Smith & Wesson's Q3 2025: Contradictions in ASPs, Innovation Strategy, and Inventory Dynamics

These are the key contradictions discussed in Smith & Wesson's latest 2025Q3 earnings call, specifically including: ASP expectations for handguns and long guns, and strategic focus on new product innovation:



Revenue Performance:
- Smith & Wesson reported net sales of $115.9 million for Q3, which was $21.6 million or 15.7% below the prior-year comparable quarter.
- The decline in revenue was primarily due to lower demand for core products, particularly in the handgun category, alongside macroeconomic pressures on consumer discretionary spending and persistent inflation.

Market Share and Demand Trends:
- Adjusted NICS was down 4.5%, while Smith & Wesson's shipments declined by 7.7% in Q3.
- Despite the overall market slowdown, the company gained share in handguns, driven by strong demand for new products like the Bodyguard 2.0. Long gun sales were affected by the outperformance of new products in the previous year and a limited product portfolio in the hunting category.

ASP Trends and New Product Success:
- Average selling prices (ASPs) moderated to a 3.1% decline, with handgun ASPs decreasing by 7.8% and long gun ASPs increasing by 17.2%.
- The increase in long gun ASPs was attributed to the introduction of higher-priced lever-action rifles, while the decrease in handgun ASPs was due to the lower-priced Bodyguard 2.0 and promotions on revolver sales.

Profitability and Financial Outlook:
- Despite lower revenue, Smith & Wesson maintained profitability by leveraging its flexible manufacturing model and reducing operating expenses.
- The company expects revenue to decline by 5% to 10% for fiscal 2025, with the fourth quarter likely experiencing a decline closer to 2% to 5%, and margins potentially impacted by lower production levels.