News that the Federal Reserve will raise interest rates by one-fourth point did little to slow a robust economic spirit as Wall Street closed the quarter ended June 30, 2004, solidly in the black. In a statement released after its two-day meeting, the Fed signaled its intent to raise rates gradually — by a quarter point each time — rather than in galloping jumps.
This bodes well for the boating industry, which relies on continued high levels of consumer confidence to finish off what has been a strong season on a high note.
The Boating Industry Index sailed into smooth harbors for our session ended June 30. The Boating Industry Index posted a gain of 196.53 points, or 8.94 percent, and ended at 2393.77. Advancing issues edged past declining issues by a 6-to-4 count.
Analysts cautioned that fuel and interest rate hikes are a volatile duo and could jeopardize current increases down the road.
“Historically, a cyclical decline in industry boat sales is preceded by a period of increases in gas prices and/or increased interest rates by about one to two years,” said Bryan Knoepp, analyst for FTN Midwest Research in Cleveland, Ohio. For wealthier boat-owners — those whose purchase nears or exceeds $85,000 — consumer confidence and a stable job market are stronger influences on their decision-making process than fuel prices, according to analyst Mike Loughran of the Robins Group in Portland, Ore.
Despite potential for a downturn, industry analysts are generally upbeat regarding current trends.
“I don’t think you’re going to hear many companies that are engaged in a boating-related industry talking about the pending decline in demand because you’re still looking at a year or two of good results,” Knoepp said.
Brunswick has purchased the remaining 30 percent of Navman NZ Limited stock it did not already own for $33 million in cash and stock.
“Navman is the core of Brunswick New Technologies, and among the fastest growing units within Bruns-wick,” said T.J. Chung, president of Brunswick New Technologies. “Indeed, Navman is the backbone for BNT and an integral player for Brunswick primarily in three arenas: enhancing our overall marine electronics capabilities, augmenting our efforts at advancing integration of boat electronics, and offering opportunities for growth in non-marine applications such as the GPS, land navigation and fleet management markets.”
Brunswick’s New Technologies unit contains Navman GPS-based products; Northstar Technologies marine navigational systems; MotoTron engine control and vehicle networking systems; IDS dealer management systems; and WDI business integration engine Web solutions and services. Brunswick purchased the other 70 percent of Navman in June 2003. Brunswick slid 0.03 points, or 0.07 percent, and closed at 40.80.
Shares of West Marine tumbled this session, off 5.00 points, or 15.70 percent following lowered guidance for the second quarter.
West Marine CEO John Edmondson said, “As also reported by several major retailers, we have been negatively impacted by unseasonably cool and wet weather in some key markets throughout the country. Stronger than anticipated margins will help offset the lower sales.” Investment firm Dougherty & Company upped its rating on West Marine to “buy” from “neutral.” West Marine closed at 26.85, and was our top dollar loser.
Source: Trade Trends, Inc.
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