Hmmmm. Fill my car's gas tank or buy a new lawn mower? Tough decision, but according to small-engine manufacturer Briggs & Stratton
Companies are blaming high energy prices for shortfalls on everything. Whatever the bugaboo of the moment -- high oil prices, hurricanes, sunspots -- you can be sure some managers will use it to explain away faltering performance, regardless of how tangentially related the event is.
Earlier this year, Briggs & Stratton explained that slowing sales were the result of a late start to the spring season. Feeling the season was over, retailers like Home Depot
While the company is struggling to stem the tide of falling sales, it must also deal with a mass exodus of workers who are taking advantage of guaranteed benefits under an expiring labor contract. The contract, which expires Aug. 1, gives retirees with enough seniority free health insurance for 10 years. As many as 260 workers are leaving one Milwaukee-based factory, about one-third of the workforce there. Briggs & Stratton employs some 9,000 people companywide.
The engine segment comprises two-thirds of the lawn and garden equipment manufacturer's revenues, down from more than 85% just two years ago. Part of the reason for the decline is that Briggs & Stratton acquired the assets of defunct Murray, a move that primarily boosted revenues in the power equipment segment; however, sales there are also expected to come in 18% below company forecasts. The engine maker will report full-year results on Aug. 10, but thought it would get the bad news out early. Investors, though, punished the stock, driving it down 16% in after-hours trading, though it opened trading today only 7% off.
While the macroeconomic trends the company singles out may indeed be the culprit in declining sales -- after all, Briggs & Stratton notes industry forecasts for engine shipments to manufacturers will be off 7% to 8% for 2006 -- we've been living with high oil prices for quite a while now, and the first six months of Briggs & Stratton's fiscal year saw sales growing briskly.
With competitors like Honda and Tecumseh
Home Depot and Wal-Mart are both Motley Fool Inside Value selections.
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