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Fleetwood Enterprises Inc. reported a 5% decline in revenues for its fiscal third quarter, ended Jan. 23, citing delayed orders from dealers and failure to adjust production prior to industry softening.
“We believe a portion of our dealer network delayed orders in the belief that we would discount products near the end of the quarter,” said Ed Caudill, Fleetwood’s president and CEO. “Our decision to discontinue the practice of widespread quarter-end motorhome discounting was met positively by our dealers, although RV sales have been adversely affected.”
The Riverside, Calif.-based manufactured housing and recreational vehicle builder reported preliminary third quarter revenues of $565 million compared with $598 million in the same quarter last year. For the first nine months of fiscal 2005, sales improved by 5% to $2.01 billion compared with $1.92 billion in fiscal 2004.
Recreational vehicle sales for the third quarter decreased 16% to $343 million compared with $410 million a year ago, as motorhome sales declined 15% to $231 million while towables dropped 19%.
Sales of recreational vehicles for the first nine months were down 1% to $1.28 billion compared with $1.30 billion in fiscal 2004, with motorhomes increasing 6% to $851 million and towables off 13% to $427 million.
“This quarter was disappointing, as we broke our six-quarter run of consecutive sales improvements,” Caudill said. “As we have suggested, we did not adjust production in time to correct for the industry softness late in our second quarter, and we again ran into industry weakness in wholesale shipments in November.”
However, Caudill said retail activity held up during the period, allowing dealers to adjust their inventories.
“We are more comfortable with our inventory levels now than we were at the end of our second quarter,” he said, “but we plan to be more aggressive in matching production against orders, including idling many of our RV plants this week as we work down inventory.”
Caudill added, “We continue to have positive discussions with our lending syndicate, with the goal of enhancing liquidity and resolving covenant issues through a waiver or amendment while we remain in compliance.”