Colt CZ Reports 10% Drop in Firearm Sales Despite Revenue Growth

The Czech firearms conglomerate Colt CZ Group reported a 10.4% decline in firearm unit sales for the first nine months of 2025, moving 415,146 guns compared to 463,186 during the same period last year. The company's nine-month earnings report, released November 20, paints a picture of a firearms industry still struggling to find its footing after years of pandemic-driven highs.

The U.S. Market Weakness

Long guns took the hardest hit, dropping 14.9% compared to a 7.1% decline in handgun sales. Colt-branded products got hammered worse than CZ-branded offerings, which makes sense given Colt's heavier reliance on the American market.

U.S. revenues dropped 15.9% year-over-year to about $254 million. CEO Radek Musil didn't mince words, acknowledging "unfavorable developments in the U.S. market have affected not only our company, but also our competitors."

That's corporate speak for "the U.S. gun market is in rough shape right now."

To make matters worse, the recent six-week federal government shutdown threw another wrench in the works. The paralysis of federal firearm licenses and permits literally halted gun sales during what should have been a strong Q4. Colt CZ had to revise its full-year guidance downward because the revenue they expected to book in late 2025 will now show up in 2026—but the production costs have already hit the books.

Where the Growth Actually Happened

While the U.S. market struggled, European sales told a different story. Revenue from Europe (excluding the Czech Republic) jumped 58.2% to about $278 million, driven primarily by the Sellier & Bellot acquisition and strong ammunition demand.

Canada saw a 45.7% revenue increase thanks to major military and law enforcement contracts, including a deal for 26,000 C8 MRR carbines through Colt Canada with the Danish Defence Acquisition and Logistics Organization. The company also secured a framework agreement with the Czech Ministry of Defense worth up to $204 million for CZ BREN 2 rifles, CZ P-10 C pistols, and accessories.

The military and law enforcement segment appears to be carrying water for the struggling commercial market right now.

The Ammunition Story

Let's be real: ammunition is what kept this earnings report from being a disaster. The ammo segment hit $370 million in revenue for the nine-month period, nearly doubling from last year. Margins in ammunition also exceeded firearms margins, which explains why the company maintained a healthy 21.4% adjusted EBITDA margin despite selling 10% fewer guns.

Sellier & Bellot's consolidation into the Colt CZ portfolio turned out to be well-timed. While American gun buyers might be sitting on their wallets, they're still burning through ammo. And European demand—driven partly by security concerns following Russia's invasion of Ukraine—remains strong.

What This Means Going Forward

The firearms industry faces some uncomfortable truths right now. The pandemic buying surge created inflated baselines that make year-over-year comparisons painful. Consumer spending has shifted, disposable income is tighter, and the sense of urgency that drove 2020-2021 gun sales has evaporated.

That said, Colt CZ isn't exactly struggling. The company generated $64 million in net profit for the nine-month period, up 87% from last year. Their diversification into ammunition and strong international markets—particularly military and law enforcement contracts—provided a cushion against U.S. commercial weakness.

The company issued $288 million in bonds in November (they planned for $144 million but doubled it due to demand), suggesting investors still see a path forward. And frankly, when a firearms manufacturer can post 7% revenue growth while selling 10% fewer guns, that tells you something about the underlying business fundamentals.

Unfortunately, it also tells you that the American commercial firearms market remains soft. Whether that changes in 2026 depends on factors well beyond any single manufacturer's control—economic conditions, political climate, and that indefinable consumer sentiment that drives discretionary purchases like firearms.

For now, the numbers are what they are: Fewer guns sold, but the companies that diversified and secured government contracts are weathering the downturn better than those who bet everything on the American consumer.