- Leading gun manufacturer American Outdoor Brands provided light guidance on falling background checks.
- Shares of the company, formerly Smith & Wesson, fell more than 6% early Friday.
- Watch American Outdoor Brands trade live.
American Outdoor Brands, formerly Smith & Wesson, reported third-quarter results Thursday evening which beat Wall Street expectations, but the stock fell as disappointing guidance was driven by a decrease in firearm background checks.
The company reported adjusted earnings of $0.16 a share, coming in above the $0.12 consensus of analysts surveyed by Bloomberg. Net sales of $162 million outpaced the $161 million that analysts were looking for.
American Outdoors said it expects to earn an adjusted $0.11 to $0.15 a share in the fourth quarter, which was well below the $0.20 that was anticipated. Shares were down more 5% early Friday.
American Outdoors pointed to a slowdown in the number of National Instant Criminal Background Check System (NICS) background checks, generally considered to be the best proxy for consumer firearm demand, as a reason for its disappointing outlook. The number of background checks fell nearly 13% year-over-year in February, according to the company.
"That number is the lowest adjusted NICS result to any February since 2011 and certainly appears to validate the ongoing challenging market conditions that we have already referenced," CEO James Debney said on the call.
The company, which manufactures the AR-15 rifle, has faced an environment of weakening demand since the election of President Donald Trump.
American Outdoor Brands was down 19% this year.
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