  Dick’s managed to screw over both the consumer and Troy Industries at the same time.  But Dick’s pulled out of the firearm market and went limp from political pressure.

Today, Dick’s has posted a major loss, coming up short, and in laughable move, has blamed their performance issues on Lance Armstrong.

If there’s a silver lining for all the people who were eagerly waiting for that Troy Carbine and were vastly dissappointed, it’s that Dick’s isn’t doing so well in the financial department.

At a time where the only thing a company has to do to sell firearms, ammo and accessories is to unlock their doors, Dick’s sales have flat-lined. In fact, their sales dropped 2.2 percent  in the fourth quarter of 2012 compared to 2011 and their shares 10 percent in the last quarter.

Dick’s CEO pointed his finger squarely at, well, Lance Armstrong. “People had a very negative reaction to the Livestrong brand,” he said at an earnings report.

Except while Dick’s sales are going soft, other companies are doing quite well.  Cabela’s has been doing very well due to firearm sales – and those firearm sales have brought people in to the store to buy other products as well:

“First-quarter results exceeded our expectations on every line of the income statement,” said Cabela’s Tommy Millner. “In addition to expected increases in firearms and ammunition sales, we saw particularly strong performance in softgoods and footwear.”

Remember this is what Cabela’s gun racks looked like just three months ago:

Cabelas Rack 130127

Cabela’s at the floor level has a general approach within the company that it’s best to underpromise and overdeliver, and that may well extend to their higher levels as well.

“Without firearms and ammunition, same-stores sales increased just 9 percent — still strong, but clearly much of Cabela’s growth was driven by gun buyers,” wrote Jeremy Bowman of the Motley Fool. ”As the stock has now tripled in the past year and a half, investors may want to take a cue from their senators and sell while the stock is hot.”

We suspect it’s a bit early to start bailing on Cabela’s, that gun sales will stay strong for the coming months. What we can be sure on, however, is that while this boom is also a bubble, Dick’s failed to get in on much if any of it.

Cabela’s is wise enough to know that people are coming for the guns, but staying for the rest of the store, and that guns sales are a government-induced artificial bubble.  They probably will be continuing to do very well, even if their stock price begins to plateau.

To give some idea what it’s looking like elsewhere in the gun world, consider that Sturm Ruger has had huge sales, and are now hammered with massive backorders.

Demand is still exceeding supply, and the bubble increase in demand (assuming the government doesn’t get progressively more tyrannical and spin us into Mad Max territory), is going to end up leaving an ultimately higher permanent demand than existed before the bubble started.

Some people are getting into the gun market so they can get their homeland security rifle and that’s it.

oleg volk rifle girl force multiplier for liberty

Some are getting into it because they think it’s a “last chance”, and some are getting into it because of concerns that guns will be more difficult to acquire – not a last chance, but a last easy option.  Some are getting into it because others are, and they want to see what it’s all about.

If the government’s inexorable push for citizen disarmament is stymied again for a while (and Joe “I Get Drunk With Your Rulers On My Black Tie Yacht And We Disarm You Pissants” Manchin is introducing another anti-rights bill), there will be a permanently elevated demand for ammunition and arms.

The public’s interest in firearms will have changed by the millions of votes in favor of the Second Amendment – the millions of votes not made at the ballot box, but with the money in Americans’ wallets.

The American public is still taking the Brain Gremlin’s advice:

  1. […] Troy Industries is a manufacturer of ARs and AR parts, as well as other modern rifle accessories.  The last time they were in the news was when Dick’s Sporting Goods dropped their line of ARs for political reasons, screwing over Troy pretty badly (as well as Dick’s screwing themselves). […]

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