Winnebago Industries posted a weaker-than-expected profit Friday as cautious buyers turned to motor homes that cost more to make and had lower profit margins and nervous dealers continued to cut inventories.
The news sent the company's shares down as much as 5.3 percent in pre-market electronic trading, though the stock later bounced back from those lows.
Winnebago, the No. 1 maker of motor homes, said fiscal third-quarter net income fell almost 15 percent, to $11.3 million, or 35 cents a share, from $13.2 million, or 40 cents a share, a year earlier. That was far below the 49 cents on average that analysts polled by Reuters Estimates had expected.
Revenue rose 5.2 percent to $231.7 million, below analysts' expectations for $248.2 million.
Winnebago's woes reflect wider challenges confronting the recreational vehicle business. The industry has struggled over the past two years with rising interest rates, higher gasoline prices, and flat to falling home values, all of which have weighed on consumer confidence.
In April, the most recent month for which there is industry-wide data, motor home retail registrations -- a measure of sales -- fell 9 percent, pulled down by a 4 percent decline in sales of so-called Class A motor homes, the largest, and a 17 percent plunge in sales of smaller Class Cs, one of Winnebago's sweet spots in the marketplace.
Winnebago said its results were also hurt by increased selling expenses as the Forest City, Iowa-based company tried to jump-start tepid sales by pushing its "Dealer Days" promotion event forward.
While that contributed to the company's revenue and net profit disappointments, Craig Kennison, an analyst at Robert W. Baird & Co., said in a note to investors that he was encouraged by the 45 percent jump in orders that Winnebago reported and predicted the industry was "near the bottom of the cycle."
In early trading, Winnebago shares were down 63 cents, or about 2 percent, at $29.97 on the New York Stock Exchange.
Earlier in the session, the shares dipped as low as $29.37.