Remington Files For Bankruptcy Amid A Tough Market For Guns
From Texas Standard.
Remington Arms – a gun company that has been in business for over 200 years – has filed for Chapter 11 bankruptcy protection, and they’re not the only gun company that has seen shrinking profits lately. Sturm Ruger, as well as American Outdoors Brand, formerly known as Smith and Wesson, have been taking hits, too. Is Remington a victim of shifting public sentiment surrounding guns – or is something else going on?
Texas Standard investigative reporter Alain Stephens says the story starts in 2007, when Remington was acquired by Cerberus Capital Management. Cerberus’ enthusiasm did not last long.
“By 2012, they weren’t interested in it,” Stephens says. “Sandy Hook occurred and a Remington Bushmaster was involved in it.” Still, there was a boom in sales at the time.
“But in the interim of this they got saddled with a lot of debt, almost $1 billion in debt,” he says. “And now they’ve filed for Chapter 11 bankruptcy protection that’s going to write off about $700 million of this debt, and the creditors are going to take control of the company.”
Then, he says, Remington’s Model 700 series of rifles wound up costing the company $12.5 million after a class action suit alleged that the gun would fire without the trigger being pulled.
In 2018, Remington isn’t the only brand in trouble.
“It’s a difficult market out here. I’m sure you’ve heard of the ‘Trump slump,’” Stephens says. “In the last 10 years, under a Democratic controlled Congress, under Democratic President Barack Obama, this stoked a lot of fears with people who thought there would be a new round of gun control legislation. And what that did was that sparked a lot of buyers to go out and buy new guns. To give you an example, in 2005 there were about 9 million FBI background checks for new purchases of guns. In 2016, that number would be 27.5 million.”
When gun manufacturers expected another Democrat to be elected in 2016, they planned accordingly.
“They ramped up production with the expectation of high sales and they overproduced,” he says. “They overshot their marks. And now they’re sitting on stockpiles of weapons that they are unable to move.”
Thus the “Trump slump,” in which sales have decreased because of a gun-friendly administration.
Stephens says another problem gun manufacturers are facing is market saturation – many gun enthusiasts already have all the guns they want. Companies need to reach new demographics, but that’s getting harder to do.
“Gun companies really can’t advertise on a lot of media platforms,” Stephens says. “Gun communities that have used Youtube and Reddit are now being constrained in those areas, too. Youtube is saying they’re going to take down videos that actuate gun sales. Reddit did the same thing. So it’s really kind of putting them in a bind as far as reaching that new market that they need to do to kind of get in the green again.”
Written by Jen Rice.