Ellett Brothers to acquire Acusport distribution

I noticed a press release posted yesterday on the Ellett Brothers dealer page saying that United Sporting Companies (Ellett) is acquiring Acusport’s distribution warehouses & inventory in Bellefontaine, Ohio, and Salt Lake City, Utah. They are also getting the offices in Waite Park, Minnesota. This is a bankruptcy proceeding, so apparently the lack of anticipated panic-buying from the assumption that Clinton would win the election did not pan out well for Acusport at all.

What this means is that the firearms, ammo, and shooting/hunting accessories distributor Ellett Brothers is about to grow in size by around 30%, making them an even more serious threat and more relevant market presence to other distribution competitors such as Sports South, Crow Shooting, Gulf Coast, Bangers, Davidson’s, J&S, MGE, etc… and all of the buying groups. They will also be better positioned to compete with the ever-growing list of quasi-distributors who are direct-to-retail online entities such as TargetSports USA, MidwayUSA, Outdoor Limited, SG ammo, and Wholesale Hunter.


Here is the transcript:

• May 1, 2018

United Sporting Companies Announces Intent to Purchase Certain Assets of AcuSport Corporation.

United Sporting Companies announces its intent to acquire, through its wholly-owned subsidiary Ellett Brothers, LLC, certain assets of AcuSport Corporation as the stalking horse bidder in a bankruptcy case filed by AcuSport.

USC intends to acquire and operate AcuSport’s distribution center and related systems in Bellefontaine, Ohio and will assume the leases for the satellite distribution center in Salt Lake City, Utah and its Waite Park, Minnesota sales office. USC expects to offer employment to a significant number of AcuSport employees at the time of closing. USC has also offered to buy any remaining inventory from AcuSport’s creditors.

As this is an asset purchase, USC will not assume any of the existing debts to creditors or vendors. Those debts remain with AcuSport and will be dealt with via the bankruptcy case.

“United Sporting Companies is pleased to be acquiring the state of the art distribution capabilities of AcuSport and to provide employment to a significant number of its employees. We believe this purchase will allow us to combine the best of AcuSport and United Sporting Companies to create the industry’s leading shooting sports distribution company,” said Brad Johnson, CEO of United Sporting Companies.

With the acquisition of the Ohio distribution center, USC will look to consolidate some of its distribution assets with the former AcuSport facility. Specifically, USC’s Simmons distribution facility in Spring Hill, Kansas will be transitioned into the existing USC network by the end of July 2018.

The asset acquisition is expected to close by July 6, 2018.

United Sporting Companies (USC) is a leading nationwide distributor of hunting, outdoor and marine products. The company operates through two subsidiaries, Ellett Brothers and Jerry’s Sport Center which were founded in 1933 and 1949, respectively. Providing the Industry’s largest product selection of over 85,000 SKUs in combination with the endless support of the most knowledgeable sales force in the country, USC proudly and efficiently serves over 30,000 independent retail customers across all 50 states through sales offices and distribution centers in Chapin, SC, Newberry, SC, Pittston, PA, Downingtown, PA, Dayton, OH, Spring Hill, KS, Dallas, TX, and Sacramento, CA.

McDermott Will & Emery is acting as legal counsel, and Houlihan Lokey Capital, Inc. is serving as financial advisor, to United Sporting Companies and Bryan Cave Leighton Paisner LLP and Allen Kuehnle Stovall & Neuman LLP are serving as legal counsel, Huron Consulting Group LLP is serving as financial advisor, and Huron Transaction Advisory LLP is serving as investment banker, to AcuSport Corporation.

I was just looking up some more information on the demise of Acusport, and the business review website of Glassdoor provides a wealth of inside information from many employees who vent about the downward spiral of the company which began in May 2017. It was no doubt the election of Trump (vs the expected election of Clinton) which broke their back as there was no rush or panic-buying for guns & ammunition. Took only one year for Acusport to fold apparently. The Acusport warehouses look to have a very modern rapid fulfillment & processioning setup with some automation which looks similar to MidwayUSA’s “Nitro Express” system.

I jut put a call into Liberty Ammunition to ask about their current status (they declared bankruptcy and had a collateral auction in Sep. 2018), to which they informed me that they had new owners and were running smoothly now, etc… We did get to talking about their distribution, where he warned me that among the larger ones which they do business with, that Ellett Brothers was in trouble, and might go bankrupt. He said that Ellett owes them a “bunch of money” and that various manufacturers aren’t even delivering to Ellett right now because of unpaid bills. This seems odd since Ellett just acquired Acusport last year, but I guess I am not surprised since, with the advent of Ammoseek, I can consistently find lower-priced ammo from online retail sellers such as TargetsportsUSA, Outdoorlimited, and SGAmmo to name a few. This also goes to explain why at any time, half of Ellett’s ammo inventory is out of stock. The lack of firearms panic-buying from Trump being elected vs Clinton has also led to a slowdown for them I suppose.

