Brunswick cites cold weather for drop in 1Q sales

Posted on Written by Reagan Haynes
Click to enlarge.

Click to enlarge.

Brunswick Corp. CEO Dustan E. McCoy and CFO Bill Metzger had one word for analysts and investors listening in to first-quarter earnings calls Thursday — weather.

Lingering and harsh winter conditions into spring took the fall for a drop in engine and boat sales, with a flurry of charts and infographics demonstrating the chilling effects cold weather has on late-winter and early-spring sales.

The company reported Thursday that first-quarter net sales fell 3 percent to $969.2 million. Sales were flat in the marine engine parts and accessories business and engine sales declined. The boat segment saw a 2 percent decline in sales.

“Weather conditions have continued to be adverse in certain key boating states and may consequently affect April retail comparisons, as well,” Metzger said during Thursday’s call. “At this early point in the marine season we believe that retail sales could be deferred to later months.”

Data show that retail demand during the first quarters of 2013 and 2014 was weak, which was inconsistent with prior quarterly trends, Metzger pointed out.

Last spring also was marred by cold and harsh weather, causing a larger overall drop in sales than it did this year, despite worse conditions in 2014.

Fiberglass outboard boats continued to show solid growth, and the aluminum category, the “most vulnerable to cold and ice,” was down modestly, Metzger said.

For Brunswick, the issue has not always been sales, but production and delivery, McCoy said.

“What we’re hearing from dealers is that they’ve got products sitting around, sold, that they’re not able to deliver,” McCoy said. “That’s especially true in the Midwest, where there’s still ice on all the water. That’s a pretty big boating market. That makes us comfortable with demand.”

The new Sea Ray L650 Fly, launched in Miami, as well as the SLX 350 and the 510 Fly, launched in Fort Lauderdale, are all sold through 2014, McCoy said. “So the issue there is not demand, but the ability of our folks to get the product out, and I’m convinced they’ll be able to do it because they’re really good.”

During the next 18 months to two years, followers might see the company looking to acquire “support marine parts and accessories businesses,” McCoy said.

The marine group will continue its focus on affordable boating options, which has been successful “but a bit differently than I would have predicted,” McCoy said.

For example, the 350 SLX, a dayboat costing $150,000 less than a 35-foot cruiser, has surpassed expectations. “So bringing product with exactly the right features into a size segment that transacts for significantly less than same-sized boats with different features is a home run,” McCoy said.

Lund has made strides to grow margins and market share by taking the price of a 19-foot boat down to what an 18-foot boat used to cost, and an 18-foot boat into the 17-foot price range, and so forth.

“What we’re seeing quite interestingly is people moving up in size,” McCoy said. “Folks who used to want a 17 are now buying an 18. So it works, but not quite the way people thought it would,” McCoy said. “People are saying, ‘Shoot, I could have a bigger, better boat.’ With the 350 … they’re saying, ‘Look at this size range, it’s much less, and that’s what I want because I don’t want a smaller boat.’ ”


3 comments on “Brunswick cites cold weather for drop in 1Q sales

  1. Curtis

    Yes we had a cold winter but that is not the main reason boat sales are flat or down.
    The economy still sucks, boats are to expensive and the average person can not afford them.
    Access to launch sites is getting tougher and the hassles of launching and retrieving take the fun out of boating.
    We have noticed a lot of people bringing their boats in for consignment because they are getting out of boating.
    I do not have the all of the answers but I know the boat business has completely changed in the last 5 years and not for the good. Our business plan has changed so many times in the last 5 years I have lost count. just hoping to hang on, like so many other dealers, if I closed at 57 were am I going to get a job and my employees are counting on me for their jobs.
    So we continue to work thru it

  2. Bob

    Curtis just made the best point that has been published here. The days of putting a boat up on your site and it sells any time soon are over. The boating industry has intrinsically changed as a result of this horrible economy and the craziness in Washington. There is no one in the Federal Government that knows how to stimulate business growth. For the boating business to come back we need a… A good stock market. B…A strong housing market C…Low interest rates. D…Unemployment under 5%.
    People will then feel confident and affluent and will begin exploring the possibility of buying a boat.
    An entitlement society does not buy boats. I have been in the boating business for forty years. And I, like Curtis am older 65, where do you go from there.
    “So we continue to work through it.” Well said Curtis.

  3. John

    Bob hit the nail on the head with full force. Over 51% of our society is in full entitlement swing. Freebee benefits are reaching close to $60K for a family on assistance programs. I understand people do need help at one time or another, but this government has created something it is finding hard to turn back around. Our bright leaders have crated nothing but a “moocher” voting block.
    Always easier to CONTROL a “dependent” society than a society that knows how to create it own paths and positive opportunities.

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments Policy.

Vote Today

What's your favorite month on the water?

View Results

Loading ... Loading ...

Login to Trade Only Today

Lost Password