A softening in the recreational vehicle market – heightened by high dealer inventories and resultant sales incentives – coupled with a challenging retail environment in the home and building sector signaled a first quarter net loss for Coachmen Industries Inc.
Net sales during three-month period, ended March 31, increased 4% to $205 million versus $197 million during the same period last year. The Elkhart, Ind., RV and system-built home manufacturer showed a net loss of $1.4 million for the quarter compared with net income of $0.6 million the previous year.
Coachmen said profits were negatively affected by “lower unit volumes and increased sales incentives offered in response to softer markets and greater competitive pressures.” Income for the quarter included compensation gained from a settlement in Coachmen’s lawsuit with The Coleman Co.
“We had forecasted a small loss in the first quarter, due to the challenging environment in the RV market and the seasonal factors which affect our housing and building business,” said Claire C, Skinner, chairman and CEO. “These factors were more extensive than anticipated.”
For the quarter, Coachmen’s RV Group reported sales of $157.3 million, up 4.7% from the $150.2 million the previous year, while wholesale shipments decreased by 12.6% to 4,699 units versus 5,375 units.
Coachmen said “this reflects the group’s continued shift of product mix toward the more expensive motorized product categories.” Compared with the first quarter of 2004, shipments of motorized products fell 9.2%, while shipments of non-motorized products decreased by 14.3%. However, shipments of diesel pusher motorhomes increased 64.7%.
Coachmen’s effort to reduce dealer inventory levels focused on “developing targeted retail incentives to pull demand through the distribution channel rather than offering broad-based wholesale discounts that would further expand dealer inventories.”
The company did gain significant market share for the first two months of 2005 in both Class A and Class C motorhome sectors, according to Statistical Surveys Inc.
“Looking to the remainder of 2005, we remain guardedly optimistic about both of our business segments,” said Skinner. “On the RV side, we are confident that our new product offerings, continued marketing initiatives and a further shift in product mix towards motorized products will allow us to increase our market share and our revenues, despite continued challenges in the market.”