Thanks to strong demand for new products, Johnson Outdoors posted all-time high revenues and earnings for its fiscal year ended Sept. 28, in spite of a weak fourth quarter. In particular, the company said it recorded unprecedented growth in its flagship fishing and diving segments, which it attributed to a focus on consumer-driven innovation.
Total revenues jumped by 10.9 percent to $544.3 million, leading to a 38.2 percent increase in operating profits to $63.0 million, driven by new products in the fishing and diving segments.
The company's overall gross margin expanded by 1.4 percentage point to 44.4 percent, which the management attributed to increased volumes, higher average selling prices and relatively tame cost increases. Net income rose by 16 percent to $40.7 million.
In fishing, sales expanded by 19.2 percent to $391.1 million. Continued high demand for new products introduced over the past 18 months powered double-digit growth in the Minn Kota, Humminbird and Cannon brands across all key channels. Over the last two years, new products accounted for approximately 60 percent of revenues in the fishing segment, versus typically about a third of revenues. Product highlights in the quarter included the Ultrex, Minn Kota's first electric steer motor for foot pedal control enthusiasts with GPS and wireless capabilities.
In the diving segment, revenues advanced by 2.9 percent to $78.9 million, as innovation sustained positive momentum in Scubapro, especially the new Hydros Pro buoyancy compensator and Galileo G2 dive computer.
Operating earnings jumped by 43 percent to $83.7 million in the fishing segment and by 50 percent to $2.8 million in diving.
In the camping segment – which includes Jetboil's outdoor cooking systems and Eureka! camping and hiking equipment – sales inched up by 0.4 percent to $37.7 million. The management said that this segment has been facing strong headwinds due to market disruptions from retailer bankruptcies and restructuring over the past couple of years. The new Jetboil flash personal cooking system beat expectations, driving an uptick in specialty chain and international sales. Johnson pointed out that it is working to reposition Eureka! for success, with ongoing progress in the digital arena, where more and more consumers go first.
However, sales of recreational watercraft products were lackluster, falling by 24.8 percent to $36.2 million, weighed down by a sluggish market for kayaks.
Operating results deteriorated in both of these segments. Operating earnings declined by 4 percent to $1.9 million in camping, while the watercraft segment suffered a loss of $1.6 million against a profit in the prior year.
Despite having a good year overall, Johnson didn't perform well in the fourth quarter, which it said was partly due to the seasonality of the warm-weather outdoor recreation equipment industry and an industry-wide slowdown in sales and production. Sales dipped by 0.7 percent from the year-ago quarter to $91.1 million.
The company recorded an operating loss $2.0 million, versus $0.1 million in the prior fourth quarter, primarily due to heavier digital investments. It also registered a net loss of $5.0 million, as compared with net income of $0.6 million in the year-ago quarter.
Fishing was the only category that showed improved sales and profits during the quarter. Diving sales fell by 2 percent to $21.4 million, although they generated an 18 percent higher profit of $1.6 million.
The two other smaller categories fared worse. Camping sales dropped by 9 percent to $7.9 million, with operating income falling by 47 percent to around $135,000. Watercraft sales plunged by 28 percent, swinging from a profit to a loss of $902,000.
Looking ahead to the next year, the management said that while it expects revenues to grow, recently enacted tariffs are estimated to have a negative impact of $6.0-$9.0 million on operating profit for the year, despite mitigation efforts, but federal U.S. taxes are set to decline.