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Arctic Cat revises fourth quarter outlook

April 11, 2008
Filed under Features

A sluggish retail environment was one of three reasons Arctic Cat CEO Christopher Twomey cited for the company’s “disappointing” fourth-quarter outlook. The Minnesota manufacturer reported its fourth-quarter net sales are expected to total $167-$169 million, a potential 3 percent drop from the previous year period.

Overall, the industry’s ATV sales dropped more than 28 percent in December compared to the prior year period, according to the Motorcycle Industry Council. That retail sales data does not include UTVs or new entry OEM sales.

Besides a slow retail market, Twomey said two other “highly unusual” events negatively impacted the company’s fourth-quarter profits. First, the company was forced to halt production for a while on its Prowler UTVs because of a temporary supply interruption. At the time, the company was in the process of transitioning to a different supplier as part of the company’s strategic sourcing initiative, according to the company’s press release. The supply issued was resolved before the end of the fourth quarter.

In a conference call with analysts, Twomey said the incident was the “first time a vendor-supply issue has affected our ability to meet sales targets” and believes “a similar occurrence is highly unlikely.”

Twomey also reported one of its largest retailers significantly reduced its planned order for the quarter, resulting in another loss of sales.

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