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Baird: Towable RVs Off to Strong Start in 2013

Editor’s Note: The investment firms of Robert W. Baird & Co. issued a client newsletter following this week’s release of the January retail RV sales report compiled by Statistical Surveys Inc. (SSI). Excerpts from the Baird newsletter follow.

U.S. towable retail up 21% in January. According to data from Statistical Surveys, unit retail sales in major towable categories (travel trailers and fifth-wheels) jumped 21% in January — a solid start to the year after U.S. towable demand grew 10% in 2012. Winnebago U.S. towable demand grew 42% in January (with just 1% market share), pushing growth to 22% through the first two months of its February quarter. Thor already reported results for the January quarter.

January towable demand grew 21% (travel trailers and fifth-wheels). Travel trailer demand increased 21% while fifth-wheel retail sales jumped 23%. The growth is a solid start to the year after U.S. towable demand improved 10% in 2012. The towable market faces more difficult comparisons in February (+17%) and March (+22%).

Thor. Thor U.S. travel trailer and fifth-wheel retail grew 19% in January, bringing United States retail growth to 5% during fiscal Q2. Recall that Thor already reported fiscal Q2 results on March 7, so the January data are not incremental to the story.

Winnebago. Towables represent just 10% of revenue for Winnebago, which entered the towable market in 2011 with under 1% share. Nonetheless, demand for Winnebago units grew 42% in January, bringing Winnebago retail growth to 22% through the first two months of the February quarter. We model Winnebago North American retail growth at 45% for the February quarter — note that given Winnebago’s small market position, even a few incremental units can lead to large swings in growth rates. Our above-consensus revenue forecast for Winnebago is unchanged ($182 million vs. $171 million). We model 3% towable shipment growth on a 45% increase in towable retail volume and a 20% jump in dealer inventory. We expect Winnebago to report financial results Thursday, March 28.

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