Coronavirus fuels ball sales boom for Vista Outdoor and Olin

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Ammunition sales increased for Vista Outdoor and Olin Corp. during the Covid-19 pandemic, as fears of coronavirus and civil unrest prompt Americans to buy guns and bullets.

Vista Outdoor CEO Chris Metz said on a earnings call on Thursday that strong ammunition sales in the last quarter were due to a 40% increase in the number of gun buyers during the pandemic, including women and people of color, based on the most recent NSSF gun industry group. He said demand for ammunition is so high, and fueled in part by storage, that some new buyers have complained that they cannot find enough ammunition in stock.

Vista Outdoor’s share price jumped 18% on the news, although Olin’s share price fell 6%, with weak performance in chemical sales overshadowing its strength in ammunition. .

Based in Anoka, Minn. Vista Exterior, which makes dozens of outdoor and shooting products, including CamelBak hydration packs used by hikers and soldiers, Bell bicycle helmets, Bushnell rifle scope and several ammunition brands, reported an 8% increase in last quarter sales on Thursday from a year ago, “due to persistent consumer trends in favor of personal protection” as well as ” resurgence of outdoor leisure activities ”. Brett Andress, analyst for KeyBanc Capital Markets, said in a note to investors that Vista Outdoor’s results exceeded “increased expectations” driven by 17% organic sales growth in the shooting sports category.

Federal background check for firearm purchases totaled 3.64 million in July, the third largest monthly tally since the Federal Bureau of Investigation began tracking background checks in 1998. Gun analysts and retailers attribute the boon to buyers arming themselves due to fears of civil unrest during the pandemic. The FBI reports nationwide counts for background checks each month. These controls are not the same as gun sales, but they serve as the closest national proxy.

Metz said ammunition sales are often lower than gun sales by months, implying continued strength in the ammunition category going forward. He said sales were also boosted by purchases of unarmed outdoor products like bikes and camping gear as people are returning to nature during the pandemic.

Bale sales were the bright spot in an otherwise dismal quarterly performance for Olin Corp. as its chemical sales slowed along with a flattened economy.

The 128-year-old Clayton, Missouri-based chemicals company said Thursday that Winchester ammunition sales were up 17% in the quarter from a year ago. Olin, which also manufactures chlorine, vinyl and epoxy, attributed the increase mainly to higher sales of commercial ammunition, and CEO John Fischer said he expects demand to remain strong. In the coming months.

“We expect this high level of demand to continue at least until the end of the year,” Fischer said on a conference call Thursday.

Jim Chartier, retail analyst for Monness, Crespi & Hardt, said this was part of a larger upward trend in gun and ammunition sales during the pandemic.

“Industry data continues to highlight unprecedented demand for ammunition and firearms,” ​​Chartier said, in a note to investors, referring to the record increase in federal background checks for fire arms.

“Data from Google Trends shows a similar acceleration for ammunition given concerns about COVID, civil unrest and the upcoming elections,” he wrote, noting that “this year’s surge was sparked by early buyers “. He told Forbes the company attributed this to an increase in hunting licenses, in addition to fears of a pandemic.

On Wednesday after the market closed, Olin reported a net loss of $ 120 million for the quarter, a six-fold increase from its net loss of $ 20 million a year ago. Sales of chemicals that are the backbone of its business, including alkali chlorine products, vinyl and epoxy, fell 27% year-on-year, weighing on the overall performance of the company. ‘business.

Frank Mitsch, principal analyst at Fermium Research, said in a note to investors that the “big dud” was expected due to the pandemic. But he also said he “wouldn’t be surprised to see more rise” in Winchester sales due to “the purchase of coronavirus panic ammunition,” especially given FBI data on audits. history.

July was a particularly difficult month for many Americans, with over 50 million workers having filed for unemployment and a growing number of deaths of more than 150,000 people of Covid-19. The Ministry of Commerce reported a 33% epic dive of gross domestic product in the second quarter. Almost 1.2 million workers filed for unemployment in the week ending Aug. 1, according to federal data on Thursday, with 16.1 million workers filing continuing claims.

Sales of Olin and Vista Outdoor ammunition are not completely dependent on the civilian market. Both are strengthening their role as military suppliers.

Olin foresees a bright future as a military supplier. Winchester is in a contract to operate the Lake City Army Ammunition Plant in Independence, Missouri, which produces ammunition for the Army. Winchester predicts that the munitions plant will increase annual revenues from $ 450 million to $ 550 million.

Vista Outdoor recently announced two ammunition contracts with the military, including one Order of $ 13.8 million for NATO 5.56 MK311 frangible ammunition which shatters into fragments on impact, and another contract to provide its Federal ammunition NATO brand 7.62 x 51 mm ammunition, which is used in sniper rifles and M240 machine guns.


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