Marine market downturn hits Johnson Outdoors

RACINE, Wis. – Declines in the marine electronics and watercraft businesses of outdoor recreational company Johnson Outdoors Inc. (NasdaqGM: JOUT) contributed the company’s decline in net sales from continuing operations to $141.2 million for the third quarter ended June 27 from net sales of $149.9 million for the prior year third quarter, the company reported in a recent statement.

Earnings from continuing operations of $7.9 million for the third quarter of 2008, compared unfavorably to earnings from continuing operations of $8.3 million in the prior year quarter.

Third quarter sales are historically the highest of the year reflecting consumer demand during the primary retail selling period for the company’s seasonal outdoor recreational products, it reported. Total company net sales in the quarter declined 5.8 percent due to a weak U.S. economy and the effects of a soft domestic boat market on the company’s Marine Electronic brands, the company stated.

For example, Marine Electronics revenues were 12.1 percent behind last year due to a soft domestic boat market. Growth in Humminbird and the addition of $4.9 million in revenue from GEONAV, which was acquired in November 2007, could not offset declines in Minn Kota and Cannon, the company reported.

Watercraft sales dipped 4.9 percent below the prior year quarter due to the effect of economic uncertainty on the retail marketplace, Johnson Outdoors added.

Lower margins in marine electronics had an impact on total company operating profit for the third quarter, which was $14.6 million compared to an operating profit of $14.8 million in the prior year quarter, which was negatively impacted by a one-time $4.4 million legal settlement. Due to business performance, the company reversed accruals of $3.2 million dollars related to its discretionary bonus and compensation plans this quarter.

“Growing economic uncertainty in the U.S. hit a peak just as the warm-weather season for our businesses was getting underway, and it has now impacted distribution channels in every business this quarter, with retailers being cautious and keeping their inventories to a minimum, said Helen Johnson-Leipold, chairman and chief executive officer. “As a result, we have ramped down production, restructured operations and moved aggressively on all identified cost-reduction initiatives. On the positive side, despite a soft summer retail market, retail reports indicate that, in general, our brands are outperforming the competition as meaningful new-product innovation accounted for more than a third of year-to-date revenues.

“Looking ahead, we will continue to invest in growth and innovation to help ensure we maintain our market-leadership positions when the economy rebounds. At the same time, we are moving forward on supply chain optimization initiatives in every business to drive improved efficiency across operations. Our strong commitment to the future for Johnson Outdoors and to enhanced shareholder value remains constant and unchanged regardless of the economic climate.”

Net sales in the first nine months of fiscal 2008 were $339.0 million versus $343.3 million in the same nine-month period last year. Total company operating profit was $13.6 million during the first nine months of fiscal 2008 compared to an operating profit of $17.2 million during the prior year-to-date period.

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