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Old 03-17-2005, 01:31 PM   #1
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Industry overproduction and resultant discounting by competitors to correct motorhome inventory levels cut into Winnebago Industries Inc.'s profits for the company's fiscal 2005 second quarter, ended Feb. 26.
Shares of Winnebago's stock ended Thursday down almost 7%, or $2.34, at $32.50.
While Winnebago effectively monitored inventories internally and at the retail level, the pipeline filled up due to a simple matter of supply and demand, according to Bruce Hertzke, chairman, president and CEO for the Forest City, Iowa-based builder.
"I think some of the manufacturers are figuring out that wholesale is outpacing retail," he said during a conference call today (March 17) with investors following issuance of the company's earnings, which showed a $1.5 million decline in net income. "That's fine at certain times, but at some point retail has to catch up. And that's the situation we're in now."
Despite the "difficult retail environment," Winnebago still achieved solid profit margins of nearly 14%, while also sustaining a full work force.
"We're proud of the fact that we didn't have any layoffs," Hertzke said, noting the company was not announcing any shutdown weeks in the third quarter.
Winnebago's healthy margins were aided by the company's policy of not discounting products. But that could change if 2005 product hasn't turned by the time the company begins introducing new models.
"Right now we see the motorhome retail market as relatively flat, or comparable, to last year," Hertzke said. "If retail sales continue at that rate, we feel we can move our 2005 product out into the system before the end of the third quarter (without discounting).
"But if our 2005 products don't move in a timely manner, then we may have to offer some discounts. It's all retail-dependent."
That retail environment, which Hertzke admitted could be affected by rising gas prices, will also dictate Winnebago's strategy for the balance of the year with regard to production.
"In our estimation, we did not overproduce in the second quarter," he said. "We understand that you have to be disciplined and keep inventory levels under control. We continue to believe the market will pick up when the dealers begin ordering 2006 models and we will increase production."
Winnebago reported that it was currently operating at 70% to 75% production capacity compared to around 82% last year. But Hertzke noted that the "dynamics" are much different, which also made year-to-year earnings comparisons difficult.
"In the summer of 2003, dealers began replenishing their inventories because of pent-up demand that resulted from the war in Iraq," he said. "I think I can safely say that last (fiscal) year was the first time Winnebago was working overtime all winter
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Old 03-17-2005, 01:31 PM   #2
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Industry overproduction and resultant discounting by competitors to correct motorhome inventory levels cut into Winnebago Industries Inc.'s profits for the company's fiscal 2005 second quarter, ended Feb. 26.
Shares of Winnebago's stock ended Thursday down almost 7%, or $2.34, at $32.50.
While Winnebago effectively monitored inventories internally and at the retail level, the pipeline filled up due to a simple matter of supply and demand, according to Bruce Hertzke, chairman, president and CEO for the Forest City, Iowa-based builder.
"I think some of the manufacturers are figuring out that wholesale is outpacing retail," he said during a conference call today (March 17) with investors following issuance of the company's earnings, which showed a $1.5 million decline in net income. "That's fine at certain times, but at some point retail has to catch up. And that's the situation we're in now."
Despite the "difficult retail environment," Winnebago still achieved solid profit margins of nearly 14%, while also sustaining a full work force.
"We're proud of the fact that we didn't have any layoffs," Hertzke said, noting the company was not announcing any shutdown weeks in the third quarter.
Winnebago's healthy margins were aided by the company's policy of not discounting products. But that could change if 2005 product hasn't turned by the time the company begins introducing new models.
"Right now we see the motorhome retail market as relatively flat, or comparable, to last year," Hertzke said. "If retail sales continue at that rate, we feel we can move our 2005 product out into the system before the end of the third quarter (without discounting).
"But if our 2005 products don't move in a timely manner, then we may have to offer some discounts. It's all retail-dependent."
That retail environment, which Hertzke admitted could be affected by rising gas prices, will also dictate Winnebago's strategy for the balance of the year with regard to production.
"In our estimation, we did not overproduce in the second quarter," he said. "We understand that you have to be disciplined and keep inventory levels under control. We continue to believe the market will pick up when the dealers begin ordering 2006 models and we will increase production."
Winnebago reported that it was currently operating at 70% to 75% production capacity compared to around 82% last year. But Hertzke noted that the "dynamics" are much different, which also made year-to-year earnings comparisons difficult.
"In the summer of 2003, dealers began replenishing their inventories because of pent-up demand that resulted from the war in Iraq," he said. "I think I can safely say that last (fiscal) year was the first time Winnebago was working overtime all winter
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Old 03-17-2005, 01:41 PM   #3
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Well, I'm interested in moving to a larger unit - specifically a 39K. With three of us and the fact we are wintering in Florida (something we didn't contemplate) a shallow LR/galley slide simply doesn't cut it.

If they offer some attractive prices (which we all know will mean a lower value of trades) then I'll be a buyer. If they don't, them I'm not. IMO prices (at least in Canada) have run way ahead of inflation and new features. From 04 to 05 a 39K has increased by $30,000 Cdn and that is hard to imagine given how strong the Cdn $$ has been.
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Old 03-19-2005, 08:33 AM   #4
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I'm sorry but this calls for a negative response; the whole industry is over charging us for what we get. It's about time they start to have some hard times, this gives us more power in our demands for better quality, products and longer warranties.

When the tied is high, they screwed us and made us believe that we were getting a deal, now it's our turn and pay backs will be _____.

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Old 03-19-2005, 02:35 PM   #5
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<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by 3huskies:
"I think some of the manufacturers are figuring out that wholesale is out-pacing retail," he said during a conference call today (March 17) with investors following issuance of the company's earnings, which showed a $1.5 million decline in net income. </div></BLOCKQUOTE>The reality of a 1.5 million dollar decline in net income in my opinion is largely overshadowed by the 1 "B"illion dollars in gross sales they had in 2004. I think that's a .0015% loss VS Gross Sales. (I know net income is different) Now if my retirement portfolio performed that way, I'd take it.

We're not accustomed to seeing a loss from WGO stock especially knowing how well its been performing. I'm sure they'll recover.
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Old 03-20-2005, 11:10 AM   #6
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Sounds like nows the perfect time to buy more stock.
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Old 03-23-2005, 04:22 PM   #7
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Exactly the time to buy more stock.
No debt, plenty of operating cash and good
earnings despite a price downturn in their stock.
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Old 03-27-2005, 05:19 PM   #8
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ever heard this before fleetwood owners. winn will sugarcoat it any way they can. its time we buyers demand a quality product at a fair price. something we havnt seen from winn in 5 years now. i know i have sent several of my friends to look at the newmars and compare. something i wished i had done
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