Clark: "So when did you get the tenement on wheels?"
Eddie: "Oh, that, uh, that there's an RV. Yeah, yeah, I borrowed if off a buddy of mine. He took my house; I took the RV. It's a good-looking vehicle, isn't it?"
Clark: "Yeah, it looks so nice parked in the driveway."
Eddie: "Yeah, it sure does. But, don't you go falling in love with it now, because we're taking it with us when we leave here next month."
Clark Griswold and Cousin Eddie of National Lampoon's Christmas Vacation offer a laughable picture of a dilapidated motor home. But RVs have a come a long way since this comic classic. Today, these behemoths of the roadway are land yachts of luxury.
And there are plenty of companies revving their diesels to get the big buyers through the door. But has the competition, including Winnebago
Glance through Coachmen's
In its fiscal 2005 first-quarter results, Coachmen's revenues increased 4% to $205.1 million. Sales from its recreational vehicles improved 4.7%. The company expects the soft sales environment to continue for at least the immediate future. Dealer inventories will have to be worked down before revenue growth can begin picking back up.
Lagging sales, coupled with dealer inventory glut, forced Coachmen to increase sales incentives to attract buyers. Higher incentive costs, as well as pricing pressures from the competition, strained the company's margins. While operating margins were running on fumes a year ago, at a slim rate of 0.2%, they were on empty for the most recent quarter, as operating "income" was actually a loss of $1.9 million.
Its operating pressures resulted in a $0.09 per share net loss, compared with the $0.04 per share earned a year ago. One good thing did come from the loss, though -- Coachmen said its market share improved on several fronts as a result of the sales incentives. The company expects to benefit from its increased market share once the market rebounds.
Coachmen may indeed profit from its increased market share, but an investor has to wonder when sales will improve. It's doubtful the competition is going to park it and call it quits. And as interest rates continue to rise, the prospect of a sudden recovery in the RV industry seems to be wishful thinking. Given the uncertainty, with a little patience, potential investors may be able to obtain a better deal in Coachmen's stock.
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Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.