Fleetwood Enterprises Inc. reported a 14% decrease in first-quarter revenues, including a 12% dip in RV sales, as the combined effects of rising interest rates and higher fuel prices continued to pressure the motorhome market.
“As expected, higher, more volatile fuel prices and rising interest rates resulted in weaker motorhome sales during the quarter,” said Elden L. Smith, president and CEO of the Riverside, Calif.-based manufacturer. “Despite the dampening effects of those macroeconomic factors, we were able to transition from the production of 2006 to 2007 models and clear plant inventories of prior year products without significant discounting.”
In a preliminary report, the recreational vehicle and manufactured housing builder said sales for the quarter, ended July 30, were $529 million, down from $616 million the previous year.
Recreational vehicle sales for the first quarter fell to $370 million from $423 million a year ago as towable sales improved while motorhome revenues declined. Manufactured housing sales also decreased to $145 million from $204 million the previous year.
Travel trailer sales were up 16% to $122 million, compared with $105 million in the prior year, while folding camping trailer sales rose 17% to about $24 million from $21 million. Motorhome revenues were lower by 25% at $225 million compared with $298 million in the same period a year ago.
In addition to slower sales, Smith noted a shift in consumer demand occuring in the motorized sector.
“Strength in this segment is currently concentrated in entry-level, more affordable and more fuel-efficient products, which are now better represented in our 2007 motorhome lineup,” he said. “We are pushing forward with the development of additional models that more completely fill these growing niches.”
Smith also cited an internal parts shortage, reported in its fiscal year-end report, that would impact first-quarter earnings.
“Our first quarter results will be affected by the soft motorhome and manufactured housing markets, combined with lower-than-normal labor efficiencies in the travel trailer division,” Smith said. “As previously announced, we experienced a shortage of parts for some of our new travel trailer models which, although temporary, caused interruptions to our production flow and some shipping delays. As a combined result of these factors, we will not break even at the operating income line this quarter.”