Winnebago Industries Grapples with Slumping Demand

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Winnebago Industries, the Eden Prairie-based RV manufacturer, is bracing for a drop in sales for the fiscal fourth quarter as demand continues to decline. Here’s what you need to know:

Earnings Expectations

In the fourth quarter that ended in late August, Winnebago Industries is projected to report earnings of $1.27 per share, down from $2.61 per share in the same period last year. According to FactSet, adjusted earnings are anticipated to be $1.36 per share.

Declining Revenue

FactSet also predicts that sales for the quarter will amount to $784.3 million, a significant decrease from $1.18 billion recorded a year ago. If these projections hold true, it would mark the fourth consecutive quarter where revenue has fallen compared to the previous year.

Key Factors to Monitor

1. Demand

The rapidly declining demand for recreational vehicles has been influenced by high interest rates, making it more expensive for consumers to finance major purchases. Additionally, persistent inflation has put a strain on consumer spending. Both Winnebago Industries and Thor Industries, another major RV manufacturer, have felt the impact, with growing inventory levels at dealership lots. Investors will be closely watching for any signs that manufacturer discounts are attracting buyers back into the market.

2. Production Strategy

Winnebago Industries regularly adjusts its production levels in an effort to align with demand. Investors will seek insight into the company’s plans for the 2024 model year vehicles. Analysts Brandon Rolle and Griffin Bryan from D.A. Davidson recently suggested that RV makers were considering a prolonged shutdown after Thanksgiving in an attempt to optimize inventory levels before the 2024 selling season commences.

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