Thursday, Winnebago Industries Inc.’s stock dropped 4% after the company reported lower-than-expected earnings for the third quarter of its fiscal year.
For the quarter ending May 25, Winnebago WGO, -3.37%, a company based in Eden Prairie, Minn., made $29.0 million, or 96 cents per share. This was down from $59.1 million, or $1.71 per share, in the same time last year.
After taking into account one-time items, EPS was $1.13, which was less than the $1.31 that FactSet predicted.
Sales dropped 12.7% to $786.0 million, which was also less than the $798.0 million mean predicted by FactSet.
“While retail patterns in the outdoor industry are still not consistent and dealers are still being strict about field inventory levels, we are generally pleased with the resilience of our portfolio as our teams balance the pursuit of long-term share, profitability, and customer satisfaction across our premium brands,” CEO Michael Happe said in prepared remarks.
During a call with analysts, Happe said that retail demand has stayed low due to high interest rates and inflation, and there isn’t much evidence that the economy is getting better for people who like to do outdoor activities as the company moves into its fiscal fourth quarter.
Happe said in a FactSet transcript, “While this environment requires caution and discipline in the near term, the secular future growth of outdoor recreation engagement by consumers is without a doubt a key driver for the health of our business long term.”
The business thinks that the retail market will continue to be tough in the fourth quarter.
“Our commitment stays the same,” Bryan Hughes, Chief Financial Officer, told reporters. “We will make good use of our capacity, keep our premium positioning, bring out exciting new products at prices that our customers want, and put long-term profitability across our brand as our top priority.”
Towable RV sales went up 0.6% to $386.3 million by segment. At the end of the quarter, the segment had a backlog of $153.1 million, which is 35% less than it was a year ago.
Motorhome and RV sales dropped 20% to $299 million, and the backlog reached $354.9 million, which is 55.7% less than the same time last year.
Marine sales dropped 31% to $87.9 million, and the backlog dropped 57.6% to $62 million.
“We have made good progress this fiscal year in reducing old RV field inventory in a cost-effective way. Our teams are still working closely with our dealer partners to keep an eye on the condition of their stock and make sure that production and shipments are in line with retail demand,” Happe said.
The company is excited for the release of its Grand Design Lineage motorhome in the fourth quarter. They are also looking forward to the Winnebago Navion line getting the Winnebago Connect intelligent control system.
Happe said, “Both strategies give our organization new ways to grow.”
So far this year, the stock has lost 25% and the S&P 500 SPX, -0.04% has gained 15%.
