Fleetwood Enterprises Inc. warned Wall Street today that its earnings for the three-month period that will end July 30 will be “only slightly above breakeven,” largely because of slow motorhome sales.
Difficulties in the manufactured housing market also will contribute to the disappointing earnings during the May-through-July period, said Nelson Potter, Fleetwood’s president.
“Market conditions have not improved so far this first (fiscal) quarter,” Potter said. “Consequently, motorhome sales, orders and backlogs are substantially below the levels we experienced last year, largely because of higher dealer inventories and a softening retail demand.
“Dealers have been hesitant to order much more model year 2000 products,” Potter continued. “This has prompted us to substantially reduce our motorhome porduction schedules, which will preclude us from fully utilizing model year 2000 raw materials. Earnings will therefore be adversely affected not only by reduced sales volume but also by inventory write-downs for obsolete raw materials.”
Within the last two weeks, Fleetwood launched “fairly aggressive sales incentive programs to encourage motorhome dealers to increase orders for the model year 2000 products,” Potter said. The company had some success with the incentive programs, but Potter said they would contribute to the loss the motorhome division, most likely, will incur for the May-through-July period.
“We believe that business conditions for motorhomes will improve once we complete the transition to 2001 model year products in August,” Potter said. “As long as retail demand continues to hold at a reasonably healthy level, we think RV dealers will have an appetite for our new products that are about to be introduced.”