MarineMax, the pleasure-boat dealer based in Clearwater, Florida, saw a significant decline in its share price following a downward revision of its fiscal 2024 operating earnings forecast. This revision indicates potential challenges ahead for discretionary spending.
The company, which also offers boating services including repair and storage, adjusted its earnings target for the fiscal year ending in September. It now expects earnings to range between $3.20 and $3.70 per share, compared to the previous estimate of $4.50 to $5 per share announced in October.
As for the first quarter of the fiscal year ending in December, MarineMax reported earnings of $930,000, or 4 cents per share. This marked a significant decline from the previous year, primarily due to rising costs. On an adjusted basis, the company stated that earnings fell to 19 cents per share. However, it did note that first-quarter sales increased by 4% to reach $527.3 million.
President and Chief Executive Brett McGill acknowledged the impact of pricing actions on gross margins and profitability. He explained that lower margins were a result of increased discounting on selected boat models in response to a softer retail environment. Additionally, a higher proportion of larger boats, which typically generate lower margins compared to other product categories, contributed to the decline. Notably, demand for yachts and power boats is highly sensitive to changes in discretionary budgets. During periods of economic prosperity, sales of recreational vehicles and boats tend to outpace other consumer products. Conversely, when consumer spending slows down, these categories are often the first to be affected.
The announcement led to a steep 17% decline in MarineMax’s premarket share price to $27.50.
