American Outdoor Brands ‘messy’ inventory situation called ‘concerning’

By Christen Smith

Convention goers look at weapons at the Smith & Wesson booth last April at the 2015 NRA Annual Convention in Nashville, Tennessee. (Photo: Karen Bleier/AFP/Getty Images)
American Outdoor Brands, the holding company for Smith & Wesson, isn’t selling product fast enough for some investors — raising doubts about the validity of the company’s forecasted profits in 2018.
In June, the “rugged outdoors” conglomerate — which includes Smith & Wesson among its portfolio of brands — announced record-breaking profit for 2017 topping $903 million. Despite this, the company’s top executives said extra inventory and a promotion-heavy environment would eat into first and second quarter revenue, depressing the 2018 total to roughly $750 million.
“I understand the firearms industry is very cyclical and that it isn’t realistic to expect a company in that industry to grow revenue impressively in a perfect upward trajectory every year,” said Kevin Mackie, a self-described long-term buy-and-hold investor who writes for Seeking Alpha. “Nonetheless, and in light of heavy acquisition activity by AOBC of late, I believe that low of guidance points to more than cyclical or even political headwinds.”
Mackie analyzed AOBC’s inventory trends beginning in third quarter 2016 and found, despite a decrease in demand, the company continued making new

Source: Guns.com