I totally disagree. One of the great things about Internet forums is that they allow the customers to express their desires, likes and dislikes about what a given company is doing. If said company is smart, they’re going to listen to their customers. If they’re stupid, as Colt has been for decades, they’re going to shut their ears to their customer base and instead plug into the echo chamber of board members and “expert” MBAs. That’s why Colt has been in a perpetual state of bankruptcy, alienating the huge US civilian market. Colt can’t even hang onto their supposed “bread and butter” military contracts. As has been mentioned, Colt’s attitude towards its customers is as arrogant as it is stupid: “shut your mouth and take what we give you, like a good little fan boy” with the predictable results (multiple bankruptcy). Unfortunately, these same people are still in charge at Colt, and it looks like CZ UB is going to put them in charge of all “COLT cz” operations in the US, which is their largest market, actually now a 66% chunk of their entire world market. This doesn’t bode well.
I really don’t give a bleep about Colt, as far as I see it, their only value is the trademark and name recognition by people who don’t know any better. Colt doesn’t make any products that I’d buy and they’ve steadfastly refused to innovate, or when they have tried to “innovate” they’ve churned out some massive duds, by totally misjudging the market and/or horrible execution and quality control.
However, I HOPE CZ is listening to their customers, as they seem to have in the past, but not so much in the present. They turn a deaf ear to their customer base at their own peril.
First and foremost, I'd encourage everyone to review this marketing slide deck from Feb 2021 (and realize it's spin to the extent allowed under financial law):
https://cdn.czg.cz/docs/CZG_Corporate_Introduction_final_CS_KB_16022021_v2.pdfMain takeaway on my end is that 1) CZ more than tripled their debt to buy Colt, 2) existing debt and probably this new debt as well appears to variable rate per the 2020 report (anyone remember the variable rate subprime mortgage crisis of the Obama years where buyers who should have been unqualified lost their homes? -- and remember we're in a rising interest rate environment), 3) their production facilities are overwhelmingly in Europe -- Czech Republic, Germany, and Sweden -- and 4) their shotguns are produced in Turkey, which I didn't realize.
And BLUF: from my perspective is that CZ-UB rolled the dice and decided to buy Colt as a gambit. The problem though is that Colt has a very different business model with expensive materials, labor, and real estate, while CZ-UB had cheap materials, labor, and real estate... And now given the Ukraine war and Russian sanctions, CZ is not only cut off from cheap materials from Russia, but also is facing skyrocketing energy costs in both the Czech Republic and Germany... In fact, the Czech's now have the most expensive electricity costs in Europe AND many European metals manufacturers/smelters are ceasing operations due to energy costs multiples of retail products of refined metals... Sweden is less affected than the CR or Germany, but also feeling the pinch.
Meataxe: Honestly, the only interest I have in Colt is Canada's Diemaco, which to date, they've refused to offer in the US.
Tdogg: Many of us have seen this game before, and know that it usually goes badly. Granted there are now geopolitical events that are exacerbating the albatross that is Colt, but even then -- anyone in the firearms industry for any length of time would also tell you the price inflation and firearms buying frenzy that followed Biden's "coronation" is par for the course and unsustainable long-term -- it was roughly a 50% jump in US sales revenues in 1 year, and CZ's slide deck above appears to be advertising it as not only sustainable but indicative of future growth potential... That's nuts!
To be clear, I do appreciate your comment and perspective, but for anyone who knows finance bros/B-school grads or has worked for a company in the modern mergers & acquisitions era in the process of M&A, knows that this is a shell game to extract value for shareholders regardless of detriment to underlying businesses tends to go badly long-term (financial pros/bros are only interested in quarterly reports). And we just saw this exact same thing domestically with the bankruptcy of Freedom Group -- Remington, Tapco, Para, Barnes, etc. -- owned by Cerebus Capital Management...
So it's most certainly informed concern, and nothing that any of us CZ enthusiasts here are wishing or take any pleasure in sharing, but it is reality. Do with this info what you may.
