Firearms in­dus­try ap­pears stuck in the dol­drums

The News & Observer (Sunday) - - News - BY TIF­FANY HSU

This hol­i­day season is not shap­ing up to be the gun in­dus­try’s best.

Firearms sales slumped af­ter Pres­i­dent Don­ald Trump was elected in 2016, as fears of gun con­trol melted away with the ad­min­is­tra­tion’s vo­cal sup­port of the gun in­dus­try.

But two years later, de­mand still ap­pears damp.

In Oc­to­ber, slightly more than 1 mil­lion back­ground checks of prospec­tive firearms buy­ers were con­ducted through the FBI, ac­cord­ing to the Na­tional Shoot­ing Sports Foun­da­tion trade group, which ad­justs fed­eral fig­ures to roughly ap­prox­i­mate market con­di­tions.

That’s 11.2 per­cent fewer checks than in the same month a year ear­lier. This year, nine out of 10 months had fewer checks than the same pe­riod in ei­ther 2016 or 2017.

Some an­a­lysts at­tribute the weak­ness to an ab­sence of sig­nif­i­cant fed­eral gun con­trol leg­is­la­tion, or to the firearms in­dus­try’s cycli­cal na­ture.

“We are def­i­nitely in a busi­ness cy­cle,” said Jur­gen Brauer, chief econ­o­mist of Small Arms An­a­lyt­ics, a re­search firm. “For those who have been around for 30 years, this kind of thing is old hat, and you just deal with it.”

An­other pos­si­ble fac­tor: a na­tion­wide surge of gun con­trol ac­tivism af­ter 17 peo­ple were fa­tally shot at Mar­jory Stone­man Dou­glas High School in Park­land, Florida, in Fe­bru­ary. Com­pa­nies dis­tanced them­selves from the Na­tional Ri­fle As­so­ci­a­tion, ma­jor firearms man­u­fac­tur­ers faced pres­sure from Wall Street and lo­cal politi­cians pro­posed a raft of gun con­trol mea­sures.

And if the past few weeks are any in­di­ca­tion, gun com­pa­nies have more stress com­ing.

DICK’S FACES CHAL­LENGES

Af­ter the Park­land killings, Dick’s Sport­ing Goods took a bold step, declar­ing that it would stop sell­ing as­sault-style ri­fles and re­quire any gun buyer to be at least 21 years old. Ed­ward Stack, chief ex­ec­u­tive of the chain, which has more than 700 stores, went to Wash­ing­ton to talk about gun con­trol. He spoke pub­licly about the emo­tional im­pe­tus for the de­ci­sion. Gun rights ac­tivists threat­ened to boy­cott the com­pany.

The com­pany’s fi­nan­cials are still ad­just­ing.

The re­tailer, which is based an hour from the Pitts­burgh syn­a­gogue where 11 peo­ple died in a shoot­ing in Oc­to­ber, said Wed­nes­day that sales at stores open more than a year de­clined 6.1 per­cent in the third quar­ter from the same pe­riod a year ear­lier.

Dick’s hunt­ing seg­ment, which in­cludes firearms, was re­spon­si­ble for half the de­cline.

Lee Belit­sky, the chief fi­nan­cial of­fi­cer, said on a con­fer­ence call with an­a­lysts that “the broader in­dus­try has de­cel­er­ated and re­mains weak.” Stack said on the call that the com­pany stripped hunt­ing prod­ucts from 10 stores and re­placed them with out­er­wear, li­censed prod­ucts and base­ball items.

The com­pany warned in a reg­u­la­tory fil­ing that fu­ture re­sults could be af­fected by “neg­a­tive re­ac­tions to our poli­cies re­lated to the sale of firearms and ac­ces­sories.” In May, the Na­tional Shoot­ing Sports Foun­da­tion ex­pelled Dick’s from its ros­ter af­ter learn­ing that the re­tailer had re­tained gun con­trol lob­by­ists. Firearms brands like Moss­berg and Spring­field Ar­mory also sev­ered ties.

A BLAND BLACK FRI­DAY

Black Fri­day has his­tor­i­cally been one of the strong­est sell­ing days of the year for firearms, ac­count­ing for five of the top 10 days for back­ground checks tracked by the FBI (most of the rest re­flect the days af­ter the mass shoot­ing at Sandy Hook El­e­men­tary School in De­cem­ber 2012).

This year was far less busy. Unad­justed back­ground checks slumped more than 10 per­cent, to 182,093 checks, from last year’s record high of 203,086 checks, which had fol­lowed shoot­ings in Las Ve­gas and Suther­land Springs, Texas.

It was the low­est num­ber of back­ground checks since 2014, even as re­tail­ers like Bass Pro Shops of­fered dis­counts on hand­guns and ri­fles for the shop­ping event. The Na­tional Shoot­ing Sports Foun­da­tion noted that a high num­ber of checks were per­formed on the days sur­round­ing Black Fri­day.

Back­ground checks are only a rough es­ti­mate of sales fig­ures. The true num­ber is likely to be much higher, as buy­ers can sub­mit to a sin­gle check and then pur­chase mul­ti­ple guns, and in many cases can skip the process en­tirely when buy­ing a firearm in a pri­vate sale.

WALL STREET PRES­SURE CON­TIN­UES

Af­ter the Park­land shoot­ing, ma­jor busi­nesses cut ties with the NRA. (FedEx, how­ever, said last month that its de­ci­sion was not mo­ti­vated by gun pol­icy.) Lead­ing in­vestors like Black­Rock voted with ac­tivist groups on share­holder pro­pos­als ask­ing for more ac­count­ing from gun­mak­ers of crimes tied to their prod­ucts.

More com­pa­nies are push­ing the firearms in­dus­try for re­form. This month, money man­agers with more than $4.8 tril­lion in as­sets, in­clud­ing pension funds in Cal­i­for­nia, Florida and Mary­land, is­sued a set of stan­dards they urged gun com­pa­nies to fol­low. Among the re­quests: Make firearms safer and eas­ier to trace and en­force back­ground checks for all sales.

“This is not a po­lit­i­cal state­ment about con­sti­tu­tional rights,” Christo­pher Ail­man, chief in­vest­ment of­fi­cer of the Cal­i­for­nia State Teach­ers’ Re­tire­ment Sys­tem, said in a state­ment.

“It is a joint as­ser­tion by all of the in­volved sig­na­to­ries that in­vestors have a stake in ad­vanc­ing pub­lic safety.”

Even busi­nesses with few ob­vi­ous ties to the gun in­dus­try have in­serted them­selves into dis­cus­sions of gun pol­icy. Toms, a shoe seller, said this month that it would do­nate $5 mil­lion to or­ga­ni­za­tions fight­ing gun vi­o­lence. Levi Strauss, fa­mous for jeans, took a sim­i­lar stance in Septem­ber.

Some com­pa­nies, how­ever, are of­fer­ing dis­counts and pro­mo­tions for gun own­ers. One gave hand­guns to all of its em­ploy­ees as Christ­mas gifts.

ERIN SCHAFF NYT

An em­ployee han­dles a ri­fle for sale inside the Clark Broth­ers Gun Shop in War­ren­ton, Va. This year, nine out of 10 months had fewer back­ground checks of prospec­tive firearms buy­ers than the same pe­riod in ei­ther 2016 or 2017.

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