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A 51% decline in RV sales led to a net loss of $23.2 million for Fleetwood Enterprises Inc.’s first quarter, ended July 27, aggravated by a host of economic headwinds and aggressive discounting in the motorhome sector.
“We are experiencing some of the toughest industry conditions that we have seen since the late 1970’s and early 1980’s,” said Elden L. Smith, president and CEO of the Riverside, Calif.-based builder. “Dealers are reducing their inventories significantly and manufacturers’ orders are considerably below the dealers’ weak retail sales rates.”
Fleetwood reported first-quarter revenue of $289.9 million, down 41% from $488.3 million in the prior year, while the overall operating loss of $23.2 million compared to net income of $5.7 million.
The RV Group recorded an operating loss of $23.8 million compared to operating income of $1.9 million in the first quarter last year. The operating loss for the motorhome division was $16.1 million compared to operating income of $9 million in the first quarter of the prior year, and the operating loss for the travel trailer division was $5.6 million versus a $7.4 million loss.
Smith said that the company continued to “cut costs and improve the responsiveness of our operations.” He also addressed the $100 million 5% debentures due in December.
“Despite a modest but unavoidable build up of motorhome chassis and finished goods inventories in the first quarter, cash and marketable investments totaled $85.7 million at July 27 with virtually no borrowings on our revolving credit facility,” Smith added. “Since then we have raised an additional $26.5 million from real estate financing. A successful refinancing of the 5% debentures is the next step in our strategy to put Fleetwood in a position of strength relative to current economic conditions and posture the company for an advantageous future.”
Smith also reported that attendance looked strong for the company’s national dealer meeting next week.
“Considering the current business climate, we are pleased with the turnout indicated for our national dealer meeting next week,” he said. “We will be showcasing our newest products with innovative floor plans and exciting decor packages. Although we expect dealers to remain cautious for the foreseeable future, we are eager to demonstrate to them why Fleetwood remains an excellent choice as their business partner going forward.”