Archive for » September 2nd, 2016«

New Models, Easy Financing Boost Boat Sales

As we continue well into the second half of the 2016 boating season, I’m seeing strong demand from customers, not just here in the Wilmington area, but also in the boating industry nationwide. Several factors are driving this, including continued low interest rates that make financing easy.

I recently read a very encouraging report by a company called Longbow Research. The report focused on one of MarineMax’s key suppliers, the Brunswick Company, the parent firm of such industry-leading brands as Boston Whaler and SeaRay, as well as Mercury outboard motors.

At the end of the June 2016 second quarter, retail boat sales nationwide were up in “high single digits,” according to the report, and dealers were expecting this to continue, with growth even into double-digit territory for the remainder of the year. Likewise, dealer inventories at mid-year were lower than expected, a sign of strong consumer demand. In fact, most dealers reported selling out of all 2016 models while awaiting shipment of the new 2017 model-year boats in July.

One interesting trend the Longbow report mentions is sales of used boats were a bit soft this year – because of customers’ strong demand for new boat models. That’s directly tied, of course, to the availability of excellent financing terms, made possible by continued low interest rates in the U.S. market.

Are buyers choosing new over used because it’s so easy to finance a new boat? Undoubtedly. On the other hand, I’m sure the popularity of our financing packages is also being driven by consumer desire for the excellent new models available this year.

In the Longbow report, dealers said the choice customers have faced this year has been between a new boat and a cheaper used one. “The current low-interest rate environment, combined with recently introduced features/technologies not available in most used boats has made it easier to move customers toward using financing for a new model versus buying used,” the report states.

Just between the April/May period and June, the use of financing by customers nationally grew by 10 to 15 percent. On average, around 70 percent of sales in June were financed, taking advantage of great interest rates, compared to just 55 to 60 percent of sales earlier in the spring.

This report was primarily aimed at advising investors on whether to buy Brunswick stock (Longbow says “yes”). But for me, what’s most interesting is how the relationship among a highly regarded manufacturer, its network of dealers, including MarineMax, and the nationwide customer base is showing up in strong – and growing – sales numbers.

Analysts who wrote the report use a lot of terminology like “cyclical recovery in the boating sector.” That just means that, as the overall economy does well, people are making the decision to enter – or upgrade their position in – the world of boat ownership.

They also talk about how new models from SeaRay and Boston Whaler “continue to resonate with customers.” We see this every day, of course. The way the stock analysts put it is to note “new product introductions driving sales growth.”

Some specifics about brands include strong demand for SeaRay boats, focused on models in the 19 to 35 foot range, with new models being the chief driver for this brand. Those include SeaRay’s new inboard SLX models, outboard Sundeck models and SPX models, which have been extremely popular this year. That has meant buyers are fairly well balanced between outboard motors on the smaller models and inboard/sterndrive models, typical of the larger boats.

Boston Whaler has been second to SeaRay in sales growth through mid-year, with many dealers around the country running out of inventory because of strong customer demand. Strongest demand nationwide has been for Boston Whaler’s models sized 23 feet and larger. The dual-center console Outrage and Vantage models have been especially popular.

And while the national trend has been a bit stronger for those bigger boats than for Boston Whaler’s smaller models, Longbow reports that “the brand has competitive product in every boating segment.”

For those of us who operate in saltwater, Mercury’s 350 to 400-horsepower Verado engines have been top sellers.
The national numbers aren’t in yet, but we expect the new 2017 model-year inventory we started receiving in July will prove even more popular with buyers.

So putting all the jargon and insider-speak aside, what does this mean?

It means the remaining months of 2016 are a great time to find outstanding value, on great financing terms, for new boats of every type. There’s still plenty of time to get on the water this season and, of course, to be ready to go as soon as the water warms up next spring, too.

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Canada’s Muskoka Region Gets a Bit Glitzier

Patrick Dovigi’s preferred method of getting to his cottage is chartered seaplane. From his Toronto home, it is a 45-minute trip to the dock at his 3½-acre private island in Canada’s Muskoka region.

Star Island had been in the same family for generations before he bought it for $2.9 million in 2013, Mr. Dovigi said. The 37-year-old founder of an environmental services firm added a 7,500-square-foot home and two boathouses. “We’ve…

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Wilson swinging for a slice of Nike’s golf equipment business

When Nike announced plans to exit the golf equipment business last month, Wilson Sporting Goods saw a chance to line up a shot to the green.

“The Nexit, as we call it, is a huge opportunity for us,” said Wilson Golf President Tim Clarke. “It’s full steam ahead.”

Nike’s decision to focus on golf shoes and apparel came months after Adidas said it wanted to do the same and also sell its golf equipment brands, including TaylorMade. Wilson, however, is as committed as ever to sales of irons, drivers and balls.

That might come as a surprise to golfers who know Chicago-based Wilson as the brand that went from industry leader through the mid-1980s to losses and a reputation for bargain box sets. By the mid-2000s, Wilson had about a 0.6 percent share of the U.S. market for golf balls and the club it was best known for, irons.

“The mentality came in that volume is king,” he said. But it took focus away from equipment for more serious players and hurt the brand’s image. In the early 2000s, the golf division alternated between years of profits and losses as it ran through six general managers in the decade leading up to 2006, when Clarke took the job. Net sales fell by about half between 2001 and 2006, according to Amer’s annual reports.

“Market share was basically nonexistent, and we were pretty well out of the pro business at that point,” he said.

Wilson cut back on costs everywhere except research and development and started introducing products every two years — about half as often as it had been — to avoid discounting, Clarke said. Sales, also affected by the recession, kept falling, but the priority was getting back to profitability, he said.

The one PGA Tour player Wilson still sponsored, Padraig Harrington, won a trio of championships in 2007 and 2008 and gave the brand a boost, Clarke said.

Sales of softer, low-compression Duo golf balls provided another. Wilson also split clubs into three categories aimed at three levels of players, but all at the premium end of the business, and began trying to shift sales upmarket.

About 53 percent of Wilson’s sales now come from pro-line equipment, up from 6 percent a decade ago, Clarke said. The rest comes from equipment sold in sporting goods stores or mass market retailers. Wilson will always have entry-level equipment in sporting goods stores but cut cheap versions that were hurting the brand, said Clarke.

According to Clarke, Wilson is nearing $125 million in annual revenue and a spot in the top five U.S. golf brands, while ranking fourth in Europe. His goal is to crack the top three and be the biggest division within Wilson Sporting Goods.

That would be easier if the golf equipment market was growing.

Golf equipment retail sales were $3.7 billion in 2015, up from $3.4 billion the year before but flat with 2013, according to the National Sporting Goods Association.

U.S. participation numbers are down from a pre-recession high of around 30 million to 24.1 million people who went golfing at least once last year, 19.5 million of whom were committed golfers, according to the National Golf Foundation.

Tom Stine, partner at industry research firm Golf Datatech, said the decline isn’t cause for alarm, but a return to a participation figure that’s held steady around 25 million for years except for a spike around an increase in the number of courses built tied to the housing boom.

Others question whether a complicated, expensive and slow-moving game will ever catch on with a new generation of players.

“There are just so many points of the game that don’t mesh up with how millennials recreate,” said NPD Group sports industry analyst Matt Powell.

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