Johnson Outdoors (Scubapro) troubles

[Leadking]

It appears the diving industry is being hit hard in the current economic melt down.

What can you add to the small amount of info available as to the state of the dive industry?
Johnson Outdoors' stock (JOUT) is down 70% this year.
- selected newswatch item -
Johnson Outdoors posts loss, tightens budget
By Tom Daykin of the Journal Sentinel
Dec. 5, 2008 | Racine-based Johnson Outdoors Inc. has cut its work force, and it is taking other cost-savings steps, after posting a $74.6 million fourth-quarter loss Friday.

Johnson Outdoors, which makes boats, diving gear and other outdoor recreation equipment, is struggling with declining sales as the economy deteriorates, a company statement said.

The biggest impact on the company's quarterly results was a non-cash asset impairment charge of $41 million.

That goodwill write-down contributed to a quarterly loss of $8.18 a share for the three months ended Oct. 3. That compares with net income of $942,000, or 10 cents a share, a year earlier.

The company's sales declined 6% to $81.8 million, from $87.3 million.

Read Full Article

Johnson Outdoors posts loss, tightens budget - JSOnline

 

[redacted]

The scuba manufacturer we love to hate and hate to love.

I guess this "Meanwhile, Johnson Outdoors is focusing on using its "marketing and innovation expertise" to drive demand for its products, said Chairman and CEO Helen Johnson-Leipold, in a statement." must refer to the boat and other outdoors equipment divisions. As long their scuba division insists on sticking with their 1980s marketing schemes, they are going to continue to loose ground to newer companies that recognize divers are their real customers, not dive shops.

 

[Web Monkey]

The scuba manufacturer we love to hate and hate to love.

I guess this "Meanwhile, Johnson Outdoors is focusing on using its "marketing and innovation expertise" to drive demand for its products, said Chairman and CEO Helen Johnson-Leipold, in a statement." must refer to the boat and other outdoors equipment divisions. As long their scuba division insists on sticking with their 1980s marketing schemes, they are going to continue to loose ground to newer companies that recognize divers are their real customers, not dive shops.

Actually it doesn't say anything about which businesses are losing money.

I'd expect SCUBAPro would be more profitable with an easier to control manufacturing volume than a factory that builds boats and outboard motors.

Terry

 

[Nemrod]

Johnson Outdoors does not own or make Johnson outboard motors. BRP owns the brand names for Johnson and Evinrude having bought those brand names from OMC, Outboard Marine Corporation, the former company that actually produced Johnson, Evinrude, Lawnboy and a few other well known names. Toro purchased the brand name Lawnboy. None of them have anything to do with Johnson Outdoor Corp that owns ScubaPro, Ocean Kayak and similar outdoor companies.

If you don't actually build stuff, products, value added material items that employee people doing so and produce revenue and multiplier effects then the US economy will trcikle down to nothing, sort of like it is doing now. After being ripped off by paying over 4 dollars a gallon for gasoline, then having their jobs pulled from under them it is no surprise that consumers are not buying recreational equipment.

Go ahead and sign that carbon treaty that will offshore more jobs to countires that don't participate, watch the economy dry up, watch those home prices fall, give all of the money our great granchildren will pay in humongous taxes to country club financial institues and companies whose CEOs just circulate from company to company like some kind of exclusive club.
N

 

[Web Monkey]

Go ahead and sign that carbon treaty that will offshore more jobs to countires that don't participate, watch the economy dry up, watch those home prices fall, give all of the money our great granchildren will pay in humongous taxes to country club financial institues and companies whose CEOs just circulate from company to company like some kind of exclusive club.
N

I expect "local diving" will become a lot more popular in the next few years, with lots of divers that have plenty of "free time".

Things are just starting to slow down and I've got 3 friends that are already out of work.

Terry

 

[PhilEllis]

Lee, good to see a post from you again...............

Let me begin by saying I am not a ScubaPro dealer, don't own any JOUT stock, and don't have any insider (or outside) information about the company. That said, it would be unfair to the word "ugly" to call the situation at Johnson Outdoor ugly. For a company that had such a stable stock price and such stable earnings, this economic downturn has not been very nice to them, and I am almost certain that the ScubaPro part of it is a gigantic contribution to their problems.

In this economy, there are basically two kinds of scuba companies.....those that are doing very, very bad and those that lie about it. The sales volume collapse that most retailers (and by extension, most wholesalers) have seen can only be described as a disaster. It is my view that the entire face of the industry will look much, much, much different at the end of this thing. A very large percentage of the retailers will be gone and I would not be surprised to see some major manufacturers names gone as well.

Most (over 50%) of scuba retailers do an annual gross sales volume of under $250,000 per year. Most in this group are property renters. For the past three months, I have braced myself at the beginning of each month for the rash of store closings. After all, if you are a renter and you can't pay the rent at the first of the month, you close. The cost of doing the scuba business continues to rise with inflation. The revenue of doing the scuba business continues to fall with this economy. This is a horrible combination for an industry already full of marginal dealers, manufacturers, and distributors. I hope to be wrong, but it doesn't look good to me.

Back to Johnson Outdoor, they have had a stock price collapse (much larger than most in their industry group). It is difficult to determine how individual divisions at Johnson perform, but I would bet that the pain and negative cash flow at ScubaPro is a large part of their problem. I expect that claims to the contrary are just "whistling through the graveyard".

Note: I have attached a graph of JOUT stock. Not good.

