Johnson Outdoors Inc. attributed a 10.5 percent drop in sales in the first fiscal quarter ended Jan. 2 to retailers continuing move toward later deliveries and more sophisticated just-in-time inventory management.
Net sales fell $8.3 million, during the quarter, down 10.5 percent, or -8.9 percent in currency-neutral (c-n) terms.
“Order positions in Marine Electronics, watercraft and outdoor gear indicate there has been a shift in orders from the first into the second and third quarters,” said Chairman and CEO Helen Johnson-Leipold, adding that the company's dealers are constantly implementing new technology that moves them closer to a just-in-time inventory model.
Johnson-Leipold emphasized the first quarter results masked growing demand for new products the company will launch this spring, including Minn Kota's Terra fishing motor and 12-foot shallow water anchor; Helix fish finders from Humminbird aimed at more moderate price points; and Old Town's top-of-the-line Predator XL fishing kayak, which is equipped with an in-console Minn Kota motor.
“We remain optimistic in our ability to deliver against our 2015 financial goal of growing profits faster than sales,” she said.
In absolute terms, the biggest declines came at the Marine Electronics segment, where continued growth in Minn Kota could not offset declines in Humminbird from non-repeating Black Friday promotions in the year earlier quarter, as well as competitive pricing actions and changes in terms on international orders in the current year quarter. The segment accounted for 56.6 percent of the decline in JOUT's sales and 88.6 percent of the operating loss during the quarter.
Outdoor Gear sales fell 23.9 percent decline due primarily to a shift in pacing of international orders and changes to sales programs in consumer camping. Watercraft sales were flat year-over-year as double-digit growth in the U.S. offset anticipated declines overseas, where the segment shut down its New Zealand operations last year in a bid to enhance long-term profitability.
Diving sales, which had shown signs of recovering in the previous quarter, declined due continued weakness in European markets and unfavorable currency translation. The lower-priced SubGear brand introduced in 20?? continued to disappoint.
The sales declines, and $2.5 million in legal costs related to JOUT's patent infringement lawsuit against Gamin International, caused JOUT's operating loss to triple. The company's net loss nearly doubled to 22 cents per share, partly reflecting a 14.5 basis point jump in the company's effective tax rate to 39.4 percent. JOUT trimmed capital spending to $1.8 million from $3.4 million in the 2014 first fiscal quarter.
JOUT sued Garmin in July, 2014, claiming its DownVu and Sidevo fish finders infringed on patents underlying Humminbird's Side Imaging products. The technology makes it much easier and more affordable for recreational fishermen to distinguish between fish, rocks, trees, weeds and other underwater objects. In its lawsuit, JOUT contends the technology enabled Humminbird to take market share from Garmin and accounts for most of the Humminbird's growth and profits. CFO David Johnson said he expects JOUT to spend another $2.5 million in the current quarter litigating the case.
