On Monday, a major American firearms dealer which staked its future on the election of Hillary Clinton in 2016 declared bankruptcy and its intention to liquidate.
United Sporting Companies Chief Executive Officer Bradley Johnson admitted in a court filing that USC, which was founded in 1933 as Ellett Brothers before merging with Jerry’s Sports, Inc. in 2009 and formally changing its name to United Sporting Companies, Inc. in 2010, hiked its inventory before the election of Donald Trump. They figured that once a Democrat was elected, gun sales would soar because of the Democrats’ typical hostility for guns and avowed determination to restrict gun sales.
The court filing stated:
In the lead up to the 2016 presidential election, the Debtors anticipated an uptick in firearms sales historically attributable to the election of a Democratic presidential nominee. The Debtors increased their inventory to account for anticipated sales increases. In the aftermath of the unexpected Republican victory, the Debtors realized lower than expected sales figures for the 2017 and 2018 fiscal years, with higher than expected carrying costs due to the Debtors’ increased inventory. These factors contributed to the Debtors tightening liquidity and an industry-wide glut of inventory.
An over-supply of firearms following the 2016 presidential election and the financial distress of certain market participants led to industry-wide sales discounts. The Debtors were forced to lower prices to remain competitive and maintain sales figures, which further eroded the Debtors’ slim margins and contributed to the Debtors’ tightening liquidity.
The Daily Mail reported of Johnson, “ … he said the Republican Trump’s unexpected win over Democrat Hillary Clinton was a factor in net sales falling to $557 million in 2018 from an average $885.3 million from 2012 to 2016, with an accompanying glut of inventory.”
Other reasons cited by the company for its bankruptcy filing included Bass Pro Shops’ merger with Cabela’s, Gander Mountain’s bankruptcy, and Dick’s Sporting Goods’ losses, all of which meant that USC had a harder time because vendors and manufacturers were less willing to extend credit to them.
The company stated it had between $100 million and $500 million of liabilities. USC’s stock included Remington, Ruger, Browning, Winchester, Smith & Wesson, Glock, Bushnell, Sig Sauer, Springfield Armory, Hornaday, Henry, Magpul, Armscor, MotorGuide, Minn Kota, Lowrance, Federal, CCI, Taurus, and Leupold. USC has 20,000 independent retailers covering all 50 states.
According to the Post and Courier:
The majority owner is Wellspring Capital Management, a New York private equity firm that’s bought the business in 2008 and is now facing a lawsuit over its handling of tens of millions of dollars in borrowed funds. Prospect Capital Corp. is alleging that the $160 million in financing to provided Ellett Brothers in 2012 and 2013 was never invested in the business, according to the complaint it filed May 23 in Lexington County.
At the end of March, The Daily Wire reported that according to Bloomberg, Dick’s Sporting Goods, the country’s largest sports retailer, lost $150 million in 2018 after the company decided to stop selling assault-style rifles and high-capacity magazines.