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Smith & Wesson’s Owner to Break Away From Gun Business Smith & Wesson’s Owner to Break Away From Gun Business
(about 7 hours later)
As gunmakers face growing pressure from the public and investors to curb violence after mass shootings, the owner of Smith & Wesson firearms plans to split the gun business into a separate company. The gun-maker Smith & Wesson was once an iconic national brand, a symbol of Americana and rugged individualism dating back to the battlefields of the Civil War.
American Outdoor Brands said on Wednesday that it would become an outdoor products business that sells everything from Hooyman tree saws to Bubba fishing gear, with Smith & Wesson as a separate publicly traded company. But over the last two years, Smith & Wesson’s parent company, American Outdoor Brands, has seen its stock price plunge as public and investor pressure to curb gun violence has grown.
American Outdoor Brands’ share price has tumbled as retailers have faced growing public outcry over mass shootings and a decline in gun sales. Sales from the company’s firearms segment have fallen 38 percent over two years through April. Late Wednesday, the company said it was spinning off its firearms unit, insulating the broader business from the challenges facing the gun industry.
In October, Dick’s Sporting Goods said it destroyed more than $5 million of military-style semiautomatic rifles and was considering whether it would continue to sell guns at its stores. In September, Walmart said it would stop selling ammunition that could be used in military-style assault rifles after a shooting at one of its stores in El Paso. The decision was motivated by “significant changes in the political climate as well as the economic, investing and insurance markets,” Barry M. Monheit, chairman of American Outdoor Brands, said in a statement.
The decision to spin off Smith & Wesson was motivated by “significant changes in the political climate as well as the economic, investing and insurance markets,” Barry M. Monheit, chairman of American Outdoor Brands, said in a statement. Less than a day after the announcement, a shooting at a high school in Santa Clarita, Calif., left two students dead and three wounded.
On Tuesday, the Supreme Court allowed relatives of shooting victims at the Sandy Hook Elementary School to sue the Remington Arms Company, the maker of the rifle used in the massacre. Timothy D. Lytton, an expert on the firearm industry at Georgia State University, said the violence of the last few years had drawn “a lot of unwanted attention” to Smith & Wesson, whose firearms have been used in several mass shootings.
American Outdoor Brands is not the first major outdoors company to spin off its firearms business. After the fatal 2018 shooting at Marjory Stoneman Douglas High School in Parkland, Fla., which involved an AR-15 rifle, the outdoor goods retailer REI suspended orders of bike helmets and water bottles made by Vista Outdoor because of the company’s production of assault-style firearms. “A national brand that is involved in a lot of different sectors wants to provide some measure of distance between itself and a company that has been repeatedly associated with high-profile shootings,” Mr. Lytton said.
Two months later, Vista Outdoor moved to sell its gun-making business. A shift in public opinion polls in favor of more gun control has influenced retailers across the United States, especially after back-to-back shootings this summer in El Paso and Dayton, Ohio.
The specific AR-15 involved in the Florida massacre, however, was manufactured by Smith & Wesson, whose products have been implicated in several other high-profile shootings. A 9-millimeter Smith & Wesson handgun was used in the attack on YouTube’s headquarters in San Bruno, Calif., in 2018. One of the firearms owned by the gunman who attacked a Colorado movie theater in 2012 was manufactured by Smith & Wesson. In September, Walmart said it would stop selling ammunition that could be used in military-style assault rifles like the one fired by a gunman in one of its stores in El Paso.
And in February, a disgruntled employee who had been fired from his job returned to a suburban Chicago factory with a .40-caliber Smith & Wesson handgun with a laser sight, which the authorities said he used to kill five of his former co-workers. The next month, Dick’s Sporting Goods, which has grappled publicly with its ties to the gun industry, said it had destroyed more than $5 million worth of military-style, semiautomatic rifles. Its chief executive, Ed Stack, has said the company is considering whether it will continue to sell guns.
After the restructuring, James Debney, the president and chief executive of American Outdoor Brands, will lead the outdoor pursuits business, while Mark Smith, the president of the manufacturing services division, will take up the role of chief executive at Smith & Wesson Brands, the firearms business. Rising consumer outrage is not the only issue facing companies like American Outdoor Brands. Some families of mass shooting victims have sued retailers and gunmakers in an attempt to make them accountable. On Tuesday, the Supreme Court allowed relatives of shooting victims at Sandy Hook Elementary School in Newtown, Conn., to move forward with a lawsuit against Remington Arms, the maker of the rifle used in the 2012 massacre.
A drawn-out legal fight and the headlines that would come with it are “something the parent company probably wants to avoid,” said Mr. Lytton, the gun expert at Georgia State. “By splitting Smith & Wesson off, they’re more likely to insulate themselves from that litigation and reputational damage.”
Separating from Smith & Wesson may also simply be a smart business decision for American Outdoor Brands: Sales from its firearms segment have fallen 38 percent since 2017.
That drop has come during a broader downswing for the industry since the 2016 presidential election, as gun owners have become less worried about the prospect that the government might seize their weapons.
Gun-makers tend to enjoy their greatest success when political forces seem to be arrayed against the industry, said Allen Rostron, a professor at the University of Missouri-Kansas City School of Law.
“People being upset about gun violence isn’t going to put a gun company out of business,” Mr. Rostron said. “The people who are going to protest and boycott — they’re not buying guns.”
Under the restructuring, which will go into effect next year, American Outdoor Brands will focus on its outdoor equipment business, like Hooyman tree saws and Bubba fishing gear, the company said. Smith & Wesson Brands will become a separate, publicly traded company.
In recent years, other gunmakers have also responded to the changing economic climate. Remington sought bankruptcy protection in March 2018 after sales fell and its debt piled up. In September, Colt said it would suspend production of sporting rifles, including its signature AR-15, for the civilian market, citing market conditions.
Wall Street has also started to rethink its close ties with gun-makers.
Last year, Citigroup said it would require business customers to restrict certain firearms sales, while Bank of America said it would stop lending to manufacturers of military-inspired firearms for civilian use. Other companies, like the investment management firm BlackRock, have asked firearms companies for details about their business practices.
American Outdoor Brands is not the first major outdoors company to spin off its firearms business. After the fatal 2018 shooting at Marjory Stoneman Douglas High School in Parkland, Fla., which involved an AR-15 rifle, REI suspended orders of bike helmets and water bottles made by Vista Outdoor, protesting the company’s production of assault-style firearms.
Two months later, Vista Outdoor announced that it would sell its gun-making business.
The AR-15 used in Parkland, however, was made by Smith & Wesson, whose products have been implicated in several other high-profile shootings. A 9-millimeter Smith & Wesson handgun was used in the attack on YouTube’s headquarters in San Bruno, Calif., in 2018. One of the firearms owned by the gunman who attacked a Colorado movie theater in 2012 was made by Smith & Wesson.
And in February, a fired employee returned to a suburban Chicago factory with a .40-caliber Smith & Wesson handgun with a laser sight, which the authorities said he used to kill five of his former co-workers.
Since its founding in the 1850s, Smith & Wesson has long occupied a singular place in the public imagination, associated with the Civil War and the exploration of the American West. But it has also faced decades of backlash from gun-control advocates. In 2000, Smith & Wesson was nearly put out of business when gun owners boycotted it after it agreed to marketing and design regulations proposed by the Clinton administration.
After the restructuring, Mark Smith, the president of the manufacturing services division at American Outdoor Brands, will take up the role of chief executive at Smith & Wesson Brands.
James Debney, the president and chief executive of the parent company, will lead the outdoor pursuits business.