February 28, 2018 / 3:52 PM / 7 months ago

Breakingviews - Which gunmaker will exit assault rifles first?

NEW YORK (Reuters Breakingviews) - Which gunmaker will be the first to stop manufacturing the preferred weapon of American mass murderers? With the decision by Dick’s Sporting Goods to take assault weapons off its shelves, it’s a matter of time before one of the big producers of consumer firearms gets out of tactical weapons and reverts to its self-defense and hunting roots. Aside from the message that would send to future customers, it would probably be good business.

An exhibit booth for firearms manufacturer Smith & Wesson is seen on display at the International Association of Chiefs of Police conference in Chicago, Illinois, October 26, 2015. REUTERS/Jim Young

Dick’s sold the suspected shooter in the recent Parkland, Florida massacre a gun. Luckily for the $3.4 billion retailer, it was not the Smith & Wesson AR-15 he chose to kill 17 students and their teachers at Stoneman Douglas High School on Valentine’s Day. “We could have been a part of this story,” Chief Executive Edward Stack told the New York Times. “We said: ‘We don’t want to be a part of this any longer.’”

The company doesn’t break out gun sales, so it’s hard to assess the financial ramifications. But its fortunes had already taken a turn for the worse amid the deflation of the gun bubble ushered in by Donald Trump’s presidency. Shares of Dick’s have crashed by nearly half since Trump was elected with strong support from the National Rifle Association. Last year Dick’s said it would fail to meet profit estimates due to “irrational” discounting of guns.

The entire industry has been in tumult. Dick’s rival Gander Mountain went bust last March. Sales have plunged at Sturm Ruger, American Outdoor Brands and Remington, which is now filing for bankruptcy protection. With household gun ownership flat to down, many gunmakers fear they sold forward an entire generation’s worth of demand.

In that sense, Dick’s is making a sensible commercial decision. By halting sales of assault weapons and increasing the age of gun sales to 21, Dick’s telegraphs to the majority of Americans who support enhanced firearms rules that it is a good citizen. Additionally, if the retailer’s read on demand for AR-15s is correct, its suppliers will now need to reconsider their own commitment to this category of deadly consumer firearms.

Shares of American Outdoor and Sturm Ruger tumbled on the news of the Dick’s decision. Remington will soon see new owners as creditors become shareholders. The race is now on to be the first gunsmith to return to its roots.

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