Smith & Wesson Brands (SWBI) share prices suffered a significant reduction of nearly 20% on Friday. This nosedive occurred following a warning issued by the company stating that inflation was causing a decrease in firearm sales, necessitating a cut in its guidance.
During the second-quarter of fiscal 2025, the gunmaker reported an adjusted net income of $4.8 million, translating to $0.11 per share. This was a decrease from the previous $6.5 million, or $0.14 per share, recorded a year prior. Notwithstanding, revenue experienced a 3.8% increase on a year-over-year basis, amounting to $129.7 million.
Mark Smith, the Chief Executive Officer (CEO) noted that, the results were beneath the company's expectations. He highlighted that consumer spending caution and inflation were the principal factors affecting the results. "The consumer cautiousness with discretionary spend that we observed in recent quarters was more pronounced during the second quarter than we anticipated," Smith stated.
Adding to this, Chief Financial Officer (CFO) Deana McPherson expressed that due to "softer demand trends," Smith & Wesson was revising its expectations downwards for the latter half of the year. For the third quarter, the company anticipates "our top line to be approximately 10-15% lower than fiscal 2024."
The reduced expectations pushed Smith & Wesson shares into a downward spiral this year, with prices hitting their lowest since the beginning of 2023.