Johnson Outdoor’s sales increased by 7 percent in the fiscal second quarter ended March 31. On an analyst call, Helen Johnson-Leipold, chairman and CEO, said improved product availability in Fishing and continued momentum in Diving offset a “post-pandemic slowdown” affecting its Camping and Watercraft sales.
Sales reached $202.1 million in the quarter against $189.6 million a year ago. Sales are up 11 percent in the year-to-date period.
“Over the past few years, we’ve seen higher participation in outdoor activities and have benefited from the pandemic-fueled demand,” said Johnson-Leipold. “Now, coming out of the pandemic, we’re facing more challenging markets and uncertainties affecting our customers and consumers.
Fishing segment sales increased by 20 percent to $155.3 million. Johnson Outdoor’s Fishing segment brands include MinnKota, Humminbird and Cannon.
“Supply and component availability significantly improved, allowing us to fill more customer orders,” said Johnson-Leipold. “Near-term customer demand continues to be solid, and we’re continuing to monitor consumer takeaway.”
Sales in its Diving segment, which includes Scubapro, advanced 12 percent to $20.3 million, also aided by increased product availability in the current year. Said Johnson-Leipold, “Momentum continues as the market rebounds from depressed pandemic levels and increased global travel.”
Camping revenue decreased 28 percent to $13.7 million due to high retail inventories and declining consumer spending. Watercraft Recreation revenue declined 44 percent to $12.9 million, reflecting significant reductions in the overall market. The Camping segment includes Eureka! and Jetboil while the Watercraft segment includes Old Town and Carlisle.
“In camping and watercraft recreation, both markets are impacted by a post-pandemic slowdown. Retailers have built up inventory and now have a lot of products on the shelf to work through. Meanwhile, consumer spending has slowed,” said Johnson-Leipold. “Consumer-focused innovation is critical for both the new and existing participants in these activities. In the higher end, our innovative Old Town Sportsman lines continued to do well.”
Operating profit declined 26.0 percent to $11.4 million from $15.4 million in the prior-year second quarter.
Gross margins improved slightly to 37.3 percent from 36.2 percent due primarily to price increases and efficiencies from increased sales volumes. However, operating expenses increased $10.8 million versus the prior year’s second quarter due to higher sales volume-driven expenses and higher warranty costs, compensation costs, deferred compensation expenses and increased professional services.
Net income for the quarter improved to $14.9 million, or $1.45 a share, versus $9.9 million, or 97 cents, in the prior-year quarter, boosted by a gain of $6.6 million gain on the previously-announced sale of the Military and Commercial Tents product lines in the Camping segment. The sale closed on March 17.
Additionally, net investment gains and earnings on the asset related to the company’s non-qualified deferred compensation plan improved by $3.3 million, fully offsetting the increase in deferred compensation expense in operating expenses.
“Looking ahead, we continue to stay on top of marketplace conditions and monitor consumer buying behavior,” said Johnson-Leipold.
David Johnson, VP and CFO, said Johnson Outdoors expects margins to continue to be pressured in coming months as the company works through higher-cost inventory. He also said inflation remains a concern, and the company is reviewing and assessing its operational model to maximize operating efficiencies.
“Looking ahead, we foresee the consumer markets to continue to be challenging. We remain focused on evaluating the expense structure and delivering product on time,” said Johnson. “Our balance sheet continues to have no debt, and our cash position enables us to invest in opportunities to strengthen our business. We remain confident in our ability to navigate challenging market conditions and deliver long-term value to consistently pay out cash dividends to our shareholders.”
Photo courtesy Johnson Outdoors
