Has Smith & Wesson Holding (NASDAQ: SWHC) lost its mind? The storied gunmaker wants shareholders at next month’s annual meeting to approve a company name change to American Outdoor Brands. This would be a big mistake.
The current Smith & Wesson traces its lineage back to 1852, when Horace Smith and Daniel Wesson founded the Smith & Wesson Company in Norwich, Conn. Together they developed the Volcanic rifle and Volcanic cartridges, and then three years later changed the business’ name to Volcanic Repeating Arms. Later, it was bought by Oliver Winchester, another storied firearms manufacturer, who had created the Winchester repeating rifle.
It was the expiration of the patent on Samuel Colt’s revolver that saw Smith and Wesson get back together and form a new Smith & Wesson company that went on to develop the Model 1 revolver, which became one of the most popular firearms at the time.
While the Smith & Wesson company of today is still very much involved in the manufacture of firearms and handguns — they make up more than 90% of the company’s total net sales and represent some 40% of its gross profits — management has sought to diversify its operations into sporting goods and outdoor gear to protect itself against the vagaries of the gun business.
Two years ago, it bought Battenfeld Technologies for $130 million, a move that gave it entry into the outdoors market and into sporting goods, and Smith & Wesson has made a number of acquisitions since to build out the platform. Earlier this year, it bought knife maker Taylor Brands, a longtime supplier of the company’s branded knives, and followed that up with laser sight manufacturer Crimson Trace. Just last week, it announced yet another acquisition in the space — Ultimate Survival Technologies, which is a niche manufacturer of campaign and extreme outdoors gear.
Smith & Wesson has been clear it wants to further build its outdoors and sporting goods unit to take advantage of the $60 billion market opportunity, and changing the company’s name to reflect that is just another part of that effort. But obliterating the well-known and respected Smith & Wesson name and replacing it with something that drips of corporate blandness like “American Outdoor Brands” is a major mistake, as it eliminates the identity and heart of this storied gunmaker.
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Rich Duprey has no position in any stocks mentioned.
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