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Gun Seller That Bet Big on Hillary Clinton Getting Elected Goes Bankrupt

Discussion in 'General Discussion' started by Reptile, Jun 10, 2019.

  1. Reptile

    Reptile NES Member

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    Firearms distributor United Sporting Cos. loaded up on guns ahead of the 2016 U.S. presidential election, expecting a surge in sales that would likely follow the election of a Democrat. Then Hillary Clinton lost.

    The miscalculation sparked a multi-year decline that has reached the courthouse steps in Delaware, where United filed Chapter 11 bankruptcyon Monday.

    When Republican Donald Trump emerged victorious in the election, United posted lower-than-expected sales as well as high inventory carrying costs, Chief Executive Officer Bradley P. Johnson said in a court declaration.

    United, which sells an array of outdoor equipment, is seeking protection from creditors while it sorts out more than $270 million of debt secured by liens on its assets, court papers show. The company, whose subsidiaries include Ellett Brothers LLC and Jerry’s Sports Inc., reported Ebitda of $4 million on net sales of $557 million last year -- well below its average of $885.3 million in sales from 2012 to 2016.

    Bloomberg - Are you a robot?
     
  2. jpm

    jpm NES Member

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    Loading up to gouge everyone after the election, no sympathy!
     
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  3. Dadstoys

    Dadstoys NES Member

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  4. xtry51

    xtry51

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    This seems to have very little to do with over stocking and much more to do with poor management after making a forecasting error coupled with overextending a business' credit. After Trump won they simply should have liquidated the inventory quickly at minimum margins to payoff the loans and chalked it up to the bad forecast.

    It's not like there isn't a market for guns at abnormally low margins. There are always buyers. If you can't find a buyer its not becuase you "overstocked your warehouse". Its becuase your price is too high. This is not rocket science.
     
  5. fshalor

    fshalor NES Member

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    No idea whether they were going to gouge or not.

    They may have tried... Or not

    But their business sense makes it clear that they would not have successfully been positioned to gouge seriously.

    I'm gonna go with not guilty. Maybe they blew their load and loaded up to try and help out.
     
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  6. greencobra

    greencobra NES Member

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    what! no boycott? damn shame.
     
  7. drgrant

    drgrant Moderator NES Member

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    All mids (and even some dealers) gouge/rape/push/shit test market, during perceived crisis events, it's pretty much the name of the game. That's how they make real money in the industry, hoarding product by fronting cash to buy a bunch up front in bulk and adding little or no value on the back end.... [laugh] The only value they provide to the industry is logistics and cash flow, so the manufacturers don't have to sell guns in small amounts at a time.... and so that individual dealers don't have to buy tons of guns at a time, either. They're just a "marketplace buffer".

    This stuff about "not gouging, to be nice" is a fairytale. Particularly not WRT mids. [laugh]

    -Mike
     
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  8. TheArmsDealer

    TheArmsDealer Dealer NES Member

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    They were/are a pretty fairly priced distributor.. some others are insanely expensive in comparison.
     
  9. FiremanBob

    FiremanBob NES Member

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    Logistics and cash flow, and being a buffer for sales channel inventory, are legitimate economic functions in an industry and the wholesalers play an important role, especially in industries like firearms where the retail margins are too thin to support huge inventories. I have dealt with Jerry's and Ellett Bros and they provided decent service, though it depended on the quality of the individual sales rep.
     
  10. Blackmore

    Blackmore NES Member

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    And if - God forbid - Hillary had won and they hadn't loaded up on inventory, their FFL customers would have been screaming at them for product. There would have been shortages which would have let the gougers raise their prices even more. And, BTW, it would have been the retail FFLs doing nearly all the gouging.
     
  11. Jason Flare

    Jason Flare NES Member

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    It’s not gouging if you don’t have to pay it.
     
