Does a sour economy cause people to stockpile weapons? You might be tempted to think so, after seeing Gander Mountain's (NASDAQ:GMTN) latest earnings report. The sporting-goods retailer said that firearms and ammunition sales provided one of its bright spots this quarter.

Katy, bar the door! The recession's coming to town!

One of the things that separates Gander Mountain from Cabela's (NYSE:CAB) or Dick's Sporting Goods (NYSE:DKS) is its gunsmith program. It touts itself as the largest employer of gunsmiths in the country, and whereas Cabela's or Big Five Sporting Goods (NASDAQ:BGFV) might sell hunting rifles and the like (Hibbett's Sporting Goods (NASDAQ:HIBB) does not), Gander Mountain sells long-arms and handguns, new and used. This may be a source of pride for the company, but it's not enough of a selling point.

While revenue jumped 18% to $207.7 million, beating analyst forecasts, losses widened much more than Wall Street had anticipated. Where the consensus loss for Gander Mountain was $0.60 a share, the actual loss came in nearly double that at $24.4 million, or $1.02 per share.

The jump in sales had more to do with Gander Mountain's new store openings, as well as its Overton's direct marketing catalog, than it did with sales of goods. Comps were down 6.7% for the quarter -- in line with management expectations of mid-single-digit declines, but still no way to keep a retail operation successful. In fact, same-store sales are projected to fall by a like amount for the full year.

The retailer has been burning through prodigious amounts of cash, with trailing negative free cash flow of $46 million this year compared to negative $66.5 million a year ago. It’s an improvement without distinction. While firearms and hunting represent its largest revenue contributor at 43% in 2007, Gander Mountain's just not packin' enough heat in an uncertain economy to get its sights set on the future.

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