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Analyst says May boat sales aren’t that bad

Wells Fargo analysts think investors have become overly focused on the fact that May U.S. boat sales were down without considering several underlying nuances “skewing May data.”

“May U.S. retail unit sales data from Statistical Surveys Inc. perhaps has created the most cross-currents among investors in recent memory,” Wells Fargo senior analyst Timothy Conder wrote in a report.

But the data are based on 27 states and later-reporting states are added into the data about 2-1/2 months after the end of a quarter, Conder wrote.

Also, a decline in yacht unit sales from Delaware, a state that sees a large portion of offshore non-U.S. resident yacht registrations, resulted in the 17.4 percent inboard fiberglass segment decline.

“Within the industry, questions have been raised if non-residents simply are not registering product that is sold, due to increased U.S. government scrutiny of offshore residents and nonresidents,” he said.

April through July are historically key months for U.S. boat retail, accounting for 59 percent of sales.

“However, given adverse weather in Q2 2013, retail sales did not begin to kick in until July and then continued through early October,” Conder said in his report.

Year-to-date sales in 2014 are stronger despite challenges and “clearly appear to be positively accelerating throughout June,” he said.

“Our industry lending sources indicate that U.S. June retail boat unit sales have been stronger than expected, accelerating as the month progressed, including the upper Midwest and Northeast areas most impacted year-to-date by weather,” Conder wrote. “It appears that 2014 could be setting up similar to 2013, which saw strong retail sales during Q3 2013 following Q2 2013 weather-related challenges.”

The company still projects industry sales to be up overall about 8 or 9 percent in the traditional powerboat segment, while ski and wake boats and PWC will each likely see low double-digit growth.

Of the powersports companies Wells Fargo covers, Brunswick Corp. represents the best value, Conder said.

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