Social distancing might lead to an upsurge in outdoors vacations and recreation.
Winnebago Industries saw sales drop 24% in the quarter ended May 30, as the company wrestled with temporary suspension of its manufacturing operations and sales disruptions in its dealer network due to the coronavirus pandemic, the company said last week.
But as stay-at-home orders began to relax, consumers realized outdoor pursuits represented an appealing response to living with the coronavirus — which in turn is a potential boost to companies in the outdoors industry.
“As states navigate the reopening of their communities, people are increasingly looking toward RVing and boating as ways to socially distance in a safe and memorable way,” said Michael Happe, chief executive of Winnebago.
Winnebago is based in Forest City, Iowa, but has management headquarters in Eden Prairie.
“Despite the COVID-19 disruption and ongoing related obstacles, we have not lost our focus on quality, innovation and customer service,” Happe said. “We have grown market share, strengthened dealer and supplier relationships, and maintained key investments in initiatives critical to our future.”
Polaris, too, saw an increase in side-by-side and four-seat all-terrain vehicle sales in April and May as new customers wanted family-friendly outdoor recreation, CEO Scott Wine said earlier this month.
Lake Street Capital Markets analyst Mark Smith wrote in a recent research note that Polaris stands to benefit from increased interest in outdoor pursuits. “We think consumers have increased demand for the company’s products which fits well with the changing consumer behavior of outdoor activities that are closer to home and fit with social distancing.”
Still the challenges for Winnebago’s third quarter were many.
Revenue for the quarter was $528.9 million, down 24% from the same period a year ago.
The figure includes $88 million in sales from Newmar, a luxury motor-home manufacturer the company acquired in November. Excluding the Newmar sales, Winnebago’s revenue would have been down 40% from the same quarter last year. The company had a net loss of $12.4 million in the quarter, or 37 cents a share, compared with a profit of $36.2 million, or $1.14 per share, in the third quarter of its fiscal 2019.
Winnebago said trends are now improving and that it is gaining more first-time buyers like Polaris. The new sales are allowing market-share gains, Winnebago said.
Winnebago competitor, Thor Industries, also is seeing an increased interest from first-time RV buyers. An analyst for Wolfe Research wrote in a note to investors June 16: “Management sees a strong demand for vacation alternatives, and think RVs give people the ability to travel while maintaining control over their environment.”