• Gross Margin: 35%, up slightly from last year's quarter.
• Operating Expenses: Decreased by $7.7 million compared to the prior year second quarter.
• Inventory Levels: $180 million, down about $69 million from last year's second quarter.
• Balance Sheet: Remains debt-free with a solid cash position.

• Warning! GuruFocus has detected 4 Warning Signs with JOUT.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Johnson Outdoors Inc (NASDAQ:JOUT) reported positive demand for new products in their fishing and camping businesses, with the Humminbird brand's MEGA Live 2 and XPLORE technology exceeding expectations.
• The Jetboil brand launched a new fast boil system, receiving enthusiastic responses from both retailers and consumers, with orders outpacing expectations.
• The Old Town brand launched five new watercraft editions, expanding into new recreational categories and maintaining leadership in a depressed market.
• The company maintains a debt-free balance sheet and solid cash position, providing a competitive advantage in uncertain times.
• Cost savings efforts have helped improve gross margin to 35%, up slightly from the previous year, despite market challenges.

Negative Points

• Johnson Outdoors Inc (NASDAQ:JOUT) faces a challenging market environment with cautious retail and trade conditions impacting overall performance.
• The diving business continues to struggle due to global economic uncertainties and consumer travel challenges.
• Tariffs are expected to impact the business, despite being a US-based manufacturer, necessitating adjustments in supply chain and pricing strategies.
• Sales for the quarter were down about 4% year-over-year, reflecting ongoing market difficulties.
• The company experienced an unusually high tax rate in the quarter due to accruals from tax audits in Europe, affecting financial results.

Q & A Highlights

Q: How does the pipeline look for new product introductions in the upcoming quarters? A: Helen Johnson-Leipold, CEO, stated that they have launched new products for fishing and camping, which are exceeding expectations. The watercraft segment has also introduced a significant line of new products. Innovation remains a strategic priority, and they are working on long-term innovations for future launches.

Q: Can you discuss the trends during the quarter and any significant changes from January to March? A: Helen Johnson-Leipold, CEO, mentioned that the market environment remains tough due to consumer sentiment and retailer hesitation. However, new product launches are expected to deliver positive results during the rest of the season.

Q: Have there been any notable changes in ordering patterns from retailers since the new tariffs were announced? A: David Johnson, CFO, noted that it is still early to see significant retailer reactions. They entered the quarter with a solid plan, and while there hasn't been a major pullback from retailers, the marketplace is expected to be challenging for the rest of the season.

Q: What is the company's exposure to China regarding tariffs, and how do you plan to respond? A: David Johnson, CFO, explained that while most products are manufactured in the U.S., they do import electronic components and raw materials from China and Southeast Asia. They are working on mitigation strategies, including supply chain efficiencies and potential pricing adjustments.

Q: Can you provide more details on the cost savings program and its impact on gross margin? A: David Johnson, CFO, stated that the cost savings program is expected to provide a 1 to 2 point benefit to gross margin. This has helped offset some discounting in the quarter, and they aim to expand these savings as part of their long-term strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.