Gander Mountain reports good Q3

In 2007 in Q3, Gander Mountain posted a net loss of $5.1 million; which obviously is the kind of thing you don’t want to see from a shooting/hunting store.  However, in Q3 of 2008, Gander’s financial statements are reporting a net profit of $0.77 million, which is a swing of about about 6 million dollars, give or take a few hundred grand.

Now, I know I post stuff about gun company’s financials every now and then, and it’s kind of dry – but there is a method to my madness. You see, whether or not you shop at Gander Mountain, their profitability has a direct affect on us. If Gander Mtn does well, it’s a sign that the shooting and hunting markets are doing well; a statement which is reinforced by the screaming rise in NICS checks during the month of November. Now, if Gander Mountain is doing well, it means that people are buying ammo, guns, outdoor clothes, and all the other awesome little things that we need people to buy to support our sport.

Now, while a boost at Gander Mountain may not mean a boost for your local gun shop, the overall effect of a major retailer turning a profit in the third quarter speaks good things about the condition of our sport, from an economic standpoint. Of course, voting with your dollars also sends a strong political message, so if you’ve got ammo to buy, buy it up!

This entry crossposted at Gun Nuts Radio.


  1. In 2007 in Q3, Gander Mountain posted a net loss of $5.1 million; which obviously is the kind of thing you don’t want to see from a shooting/hunting store.

    Actually, I disagree. Given the terrible experience I had at Gander, I would rather see the resources they do eat up go to better sporting stores. It’s called creative destruction, and I think it’s generally a good thing if we get better service and products out of it.

    You can’t pick two numbers from one company and say they are a bellwether for the entire industry precisely because if people have bad experiences with one company when there are so many competing stores, they will chose the competitors. You’d have to look at the trends for all of those stores to see what it means for the retail industry. (Obviously, you can’t get all of that data because a couple of those competitors are privately held.) In fact, given the competitiveness of the online outlets even with the cost of shipping added on to an order, a true sign of the industry would have to take in all of those reports, too.

    Specifically to Gander, I also think that simply looking at those two numbers doesn’t begin to illustrate the issues they are having. The first sign for me about their real (and I’m not an industry number tracker) was back at the beginning of of 2006 with the debate there in Indiana about government subsidies for Cabela’s. Now, I agree in principle with what Gander was arguing, but I also recognized that it was not an argument made on principle, but true fear for profit. (That became easy to see when their little report mentioned legislation that didn’t actually exist.)

    Even for those who weren’t watching things back then, there have been more recent reports about falling stock prices, layoffs, cost cutting, and leadership shakeups that give us a clearer picture of Gander than one not crappy quarter.

    In essence, I think the two measures you’re using for a sign of “good” reports aren’t really accurate given the issues they’ve had in the same quarter with management, and I also think that if they are eating up resources while not serving sportsmen and gun owners that well, I’d rather see the capital go to better services. It will be healthier for us in the long run.

  2. I actually remember the debate about the Cabela’s subsidies; and I think that Gander’s complaints were legit from both points of view. A Cabelas would do incredible harm to Gander Mountain, so from both a legal and profit protection standpoint they were right to do what they did.

    Plus, your bad experience with Gander isn’t enough reason for me to wish harm on them – I could counter with the bad experiences I’ve had with Cabelas, but the fact that they’re still serving the shooting and hunting sports is reason enough for me to let bygones be bygones. I just don’t buy stuff from them.

  3. I’m talking about a strictly economic point-of-view here. That’s like saying that you don’t really like the 8-track player, but it plays music, so a retailer should keep it on the shelves next to the iPod. If there’s no more room in the market, let’s shuffle out the bad. (The bad being determined by a larger market, not by John Doe’s personal favorite store.)

    It’s fine that you’ve had better experiences at Gander, but I think all of the other evidence I linked to shows that they aren’t holding up in the industry very well and may, in fact, end up being a source “waste” in terms of economic resources.

    Specific to Gander, I just don’t think it’s accurate to say a quarter in which they turned less than a million dollars in profit is a good sign when the other quarter you highlight was a loss of more than 5 million, and they’re only getting those profits by cutting back in a big way. It’s certainly an improvement, but if you’re going to use the store as a bellwether, there is key information missing.

    The other thing I would look for in order to make the leap that their profitability is a sign of a rockin’ industry is what kinds of things they are selling to make that profit. In my post about Cabela’s on Sunday, I noted that the trends of removing more of the non-shotgun sports equipment out of stores and moving the tactical flashlights to camping aren’t good signs for those of us who are mostly gunnies. That essentially means more camping and hunting focused. There’s nothing wrong with serving those markets if they are more profitable, but it’s relevant to note before saying that both the shooting and hunting segments of the retail market are doing well.

  4. So because Gander is struggling financially (which they are) you’d rather they went under because they’re not serving the shooting sports? I mean, I’m not arguing that layoffs, CEOs resigning, or any of their tribulations are a good thing (because they’re obviously not).

    The statement I linked shows that while their retail segment had a 1.6% decrease in gross sales from Q3 ’07, because of their cost cutting they were able to make that into a 3.7 million dollars of profit from the retail segment, which means at the corporate operations level, they still have $3 million in bloat that’s costing them money (assuming no additional revenue streams, for funzies).

    Now, if they’re cutting corporate costs and trying to run a more streamlined organization, but still keeping stores open and servicing the shooting and hunting public, then good for them. Since I’m in our local Gander Mountain about once a week, I can tell you that at least here in Indiana, the local Gander hasn’t moved tactical flashlights to “camping”, and in fact is stocking more AR15 and other EBR style rifles than some of the dedicated “gunshops” in the area. Admittedly, that’s anecdotal data at best.

