Yesterday, Cabela's, the world's largest marketer of hunting, fishing, camping, and related merchandise announced that their sales accelerated in the first quarter. Same store sales were increasing at a high teens rate, and Q1 EPS will be $.10 to $.15 above current estimates.
Cabela's operates 40 retail stores, and also a catalog business. Sales consist of Hunting Equipment 45.3%, Gen'l Outdoors 29.8%, and Clothing and Footware 24.9%. Hunting Equipment is composed of firearms, ammo, archery products.
Estimates for Cabela's were $.44 per share for the first quarter, before the update. If the correction is $.10 to $.15, that means an increase of 22% to 34% in estimates. If firearms are 45.3% of their sales mix, they must be selling a lot more firearms in the first quarter than estimated by analysts.
One might assume that Ruger, like Cabela's, is selling a lot of weapons in the first quarter. The Ruger analyst estimates do not fully reflect strong sales. For example, First Call has Q1 EPS for Ruger at $1.01, which is nearly the same as 2012 Q4 EPS of $1.00. The difference between the two quarters is that there was a price increase in January (per Mr. Fifer's Conference Call), NICS background checks hit several records in January and February, and Cabela's said Q1 sales were exceptionally strong. Smith and Wesson CEO said in the CC they're selling every weapon they can manufacture.
In addition, the full-year 2014 First Call estimates for Ruger are $2.40 per share, compared with 2013 EPS of $3.70 per share, and actual 2012 EPS of $3.60 . In other words, the analyst estimates assume profits will be flat in 2013, and then will plunge by about 35% in 2014. This does not seem too likely to me.
You cite a lot of interesting information here. However, I don't think there is any reason to believe that retailer profits will correlate very closely with manufacturer profits. The very high demand for guns no doubt supports increased profit margins and increased unit sales volume for retailers. But since Ruger is operating at or near full capacity, it cannot increase volume much if at all (it can only increase its order backlog). As for pricing, retailers immediately turn increased demand into higher prices and increased profits. Because Ruger has been operating at full capacity and has a long order backlog, it has so far only been delivering units which were largely sold prior to the recent spike in demand. Unless Ruger sales terms allow it to increase prices on orders after the orders are placed and accepted, then presumably these would not have been at further elevated pricing like the retailers are getting.