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Vista Outdoor Jumps on Remington Arms' Struggles

GuruFocus.com
·2 mins read

- By Graham Griffin

Remington Arms, one of the largest firearms manufacturers in the U.S., was auctioned off to seven different bidders after filing for bankruptcy in July for the second time in two years.

The company was acquired by Cerberus Capital Management in 2007 and encompasses many different firearms and ammunition brands. Due to continuing struggles, Remington was unable to see the same benefit from the current gun sales boom that many competitors are experiencing.


In 2012, Remington Arms was faced with a high-profile lawsuit when one of its rifles was used by the gunman in the Sandy Hook Elementary School shooting. Investors fled the company amidst widespread news coverage and left it encumbered in debt.

Lacking financial support, Remington watched debt blossom close to $1 billion as its revenue in 2019 was cut to approximately half of what had been seen in previous years.

In comparison, top competitors of Remington have seen a radical spike thanks to pandemic-related sales. Smith & Wesson Brands Inc. (NASDAQ:SWBI), for instance, saw share prices soar over the last several months.

Vista Outdoor Jumps on Remington Arms' Struggles
Vista Outdoor Jumps on Remington Arms' Struggles

During June, the Federal Bureau of Investigation recorded its highest number of background checks for gun sales. At 3.93 million checks completed, previous years' numbers were surpassed by 70% and numbers are expected to remain steady throughout 2020. While the checks do not directly correlate with gun sales, they can be used to estimate the number of firearms moving from person to person.

Online firearms retailers in particular have seen record profits alongside the manufacturers' surging stock prices. In May, prior to the record numbers coming over the summer, ammo.com reported a 602% increase in revenue and a 511% increase in transactions.

Due to these surging numbers, companies were quick to jump on Remington's struggles. Sturm Ruger & Co. Inc. (NYSE:RGR), one of Remington's top competitors in the U.S., purchased the company's Marlin firearms brand and Sportsman's Warehouse Holdings Inc. (NASDAQ:SPWH) acquired the Tapco brands products.

Vista Outdoor Inc. (NYSE:VSTO) won the bid for purchasing the Lonoke ammunitions business and other intellectual property assets. The acquisition will further cement the company within the shooting sports industry.

Disclaimer: Author owns no stocks mentioned.

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This article first appeared on GuruFocus.