A soft retail market coupled with high inventory levels and product discounting resulted in flat earnings and a decline in revenues for Winnebago Industries Inc.’s fiscal 2005 third quarter.
Net income for the three-month period, ended May 28, slipped to $17.6 from $17.7 million in fiscal 2004. Revenues for the quarter were $255 million, a decrease of 17.8% compared to sales of $310.2 million the previous year.
“Third-quarter results were negatively impacted by lower motorhome deliveries, as well as lower production efficiencies caused by reduced factory production,” said Winnebago Chairman and CEO Bruce Hertzke. “Motorhome deliveries for the quarter were lower due to lower retail demand and an industry-wide oversupply of motorhomes. As a result, we reduced our production level during the third quarter to better correspond to demand.”
The Forest City, Iowa-based motorhome builder also said a higher level of discounts was needed to clear out 2005 motorhomes to make way for the new model year.
Winnebago reported net income for the first nine months declined 3.9% to $49.7 million from $51.7 million last year while sales declined 8.5% to $760.5 million from $831.2 million.
The company said its sales order backlog was 1,523 units as of May 28 compared to the backlog of 2,444 units in 2004. “As a result of a weaker backlog and industry-wide softness in the motorhome market, we will continue to adjust our factory schedule as necessary to correspond to the demand for our products,” said Hertzke.