  5. If they free up resources that could be invested in other outdoor companies that would better serve our sport, yes, they should go under. I’m not talking about it in terms of feeling good about jobs lost, less selection initially, or even the convenience for some shoppers. I am talking about the broad economic picture.

    Let’s say that they close up some shops around there and then some of their gun counter workers decide to go open a new gun shop to serve that market. That experiment is a better use of resources than throwing their talent and other people’s money into a hole that the big box store may never come out of. You could even argue that if the customers all just go to other big box sporting stores that those competitors now have more profits that could be shared with non-profit gun and conservation groups rather than hoping to pay off old Gander CEOs.

    I’m not trashing Gander for the sake of talking smack about a store I personally didn’t like. I just think that there was a bigger picture that was lacking from the numbers, and I also think some pure economic thinking would add to the analysis. For example, what else could they do to cut costs to make that profit increase? What could they do that’s different to attract more customers? How can they innovate? They clearly need to do something different if they are having a hard time in a market that’s being very generous for gun dealers.

    I hope that the streamlining is a good thing because having more companies out there does increase competition which is better for our consumers. However, if that’s how they made their profit, then that doesn’t quite fit with the initial argument that they are doing well because they are selling lots of stuff in the post. In that case, I think there’s a more interesting story to tell and to get people engaged in.

    And yes, both of our observations are anecdotal, something that I also noted in my post when I asked folks if the things I observed were national policy or just because the Cabela’s we go to is near Philly and Jersey. That may well be a smart decision on their part to become less gunnie, and I would say it’s fine for them to make those changes. We’ll just shop around and send our resources to the company that now serves our needs the best.

  6. Continuing to play the hypothetical game, what if they go under and no one steps up to fill that gap left in the market? One of things about Gander is that they’re in a lot of places that aren’t served by a Cabelas or Bass Pro so local shooters in that area may not have the option of going to another big box store.

    I guess what I’m trying to say is that I’d rather not see shooters lose an option to buy supplies and gear at; if Gander isn’t reporting 5 million in losses, but instead reporting profits that is a good thing. Now, I hope that they’re streamlining and laying off people so that they can be a more efficient organization, and not so they can pay some guy a ridiculously bloated salary.

    Of course, what I’d really like to see is MidwayUSA open a bunch of retail stores.

  7. Fine, another big box store doesn’t open up, but their customers are going to go somewhere. Shooters won’t stop shooting because Gander isn’t there. Campers won’t stop camping. They’ll find other outlets – big box store or not. I’m assuming the state of Indiana had gun owners before Gander arrived. In fact, if Gander went under, Midway might decide to open stores. (Though I doubt it since I’m sure part of their pricing structure is based on lower overheads because they are online.) The market to buy these things doesn’t go away because Gander does. Presumably, Gander made the decision to open up stores there because someone believed there was a sufficient market base to support them. (If they didn’t think it was there, then they are a waste of resources.)

    I guess where I am still left scratching my head is whether your argument is that Gander is doing well because people are buying like made and it’s a bellwether for the industry that supports us, or if Gander is cutting like crazy, happened upon a profit because of it, but is in flux even though there are crazy high gun sales. (The first argument is made in the post, and you seemed to agree with me that they only crossed the profit line because of reductions in comments.) Because I think whichever side you take changes the fundamentals.

  8. I’m guessing that if Q3 was that good, and I’m assuming that we’re talking calendar quarters here, then their Q4 should be even better. What with all the gun/ammo buying frenzy going on.

    Also, I would think that Q3 would normally be a pretty good time for the chain. July-September? That’s a lot of prime outdoorsy time and leading right up to the hunting seasons. Now, Q1 might be a bit on the lean side normally…

  9. Considering that they, on average, charge between 5% and 25% more than comparable superstores (like Bass) or even mom-and-pop style stores in my area, they bloody well better be making money, and if they are not (assuming equal traffic among all equivalent stores), it means they are being run about as well as GM.

    However, something tells me that massive markup has something to do with their poor performance in the past. Their current successes probably almost entirely stem from the build-up to the election, even back in Q3 (people were already buying more than in the past, even then). Once that tapers off, or is illegalized, I really wonder how well that store will do.

  10. Gander just has awful service, esp in the gun dept. I’ve told my local one they’ve lost my business as of today, in fact. They need badly to straighten out their business practices, bring in people from high-end retail to teach them how not to piss off customers, who can easily go from loyal to lasting enemy through thoughtlessness.

    It isn’t a hard thing to grasp that if they don’t fix it, they’ll go under. Angry customers lose you future customers, since they’ll tell everybody else every time the name comes up.

  11. The Richmond area (Hanover County) acquired a new Gander Mountain in 2007 and shortly thereafter Bass Pro Shops sought and received approval from the Board of Supervisors to open a new store as an anchor to a new shopping center one I-95 exit north (less than three miles) of the Gander store. Bass Pro opened in October and by all reports is putting a hurting on the Gander store. Even before the Bass Pro opened I never saw the Gander store very busy when I was in it – business could have been described a steady. I was in the Bass Pro doing some Christmas shopping last weekend and it was packed. It has been every time I’ve been in the store. Unlike Gander, Bass Pro stores (and I presume Cabelas) seem to be as much tourist attractions as they are stores that attract ourdoorsmen.

    I like Gander but there may be a lot of gun owners that are like me who prefer to buy their guns from mom and pop gun shops/sporting goods stores so I wonder if Gander is benefiting from the uptick in gun sales. Also, in today’s Shooting Wire, Jim Shepherd writes about how the hunting firearms are still sitting on the shelves while the high capacity pistols and AR-style rifles are flying off the shelves. Shepherd says if a company is dependent on hunting, it is hurting.

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