Baird: Retail Results Should Drive Shipments
Editor’s Note: Robert W. Baird & Co. issued a client newsletter following release by the Recreation Vehicle Industry Association (RVIA) of the January wholesale shipments report. Excerpts from the Baird newsletter follow.
January shipments up 15%. Total RV shipments increased 15% in January, as motorhome shipments increased 36%, while towable shipments grew 13%. The shipment gains follow strong December results as dealers continue to replenish inventory ahead of the spring season. Additionally, RVIA recently released its updated shipment forecast, calling for RV wholesale growth of 9% (above the previous 4% growth forecast).
Total RV shipments continue improvement in January. Overall shipments grew 15% in January, the second consecutive month of strong wholesale growth following flat-to-down shipments in the back half of 2010. Shipment growth decelerated through late summer and into fall as retail slowed and dealers managed inventory levels into the slower winter season. Comps remain difficult, but strong wholesale results indicate dealers are replenishing inventory ahead of the spring selling season which begins this March/April. With dealer inventories back at healthy levels, retail results should drive shipments going forward, as dealers restock inventory on a 1:1 basis.
Motorhome shipments increased 36%. Class A shipments increased 22% while Class C shipments increased 60%. We expect modest motorhome shipment growth into spring against difficult comps, with possible upside from better retail.
Towable shipments up 13%. Travel trailer shipments increased 10% and fifth-wheel shipments increased 23%. We believe dealers are more optimistic heading into 2011, and are able to restock new units following a right-sizing of inventory levels in 2010.
SAAR. We calculate a seasonally adjusted annual rate of shipments. The SAAR of motorhome shipments increased modestly to 24.7K units in January, from 24.0K units in December — 23.6K units were shipped in 2010. The SAAR of towable shipments fell to 194.4K units in January, from a particularly strong 229.7K units in December — 199.2K units were shipped in 2010.
Impact on WGO and THO. Thor already has reported results through January. Meanwhile, RVIA shipment data are available for the first two months of the Winnebago quarter ended February. Over that period industry motorhome shipments are up 28% versus our estimate for down 11% at Winnebago. It is the offseason, but it implies potential for upside.
This summary of a Baird research report is not intended as investment advice. To participate in Baird surveys and receive research reports, contact Craig R. Kennison, CFA, at firstname.lastname@example.org.