Sells new and used recreational boats, including pleasure boats (such as sport boats, sport cruisers and yachts) and fishing boats, with a focus on premium brands in each segment. The Company also sells related marine products, including engines.
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Troubled waters ahead.
MarineMax, Inc. operates as a recreational boat dealer with 88 stores in United States. It sells new and used recreational boats, including pleasure boats (such as sport boats, sport cruisers, sport yachts, and yachts), and fishing boats, with a focus on premium brands in each segment. It also sells a line of boating accessories, including life jackets, inflatables, and water sports equipment and other marine related products.
The past performance of the company has been good with decent level of revenue growth. However, the company is not likely to sustain the same level of growth in fiscal 2007 since the future outlook is negative. Since the company offers luxury goods, its business is severely affected by the economic environment. Housing slump in US is discouraging the customers to make big-ticket purchases like boats. MarineMax has already started getting a sinking feeling by incurring a loss in December quarter. Events like boat shows are the major revenue drivers for the industry. However, this year these actions are likely to slow down due to the economic slowdown. Management expects decline in operating margin due to higher marketing spends owing to softness in the industry.
As per the recent industry data, the segments in which the company operates have dropped in revenue terms and the slide is expected to continue. Further about 59% of company’s revenues come from sales of new boats manufactured by Brunswick. As the demand is expected to fall in future, Brunswick is on the threshold of downsizing its staff. Discouraging trends have provoked the management to lower its earnings outlook, which indicates a sharp fall of 27% in the full year earnings of fiscal 2007. Thus, diving is tough and the sea is gazing wildly at MarineMax.
No anchor for MarineMax.Fortunes of the retailer MarineMax, that sells new and used recreational boats look precariously hinged as a result of slowdown in the U.S economy. Deceleration of the housing market in the U.S has daunted the consumers from making pricey purchases like boats. Credit crunch stemming in the mortgage market is likely to trigger further weakness in the housing market. Albeit, MarineMax has registered a revenue growth of approximately 30% in the first quarter of fiscal 2007, bottom-line has suffered massively on account of heavy marketing and promotional expenses incurred to promote the sales. Additionally, escalating crude oil prices could discourage the top-line performance of the company as recreational boats, that are sold are powered by diesel or gasoline engines. As per the management estimates, the segments of the retail boating industry in which the company operates are down in the range of 10% to 15%. In order to survive in the rough weather, MarineMax is trimming down the purchases from the suppliers to cool off their pressure of inventory-clearance. Yet, as anticipations of the continued softness in the industry is high, management expects the challenging environment to take toll on its EPS that is expected to decline by over 38% in fiscal 2007. Viewing these elements, the scrip does sail through a rough weather in the near future and this is certainly not a Bon voyage.