By Charlie Lunan
Johnson Outdoors Inc. (Nasdaq:JOUT) reported flat sales in its fiscal third quarter, ended July 1, as its dive segment, tents sold to large retailers and currency exchange rates dragged down growth and profits compared with a year earlier.
Strong demand for new products from Minn Kota and Humminbird drove sales at the marine electronics segment up 2.2 percent to a record $88.1 million. Segment profits soared 36.8 percent, or 5.4 percent, to $20 million.
At the watercraft segment, revenue dipped less than 1 percent to $19.3 million despite a 4.2 percent growth at Old Town, which has gained share in kayak fishing since launching a line of redesigned Predator boats three years ago. Despite flat sales, operating profits improved $560,000, or 24 percent, to $2.89 million.
“In the last four years, Old Town Predator boats have captured three best boat honors at ICAST, the latest at this year’s show for the Predator PDL, our first pedal drive kayak for the fast-growing pedal kayak fishing segment,” noted JOUT Chairman and CEO Helen Johnson-Leipold. “Our efforts have succeeded in both returning watercraft to profitability a year ahead of schedule and growing profits at a faster pace than anticipated.”
At the outdoor equipment segment, double-digit growth in sales of camp stoves at Jetboil — which is sold primarily by specialty camping retailers — could not overcome a decline at Eureka, whose tents saw a drop in sales at large retailers. Revenues fell $2.4 million, or 15.3 percent, to $13.2 million, and operating profit fell 25.5 percent to $1.17 million.
“The camping tent market is having a tough year, and Eureka is feeling the impact of that downward pressure,” said Johnson-Leipold. “We have taken steps to reduce our cost structure near-term.”
Diving revenue slipped 4.8 percent to $18.8 million, due largely to continued declines in sales to Middle East dive markets. That and currency translation resulted in an operating loss of $6.2 million, compared with a profit of $947,000 a year earlier.
Johnson Outdoors reported total gross margin of 42.6 percent, up 90 basis points from the year-earlier quarter. Net income dropped 32 percent to $6.8 million, or 68 cents per fully diluted share, due largely to a $6.2 million non-cash goodwill impairment charge taken at the dive segment. That charge was partially offset by a $4.6 million drop in legal expenses, which jumped a year earlier amid a patent dispute with Garmin International that Johnson Outdoors ultimately won.
For the nine months ended July 1, Johnson Outdoor’s total sales reached $358.8 million — up 4 percent from the same prior-year period, or up 5 percent in currency-neutral terms. Total company operating profit soared 66.5 percent to $27.8 million, as higher volume and improved margins in marine electronics and improved performance in watercraft more than offset profit shortfalls in diving and outdoor gear. Net income was $15.6 million, or $1.56 per diluted share, compared to $9.4 million, or 95 cents per diluted share, in the same period last year.
Photo courtesy Eureka/Johnson Outdoors