  12. whacko

    whacko NES Member

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    If Hillary had won.....it would not be gouging. Demand would have been greater than supply driving up the price that a buyer and seller mutually agree on at point of sale. Economics 101
     
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  13. whacko

    whacko NES Member

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    Truth. Demand would have been greater than supply if the Hillary had won. I cannot stand the gouging claims that come out here on nes. Free market.....a buyer and seller agree on a MUTUAL compensation for an item. Way too many on here throw the term gouging around when it comes to ammo and fire arms simply because they are in the "unique" position of wanting something that another has for sale and the asking price is more that they feel is "fair"....so feelings get hurt and its considered gouging.


    True gouging for an example......guy walks into a gas station with an empty can cuz his car is 3 miles down the road and he ran out. Gas station owner ups the price from $3 a gallon to $8 a gallon for that sale just because he knows the guy needs it right then and there and will have to pay him. That's gouging.

    Seems to me the ones here that cry gouging when the ammo and fire arms supply is dry after an election or other "event" are the cry babies that got caught with their pants down and can't deal with someone else being in a better position in the capitalist free market :)
     
    Last edited: Jun 11, 2019
  14. whacko

    whacko NES Member

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    You really don't understand economics do you?

    It's not gouging its supply and demand. When you go to the store and see a price on a gun you think is high.....you have the ability and the choice to check prices elsewhere for one you feel is fair. That's not gouging in that situation.
     
  15. Dennis in MA

    Dennis in MA NES Member

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    Yeah. Buying something at X to sell it at Y is gouging. Bastards. There ottah be a lawr. No profits allowed. No ability to take a risk of loading up on Product X in anticipation of the value of Product X going up in the future.

    Ban the stock market. Ban personal holdings in precious metals. The state now owns all land.

    Damn. Did Bernie Sanders start posting here. :(


    "Oh, but we don't want a law. We just want them to burn in Hell."

    Ah. OK. Again, how do we stop this?? I bought a bunch of guns back in the land before time. Right after Newtown, I sold them for a pile. Gouging??? Actually I sold them for cheaper than I could have. When is it gouging? Maybe we need a law that tells us that. How about a Gouging Committee?

    Forget that.

    How about this???

    The human animal is unique in the animal kingdom. If you had a chance to make $10 but someone you didn't like got $15, you'd more often than not NOT take that deal.

    We'd rather see people FAIL than succeed. Bleep them. We despise those who succeed. We want them to fail and sit where we are.

    You cannot get ahead by holding others back.



    OK, I'm done. Gouging claims get my blood pumping. It's such bullspit. "I don't like it." Then YOU buy the guns before Hillary is elected.
     
  16. whacko

    whacko NES Member

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    This^

    It was a bad forecast. But here we go again with the gouging claims from the nes "think tank". I manage warehouses for a living. We work with forecasts. Manufacturers have to plan production schedules based on their estimate of future sales in a "make to stock" industry. Wholesalers and public warehouses are the middle nodes in the supply chain that assist in the "flex" up or down in future forecasting and therefore physical holding space.

    All this company did was make a forecast of very strong demand in early 2017........and planned accordingly. The sales were soft........they should have liquidated......but that's a other topic. Nothing in this story speaks "gouging" to me. It was a bad business decision that cost them. That's all.
     
    Last edited: Jun 11, 2019
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  17. whacko

    whacko NES Member

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    So eloquently said lol

    I was going to rant about the guys crying "gouging" and how they are ignorant, unpatriotic, and borderline communists for their hatred of a company being in the position to buy and sell at a profit and ultimately have what they don't.......but at the time I decided I'd bite my tongue. But then you posted this so cats out of the bag now.
     
    Last edited: Jun 11, 2019
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  18. Glockster30

    Glockster30 NES Member

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    Overstocking still played a key role in the company's need to file for bankruptcy. If there are tons of inventory that the company can't move, it's screwed as it costs them money to have inventory sitting on the shelf. If they tried to liquidate their inventory, they'd be lucky to get 10-15% back on what they paid for it because after Trump won, no other companies are going to pay anywhere close to the true value of the product; otherwise, they'd be filing for bankruptcy too. The company averaged sales of $885M in the years prior to 2016 and figured that if they received the same or better sales after 2016 with Clinton as president, they were golden.

