Smith & Wesson's Q1 Handgun Shipments Surge

Gate's recent analysis of Smith & Wesson Brands' fiscal first-quarter 2026 results, released on Sept. 4, 2025, reveals a company exceeding internal expectations despite a slight year-over-year revenue decline. The firearms manufacturer reported net sales of $85.1 million and an adjusted EBITDA of $8 million. Notably, shipments in core handgun categories experienced a remarkable increase of over 35% compared to the previous year, significantly outpacing industry retail demand. However, average selling prices (ASP) saw a 6.1% sequential decrease amidst a highly competitive market environment.

The financial report also unveiled a significant strategic initiative with the revival of the Smith & Wesson Academy, along with detailed projections for revenue, gross margin, and operating expenses for the fiscal second quarter concluding on Oct. 31, 2025.

Handgun Shipments Outshine Retail Demand

Despite a 2.4% decline in industry-wide retail demand, as indicated by adjusted National Instant Criminal Background Check System (NICS) checks, Smith & Wesson's handgun shipments to the sporting goods sector surged by more than 35% year-over-year. This impressive performance stands in contrast to the company's long gun segment, which experienced a 28.1% year-over-year decrease, primarily attributed to Smith & Wesson's limited presence in the underperforming shotgun and bolt-action rifle markets. The company's management highlighted the exceptional performance of their Bodyguard, Shield, and M&P product lines, underscoring the resilience of their targeted portfolio.

Smith & Wesson's President and CEO, Mark Peter Smith, emphasized the company's strong performance in the handgun segment, stating, "Our first-quarter handgun results were outstanding. We saw our shipments to the sporting goods channel increase by over 35% compared to last year, while NICS checks decreased by 2.4%. This success was driven by strong performance across several product lines, including Bodyguard, Shield, and M&P, demonstrating the power of the Smith & Wesson brand and the unwavering support of our passionate and loyal customer base."

This performance showcases Smith & Wesson's ability to gain market share through its diverse portfolio, new product introductions, and brand loyalty, even in the face of declining overall firearm retail demand.

Innovation-Driven Sales Mix Accelerates

New products constituted 37.3% of total sales, highlighting the ongoing success of the company's innovation strategy. The recent introduction of the Shield X pistol in late July received positive market feedback, with a robust pipeline of upcoming new products planned for both handguns and lever-action rifles.

Mark Peter Smith emphasized the importance of innovation, stating, "Innovation remains a cornerstone of our strategy, with new products accounting for 37.3% of sales in the first quarter. The initial reception to our Shield X, introduced in late July, has been very positive. As I've consistently mentioned, our award-winning engineering and design teams consistently deliver products that resonate with consumers. With a strong pipeline of new products on the horizon, we will continue to invest in innovation to keep our lineup fresh and maintain our leadership position in the industry."

An increased mix of new products supports pricing power and competitive differentiation, potentially mitigating downside risk from cyclical retail slowdowns.

Smith & Wesson Academy Revived as Customer Acquisition Strategy

The newly relaunched Smith & Wesson Academy, situated at the company's modern Tennessee facility, spans nearly 30 acres and features purpose-built ranges and expert-led coursework for law enforcement, military, and civilian customers. The company has appointed a distinguished former Navy SEAL and firearms instructor to lead this initiative, which will provide free access to institutional clients and offer civilian courses to drive brand engagement and promote responsible firearms ownership.

Mark Peter Smith expressed enthusiasm about the Academy's relaunch, stating, "I'm thrilled to announce that the Smith & Wesson Academy is back and better than ever. Our state-of-the-art facility encompasses nearly 30 acres of purpose-built ranges, training facilities, and advanced equipment. The academy will be led by Mark Cociolo, a retired US Navy SEAL veteran and firearms training expert with 25 years of service, including time with the prestigious SEAL Team Six. Our goal is to provide an additional advantage to current and prospective law enforcement, federal agency, and military customers, who will have free access to Mark and his team's expertise and our facilities. Additionally, in line with our commitment to promote responsible firearms ownership, we aim to enhance the firearms proficiency of civilian consumers through a variety of custom-designed courses suitable for all skill levels."

This investment in customer education and institutional support is positioned to strengthen market share in government and commercial segments, potentially improving long-term customer retention and deepening brand loyalty through direct engagement.

Future Outlook

Management anticipates fiscal second-quarter 2026 sales to increase significantly compared to the fiscal first quarter but remain 3% to 5% below the fiscal second quarter of 2025. Gross margin is forecasted to remain steady sequentially at approximately 25.9%, impacted by lower absorption and steel tariffs. Operating expenses for the fiscal second quarter are expected to rise by roughly 20% sequentially, driven by factors such as profit sharing, costs associated with the Smith & Wesson Academy launch, promotions, sales activities, and distribution. Capital expenditures for fiscal 2026 are projected to be between $25 million and $30 million, and the company has reaffirmed its quarterly dividend of 13¢ per share.