Winnebago Industries Inc. is counting on its new value-priced 2007 Class C motorhomes to help the company build on its market share gains in the motorized sector. The company’s new Winnebago Access and Itasca Impulse won’t be formally introduced to dealers until later this month, but already they’re being well received by retailers, the company said in announcing its third quarter results on Friday (June 16).
And in a follow-up conference call, the company reiterated that it continues to explore ways to enter the towable market and said it has held discussions with several unnamed companies about possible acquisitions.
Third-quarter sales were down 13.6% from a year ago, while earnings were off 25%. Revenue fell as the trend toward lower-priced motorhomes persisted. Still, earnings per share of 40 cents exceeded Wall Street’s consensus as gross margins recovered to offset lower revenues, which helped boost Winnebago’s shares in Friday’s trading.
While sales are down, Winnebago’s market share is growing. Year-to-date, Winnebago’s share of the Class C retail market has grown from 18.9% a year ago to 25.7%, said Chairman and CEO Bruce Hertzke. The company’s Class C products, including the fuel-efficient Winnebago View and Itasca Navion diesel lines, are performing well and offset disappointing sales of its Class A products.
Winnebago’s share of the Class A market slipped from 16.6% a year ago to the current 15.3% while the company’s combined market share of the A and C markets has grown from 17.3% to 19.1%.
“We are fortunate to have a great presence in the Class C market,” Hertzke said.
In the third quarter, the company shipped 2,566 motorhomes – 56% were Class C’s and 44% were Class A’s – compared to the 60% Class A and 40% Class C mix which is typical for this time of year, the company said. Hertzke said he does not know when wholesale shipments will return to the more historic ratio but he believes it will happen.
Because of sagging motorized sales industrywide, dealers are adjusting their inventories accordingly and deciding whether to reduce the number of manufacturers they carry or cut everybody’s product, Hertzke said. He said Winnebago expects its dealers to honor their agreements with Winnebago, stock its products and sell them.
Regarding a possible entry into the towable market, which is currently far outperforming the motorized segment of the industry, Hertzke said, “We’ve had some discussions and even talked with some different companies. It is still part of the market we continue to review. On the same hand, we don’t have anything to announce.”
When pressed by one analyst whether that meant Winnebago had decided to enter the towable market, he replied, “There is no commitment either way.”
He did indicate that Winnebago would not necessarily have to buy an existing towable manufacturer but could start up its own towable operations.
One analyst, Craig Kennison with RW Baird & Co., noted that Winnebago’s balance sheet remains particularly strong, with $140 million in cash and no debt. The company repurchased nearly 1.5 million shares at an average price of $29.94 during the quarter.