Arctic Cat sales slower in the second quarter

Story by Snowmobile.com Nov. 13, 2007

OEM reports decline but holds out hope for rebound this season

Arctic Cat Inc. of Thief River Falls, Minn. has reported a significant reduction in sales for the fiscal 2008 second quarter ended Sept. 30, 2007.
The company had net sales of US$205.2 million for the quarter, down about 18% from US$285.3 million for the same period last year. Net earnings also declined, to US$13.9 million from US$20 million.

Snowmobile sales in the second quarter accounted for US$97 million, down US$24.5 million from the previous year.

For the six-month period that ended on Sept. 30, 2007, Arctic Cat reported net sales of US$293.1 million and net earnings of US$6.8 million, compared to US$381.7 million and US$15.4 million over the same period the previous year.

Snowmobile sales in that same six-month period totaled US$108.9 million versus US$142.4 million a year ago.

“Our revenues were in line with our guidance and earnings were above our expectations, due to the timing of parts, garments and accessory shipments and better margins than anticipated,” says Arctic Cat chairman and CEO Christopher A. Twomey. “We continue to adjust our fiscal 2008 production levels to reduce dealer inventory and align it with anticipated consumer demand this year.

“At the same time, we are committed to further enhancing our lean manufacturing and strategic sourcing capabilities. We made progress on our 2008 strategic initiatives during the quarter, in order to position the company for improved growth and profitability in the future.”

Arctic Cat’s initiatives include a 30% reduction in snowmobile production this fiscal year, which is the primary reason for the drop in snowmobile sales. The company says it took this action because a lack of snowfall over the last 10 years has led to lower retail sales and slightly higher dealer inventories. Arctic Cat anticipates dealers will increase their snowmobiles orders next fiscal year.

The company also plans to reorganize its snowmobile, ATV and parts, garments and accessories product lines into three separate business units. Each will be led by general managers with a focus on expanding each business.

Arctic Cat will also be relocating the company’s headquarters to the Minneapolis area early in the 2008 calendar year. Certain corporate executives, general managers and sales and marketing personnel will also make the move to Minneapolis.

Despite moving the company’s headquarters, Arctic Cat says its core manufacturing operations will remain in Thief River Falls and will not be affected.
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