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Bottom Line: Sturm, Ruger missing the mark as gun sales continue to tumble

  • John Lippman. Copyright (c) Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Valley News Business Writer
Published: 2/22/2020 10:20:47 PM
Modified: 2/22/2020 10:27:29 PM

However you feel about firearms, manufacturer Sturm, Ruger & Co. is a well-run company.

Reliable revenues and earnings, a hoard of cash socked away, zero debt and paying a steady dividend, the Newport gunmaker embraces the kind of traditional financial values that long ago were shed by so many American companies.

But even Ruger can’t escape the current challenges of the firearms industry.

While it’s safe to say gun owners and gunmakers would not want to see a gun-control advocate in the White House, it’s also often noted with irony how the threat of stricter gun laws also spurs higher sales as gun owners are motivated to buy guns before the feared curbs are enacted.

Indeed, President Donald Trump may be the best friend the NRA ever had, but the so-called “Trump Slump” is blamed for an industrywide dampening in gun sales.

The softer sales have led to aggressive marketing ploys by rivals that are undercutting sales at Ruger, which traditionally is restrained in such tactics.

Ruger reported financial results last week, and they reveal just how much the industrywide sales slump has impacted the company, whose Newport plant — one of three Ruger operates along with plants in North Carolina and Arizona — makes rifles and one line of pistols.

Ruger’s sales fell 17.2% to $495.6 million and net income tumbled 56.7% to $32.3 million in 2019 from the prior year, according to the company. Sales have been declining at Ruger each year since 2016, when they briefly climbed back up from a two-year slump after peaking at $688.3 million in 2013.

Dig deeper into the company’s 10-K regulatory financial filing, however, and a glimpse of the impact from lower sales becomes clear: Ruger employed a total of 1,580 workers as of Feb. 1, down from 1,830 people in 2018 and 530 fewer than at its peak of 2,110 in 2016.

(Ruger doesn’t break out the number of employees at its Newport plant, and company officials did not respond to an email requesting the information).

Ruger CEO Chris Killoy, in a statement accompanying the company’s 2019 financial results, said, “2019 was challenging for the firearms industry as manufacturing overcapacity, excess inventory levels ... and a continued softness of demand led to a marketplace saddled with undisciplined discounting, reckless extension of payment terms and excessive promotions.”

“This left some distributors and manufacturers in its wake,” he said.

Translation from the corporate speak: Gun manufacturers are making more guns than stores can sell and than customers want to buy. This causes a backlog of product and leads to aggressive discounting by competitors.

Or, to put it another way, the firearms industry’s pain has a lot to do with shooting itself in the foot.

A branch grows in Newport

Local bank branches are supposed to be going the way of the dodo in the era of e-commerce, so it’s unusual when a bank actually opens a new branch as opposed to closing one.

But this weekend, One Credit Union is slated to open a new $600,000 branch in the Sugar River Plaza in Newport.

The Springfield, Vt.-based credit union, which has five branches in Vermont and one in Claremont, will offer many of the tech features that are popping up in consumer banking, including a “tech bar” fitted with iPads where the bank can demo its mobile banking app.

The five-employee branch — one customer service rep will be a “floater” between the Newport and Claremont locations — is being headed up by Newport resident Patty Kober, who most recently was assistant manager at Northeast Credit Union in Lebanon but previously had a long career at Bank of America.

One Credit Union’s expansion into Newport comes a few weeks after Hanover’s Ledyard National Bank said it would expand into the Concord market with a new retail branch on Main Street that will feature a two-way videoconferencing ATM.

But local branch closings have been far more common in the Upper Valley.

Bar Harbor Bank & Trust, which acquired the former Lake Sunapee Bank in 2017, last year closed its Route 4 branch at Waterman Place in Quechee and its drive-up window in Newport. Citizens Bank shuttered its branch in White River Junction in 2016 and closed branches in Lebanon and Springfield in 2018. Claremont Savings Bank closed its Cornish Flat branch in 2015.

No reservations just yet

Motorists on Route 120 in Lebanon have noticed the activity at the Element Hotel, which has been shut down since Dec. 24, when an explosion in the utility room on the fifth floor crippled the electrical and heating system, leaving the future of the 120-room hotel in question.

Speculation has been circulating that the damage caused by the fire to the hotel is so severe that the entire building might have to be demolished.

But David Leatherwood, president of Norwich Partners, which owns the Element, said they do not yet know whether the hotel will have to be razed. But he expects to find out in the not-too-distant future.

“Engineering reports are due in April,” Leatherwood replied via email when asked for a status report. “Nothing new to report or comment on until late April or May.”

Tell me your business. I’m at jlippman@vnews.com.




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