The Business Magazine of the Fishing & Marine Industry

Johnson Outdoors Sees Fiscal Q3 Sales Decline as Camping and Watercraft Contract

Johnson Outdoors Sees Fiscal Q3 Sales Decline as Camping and Watercraft Contract

Johnson Outdoors, Inc. reported that total company net sales in the third quarter ended June 30 declined 8 percent to $187.0 million compared to $203.8 million in the prior-year third fiscal quarter. Key contributing factors include:

  • Fishing sales increased by approximately 1 percent, driven primarily by product price increases;
  • Diving sales remained flat over the prior year’s third quarter;
  • Camping revenue declined 50 percent or $11.8 million, of which $4.9 million was due to the sale of its Military and Commercial Tents product lines in the second quarter and the remainder due to high retail inventories and a decline in consumer spending; and
  • Watercraft Recreation revenue declined 28 percent, reflecting significant reductions in the overall market.

“Moderating demand from the high pandemic-fueled levels of the past few years in a competitive marketplace impacted results. However, we remain focused on sustaining innovation leadership, and recently we announced an exciting line of new products in Fishing and a new cutting-edge technology in Watercraft Recreation, underscoring the critical importance of our investment in innovation to drive long-term growth,” said Helen Johnson-Leipold, chairman and CEO. “The power of our innovation and the strength of our brands continue to position Johnson Outdoors for long-term marketplace success.”

Gross margin increased to 41.5 percent of sales, compared to 36.1 percent in the prior-year quarter. The margin improvement was due primarily to price increases and lower freight and materials costs. Operating expenses of $60.1 million increased by $10.4 million from the prior-year period. The company said this was due primarily to a $5.1 million increase in deferred compensation expense related to marking plan assets to market and entirely offset in Other Income. Higher warranty expenses and advertising and promotion costs also contributed to the increase between quarters.

The resulting operating profit was $17.4 million for Q3 versus $23.8 million in the prior-year third quarter. Profit before income taxes was $19.8 million in the current-year quarter, compared to $19.2 million in the prior-year third quarter.

Interest income increased by $1.1 million over the prior-year quarter, with net investment gains and earnings on the assets related to the company’s non-qualified deferred compensation plan, included in Other Income, improved by $5.1 million over the prior-year third quarter, which fully offset the increase in deferred compensation expense in operating expenses.

Net income rose to $14.8 million, or $1.44 per diluted share, versus $14.1 million, or $1.38 per diluted share, in the prior-year third quarter. The effective tax rate was 25.3 percent compared to 26.8 percent last year.

JOUT reported cash and investments of $163.3 million at quarter-end, an increase of $45.7 million versus last year’s June quarter-end. Depreciation and amortization were $11.8 million, compared to $10.4 million in the prior nine-month period. Capital spending totaled $19.4 million in the current year-to-date period compared with $25.2 million in the prior-year period. In May 2023, the company’s Board approved a quarterly cash dividend to shareholders of record as of July 13, 2023, payable July 27, 2023.

“Looking ahead, we’re focused on continuing to improve operational efficiency to strengthen margins and are working to manage inventories appropriately as we enter the off-season,” said David W. Johnson, CFO of Johnson Outdoors. “Our balance sheet remains debt-free, and our healthy cash position continues to provide us with the flexibility and resources necessary to invest in strategic opportunities to strengthen the business and consistently pay dividends to shareholders.”