We’ve all been hearing about how firearms sales have dropped this year with the election of Donald Trump. The decline in sales began in the fourth quarter last year in response to the election news. Some believed that sales would pick up in the first couple of quarters this year but that never happened.
It’s now being reported that Remington Outdoor has seen such a sharp decline in gun sales that S&P felt compelled to downgrade the nation’s second largest maker of firearms in the United States from their already junk rating of CCC+ to CCC-. The downgrading places Remington in a very difficult position that some say could force the firearm giant into default or even bankruptcy.
(The Inquirer) – Remington Outdoor, the second-largest U.S. gunmaker has suffered a “rapid” and “sharp” deterioration in sales and a similar drop in profits since January, and faces “continued softness in consumer demand for firearms,” credit analysts at Standard & Poor’s Global Ratings said in a report Friday.
S&P as a result has cut the company’s corporate credit rating — already at a junk-bond-level CCC+ — two full notches, to CCC-, a move likely to make the company’s high-yield debt less attractive to investors and lenders, and force Remington to pay more in interest. The company could face a change in control, bankruptcy, or default on its debt by next year…
The company has an overstock supply of guns that aren’t selling. Some believe they will have to greatly discount the price of their existing stock, but doing so, will mean the likelihood of a poor or loss of profit through this year’s fourth quarter and next year’s first quarter. This will only spell further doom for the financially floundering firearm giant and will probably lead to their need for restructuring, if that is even possible.