Thursday, June 16, 2011

Winnebago Industries (WGO) Announces Quarterly Results


Consolidated revenues for the third quarter of Fiscal 2011 ended May 28, 2011 were $135.6 million , an increase of 0.6% percent, versus $ 134.8 million for the third quarter of Fiscal 2010. [...] Net income for the third quarter of Fiscal 2011 was $1.2 million versus net income of $6.0 million for the third quarter of Fiscal 2010 . On a diluted per share basis, the Company had net income of $0.04 for the third quarter of Fiscal 2011 versus net income of $0.21 for the third quarter of Fiscal 2010. [...]

The third quarter of Fiscal 2011 as compared to the third quarter of Fiscal 2010 was negatively impacted by last-in, first-out (LIFO) inventory expense as opposed to LIFO income in the prior year, commodity inflation, an impairment charge on an asset held for sale, as well as increased discounts, repurchase exposure and legal costs. [...]

"The retail market for motor homes softened during our third Fiscal quarter, adding to our disappointment with the level of industry retail sales thus far in Calendar 2011 compared with the prior year," said Winnebago Industries' Chairman and CEO Bob Olson. "While discouraging, it is understandable in the context of new job creation slowing in America, along with reports of falling home prices, declining auto sales, weaker consumer spending, the concern over rising fuel prices and the impact these issues are currently having on the stock market. We remain concerned the current recovery appears to be slowing."
You heard it here first.


Taylor Conant said...

Suddenly, every businessman is a macroeconomist instead of being a businessman focused on managing his business well. All of these companies are built on perpetual cheap financing schemes. They don't know how to make a profit when their customers don't have free money to spend on their worthless garbage. Amazing to see them throw in the towel like this. "Welp, without a recovery in the economy, not sure how anyone could expect us to do well." Why don't I just buy the S&P 500, then? There's obviously no management premium I could attain in shares of your company.

CP said...

Every hedge fund is a macro fund now, too!

WGO is like a little animal that was heavily specialized for a niche that has been obliterated by an ice age glacier moving in. What can you do>?

They should have sold all their manufacturing ops to a competitor in 2007 and bought XLF puts!

Thinking outside the box.

Taylor Conant said...

What could they do? Well, a lot of mistakes are made BEFORE the crisis occurs, not after, so:

1.) Maintain conservative financing/capital structure at all times
2.) Do not make business decisions which require exponential or even steadily linear growth models to make sense ( or at least, correct for the risk of volatility by creating a model whose growth rate is below current and anticipated)
3.) Educate leadership and management on proper economic theory so they aren't caught flat-footed when the prognostications of the political class turn out to be dead wrong(ie, Bernanke, "There is no housing bubble")
4.) Have the stomach and the nerve to make tough decisions and fire people/sell off excess capacity when the survival of the business depends on it

The CEO of Cash America, a pawn and payday lender, referred to the onset of the economic crisis in 2007 in his annual report as "mystical." How are you earning your salary if you argue that the results of your business efforts are being controlled by "mystical" forces?

Pray harder?