Thor issued a business update earlier today where it outlined plans to accelerate production amid signs of tight dealer inventories. We’ve seen some supply issues across the leisure vehicle category (off-road, motorcycles, etc.), so this isn’t a huge surprise. Today’s announcement (5/29/20) follows commentary earlier in the week from Thor’s CEO suggesting improving traffic trends. While tight inventories could impact retail momentum, we view this as a high-class problem and expect the company’s flexible production model to help meet end-demand.
Search Coverage List, Models & Reports
Search Results1-10 out of 53
BRP reported a significant pick-up in off-road retail demand during the second-half of April, which is consistent with our checks. While coronavirus disruptions are forcing the company to adjust its marine strategy—e.g. discontinuing its Evinrude outboard engines—we think the remaining boat business provides a sufficient platform for innovation. Guidance calls for continued sales declines in the second half of the fiscal year (down -10% to -20%), but we’d expect investors to focus on the strong retail / market share gains.
Our latest cruise checks show relatively steady booking momentum of North America (down -55% to -65% over the past month), although we’re encouraged by the following developments: 1) new ‘cash’ bookings are finally outpacing rebookings; 2) cumulative bookings for 2020 improved ~100-300bps in recent weeks, which could suggest some pent-up demand and 3) we’d expect marketing to resume over the next few weeks.
Following recent earnings reports across leisure, food retailers, and hardlines retailers, we are publishing updated estimates and price targets for each of the following: Norwegian Cruise Lines (NCLH), Royal Caribbean Cruises (RCL), Walmart (WMT), Sprouts Farmers Markets (SFM), Advance Auto Parts (AAP), AutoZone (AZO), Home Depot (HD), Lowe’s (LOW), Wayfair (W).
Based on our latest Harley dealer checks, we think May retail demand picked-up sequentially relative to April. Dealer inventories appear very tight (good for used bike prices and creating some scarcity) and should also benefit from this week’s production restart.
Royal’s first quarter release focused heavily on liquidity and cash burn metrics (no surprise there). With approx. 12 months of cushion under a prolonged shutdown (pre-deposit impact), we’d expect a greater focus on booking momentum going forward (encouragingly, trends have picked up over the past 4 weeks; demand from loyalty customers has been ‘surprisingly strong’). 2021 bookings are within historical ranges at mid-single digit price increases driven largely by new cash bookings.
We spoke with Jim Silver of TTPM who continues to expect a tough 2Q in part due to a weak y/y entertainment line-up. In addition, despite strong performance at the big three retailers (Target, Walmart, and Amazon), retail closures of mom-and-pops will be a near-term headwind. Jim thinks full year U.S. retail will be down.
The company remains cautiously optimistic about 2020; recent dealer commentary appears largely in line Camping World as far as improving momentum / traffic. Pleased that OEMs are now at 70% production capacity (varies somewhat by week and by OEM since they are ramping at different paces).
We think retail momentum has continued to improve from late March / early April. Demand for entry level product appears strong, which could suggest more first-time buyers entering the segment (a potential longer-term tailwind).
Performance likely varies somewhat by region / state depending on government restrictions on dealers and infrastructure (e.g. boat ramps, launches, etc.).
Inventory appears to be in okay shape today (it was likely a bit heavy entering the selling season), although there could be some tighter availability as we move through the summer months given retail demand on OEM production stoppages (most manufacturers were closed in April).
We’ve seen improved demand across several segments of the consumer landscape. Most discretionary categories appear to have bottomed-out in late March / early April and have subsequently improved week-to-week, with less discretionary categories like home improvement enjoying healthy demand over the last 2-months. Changes in vacation spend and summer plans (fewer camps, sports, etc.), are likely helping, but the big unknown over the next few quarters is whether the demand we’re seeing is sustainable in light of higher unemployment and lingering economic impacts from coronavirus.
- 1 of 6
- next →