    If they just met their average sales of $885M, that would have left them with a debt to income ratio (DTI) of 30% ($270M/$886M), which is healthy when the rule of thumb is to have a maximum DTI ratio of 36%. Instead, with sales falling to $557M for the year, the DTI rose to 48% (270M/557M), which obviously was not sustainable for that company in a failing market. This also assumes that they were not carrying any previous debt, as well, which would make their DTI ratio even higher than 48%.

    In short, they bet the farm that Clinton would win and they lost.
     
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  19. whacko

    whacko NES Member

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    It was a terrible business decision and that's all.
     
  20. new guy

    new guy NES Member

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    This is a news story right now for no other reason than the media wants to point and laugh at a gun company's failure because they read the political tea leaves wrong. Meh.

    Is the gun business soft right now? Without looking at stock prices I want to say that it feels like it probably is, but not because Hillary lost, more likely because the average gun consumer is tapped out, with no room left in the safe.
     
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  21. jkelly1229

    jkelly1229

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    So whos the maker and when can we expect the flash sale lol.

    But your right. Look at canik. Their guns are coming down because they need to sell more to make a profit. Simple cause and effect
     
  22. whacko

    whacko NES Member

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    If their price is coming down it's because they have more supply than demand for their pistols. If they could sell them at current asking price they would not lower the price to "make more profit".
     
  23. jkelly1229

    jkelly1229

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    I know i was saying that is an example of adjusting to the market
     
  24. Dennis in MA

    Dennis in MA NES Member

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    I want to be fair here: I might not LIKE someone charging me what I believe is too much. But I don't wish painful-ass-cancer on them.


    There is this guy that works in my building somewhere. Every day when I come in, he's in the visitor lot in a specific spot. It's the spot NEXT TO the one you drive thru to get to the back parking (tenant) lot.

    Every day he's parked in the visitor area. For well over a year.

    Most days he's gone by noon. And TBH, we don't have a visitor parking problem. Not since the bank went bye-bye.

    It bugs me on a personal level. That and he got out of his car RIGHT when I was going to drive by and almost took out his driver's-side-door this AM.

    Am I going to complain to Mgmt about it??

    No.

    Why?? Because he really isn't hurting anyone. Definitely not me! If there was a traffic problem in the visitor lot, I'd say something. But basically this just bugs me on a "well that's not how I would roll" basis. Nothing more.

    Same with "gougers." 999,999 out of a million, the gouging complainer isn't even economicaly affected.

    We, as humans, are built to NOT stay in our own lanes. It's hard to stay in your own lane. So I get it. While I'm piling on to the gouger complainers, my hope is more they realize the truth of this and grow, not feel criticized and such.
     
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  25. jpm

    jpm NES Member

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    It would be simple supply and demand IF the supplier wasn't creating the excessive demand by artificially creating a shortage by scooping up everything in sight. In this case he was actively way over-buying everything in anticipation of a buying frenzy that would create a shortage exacerbated by his over-buying.

    p.s. there is nothing unpatriotic about criticizing this company. Capitalism and patriotism are mutually exclusive things and there is nothing unpatriotic about criticizing any company or capitalist.
     
  26. whacko

    whacko NES Member

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    Sure you can criticize them for being stupid and putting themselves out of business through a forecast based on speculation that didn't pan out. I just don't see that business plan as gouging. They created a hefty stock based on a forecast. Nothing more nothing less. Did the market see any drop in supply in late 2016 early 2017 because of this company hording? I don't recall anyone bitchin that a single supplier had ALL or most of the stock. It's a "stretch" to claim they had enough power to buy enough stock to artificially inflate prices in the whole market. Even if they did what you claim.....that's not gouging its called cornering a market. The hunt brothers did this with silver in the late 1970s.

    Gouging
    term that refers to the practice of raising the price of goods, services, or commodities, to an unreasonable or unfair level


    Cornering
    cornering the market consists of obtaining sufficient control of a particular stock, commodity, or other asset in an attempt to manipulate the market price.



