Hmmm. Perhaps the boating market isn't in thin waters any more. Two industry players report smooth sailing in the second quarter 2010.
West Marine reported on July 30, 2010, a second quarter revenue gain of 11.5 percent. Earnings per share for the second quarter was $1.52 compared to $1.46 for the same period last year.
CEO Geoff Eisenberg said the company benefited by last year's closure of competitor Boaters World and by good boating weather in the northeast.
Full story at MercuryNews.com.
It pays to be global for Brunswick Corporation who reported on July 29, 2010, a second quarter revenue gain of 41 percent to $1.015 billion. Net earnings for the quarter was $13.7 million, or $0.15 per share, compared to a loss of $163.7 million, or -$1.83 per share, in the same period last year.
Brunswick is the nation's largest manufacturer of recreational boats under about a dozen brands including SeaRay, Hatteras and Bayliner as well as Mercury and Mariner boat engines.
In it's conference call with investors, Brunswick pointed to continued industry weakness in fiberglass inboard and outboard boat sales. US Inboard demand was down 29 percent in the second quarter, following a 23 percent decline in first quarter 2010 and a 33 percent fall in the fourth quarter 2009. US demand for outboards fell 16 percent in the second quarter, following declines of 22 percent in the first quarter and 29 percent in the fourth quarter 2009.
Brunswick was helped by the overseas market. Boat sales outside the US was up 64 percent for the quarter while engines sales outside the US jumped 28 percent.
Profit in the boat segment was helped by less need for discounting to push retail sales out the door. However, Brunswick reported 27 weeks of inventory in its pipeline. That can't be healthy for a seasonal business.
While the outlook for the US boat market is still grim, Brunswick can count on its bowling, billiards and exercise equipment to pick up the slack. The company's business results were a surprise to analysts and its stock is up over 200 percent from last year.
For the earnings call transcript, go to seekingalpha.com.
West Marine gains by less competition and Brunswick gains from bowling ball sales and demand in Europe. Good if you can get it, but special factors only work once. Demand has to be stronger for the industry to get healthier..
My IBM background tells me to issue some disclaimers here. So I disclaim any expertise as a stock analyst. This report is not a recommendation to buy or sell stock in these or any other company. If this were a recommendation, you should do the opposite of whatever I say. I have a proven talent for buying high and selling low because, like most laymen, I tend to hold on to stocks for too long, then won't sell until it "comes back." Which explains why I'm not running my boat these days--nor in the market for a new one.
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Photo credit: Mercury Marine