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Baird: Dealers Conservative Heading Into Winter

Robert W. Baird & Co. issued a client newsletter to investors following the towable sales report for August by Statistical Surveys Inc. The following offers a summary of the results.

U.S. towable retail up modestly. Dealer towable sales increased 3% in August, according to Statistical Surveys (data is frequently revised upward), generally in line with results from our recent dealer survey. Results improved sequentially, but growth has been slow on weak consumer confidence and an uncertain economy. While retail remains weak, lean dealer inventories and incentives at recent manufacturer open houses could support orders heading into winter.

Towable demand up 3%. U.S. towable sales improved 3% in August, and are up 7% YTD. Travel trailer registrations improved 4% (+8% YTD), offsetting fifth wheel sales down 2% (+3% YTD). Keep in mind, data is frequently revised upward.

Inventory. Dealers restocked units throughout the winter and spring as shipments exceeded retail sales, but dealers in our recent survey confirmed inventory is still relatively lean. We expect dealers to remain conservative heading into winter, but do not expect destocking, despite weaker retail.

Retail U.S. SAAR. We calculate a seasonally adjusted rate of retail registrations. The SAAR of U.S. towable demand (including fifth-wheels and travel trailers) increased to 168K units in August, from 157K units in July. Just over 150K units were sold in the U.S. in 2010.

Important note. The data excludes or is incomplete with respect to Minnesota and Maine. We caution against attaching undue significance to data from a single month. The data tend to fluctuate from month to month, and are frequently revised upward.

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 ckennison@rwbaird.com.

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