Johnson Outdoors Inc. (JOUT, Financial) reported its first-quarter 2019 financial results before the opening bell on Feb. 4. While the company’s earnings met expectations, its revenue plunged on a year-over-year basis.
In addition to seeing a weakness in fishing and diving product sales, the imposition of tariffs took a toll on the company’s quarterly revenue.
Snapshot of the quarter
The Wisconsin-based outdoor gear company recorded net income of $3.5 million, or 35 cents per share, up from $235,000, or 2 cents per share, in the year-ago quarter.
Revenue declined 10% to $104.4 million. The fishing segment underperformed as a result of new product launches, leading to tough year-on-year comparisons. Similarly, sales in the diving division plummeted 11% owing to weakness in the Asian dive market as well as a 2% negative impact from unfavorable foreign exchange rates. Water recreation revenue remained flat compared to the year-ago quarter.
Operating profit for the quarter stood at $6 million. Gross margins shot up in spite of a $0.7 million unfavorable impact from recently enacted tariffs.
Strategic plans
The company’s tactical plan revolves around how it can grow its outdoor recreational businesses, which include fishing, camping and hiking, paddling and diving. On the earnings call, Chairman and CEO Helen Johnson-Leipold commented on the company's outlook:
“This year’s exciting new product lineup, particularly in fishing, is building strong favorable momentum heading into the major selling season for warm-weather outdoor products. We said that the past two years have tremendous growth in fishing with unprecedented results and that we expected this business would continue to grow at a more moderate pace going forward. And based on everything we are seeing at this time, we still expect year-over-year sales growth in fiscal 2019. And as we take the longer term view beyond 2019, the future looks great.”
One of the many things the company's initiatives is identifying target customers. In other words, the company’s product line and developments will be based on what customers want.
“It’s all about uncovering the key insights that will lead to bigger, better, new products success and deeper relationships between our consumers and our brands year-after-year,” Johnson-Leipold said.
Shifting gears, the company is focusing on strenghtening its online presence. Johnson Outdoors has built an online infrastructure and framework so as to provide customers with a great online expierience.
The company’s future prospects look bright considering the measures it has taken to maximize growth potential. Tarriffs, however, are expected to have an adverse impact on the company’s fiscal 2019 profits to the extent of $6 million to $9 million.
Disclosure: I do not hold any positions in the stocks mentioned.
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