And things just keep getting worse for United Sporting Companies / Ellett Brothers. The current direct-to-retail internet market just isn’t allowing traditional large distributors to function in the way in which they used to:

Ongoing… Here USC appears to be blaming their capital management firm, as well as blaming Trump’s win whereas they had boosted their inventory significantly before the election (they had assumed a Hillary win would lead to panic buying). This does not however, make any sense as they had just last year bought what was left of Accusport. Why buy another distributor when your own sales are already down for over 1 year running and you have too much inventory???

Ammo is basically the only thing I purchase from USC / Ellett, and as of this morning, they are showing a grand total of 3594 different ammo skus existing, but with only 1492 being in-stock. They need to have a serious sale, and they are - as of today. One thing that jumped out at me was that they show Liberty Ammunition’s “Animal Instinct” frangible hollow-point 30-06 for a staggeringly low $15 per box. The next closest price anywhere on the market is $44 per box. This is sort of funny (but not funny) in that as mentioned earlier in this thread, Ellett did not pay for their last shipment of ammo from Liberty, and they owe Liberty quite a lot of money. So it is easy to mark an item down this low when you have zero invested in it I guess.

Ellett Brother web-site reads; they only sell to store front businesses, not in home businesses. Most likely why they are hurting and other larger distributors are hanging in there. Those hay days are long gone.
On shooting ammo the pie pieces are getting smaller and smaller for retail sellers as more online companies cut into the retail market place and offer wholesale prices to reduce their inventory on special deals from manufacturers .
The Trump effect is still alive, and sales are no way what they were in 2016 before the election.
Unless your shooting a lot and don’t reload, and have a large wallet ,you most likely are not a huge ammo buyer.
As the 2020 election get closer we’ll see if the buyers market continues.
My opinion only of coarse, which will not buy you a cup of coffee this morning :-)

Update: This whole mess with Ellett seems to be the largest disruption to the ammunition industry this year anyway, with several manufacturers owed money by Ellett for product, and several retailers left in a lurch without access to product via Ellett whereas Ellett was one of a relatively few distributors who would do business with non-FFL’s.

Ellett’s current count for ammo product sku’s is down to around 350, and is mostly a bunch of odd unpopular calibers or types that are low-volume rotation stuff. The prices are / were great though - deeply discounted. This does nothing to ease the suffering of some of the smaller ammo manufacturers whom Ellett owes money to though, and Ellett is not allowing for any sort of reclaiming of unpaid-for product either. This might be entirely feasible for the likes of Florida-based Liberty Ammunition who would certainly be willing to drive half-a-day to the north to reclaim their pallet(s) of unpaid for ammo in South Carolina where Ellett is.

At the moment, USC / Ellett has a court injunction going against them which ordered them to halt sales from July 19th through July 24th for whatever reason, but more concerning is an insidious little trick they seem to be playing with their online payment processing. Ellett has their own payment processing page for business customers who have 30-day terms with them and a simple setup which shows outstanding invoices to be paid, and when they are due. This is nothing unusual, however they have just modified their payment screen so that past invoices which have been paid will still show up in the list, and still appear as if they could / should be paid. If you don’t pay close attention or if you have many invoices floating, then you can easily do an accidental double-payment. Ellett even goes so far as to warn people of this potential with a tiny message in a message window, saying that one should “click the arrow to view any previous payments”. But which arrow …?.. There are at least 6 arrows on the screen, if you even see this message at all. It’s not as if it just stays up for a day or two after an invoice is paid either, the one I saw on my screen (and which I momentarily panicked over) is from an invoice that I paid weeks ago. Their system WILL actually allow a person to double pay one that is already paid - which is the crazy thing… why would they allow that? It would be easy for them to not allow it to happen, as is the case with all other distributors, but they aren’t.

So why would Ellett do this? Simple - they want people to double pay by accident, since they are in bankruptcy and soon might be dissolved, leaving the money left in limbo to their favor. Their tiny little message serves as a sort of legal disclaimer to cover them I suppose? My concern is over the many retirement-age gun shop owners who aren’t always the most computer-savvy sorts, and maybe don’t have the sharpest vision, and who could fall prey to this trick. Unbelievable really. Ellett is like the Venezuela of the ammo distribution business lately… (once the richest distributor in the continent, etc… etc…).