Phil Ellis
www.divesports.com

 

[Leadking]

The purpose of my post is not to "beat up Scubapro" but to start a dialog about the current state of the dive industry. As I have sold my business and no longer talk with my dealers on a daily basis and cannot find a forum for discussing the business of diving, I elected to post here.

I do not believe the Johnson Outdoors/Scubapro situation is unique. Because it is a publicly traded stock, its situation is more visable.

I am looking for people involved in the industry to inform me (us) what is going on.

If it makes you more comfortable, please PM me, all pm's will remain confidential.

 

[PhilEllis]

As long their scuba division insists on sticking with their 1980s marketing schemes, they are going to continue to loose ground to newer companies that recognize divers are their real customers, not dive shops.

I typically agree with most of what you write, but in this case, I could not disagree more. While the problems of the scuba industry are deep, wide, and complicated, I don't think your quote above is one of them. In fact, it is my belief that many of the problems experienced today by scuba manufacturers results from actually THINKING that divers are their direct, primary customers. Much of the condition of the current dealer network can be attributed to the fact that the scuba companies have FAILED to realize who their primary, direct customers are. Had they realized this earlier, the treatment and support (and condition) of the dealer network would be much, much different.

Right, wrong, or indifferent....the customers that come to my store are customers THAT I OBTAINED, not customers that were obtained for me by a scuba company. If you think the commerce side of scuba is screwed up now, you can't IMAGINE how bad it would be if you were a direct customer of the average scuba manufacturer.

Phil Ellis
www.divesports.com

 

[Stu S.]

Brands like Aqualung, Mares, Scubapro, etc., are part of larger companies. It may be difficult for a non-employee to obtain information about the performance of the dive equipment business of that corporation.

Think of "Johnson's Wax", and that' the roots of Johnson Outdoors. Here's a little history.

About Johnson Outdoors

 

[scubajcf]

This is just an exerpt of the overall business results for the quarter ending June 2008. I would note, that Scubapro is an international business and seemed to have had benefit from the weak dollar over the summer. I would guess that due to the company's weakness, writedowns and cost trimming, this will effect inventory levels and maketing in 2009.

FD: I have NO connection whatsoever to Johnson Outdoors.


JOHNSON OUTDOORS INC.
Net Sales

Net sales on a consolidated basis for the three months ended June 27, 2008 were $141.2 million, a decrease of $8.7 million compared to $149.9 million for the three months ended June 29, 2007.

Net sales for the three months ended June 27, 2008 for the Marine Electronics business were $62.4 million down $8.6 million or 12.1% from $71.0 million in the prior year quarter. This decrease was due to general economic conditions and weakness in the domestic boat market, which reduced demand for trolling motors and downriggers, and unfavorable volume comparisons due to initial stocking of new products in the prior year. This weakness was partially offset by incremental sales from the recently acquired GEONAV business, which added $4.9 million of sales, and higher sales of Humminbird fishfinder / GPS combo units.

Net sales for the Watercraft business were $34.6 million, a decrease of $1.8 million or 4.9%, compared to $36.4 million in the prior year quarter due to weak economic conditions, partially offset by stronger international sales.

Net sales for the Outdoor Equipment business were $17.1 million for the current quarter, a decrease of $0.1 million or 0.6% from the prior year quarter sales of $17.2 million. Military and commercial tent sales were down $0.5 million and $0.4 million respectively, partially offset by an increase in consumer tent and international sales of $0.5 million and $0.3 million, respectively. The decrease in commercial tent sales reflected cautious spending by rental companies in the face of a weakening domestic economy. Consumer tent sales increased due to strength in the overall camping markets.

Net sales for the Diving business were $27.3 million this quarter, versus $25.5 million in the prior year quarter, an increase of $1.8 million or 7.1%. The increase was due to favorable foreign currency exchange translation.

Net sales on a consolidated basis for the nine months ended June 27, 2008 were $339.0 million, a decrease of $4.3 million or 1.3% compared to $343.3 million for the nine months ended June 29, 2007.

Year to date net sales for the Marine Electronics business were $157.2 million down $7.8 million or 4.7% versus $165.0 million in the prior year period. This decrease was due to general economic conditions and weakness in the domestic boat market, which reduced demand for trolling motors and downriggers, and unfavorable volume comparisons due to initial stocking of new products in the prior year. This weakness was partially offset by higher sales of Humminbird fishfinder / GPS combo units, as well as incremental sales from the GEONAV business, acquired in November 2007, which added $10.3 million in sales for the year to date period.

Year to date net sales for the Watercraft business were $71.8 million, an increase of $1.3 million or 1.8%, compared to $70.5 million in the prior year period. The increase in Watercraft net sales was due to growth in watercraft accessories, entry-level kayaks, and growth in international markets.

Year to date net sales for the Outdoor Equipment business were $38.3 million, down $8.1 million or 17.5% from prior year to date net sales of $46.4 million. This change in net sales was driven largely by a decline in military sales of $7.0 million and a decline in commercial tent sales, which was down due to softness in the U.S. economy and a specialty markets sales program in the prior year, partially offset by growth in consumer tent sales in the current year.

The Diving business had year to date net sales of $72.3 million, an increase of $10.4 million or 16.8% from the prior year period net sales of $61.9 million. The primary drivers of this increase were new product launches, favorable foreign currency exchange translation of $5.3 million and incremental sales from the Seemann acquisition. The Seemann business, acquired on April 2, 2007, added $4.0 million in sales for the nine month period ended June 27, 2008.