Winnebago posts loss in 3Q on falling sales

NEW YORK -- Winnebago Industries Inc., the nation's biggest motor-home manufacturer by market share, posted a loss of $8.6 million in its fiscal third quarter, as revenue continued to crumble in the face of falling RV sales.

The Forest City, Iowa-based company reported a per-share loss of 29 cents per share for the quarter ended May 30. It earned $3 million, or 10 cents per share, last year.

Revenue plunged 64 percent to $50.8 million, as motor-home shipments fell 62 percent during the quarter.

Chief Executive Robert Olson said lack of access to credit "remains the biggest hurdle" for the industry. Motor-home sales, which are closely tied to consumer confidence, have been falling in recent years, as rising fuel prices followed by the economic recession drives consumers away from showrooms.

"We continue to believe there are dealers who want to replenish their inventories and retail customers who want to enjoy the RV lifestyle but can't because of the constraints most lending institutions have placed on both wholesale and retail financing," Olson said during a conference call with investors.

Wall Street analysts surveyed by Thomson Reuters predicted a loss of 27 cents per share, on average.

Winnebago said it held up better than the competition during the quarter. During the first two months of its fiscal third quarter, industrywide motor-home sales fell a steeper 77 percent, the company said. As a result, the company was able to pick up additional market share during the quarter, Olson said.

The company also said it has managed to cut dealer inventory by 50 percent from a year ago and its sales backlog has climbed 14 percent since the end of the last quarter.

Olson said inventory at dealerships is so low that, once consumer demand recovers, RV deliveries should begin to recover.

"We are an eyelash away from being at one of the lowest dealer inventory levels in the history of our corporation," Olson said. "My gut tells me we're an eyelash away from this replenishment cycle restarting."

Winnebago has been cutting costs to cope with the downturn. Last week, the company announced the closure of a fiberglass factory in Hampton, Iowa, resulting in the loss of 40 jobs. The announcement came just months after it announced pay cuts across its salaried work force.

Several of Winnebago's competitors, including Monaco Coach Corp. and Fleetwood Enterprises Inc., have sought bankruptcy protection and sold off assets in recent months.

One key problem for the industry is the tight credit markets, which Olson said has locked out all but those with the most-sterling credit histories. Many dealerships are asking for down payments of as much as 20 percent, while many lenders are requiring credit scores of 725 to 730 "before you even get looked at," he said.

"We're seeing that some of the local banks, some credit unions, are helping" prospective buyers, he said.

"But I will say their criteria to lend money has become very, very stringent."

Shares of Winnebago rallied Thursday despite the weaker results. Shares rose 78 cents, or 12 percent, to $7.26 in midmorning trading.

The stock has more than doubled from a 52-week low of $3.14 in March, but is off from a high of $15.20 last year.