Johnson Outdoors, Inc. posted lower sales and decreased earnings results for its first fiscal quarter ending December 29, 2023. Total company net sales in the fiscal first quarter declined 22 percent to $138.6 million compared to $178.3 million in the prior year first fiscal quarter.

Key contributing factors include:

  • Fishing sales declined by approximately 20 percent, driven by high retail inventories and lower consumer demand;
  • Diving sales decreased 8 percent over the prior-year quarter, mainly due to a 6 percent negative impact on sales due to foreign currency translation;
  • Camping revenue declined 49 percent, approximately half due to the sale of its Military and Commercial tents business in 2023; the remainder was due to high retail inventories and a decline in consumer spending; and
  • Watercraft Recreation revenue declined 50 percent, reflecting continued significant reductions in overall market demand.

“We’re facing a tough marketplace with high inventory levels at retail and lower consumer demand resulting in soft first-quarter sales. We are taking steps to outperform the challenging marketplace and improve our financial results,” said Helen Johnson-Leipold, chairman and CEO, Johnson Outdoors, Inc. “Looking ahead, our focus remains consistent on investing in innovation and marketing to position our brands for success.”

Gross margin was 38.1 percent of sales for the first quarter, compared to 35.2 percent in the prior-year quarter. The margin improvement was said to be due primarily to decreased costs on “certain materials and lower inbound freight expenses.”

Operating expenses of $52.8 million decreased by $4.5 million from the prior-year period, said to be mainly due to lower sales volumes. Additionally, $1.8 million of lower professional services expenses was partially offset by $1.3 million of additional deferred compensation expenses resulting from changes in the market value of plan assets year-over-year.

Total company operating profit was approximately $0.05 million for the first fiscal quarter versus $5.5 million in the prior year first quarter.

Profit before income taxes was reported at $5.9 million in fiscal Q1, compared to $8.2 million in the prior-year first quarter. The current year’s quarter includes a gain of approximately $1.9 million on the sale of a building. Net investment gains and earnings on the assets related to the company’s non-qualified deferred compensation plan, which are included in Other income, reportedly improved by $1.3 million over the prior year quarter, which fully offset the increase in deferred compensation expense in operating expenses above. Additionally, interest income reportedly increased $0.4 million over the prior year quarter.

Net income was $4.0 million, or 38 cents per diluted share, in the first quarter, compared $5.9 million, or 57 cents per diluted share, in the prior-year first quarter.

The effective tax rate was 33.0 percent compared to 28.0 percent in the prior year first quarter.

Other Financial Information

  • Cash and investments of $114.2 million as of December 29, 2023, an increase of $10.8 million from the prior year.
  • Depreciation and amortization were $5.0 million in the three months ending December 29, 2023, compared to $3.8 million in the prior three-month period.
  • Capital spending totaled $5.0 million in the current year-to-date period compared with $6.6 million in the prior-year period.
  • In December 2023, the company’s Board of Directors approved a quarterly cash dividend to shareholders of record as of January 11, 2024, payable January 25, 2024.

“We remain focused on managing our high inventory levels, executing on our defined cost savings program, and managing our expenses to improve profitability,” said David W. Johnson, vice president and chief financial officer. “Importantly, our debt-free balance sheet and cash position enable us to continue investing in strategic opportunities to strengthen the business while consistently paying dividends to shareholders.”

Image courtesy Johnson Outdoors