Inventory may be industry’s silver lining

DENVER – The boating industry continues to face a challenging boat sales environment, driving sales down and inventory levels up.

Boating industry retail sales are down in the mid-to-high single digits, with entry-level boats and mid-range cruisers hardest hit, estimated RBC Capital Markets analyst Ed Aaron in a recent report.

But the silver lining is that the boating industry’s inventory management is improving. Aaron reported that while inventories are up modestly and inventory turns are less than ideal, “manufacturers and dealers have been more responsible with inventories relative to prior cycles,” which “should help cushion the blow of a downturn and enable a faster recovery once industry conditions improve.”

Aaron also reported that orders for model year 2007 appear to be down as much as 10 to 15 percent below this time last year, which likely means wholesale shipments will be “significantly reduced” into next year. But because dealers have ordered conservatively, it’s more likely that will accept delivery on their orders, he added.

At Brunswick, Aaron expects 2007 results to dip below current estimates and include a drop in earnings. MarineMax is a different story. Aaron said his firm expects the company to exceed expectations in the fourth quarter, due in part to aggressive marketing and a quiet hurricane season.

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