Big RV manufacturer Thor announced it had missed its profit expectations for last quarter. As big as Thor is in the market, other RV stocks took a beating based on the news.
Thor drops the hammer
Thor Industries Inc.’s stock dropped like a rock, falling 14% in morning trades. The company revised its predictions for fiscal year 2024. A rosy $6.25 to $7.25 a share has now been rolled downward to $5.00 to $5.50 a share. Thor’s second-quarter profit dropped to $7.22 million, or just 13 cents a share. Market analysts had been looking at 67 cents a share. Thor had been on a roll, with its stock up 7% for 2024, until the bad news announcement was made.
Thor says last year’s interest rate hikes were the culprit. Dealers, it says, are fighting “elevated floorplan financing costs.” “Similar to last year, our fiscal second-quarter financial results were impacted by cautious wholesale ordering patterns by our North American independent dealers in response to challenging seasonal market conditions and the elevated interest rate environment,” said a Thor statement.
Other RV stocks took a beating
Thor’s problems infected other RV manufacturers and related companies’ stocks. RV stocks took a beating, with Winnebago falling off 5%. Camping World saw a loss of 3%. LCI Industries, a major RV chassis manufacturer, sank 4.2%, all in morning trading activity.
Here’s the Motley Fool take on the matter.
Related: Camping World’s profit plunge: 2023 sees significant revenue decline
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IMO, Thor is too large to be nimble when market conditions change. By the time they shift, the problem is too far removed from the present for any changes made to be effective. Remove 1 or 2 layers of bloated management and then rebuild the corporate culture around the consumer and quality. Unfortunately, this would be almost generational to acheive savage ROIs if ever implemented. Death can be quick and renewing life takes a little more time, therefore improving the profits will most likely continue to be pursued at the expense of quality.
But might be a good time to buy their stock and make a few pennies or dollars by selling it if it rises. Or selling it later to harvest some losses and lower ones tax liability if it falls further.
Maybe but it’s not a sector I am in. Scares me….. Scares me a lot….. LOL.
Me neither and, despite my comment, not one that I am likely to ever be “in.” Aside from actually owning an RV, of course. Were Newmar still a stand-alone company, then I might look into buying its stock, but it isn’t and I won’t. Safe travels, Cancelproof! 🙂
I understand what you are saying, but I’ve long found it interesting that Forest River is owned by Berkshire Hathaway. What do they see that we don’t? Is it time to buy low and sell high later? Maybe, but buying RV Company stock would rob me of sleep.
Berkshire is a Predatory company from the jump. They don’t just look over the horizon, they actively work to change the horizon with social policy warrior support. A company that would be happy if more people were displaced from Stix n brix and were forced to buy RVs just to survive.
Maybe, the dystopia and homelessness that Bershire creates, and thus a market for dilapidated RVs which will need to be replaced into the RV sphere by true recreation enthusiasts….. nah, that’s too far….. no company could be that dark, could they?
But Berkshire Hathaway is also a real estate company selling homes to people; how, then, would they benefit from displacing people from sticks and bricks?
I would disagree with the “too large to be nimble”. The can stop any product just as quick as any company. They have the advantage of retiring a product line or manufacturing plant and it only affects a fraction of their revenue. Try that with a small or Mom & Pop company. Thor also has pricing power with their suppliers. They can also go back to their suppliers and ask for a further price reduction in negotiated cost because of the market; it’s called sharing the softness in the market. I have been there and done that. Again, something a small company can’t do very well.
I completely understand what your saying and do not disagree with most of your point or maybe any of it. Bloated management is typically resistant to change, which is the dynamic that I associate with a companies nimbleness. The layer of management that votes to table it until the next quarter “steady as she goes” and then the next quarter “steady as she goes” making only incremental changes when slashes are nessesary. Ledger watchers, not production line watchers, typically.
Thank you, Russ and Tina! 🙂 Well, I can’t say that I am sad about Thor making less money that ot anticipated. Does seem unfortunate that Camping World’s stock price fell by less than Thor’s. 🤔😯 Corporations walk a fine line in announcing expected profits, revenue, or some other financial measure. They want to say things will be great, but how great? Forecasts are fuzzy. Tweak something and get the number you want. These guys did not lose money, they just made less than they announced they’d make. Funny, huh? 🤔 😅 🙂 Not funny? 🤔😯 🙁 Safe travels! 🙂
I would never consider buying a Thor product, let alone their stock.
It doesn’t help them either when the bigger they get the more crappier products they produce. One time fine manufacturers sold out for corporate greed their brand names went down hill fast.
like my dad would say…”gotten too big for your britches” and eventually the direction ends up going down hill from there with loads of egg on your face, so to speak
Falling demand creating falling stock prices is as common as the Executive Team’s bonuses based on dividends versus quality. Two issues facing Thor and many others these days….
