Double-digit sales and profit drops didn't stop Arctic Cat's stock from gaining almost 14 percent Thursday after the Plymouth-based maker of snowmobiles and all-terrain vehicles beat Wall Street expectations.
CEO Chris Twomey said the recession ended in the third quarter, but he still expects purchases of his recreational products to lag overall consumer spending that is anemic.
His business plan also is built on the U.S. unemployment rate lingering above 9 percent "well into 2010," which he anticipates will affect how many people will even consider buying power sports equipment.
Arctic Cat, with its main production plant in Thief River Falls, Minn., has slashed 12 percent of its workforce in response to the recession and executives have focused on controlling other operating costs and reducing inventory.
Consequently, the company achieved a profit of $14.8 million, down 13 percent from a year earlier, for the second quarter of fiscal 2010 that ended in September. Arctic Cat's earnings per share of 81 cents outpaced the analysts' forecast of 62 cents.
The company's profit slide was smaller than the sales decline. Revenue fell 19 percent in the quarter to $166.3 million.
Twomey welcomed the snowstorm that hit Colorado Thursday. "While this early snow always melts except in the high elevations or the mountains, it always excites our customers and builds anticipation for the upcoming snowmobile-riding season," he said.
During the second quarter, snowmobile sales dropped 13 percent to $85.7 million, all-terrain vehicle sales were off 28 percent at $51.7 million and parts, garments and accessories fell 16 percent to $28.8 million.
