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Jun. 2, 2008 – Arctic Cat ends year in the red

June 2, 2008
Filed under Features

Efforts at reducing dealer inventories coupled with reduced retail sales led to more than a $3 million loss for Arctic Cat for its recently reported fiscal year.
The Thief River Falls, Minn.-manufacturer reported a nearly 26 percent drop in sales for its fiscal year, which ended March 31. It is the first time in eight years the manufacturer suffered a year-over-year revenue decline.
“We anticipated that fiscal 2008 would be a challenging year, as we lowered our production levels to reduce dealer inventories,” Arctic Cat CEO Christopher Twomey said in a press release. “Our results were further impacted by macro-economic issues that weakened consumer confidence and discretionary spending.”
Arctic Cat does not expect its sales decline to continue. The company is forecasting increased sales in its current fiscal year, with a revenue increase of 5-8 percent expected.
“We expect the company to return to profitability in fiscal 2009,” Twomey said. “We are focused on achieving growth by offering innovative products that drive market share gains, and lowering costs through our strategic sourcing initiative and by further leveraging our efficiency.”
Arctic Cat does not expect to see big sales gains in the first quarter. The company expects its initial quarter, which ends June 30, to bring sales of $85 million-$95 million compared to the $87.9 million a year ago.
“Following our planned, lower snowmobile production last year, to align dealer inventory with retail demand, we expect increased snowmobile revenues. We also anticipate flat to slightly higher ATV revenues, based on increased Prowler utility vehicle and international ATV sales, as well as an overall richer product mix.”
Looking back to last year, Arctic Cat reported:

  • Its year-end ATV sales dropped 19 percent to more than $350 million. The company did reduce quad production by 10 percent to ease dealer inventories;
  • Snowmobile sales dropped 34 percent compared to a year ago to more than $161 million as the company cut back production by 30 percent; and
  • PG&A sales increased 5 percent thanks in part to snowmobile and ATV parts sales.
    “We achieved our goal to significantly reduce dealer inventory levels in fiscal 2008 through planned production cuts,” Twomey said. “Although recreational vehicles continue to experience a tough retail market, we believe our current dealer inventory levels will enable growth in sales to dealers in our fiscal 2009.”
    For its fourth quarter, Arctic Cat reported revenue of $168.9 million, a slight drop from the previous year period when net sales reached $172.6 million.
    Fourth-quarter net earnings were $424,000 vs. a net loss last year of $1.6 million.
    ATV sales in the fourth quarter dropped slightly compared to last year, amounting this quarter to $142.9 million. psb

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