Retail boat dollar sales increases to continue?

SAN FRANCISCO, Calif. – While retail boat unit sales have been down in recent quarters, the industry has maintained a certain level of optimism due to increases in dollar sales, which can be attributed to higher prices.

This may not continue, though, according to a report from analyst Gary Cooper of Banc of America Securities LLC.

“Although dollar sales continue to rise … we believe this trend may not be sustainable in a slowing U.S. economy,” he stated in a report this week. This, in turn, may impact boating industry giant Brunswick Corp.’s future earnings.

Another item of note in the report was concern over continued engine pricing competition, which impacts the company’s ability to generate a profit in the U.S. outboard market.

“Despite that, BC managed to grow sales and profits of its marine engine division in 1Q05 due to the strong sales of its 4-stroke Verado outboard engines as well as its navigation products, which we expect to continue,” stated Cooper.

In fact, the analyst expects Brunswick to exceed its second quarter EPA estimate of $1.13 by $0.02-0.03 and believes there may be an upside to the firm’s FY05 EPS estimate of $3.34 “due to a possible stock buyback and the two acquisitions announced in 2Q05.”

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