Johnson Outdoors reported overall sales and income growth for the second fiscal quarter of 2004, but in reality only two of the four divisions maintained the same profitability levels of last year. Outdoor Equipment and Motors both showed strong sales increases and corresponding operating income growth. While the Diving division kept its head above water due to exchange rates, it is suffering from a slow-down in the industry as a whole, and Watercraft is still leaking red ink.
JOUT said that a majority of the Outdoor equipment volume increase came from a 54.3% jump in military sales, which the company called “higher than average.”
In a conference call with analysts, Jerry Perkins, COO, said that the number one goal for the Outdoor division is to stabilize the commercial and consumer tent categories and create a more balanced spread of profits. According to Perkins, commercial sales climbed 7% and the operating profits doubled. Consumer sales are down for Q2, but “picked up in March.”
The company is clearly trying to reduce its reliance on military business while reaping the benefits of the increased demand from this key customer. “Strong military sales are giving us the time we need to target the right mix of products and programs to grow the consumer and commercial tent segment, and we're taking full advantage of the opportunity while we can,” Perkins said on the call. He also said that, for the Outdoor division, everything is riding on the key third quarter.
The JOUT management team continues to pour resources into the struggling Watercraft division. Helen Johnson-Leipold, chairman and CEO, quipped that it was “disappointing” that the efforts had not translated into the bottom line. She did say the company still remains committed to the division. Three quarters of the $300,000 sales decline in the division was attributed to lower than expected orders from “a major leisure life customer.” The rest was said to be due to production inefficiencies related to new kayak molds in their west-coast manufacturing facility.
The silver lining for the Watercraft division is Old Town Canoe. This is the one division where the J.D. Edwards systems have been fully implemented, and the results are beginning to show. Sales for the brand increased 33% for the quarter and doubled in March.
The only questions by analysts during the conference call were concerning the proceedings around the Johnsons offer to buy back the company at $18 per share.
One analyst told BOSS that the only thing left for share holders to do was file lawsuits, but he doubted even that would make much difference. “Its pretty much pro-forma,” he said. “What the family should do is come back with an offer of around $21 a share, and that would ease a lot of investors concerns.”
