Yes, today is Cinco de Mayo.
But honestly, do you really know what Cinco de Mayo commemorates?
If you’re an abject failure at history (like me), you’re lost. And it’s not a contrived excuse for a party, especially if you happen to have a Mexican heritage. Today’s a day celebration of the 1862 victory by Mexico over the French Empire at the battle of Puebla. It’s the battle that raised General Ignacio Zaragosa to hero status as his smaller, poorly equipped army win the first battle of Puebla.
Yes, there was a second battle of Puebla. Mexico lost. Don’t bog down on details.
From the celebration of a winning battle in a tough war, Cinco de Mayo has evolved into a celebration of Mexican-American culture.
Celebrations began in California in the last century and have since spread across North America.
They’ve spread, at least in part, because of an increased interest in Mexican spirits. No not the Dia de los Muertos spirits, that’s November 1/2. The spirits of Mexican beer, wine, and tequila. Liquor companies started promoting the day in the 1980s and it caught on -in a major way. In 2013, according to Nielsen, Cinco de Mayo generated more than $600 million in beer sales, more than the Super Bowl or St. Patrick’s Day.
Now that’s celebrating.
Here’s a little watercolor knowledge: despite more than 150 places in the United States holding formal celebrations, the day is virtually ignored in Mexico. If, however, you find yourself reading this from the Cayman Islands, near Montego Bay, Jamaica, or the City of Brisbane, Queensland, Australia, there are celebrations nearby.
Same in Cape Town, South Africa; Lagos, Nigeria; Paris, and Osaka and Tokyo, Japan.
Now that our history lesson’s out of the way…on to economics.
Ruger announced their first quarter 2022 earnings after the stock market closed yesterday. The numbers seem to confirm a couple of things: 1) Gun sales are down compared to 2021, but, 2) the drop isn’t anything like the precipitous falls experienced when one of those infamous industry bubbles burst.
Instead, the market seems to be stabilizing- at very solid levels.
Inventory levels of goods - with the possible exception of ammunition- seem to be stabilizing.
Ammo, however, remains problematic, especially for those lower-demand calibers. They just aren’t being allocated time on loading machines as ammo makers continue to struggle to meet demand for popular calibers.
Ruger’s numbers weren’t anything most CEOs would find upsetting. First quarter sales were still $166.6 million. Down from 2021’s $184.4 million first quarter, but still good enough to earn shareholders a dividend of $1.70 per share.
Plenty of CEOs in other industries would sacrifice their senior leadership teams for those kinds of returns.
In his remarks, Ruger CEO Chris Killoy noted that new products are still going strong with consumers. New products including the PC Charger, MAX-9 pistol, and the Marlin 1895 Lever Action rifle.
Regarding the Marlin, Killoy (a lever gun fan) noted that even with brisk sales, Ruger has “just scratched the surface” of demand for the Marlin rifles.
Today, I’m flying to Phoenix, Arizona for the first of SIG SAUER’s Freedom Days consumer events. It will be interesting to see how consumers react to SIG’s new products post-the Army awarding them the future weapon contract. Also looking forward to spending some quality time at Arizona’s awesome Ben Avery Shooting Center. Not looking forward to 102 degree temperatures, but it’s gotta be summer somewhere.
Looking to spend some time with a couple of other manufacturers and the companies cooperating with SIG on this first-out-of-the-gate, consumer-focused event.
As always, we’ll keep you posted.
— Jim Shepherd