The predicted slowdown in military tent sales became a reality at Johnson Outdoors during their fiscal second quarter ended April 1, but the softness in the category was offset by sales growth in the Marine Electronics division, driven by the acquisition of Humminbird in May of last year. Total Company net sales in the second quarter rose 11.1% over the comparable 2004 period due solely to the addition of the Humminbird brand.
The Watercraft division posted an improved quarter, but the segment is still running in the red for the year. During a conference call with analysts and the media, President and COO, Jerry Perkins said that Watercraft sales to their top ten retail customers were up in the double digits and the company set an “all-time sales record” at two recent east coast consumer kayak shows. The decline in sales in the Watercraft division is due to the discontinuation of certain “low-margin specialty kayaks.” Increased efficiency in manufacturing drove a $1.1 million improvement in Watercraft operating losses.
The Outdoor equipment division still would have seen sales decline roughly $350,000 excluding the military tent business impact. The military tent business accounted for about three quarters of the total shortfall. Johnson Outdoors has been quite active lobbying congress concerning their issues with the military business. Operating margins in the outdoor division declined 380 basis points to 14.8% compared to 18.6% last year.
Diving sales showed a $600,000 benefit from favorable currency translation, but it was offset by soft markets worldwide.
The most profitable segment was the Marine Electronics division, which actually saw its operating margins decrease 400 basis points from 23.5% to 19.5% due to lower margins at the acquired Humminbird division.
|Fiscal Second Quarter Results|
|(in $ millions)||2005||2004||Change|
|Gross Margins||43.1%||44.2%||-110 bps|