Winnebago Industries Swings to Loss as Volume Tumbles
By Tess Stynes, June 18, 2009, The Wall Street Journal
Winnebago Industries Inc. swung to a wider-than-expected fiscal third-quarter loss on a continued decline in motor-home deliveries and production.
Also hurting results was increased promotions and consumer preferences for lower-priced recreation vehicles. It was the fourth-straight quarterly loss for the RV maker, whose products cost from $60,000 to $300,000. Winnebago had managed to stay profitable for years despite falling sales through streamlining and focusing on larger, more profitable RVs.
But tight credit policies pushed Winnebago and some other RV makers into the red, with some exiting the sector. Concerns about rising unemployment have compounded the woes.
Winnebago Chairman and Chief Executive Bob Olson said that while the industry has seen modest improvement this year, it isn't enough to imply a recovery, with credit remaining the biggest hurdle. He said the company plans to continue cutting costs.
Still, Winnebago said that market share rose to 18.4% this year through April, from 17.3% a year earlier, citing RV industry service Statistical Surveys. However, industry sales were down 46% from a year earlier.
For the quarter ended May 30, the maker of motor homes and RVs reported a loss of $8.6 million, or 29 cents a share, compared with a prior-year profit of $3 million, or 10 cents a share. Analysts polled by Thomson Reuters most recently were looking for a 27-cent loss.
Revenue tumbled 64% to $50.8 million
Deliveries of higher-profit and higher-priced Class A motor homes plummeted 71%, while smaller Class C vehicles posted a 60% drop. The backlog for the higher-priced models is 58% below year-earlier levels, while the backlog for the smaller vehicles is off 60%.
The company has been testing hybrid technology to boost the fuel-efficiency of RVs, which despite advances in recent years, remain associated with poor gas mileage.
Write to Tess Stynes at tess.stynes@dowjones.com