Consumers avoid high-priced items like RVs, hurting Eden Prairie-based Winnebago

Winnebago does not see sales for recreational vehicles getting any better this year, but it is seeing some positive momentum in the leisure market as a whole.

The Eden Prairie-based company sells mostly RVs, but also owns the Chris-Craft and Barletta boat brands and this spring, and sales for the marine unit saw a sizable bump.

Winnebago’s strategy this spring was to introduce some lower-priced models to appeal to the cost-conscious who don’t necessarily want to take on a lot of debt.

“Consumer demand remains pressured as buyers continue to navigate economic headwinds and higher borrowing costs” said Michael Happe, Winnebago’s chief executive, during the company’s third quarter earnings call on Wednesday.

He noted that North American retail RV sales had declined by more than 8% for three straight months.

The RV Industry Association released a forecast Wednesday that predicts wholesale RV shipments slowing through the rest of the year.

Winnebago also lowered its own forecast of wholesale RV shipments. Winnebago’s new forecast is slightly more conservative than the RVIA’s forecast.

“Given ongoing pressures on consumer discretionary spending, we think significant demand-related questions remain,” wrote Garrett Nelson, vice president and senior equity research analyst at CFRA Research. “But the recent drop in oil prices (if sustained) is a positive.”

Winnebago’s revenue for the third quarter, which ended May 31, was $775.1 million, down 1.4% from the same quarter a year ago. Earnings for the quarter were $17.6 million, or 62 cents a share, down 39.3%.

Still, the company finished above analysts’ expectations, but Wall Street did not have a good reaction. Winnebago stock closed Wednesday at $28.24 a share, down 9.9%.

Still, Happe said the company hopes its new models will jumpstart sales. In the towable segment, for example, the company has introduced several cheaper options from Grand Design and the new Winnebago Thrive towable RV.

The Marine Segment had revenue in the quarter of $100.7 million, up 14.6%.

The Chris-Craft and Barletta marine brands have seen positive sales momentum, including from newer models that are also on the value end of those premium portfolios, Happe told analysts.

“Chris-Craft have continued to introduce a few models that are pretty effective on the lower half of their product lineup,” Happe said.

Happe pointed to the success of Chris-Craft’s new Sportster model. While priced between $150,000 and $200,000, it still is on the lower end of pricing for the brand.