Not to surprised. Rolling along I-10 & I-20 this week, we have seen many an RV dealer with vast yards full of RVs. Market is very soft and this year may see the death of some venues and manufacturers. Interest rates do not help. Inflation is taking it’s bite.
Well it is the beginning of the camping season. I would expect inventory to be higher. Drive by in October.
Another thing screwing things is the value JD Powers is giving to used RV’s. They have a different value listing than available to you. Which you pull up on the internet. Than financial institutions use. JD Powers value listing for financial listings is less. I don’t recommend US Bank. Use a credit union, but shop around even out of your area. Some credit unions have a way for you to become a member even if you don’t belong to one of the group. US Banks interest rate is 9.9% where as the credit union I went with was 7.24%.Big difference in payments.
Based on thors reputation it couldn’t happen to a more deserving company.
Can we now expect Thor to replace drawer and cabinet materials with cardboard and stick pins as a remedy? Not holding my breath that it will occur to management that focusing on improving quality and reliability vs cutting costs could be key to people actually wanting to purchase your products.
You can only kick the can down the road so far in that quest to please in those quarterly earnings calls or the stave off the howls of your venture capitalist wolves.
It’s not that people aren’t still willing to buy crappy products. It’s that paying 7% interest on a loan adds a good bit to the monthly payment. People look to get their costs down by buying used units, or skipping it. So the new ones sit on the lots waiting for better times or better interest rates.
Or people look to getting their quality and reliability up by buying used units. The 2008 economic downturn saw quality take a dive and I suspect post Covid bump, we’ll see the same this time around.
What used to be reliable manufacturers have been put in a bind by being bought out by venture capitalists seeking to wring every nickel out of costs, including materials, while getting every nickel they can out of consumer’s pockets with inflated prices and glitzy marketing while chasing quarter to quarter earnings based on the expectations of “analysts” who wouldn’tknow an RV from a bathtub, long term value, product quality and concern for buyers and their safety be damned.
With all the manuf.’s in Thor’s stable, it’s hard to determine if this is a result of inferior build quality and poor warranty service. I have to agree with wanderer below, I think it’s the interest rates and the lending community shying away from RV financing altogether. Families across the nation are heavily burdened by debt caused by bidenomics (not trying to start an argument here, it’s just fact). You can read everywhere people are up to their necks and many families buying groceries with credit cards. So that pretty RV will just have to wait a while…
I tend to agree with your statement, and Wanderer below.
Bidenomics has led to my stocks, along with the S&P, soaring. The plummetting of RV Company stocks is part of the feast or famine nature of the RV business, regardless of who is in the Oval Office.
Indeed. My portfolio always does better under big D policy. My staff always does better under big R policy.
Being heavily burdened by debt has more to do with the GOP cutting taxes for corporations under the guise that they would give it to their workers. Really? My stocks are soaring and having the Fed (not Biden) raise interest rates is a direct result of inflation which is a direct result of fiscal decisions made during the Trump administration. Don’t get me wrong, the Dems have a part to play in this too but your negative connotation of “Bidenomics” is not “just a fact”. It’s misguided at best.
In my opinion and having been in the corporate finance world both domestic and international for 45 years, Bidenomics has nothing to do with the downfall of RV industry stock. We have witnessed the corporate world not only passing on past supply chain increases to consumers but adding an additional percentage that translates to about 50% of the inflation figures. Moreover, corporate profits have reached record levels with stock buy backs an every day occurrence to drive up stock prices. The RV producers made windfall profits during the pandemic by boosting prices significantly while interest rates were relatively low and producing shoddy products. Now, market forces are at work.
You are correct. Costs are marked up and increased costs are also marked up. No corporation passes on the cost, they profit off the increased cost. Always been that way and always will be that way.
Make 10 on 100 cost is 10% on 1 sale
Make 15 on 150 cost is 10% on 1 sale
Make 20 on 200 cost is 10% on 1 sale
Profit doubled selling one unit, but profit percentage stayed the same No one can rationally expect the company to make less than the historical 10% per unit. Market forces are at work.
If profits stay the same when costs go up your company is going backwards.
It sounds to be like the RV producers are good ol’ fashion Robber Barrons?
When you mention the name Biden or Trump you politicize your statement and immediately make 50% of your readers prejudiced. All presidents have done some good and some bad. So often a president is blocked from doing what’s good for the country by congress. Debt is a cancer that has been plaguing this country for decades.
Sales are down. Could it be, that most of the ones enamored by the Bling, and have no understanding of financing, have bought in already?