    In my 2 econ classes I've taken its generally understood that

    1. if the buyer has other options......it is not gouging.
    2. Gouging can occur in a regional market when multiple sellers agree to artificially raise prices due to some demand driven event in that region.

    Were talking about one seller here so back to option 1.......buyers would have had options so not gouging.
     
    Last edited: Jun 11, 2019
  27. drgrant

    drgrant Moderator NES Member

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    They gouge (or more correctly, profiteer) and collude when conditions suit them, but there is literally no way to stop it, so it's not worth caring about, but it's still valuable to know when you're getting soaked or not.

    I just think mids are largely oxygen thieves that add no value. Yet I support their right to exist because free markets are always better. There's a flip side to this stuff too, like -right now-. Prices are "lacking fluff" right now on most guns and ammo... it's a buyers market, and the mids are getting hosed. If the mids didn't exist the prices probably would be more stable, but certainly would not be as low as they are now!

    -Mike
     
    Last edited: Jun 11, 2019
  28. drgrant

    drgrant Moderator NES Member

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    Just because it's "mutual" doesn't mean the buyer isn't getting taken for a ride or that there isn't f***ery afoot in the marketplace. Not to mention that in the cases with these mids, often times both the gun shop and the guy buying the gun have already been ripped off, because they both bought into the lie the mid told them that they were "running out of guns" etc.

    The only reason one might not want to call it gouging is because this is often not some necessity like toilet paper or something. And even during the rapiest periods in the industry, you could
    still buy (insert some suitable gun for self defense here) and not pay much extra for it. So there's no element of coercion in the sense that the consumer is "required to overpay or theyre not getting
    a gun" so I would agree it's not gouging at that level.

    I have a nice bridge to sell you guys if you think that mids don't manipulate the market and get lots of extra profit during scares. Hell I don't blame them, I would probably do the same thing, particularly given the buyers are often market-unaware nippleheads and most people are suckers and fall for illusion of scarcity, every time, and the mids love it because they don't even have to collude openly to do it, too... some window passes, and magically in 24 hours the dist price of an AR-15 magically set at 10% below the hard threshold of pain (say like, set up so it results in a retail of $1600) and this ain't because "they're running out of rifles" but rather because they figured out that joe nipplehead is now the customer that's coming in tomorrow... and the increases are big enough that even if overall sales drop by (insert some double digit value here) the rape on the base price of the gun will be more than enough to offset any reduction in # of rifles sold.

    -Mike
     
  29. whacko

    whacko NES Member

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    I have to disagree. If there is a mutual agreement between buyer and seller.....then the buyer is not getting taken for a ride. The buyer willingly reached into his wallet and gave dead presidents or handed the seller his credit card or debit card. The buyer could have negotiated more......or walked away to look for a better price elsewhere......

    This system we are talking about.....free market capitalism.... results in lower prices for consumers over the long run. We may not like pricing at certain times in certain markets......but we are not getting screwed.

    Know how many guns I bought during Obamascare 2 and sandy hook full retard? None. Prices were too high due to high demand in my opinion. No biggie. How much ammo did I buy.....a fair amount during Obamascare 2 and I paid for not being prepared. But I don't feel I got screwed. I learned my lesson though.....and post sandy hook full retard I dipped into my Obamascare 2 learning curve supplies and for the most part held out until demand dropped and prices came back down to what I was willing to pay. Bottom line though......I don't blame the retailers or wholesalers one bit for price hikes during full retard gun buying sprees. Why would you sell a gun at lower than price "a" when you know damn right well in a day or two someone is going to walk in and buy that gun for price "a". Its called a business.....not a charity.
     
    Last edited: Jun 11, 2019
  30. drgrant

    drgrant Moderator NES Member

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    Lol depends on what your definition of getting taken for a ride is. Doesn't mean it's illegal, hell, slippery as f*** car salesmen do it all the time every day. Selling products based on
    lies or deceit is legal, but still pretty f***ey.

    On the other hand, one could always rely on the Costanza rule...




    That said, I agree with you in the sense that nobodys getting a gun held to their head, and that ultimately, it's not coercive- the buyer can walk away whenever they
    want.

    -Mike
     

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