Shares of MarineMax (HZO -0.90%), the world's largest recreational boat and yacht company, were falling after the company missed the mark on the bottom line in its first-quarter earnings report and cut its guidance for the year.
The stock was down 18.7% as of 12:01 p.m. ET.
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MarineMax faces a stiff wind
MarineMax said that revenue in its first quarter of fiscal 2024, ended Dec. 31, 2023, rose 4% to $527.3 million, ahead of analyst expectations at $521.3 million, and same-store sales were up 4%.
However, that revenue growth didn't translate into bottom-line growth as gross profit fell 6% to $175.5 million. Management blamed an aggressive promotional environment for a decline in gross margin from 36.8% to 33.3%.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were slashed by half to $26.6 million, and adjusted earnings per share declined from $1.24 to $0.19, missing the consensus at $0.50.
CEO Brett McGill explained: "Our pricing actions did result in lower gross margins and profitability. This was primarily due to increased discounting on certain boat models in response to the softer retail environment, as well as a greater mix of larger boats, which historically carry a lower gross margin than other product categories."
Will a rising tide lift MarineMax?
MarineMax said weak consumer demand would weigh on performance this year, and it cut its earnings-per-share guidance from a range of $4.50 to $5 to a range of $3.20 to $3.70.
Given that guidance, the slide today in the stock isn't surprising, but MarineMax looks cheap at a price-to-earnings ratio of just 8 based on its guidance. As a consumer discretionary company, MarineMax is sensitive to the economy, but it should bounce back when consumer spending is on more solid ground.
