US retailer MarineMax yesterday saw its stock drop by almost 25% after it reported lower sales for its third quarter. The country’s largest boat retailer reported sales of US$329.8m for its third quarter, compared to US$345.6m a year ago. It lowered its 2017 annual guidance to the range from $1.14 to $1.24 earnings per share to $0.97 to $1.02.
In a call with analysts, MarineMax executives insisted that its business was “just fine”, and that the decline in sales for boats over 60ft that caused its lower sales numbers is temporary.
Chairman Bill McGill said that buyers of 60ft-plus yachts, which represent about 10% in sales, were slower than usual in making a decision to purchase. McGill blamed “slow progress” in Washington for his buyers’ hesitation. “Pushback by the Democrats” in Congress to President Donald Trump’s policy and tax initiatives, as well as talk about impeachment, has created “uncertainty” among buyers of large-ticket items, said McGill.
The MarineMax chief insisted the trend would be temporary. “These buyers are just taking a longer time to get the deal done,” he said. “We've seen an uptick in the bigger boat business in the last few weeks and we don't believe that it's something that's going to continue over a long-term.”
“That specific segment has been fairly hot since the recession ended,” noted Mike McLamb, CFO. “This is the first time there's been somewhat of a pullback since probably 2011. We and others in the industry believe it will be short lived once things in Washington get moving in one direction or the other.”
Despite softness in yacht sales, McLamb said that total unit sales were up at MarineMax by single digits. If yachts over 60ft and sales in the northeastern US, which experienced rainy weather, had been factored out, MarineMax’s same-store sales would have been up by 11% for the quarter, he said.
“The fact that we produced reasonably positive unit growth over last year's strong June quarter is why we are convinced about the long-term state of the industry,” said McGill. “Pent-up demand for new models continues to be greater than any point in time over my 40-year career.”
McGill said US dealers believe that new and used-boat inventory is “tighter” than it should be. “Many of our stores had less inventory than we would have liked for certain recreational day boats and we are fairly confident that our unit growth would have been measurably higher if we had had this additional product in our stores,” said McGill. “The business is doing just fine, the big boat business is taking a little longer to get it done.”