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Fleetwood Enterprises Inc. reported a 16.4% decline in revenues for the company’s fiscal 2007 second quarter, ended Oct. 29, aggravated by last year’s inflated sales from units shipped for hurricane relief.
“Approximately $60 million of the sales decline reflected an atypical comparison with the prior year, when we provided Emergency Living Units (ELUs) from both the Housing Group and the travel trailer division for disaster relief in the Gulf Coast area,” said Elden L. Smith, president and CEO for the Riverside, Calif.-based builder.
Smith also cited continued weakness in the motorhome market and an “unusually slow quarter for manufactured housing” factoring into the drop in sales and a wider net loss for the three-month period.
Revenues for the quarter were $526.6 million, down from $629.5 million a year ago, while the company reported a net loss of $20.4 million, including discontinued operations, compared with a net loss of $1.9 million. Fleetwood noted that results included $2.6 million in restructuring costs, primarily severance.
For the six months, revenues declined 15.2% to $1.06 billion from $1.25 billion the previous year while the net loss during the period was $20.8 million compared with a net loss of $31.5 million.
“We have continued to pursue cost cutting and capacity consolidation initiatives, and by the end of our third quarter will be better positioned for current market conditions,” Smith said. “In addition, we believe that our embedded operating leverage means any upturn in our industries will result in significant financial improvement in our operations.”
The RV Group incurred an operating loss of $14.9 million for the quarter on revenues of $364.6 million, compared with an operating loss of $0.7 million on revenues of $393.5 million for the same quarter the prior year. In the first six months, the division reported an operating loss of $28.2 million on sales of $735.8 million, versus an operating loss of $5.8 million on revenues of $816.7 million a year ago.
Fleetwood said a 7% decline in motorhome sales and a combination of significantly lower volume and more competitive pricing in the travel trailer division impacted RV operating results.
Smith, however, said that conditions were favorable for a turnaround, particularly in the motorized sector.
“We are optimistic that if recent positive trends in fuel prices, interest rates and consumer confidence extend into spring, motorhome sales will recover next year,” Smith said. “…Enthusiasm was apparent at last week’s national RV trade show in Louisville, Ky. Most of the dealers we spoke to seem to think that conditions are in place for a good selling season in 2007, particularly in motorhomes.”
He emphasized that Fleetwood’s new motorhome product offerings were well positioned, addressing consumer demand for more affordable and fuel-efficient vehicles. The company also improved market share in its travel trailer division in the past few months after “a lengthy period of decline,” according to Smith.