It's too easy to make puns at the expense of a boat seller that sank during the recession, but the truth is that MarineMax
Recessions are tough on companies in general, but companies dealing in big-time discretionary spends get destroyed. Tiffany's
Things were much the same at MarineMax. Revenue fell from $1.25 billion in fiscal 2007 to $885 million in 2008 to a mere $588 million in 2009. The company generated net income of $20 million in 2007 but then lost $134 million in 2008 and another $77 million in 2009.
The stock fell from a peak of about $36 in 2006 to $1.19 per share in March of 2009.
Circumstances such as these are the things that separate the admirals from the rowing slaves, and over the course of two years, MarineMax managers took charge and set forth to right their ship. They slashed expenses, partially by reducing the store count from 93 to 56, and partially by cutting the company's selling, general, and administrative costs by a third.
Then they reinvented their business by growing the service, parts, storage, brokerage, financing, and insurance components -- all of which generate higher margins than boat sales do. And sure enough, MarineMax just reported its highest quarterly gross margin ever: 30%, compared with just 21.5% in the prior year's comparable quarter -- despite a 24% drop in revenue. Management also now updates sales forecasts three times a year instead of once, so as to better control inventory. Together, these initiatives helped push MarineMax into Profit Harbor in its most recent quarter.
The takeaway is clear: Some 1,400 competitor dealers went under during the recession. Necessity is the mother of invention, and rather than go down with the ship, proactive management manned the lifeboats. MarineMax is still a speculative buy, because the turnaround could stall and the company faces competition from West Marine