Johnson Outdoors is taking full responsibility for their poor performance in the fourth quarter. Chairperson and CEO Helen Johnson-Leipold said repeatedly said in a conference call with analysts that the management team is “disappointed”, and “Its time to perform”.
The real disappointment for JOUT in Q4 was the huge loss posted by the Watercraft division of the business. Most of this was attributed to the company simultaneously attempting to restructure the division and implement the JD Edwards operating systems.
“What we proved is you cannot change all of these things at once,” said Jerry Perkins, COO for Johnson. In spite of the problems with these implementations, JOUT still plans to go ahead with JD Edwards throughout the Watercraft division.
While Watercraft was the only division to post an operating loss, it was not the only subject brought up by the investors, and it was not the only division where JOUT may be experiencing troubles.
Analysts raised a number of questions about the effect of military sales on the Outdoor Equipment division as well. JOUT just lost a renewal bid for modular tent systems worth $45.2 million (see SEW_0341). For Q4, military sales were said to be about 70% of the Outdoor business, and around 61% of YTD Outdoor sales.
The JOUT management team said that they are attempting to diversify tent sales to more balanced, but they continue to bid “ on every (government) contract thats out there”. The effects of the lost military business have yet to show up on any financials, but JOUT expects to see these “in 2005 and beyond.”
The Diving division has seen its share of troubles as well. Between a plot to take over the division by its former head (SEW_0336), and product liability lawsuits (SEW_0330), management has had their hands full. Currently they are looking for a new head for the diving division with Perkins saying, “I have a large stake in finding a new head, since I personally have been running (the division) for the last three months in addition to my other duties.”
The company is also facing a series of lawsuits stemming from their voluntary recall of a UWATEC dive computer, and several injured divers that allegedly resulted from the computer malfunctioning. JOUT has settled at least one case, with the others pending trial. Perkins said, “We have a strong case based on the facts.”
The company would not make any solid predictions about future performance. When asked if things would get worse before they get better, Perkins simply replied, “We assume not.”
>>> A lesson for companies that see the military business as the Holy Grail for growth. It can go away as fast as it comes in…
