On the heels of disappointing results from Thor (NYSE:THO) industries, the recreational vehicle sector is on the defensive with shares of Winnebago (WGO), Camping World (CWH), Lazydays Holdings (GORV), and LCI Industries (LCII) all trading in the red versus a 1% gain in the S&P 500 and 0.6% gain in the Dow Industrials. The Dow Jones transportation average is up more than 1%.
Before Wednesday’s open, Thor (THO) said profit for the fiscal second quarter dropped 75% on a 6% decline in sales, both of which were below the Street’s expectations.
Thor CEO Bob Martin warned that the continued environment of higher interest rates would impact consumers’ desire to make large discretionary purchases and encourage a “prudent” focus on Thor’s business for the remainder of the year.
Thor (THO) also lowered 2024 sale guidance on what the CEO called “challenging market conditions,” pointing to higher interest rates for squeezing demand for high-priced items. With 80% of RV sales financed, the inverse relationship to interest rates is not surprising.
Since 2020’s COVID-fueled fever pitch in sales, RV sales have been decelerating at the same time the Fed funds rate has been increasing by more than 500 basis points. By the end of 2021, RV shipments set a record high of 600K, nearly 40% higher than the prior year. By the end of 2023, that number had nearly dropped in half.
Winnebago (WGO), which reported its latest quarterly results in December, experienced a similar drop in sales attributed to market conditions, product mix, and higher discounts. The company’s fiscal Q1 profit fell by 49% to just $1.06 per share on a 33% drop in sales.
Camping World (CWH) reported a 13% drop in sales year-over-year, while Lazydays (GORV) sales fell 16% in Q3 from a year ago (Lazydays reports Q4 results on Friday).
Although shares of off their intra-day lows, Thor (THO) remains lower by 11%, Lazydays (GORV) lower by 7%, Winnebago (WGO) by 5%, Camping World (CWH) down 2%, and LCI (LCII) Industries down 3%.
