Firearms Seeing Sharp Increase In Promotions; Analyst Expresses Concern For American Outdoor Brands

Recent channel checks indicate a “continued high level of competitive promotions and discounting, along with still elevated inventory levels, particularly in the lucrative modern sporting rifle (MSR) category,” Wunderlich’s Rommel Dionisio said in a report.

American Outdoor Brands Corp AOBC, formerly known as Smith & Wesson, has also begun aggressive promotions, Dionisio noted. Maintaining a Hold rating and a price target of $17, the analyst recommended investors to stay “on the sidelines” until there is greater visibility into a recovery of the firearms market.

Rising Promotional Environment

Firearm retailers and distributors had moved up before the presidential election, predicting a Hillary Clinton win. Most believe that inventories would remain elevated for another three to eight months, Dionisio mentioned.

Last week, American Outdoor Brands imitated an aggressive promotion for its M&P Shield pistol lineup, which had been a bestseller in the concealed carry market. The company is offering a $75 rebate on M&P Shield pistols, along with $50 rebates on Bodyguard models and $25 rebates on SD pistols.

“This is easily the most aggressive markdown we have ever seen the company run on the M&P Shield line,” the analyst commented. He added that American Outdoor Brands had already been running retailer incentives and discounts on MSRs.

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