Johnson Outdoors Inc. reported second quarter sales were flat with record results a year earlier as shipments of new products by its marine electronics and diving segments offset declines at its Watercraft and Outdoor segment. While the company continues to struggle with challenges at the Watercraft segment, it attributed the decline at its Outdoor segment to a drop in tents sales to the U.S. military.
Higher healthcare claims and bad debt in Europe more than offset a $3.5 million settlement with the company's insurance carriers and a $1.5 million decline in operating costs to cause a decline in operating income. Substantially higher tax rates, meanwhile, lowered operating net income.
Total net sales reached $128.7 million, compared to $128.9 million in the prior year quarter. Excluding the $600,000 unfavorable impact of currency in the current quarter, revenue would have exceeded the record second quarter results of 2011.
Marine Electronics revenue edged up 1.7 percent due to strong performance of new products such as Minn Kota’s Talon shallow water anchor. A stern mounted device that drives a spike into sandy bottoms to hold a boat stationary, the Talon is priced at $1,299 and up at retail. JOUT Chairman and CEO Helen Johnson-Leipold also called out upgrades to the Hummingbird 360 that will allow fishermen to focus in on one-quarter slices of a 150-foot radius circle under their boat. A new version of the device that will start shipping this summer will also allow fishermen to split the screens on their displays to juxtapose underwater images with data from the company’s fish finder and side imaging sonar devices. Users will also be able to mark waypoints on a Hummingbird 360 image and set alarms to notify them when their boat drifts within casting distance of the spot.
Revenue from JOUT’s Diving business, which includes the Scuba Pro and Sub Gear brands, grew 1.6 percent due to 20 percent growth in the United States, 9 percent growth in Asia and decent growth in Northern Europe that was largely offset by weakness in Southern Europe.
Excluding currency translation, sales increased 3.6 percent.
Outdoor Equipment sales declined 8.2 percent due mainly to a 23.5 percent decline in tent sales to the U.S. military compared the prior year period. Watercraft sales slipped 5.8 percent due to lower volume across all channels and a higher mix of less expensive boats. Johnson-Leipold said the disappointing results underline the importance of JOUT’s plan to boost sales of its Necky, Ocean Kayaks and Old Town kayaks and canoes to specialty dealers.
Gross profit margin declined 200 basis points to 39.3 percent due to unfavorably product mix in Watercraft and Marine Electronics, which doubled shipments of entry level electronics to Walmart and other big-box retailers during the quarter. Inventory reserves related to a closure of the company’s Dive office in Italy also hurt profitability.
The company reported net earnings of $7.3 million, or 74 cents per diluted share, during the second fiscal quarter, compared to net earnings of $8.5 million, or 87 cents per diluted share, in the same quarter last year due large to much higher tax rates.
