MarineMax expects first quarter loss

CLEARWATER, Fla. – Boat retailer MarineMax, Inc. (NYSE: HZO) has reported that, given the current retail and economic environment, its earnings per share for its fiscal year ending September 30, 2008 will be lower than its previous guidance of $0.60 to $0.80 per diluted share.

With the increased uncertainty caused by weakening economic conditions, along with the natural seasonality of the marine industry, the company said it’s not providing an updated guidance range for fiscal 2008.

MarineMax said it expects to report first fiscal quarter 2008 revenue of approximately $215 million, compared with $234 million in the comparable quarter last year, and a same-store sales decline of approximately 9 percent versus a 14-percent same-store sales increase reported a year ago. The company also expects to report a loss per diluted share of $0.35 to $0.38 for its first fiscal quarter of 2008 versus a loss of $0.21 in the comparable quarter last year, it said. Its results were impacted by the ongoing economic pressures caused by the challenged real estate and lending environment, as well as general economic concerns, according to the company.

"While retail conditions in the marine industry have deteriorated further than we expected, available boat registration data through September 2007 shows that our long track record of market share gains has continued,” said William H. McGill, Jr., chairman, president and CEO of MarineMax. “This core belief of investing into our future by growing market share is expected to provide meaningful benefits when our industry recovers. We are disappointed with our financial results for the December quarter but are encouraged that our customers have not lessened their passion for boating as a great family recreation."

McGill continued, "Our balance sheet is expected to reflect the prudent measures we have taken. We expect to report a modest decrease in inventory as well as general improvements in other balance sheet ratios from the December quarter a year ago. We will closely monitor the relationship between sales and inventory and continue to make adjustments to our purchases as dictated by market trends."

Despite this decrease in inventory, analyst Ed Aaron of RBC Capital Markets is concerned about the outlook for MarineMax and other boating stocks, like Brunswick.

“Realizing that the company had very strong comps (>20%) in '04 and '05, and that sales were propped up to some extent by discounting over the past year, the company has exhausted considerable demand,” Aaron commented. “The company is now facing an extremely difficult industry environment (especially in Florida, where the company generates 40% of its sales), and still has far too much inventory relative to demand (inventory is reportedly down slightly from last year's excessive level of $545 million).”

“This has obvious negative implications for Brunswick, in our view,” he added. “Weak demand at MarineMax is likely to lead to further reductions on orders from Brunswick (NYSE: BC). And if MarineMax is cutting orders, it stands to reason that many other dealers are doing the same.”

MarineMax said it expects to release its full first quarter results on Feb. 7.

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