US firearm maker Remington Outdoor Company has filed for bankruptcy but will continue to trade, according to a number of reports by worldwide news agencies.
The Guardian reports the company’s woes come after firearms sales tumbled in the US under President Donald Trump following “a golden era of sales under Barack Obama”.
It said that firearms companies have too much stock and revenues are falling with Remington the first major company to hit major financial trouble.
However, Remington is expected to survive as it invokes the US’s chapter 11 bankruptcy law which will allow it to offload $700million of its $950million debt and continue to trade.
News agency Reuters reported the company had reached a restructuring support agreement with creditors for a comprehensive financial restructuring and $145 million of new capital.
It said the business operations would continue to operate normally and would not be disrupted by the restructuring process.
Remington’s sales have declined in part because of receding fears that guns will become more heavily regulated by the US government, according to credit ratings agencies. President Donald Trump has said he will “never, ever infringe on the right of the people to keep and bear arms.”
Remington’s sales plunged 27 per cent in the first nine months of 2017, resulting in a $28 million operating loss.
The Guardian said that in December, American Outdoor Brands, the owner of Smith & Wesson, reported that its profits had fallen 90 per cent year over year, from $32m to just $3.2m.
Last October, Sturm Ruger, the US’s largest firearm manufacturer, announced its quarterly revenues had fallen 35 per cent. Both companies will report their latest results shortly but neither is expected to announce a dramatic increase in sales.
“They call it the Trump slump,” said Robert Spitzer, a professor at the State University of New York at Cortland and the author of five books on guns.
“Gun sales have become politicised to a great degree,” he said. “Gun purchases recently have been made not just because someone wants a new product but to make a statement; not just because of fears that there might be tighter regulation but also to make a statement against Obama.”
With Trump in the White House, said Spitzer, gun sales had sharply defaulted to their long-term trend of declining ownership rates.
“Gun ownership has been declining since the 1970s and there are now fewer gun owners than ever,” said Spitzer.
Fewer people are hunting, younger people are less interested in gun ownership and the gun industry has had little success in its attempts to appeal to women and minorities.
The US has the highest rate of gun ownership in the world with 88 guns for every 100 people. But just 3 per cent of the population owns an average of 17 guns each, with an estimated 7.7 million super-owners in possession of between eight and 140 guns apiece.
The surge of gun purchases under Obama was largely driven by sales to existing gun owners. Sales spiked on Obama’s re-election and after his calls for new laws in the wake of tragedies like the Sandy Hook massacre in 2012, which claimed the lives of 20 children and six adults.
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