Smith & Wesson sales surge as gun restrictions loom
(Reuters) - Smith & Wesson Holding Corp (SWHC.O) posted its biggest quarterly revenue and raised its full-year sales outlook for the third time as buyers stock up on firearms before tighter gun control laws come into force.
Recent mass shootings such as the Newtown school massacre and the Aurora theater shooting have triggered fierce gun control debates and prompted President Barack Obama to push for legislation to curb gun violence.
Gun sales often rise following mass shootings, according to a Reuters analysis of U.S. government data on background checks run on prospective gun buyers in the past 13 years.
Gun dealers say after shootings some customers fear for their safety, while others are concerned about new restrictions on gun ownership.
Smith & Wesson, which sells guns under brands such as Smith & Wesson, M&P, Thompson/Center, has been scrambling to boost production to keep up with the spike in demand.
The company said on Tuesday it was unable to meet the demand despite operating its plant at full capacity for the last four quarters.
Backlog at the end of January swelled to $667.8 million, but the company said it included excess order from distributors and might not result in actual sales.
The surge in demand helped rival Sturm Ruger report its biggest quarterly revenue last week. Sporting goods retailer Big 5 Sporting Goods Corp (BGFV.O) said it expects demand to continue into the current quarter.
Smith & Wesson said it expects sales of $575 million-$580 million for the full year. The company had first forecast full-year sales of $485 million-$505 million in June last year.
Analysts had expected sales of $561.3 million for fiscal 2013, according to Thomson Reuters I/B/E/S.
The company also said it would buy back up to $35 million of its shares by June 30.
"Performance gains were driven by continued robust consumer demand for firearms as well as increased sales of our M&P polymer pistols and modern sporting rifles," said Chief Executive Officer James Debney.
Income from continuing operations for the third quarter more than tripled to $17.5 million, or 26 cents per share. Revenue rose 39 percent to $136.2 million.
Analysts on average expected the gun maker to earn 23 cents per share in the quarter ended January 31, on revenue of $133.7 million.
Springfield, Massachusetts-based Smith & Wesson's shares rose about 4 percent in after-market trading immediately after the results, but pared those gains and were down 2 percent at $10.01.
(Reporting by Arpita Mukherjee and Siddharth Cavale in Bangalore; Editing by Saumyadeb Chakrabarty)
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