Johnson Outdoors, Inc. reported total company net sales increased 7 percent to $202.1 million in the fiscal second quarter ended March 31, compared to $189.6 million in the prior-year second fiscal quarter. The company attributed the growth to strength in their Diving and Fishing businesses that offset declines in Camping and Watercraft sales. Operating profits declined for the period but were offset by a gain on the sale of the Military and Commercial Tents product lines in the Camping segment.
“Supply chain challenges have significantly improved, and we continue to work hard to fill customer orders in our Fishing business,” explained Helen Johnson-Leipold, chairman and CEO of Johnson Outdoors, Inc. “Diving continues to benefit from an increase in travel. Conversely, our Camping and Watercraft Recreation businesses are experiencing softer markets as they stabilize after high growth experienced during the pandemic. Looking ahead, while we continue to monitor consumer demand and navigate uncertainties in the marketplace, we remain focused on sustaining innovation leadership for the growth and success of our brands.”
Fishing sales increased by 20 percent, driven primarily by price increases and improved supply and component availability which allowed for fulfillment of orders driven by solid customer demand.
Diving sales increased by 12 percent over the prior-year period due to increased product availability in the current year, as well as continued growth in global post-pandemic travel.
Camping revenue decreased 28 percent, due to high retail inventories and a decline in consumer spending.
Watercraft Recreation revenue declined 44 percent, reflecting significant reductions in the overall market.
Gross margin was 37.3 percent of sales in the quarter, compared to 36.2 percent in the prior-year quarter. The margin improvement was due primarily to price increases and efficiencies from increased sales volumes.
Operating expenses of $63.9 million rose $10.8 million from the prior-year period due primarily to the impact of higher sales volume-driven expenses, as well as higher warranty, compensation, professional services and deferred compensation expenses between quarters.
The resulting total company operating profit was $11.4 million for the second fiscal quarter versus $15.4 million in the prior-year second quarter.
Profit before income taxes of $19.9 million in the current-year quarter increased $6.7 million from the prior-year second quarter, driven primarily by a $10.1 million increase in Other (income) expense, net year-over-year, which more than offset the decline in operating profit. Included in the current quarter’s other income was a $6.6 million gain on the sale of the Military and Commercial Tents product lines in the Camping segment, which closed on March 17, 2023. 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 above.
Net income for the quarter was $14.9 million, or $1.45 per diluted share, versus $9.9 million, or 97 cents per diluted share in the prior-year quarter.
The company reported cash and short-term investments of $107.6 million as of March 31, 2023.
“While supply chain conditions have improved, gross margins continued to be impacted by high costs in inventory from inflationary pricing conditions,” said David W. Johnson, CFO. “We remain laser-focused on monitoring demand, evaluating our expense structure, and managing higher-than-normal inventory levels. Our debt-free balance sheet and healthy cash position continue to well-position us to navigate challenging market conditions and provide us with the flexibility and resources necessary to invest in strategic opportunities to strengthen the business and consistently pay dividends to shareholders.”
