Investment firm Robert W. Baird & Co. has adjusted its outlook for the RV market as the summer selling season nears an end.
In a note to investors, analyst Craig Kennison summarized: “Retail remains awful and dealers are anxious to reduce inventory, leaving us pessimistic about the next few months. As stocks recover from lows induced by record oil prices, we would take money off the table in selected areas and revisit the space next year.”
Kennison said that he didn’t anticipate recovery in the market before next spring, noting, “Falling oil prices have provided some relief, but industry fundamentals continue to worsen.
“For manufacturers, we are concerned that inventory is accumulating in the channel as dealers fail and consumers default, limiting opportunities to liquidate factory inventory. Some manufacturers are selling at a loss to convert inventory into cash, according to sources, diminishing the profit outlook for the industry.”
With the market tightening, Kennison said that dealers and manufacturers and suppliers were cutting capacity. “These cuts, along with natural attrition, ultimately should result in a more profitable environment when the cycle turns,” Kennison said. “We think Winnebago and Thor are the most likely to survive the downturn given the strength of their balance sheets.”
He added that Baird “remains optimistic that conditions will improve” when consumer confidence recovers.