sad indeed.
Remington Arms declares bankruptcy despite surging gun demand.
https://www.foxbusiness.com/lifestyle/remington-arms-bankruptcy-surging-gun-demand?cmpid=FNC_app
Just a little hard to understand. Must be something wrong with the business model....
The lawsuit isn't even happening yet, and insurance will help buffer that when it does.
There are almost certainly management and business model issues. Remington is considered rather stodgy, and not on the cutting edge. But the lawsuit hangs over that, as they are shying away from the kinds of promotion that other firms are doing because that is what the lawsuit is focused on.
Regardless, their big problem is managing debt. They've been trying to expand by acquiring, and doing that with debt, but they haven't figured out how to increase sales to cover the debt. So they are sensitive to market swings. That's where their stodginess hurts them. Their acquisition of Bushmaster is a classic example. Bushmaster was a huge brand in the early 2000s, because Colt had mostly dropped out of the civilian AR-15 marketplace. So Remington bought Bushmaster, then moved manufacturing to New York, mostly laying everyone off at the original manufacturing facility. It was smart business, right? Not really. They misread how firearms owners and enthusiasts think. There were some quality control hiccups, and meanwhile the AR market saturated with makers aggressively moving sexier designs, and there was a huge influx of manufacturers moving custom parts, and then the founder of Bushmaster turned around after his non-compete clause expired and restarted manufacture at the old factory with his old crew under the name Windham. The Bushmaster brand is now considered third-rate to brands like Noveske, Sig, Aero Precision, and others. And Colt and HK still have a lock on the military contracts.
And none of this is surprising because private equity firms mostly understand money, not marketing.
