May 4, 2009 – Polaris sees 1Q sales downturn in each of its segments

swadminMay 4, 2009

Although it saw some positive signs toward the end of its first quarter, Polaris Industries did end up reporting a 20 percent revenue decline for its initial 2009 quarter.
Polaris reported sales of $312 million in its opening quarter after seeing losses in each of its major segments, including a 19 percent falloff in its off-road vehicles segment, which includes ATVs and side-by-sides.
“Overall retail trends for Polaris were down throughout the quarter,” Polaris CEO Scott Wine said in an earnings conference call. “While the numbers are weak, we actually saw slight improvement from the final two months of 2008.”
Wine also noted Polaris has seen some initial positive reports on April sales. Still, one of the company’s bright spots of the past year and a half — side-by-sides — were unable to beat the retail weakness seen throughout the first quarter.
“Side-by-side demand was below the fourth-quarter results and at the low end of our expectations,” Wine said, “and we have adjusted our manufacturing and marketing plans accordingly.”
Wine notes the company does not expect to see ATV sales rebound to near 2008 levels until at least the second half of the year when the company’s 2010 model lineup will be announced.
The availability of consumer financing appears to be having an impact. Polaris said during its first quarter 44 percent of consumer retail loan applications were approved, a 7-percentage point decrease from the fourth quarter of 2008. The company did note that even with the uncertainty in the financial markets, it expects retail credit throughout the year to be “accessible for Polaris consumers with an acceptable credit history.”
Despite the overall sales decline, Polaris did improve its dealer inventory levels. Wine says dealer inventory is 7 percent below the year-ago period and 8 percent below the fourth quarter of 2008. “Both our dealers and Polaris believe dealer inventory is still too high and we’re committed to working with them to reduce inventory throughout the year,” he said.
Polaris officials also addressed specific market segments, including:

Victory retail sales increased compared to the year-ago period. Its wholesale revenue, however, is down close to 50 percent vs. a year ago due to the company’s efforts to improve dealer inventory levels and reduce its noncurrents.

Snowmobile sales are down 13 percent compared to a year ago and the company expects its 2009 sales in this category to be 10-20 percent below last year’s levels.

Parts, garment and accessory sales declined by 15 percent.
Wine also commented on the company’s new relationship with Bobcat Co., noting Polaris will initially act as a supplier for Bobcat. However, he did say the Polaris dealer network could see “substantial opportunities” from this new relationship in the years to come. psb

swadminMay 4, 2009