- The Washington Times - Thursday, March 19, 2009

NEW YORK (AP) - Winnebago Industries Inc. posted its third consecutive quarterly loss on Thursday as sales of RVs continued their downward slide amid locked-up credit markets that make it difficult for consumers to get financing.

“It’s extremely challenging to compete profitably in a market of this nature,” Winnebago Chief Executive Bob Olson said in a conference call.

The recreation-vehicle maker said it lost $10.4 million, or 36 cents per share, in its fiscal second quarter, which ended Feb. 28. That’s after a profit of $2.5 million, or 9 cents per share, in the same quarter last year. Wall Street analysts were expecting a narrower loss of 31 cents per share in the most recent quarter, according to a survey by Thomson Reuters.

Revenue plunged 81 percent to $31.8 million from $164.2 million, falling short of analysts’ estimates of $42.7 million in revenue.

RV dealers have been closing their doors across the country as consumer spending falls. Increased incentives have largely failed to lure buyers. Sales of RVs are closely tied to discretionary spending, which has fallen sharply in the economic recession.

In recent weeks, the downturn has claimed two of Winnebago’s main competitors. Fleetwood Industries Inc. and Monaco Coach Corp. filed for Chapter 11 bankruptcy protection within days of each other earlier this month.

“We anticipate continued softness in motor-home sales until we see improvement in the credit markets at the wholesale and retail levels and in consumer-confidence levels,” Olson said.

In 2008, RV shipments fell 33 percent, according to the Recreation Vehicle Industry Association. In January alone, they plunged more than 70 percent.

Chief Financial Officer Sarah Nielsen said falling RV sales have severely hurt revenue during the first half of the fiscal year and, “as a result, maintaining liquidity and conserving capital are the primary goals of management.”

Mary-Beth Kellenberger, senior consultant at Frost & Sullivan who follows the transportation industry, said the company has been working to cut costs but is facing huge inventories.

“They recognize that they are one of the few and may be possibly the last man standing in the industry and are trying to manage through that possibility,” she said.

The Forest City, Iowa, company has been working to cut costs. Last month, Winnebago announced a round of pay cuts for its salaried work force. CEO Olson took a 20 percent pay cut, while other executives faced 10 percent pay reductions and white-collar workers took 3 percent pay cuts.

Olson said Thursday that hourly and salaried workers took a one-week unpaid furlough in the second quarter. A second weeklong furlough is scheduled for employees during the fourth quarter, he said, adding that the company was looking for additional ways to save costs.

Shares of Winnebago fell 29 cents, or 5.3 percent, to $5.15 in morning trading Thursday following the results. The stock has lost more than 70 percent of its value over the past 52 weeks.

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