Bad weather and continued softness in the sterndrive and inboard segments caused MarineMax to continue offering promotions and discounts in the second quarter of 2013, enabling the country’s largest boat retailer to increase market share.
“While all of our markets were impacted by adverse weather during the June quarter, the primary growth contributions came from our New York region, including Connecticut and Rhode Island, and to a lesser degree, Florida,” MarineMax CEO Bill McGill told investors and analysts during a quarterly earnings call Thursday. “Interestingly, our March quarter resulted in even more meaningful market share gains than we had previously anticipated.”
MarineMax also offered promotions in the first quarter in response to adverse weather conditions, which paid off “in a major way” in terms of market share gains, McGill said.
“Midway through the June quarter, as weather conditions persisted, we increased our promotional activities further in an effort to gain additional market share and revenue,” McGill said. “We believe we will again see strong market share gains from the June quarter, as well, but this growth came at the cost of incremental expenses, which pressured our earnings in the short term.”
“I would say some of the business we are seeing now in July is as a result of the efforts we have put forth last quarter to help drive it,” McGill said. “And so, we are encouraging our people to get onto the water. We’ve got a lot of promotions going on right now, not only with the manufacturers, but also internally to get people into the showroom and also get them on our gateways and get them out boating.”
MarineMax CFO Mike McLamb said the promotions should be short-term.
“Given the industry data I think everybody has seen on sterndrive and inboard boats, which is our primary product, [sales] were soft in the June quarter,” McLamb said. “We are incrementally more promotional right now to keep driving business into shorter markets.”
“If you see negative industry data in sterndrives and inboards, both of which today are still primarily the biggest part of our business — although we're becoming more diversified with aluminum pontoon and fishing boats, ski boats and all that — but if you see the type of negative data that you saw, you can probably assume that we experienced it,” McGill said. “I would like to say we're fighters and we are scrappers, so we're trying to make business happen and so our earnings may be pressured.”
New York and New Jersey continued to be tough markets in the wake of Hurricane Sandy, McGill said, adding that he believes pent-up demand will cause a sales boost in 2014.
— Reagan Haynes