Johnson Outdoors (NASDAQ:JOUT) Surprises With Q1 Sales
Outdoor recreational products company Johnson Outdoors (NASDAQ:JOUT) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue down 13% year on year to $175.9 million. It made a GAAP profit of $0.21 per share, down from its profit of $1.45 per share in the same quarter last year.
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Johnson Outdoors (JOUT) Q1 CY2024 Highlights:
- Revenue: $175.9 million vs analyst estimates of $158.8 million (10.8% beat)
- Operating profit: ($0.3) million vs analyst estimates of $4.5 million (large miss)
- EPS: $0.21 vs analyst estimates of $0.50 (-$0.29 miss)
- Gross Margin (GAAP): 34.9%, down from 37.3% in the same quarter last year
- Market Capitalization: $433.9 million
“Our second quarter results reflect challenging marketplace conditions. In the season ahead, we are investing in marketing and promotions and supporting our new product launches, like the new Minn Kota Quest trolling motor line that is seeing positive response from the trade. We are also continuing to work hard to improve our cost structure and reduce inventory levels,” said Helen Johnson-Leipold, Chairman and Chief Executive Officer.
Operating in locations worldwide, Johnson Outdoors (NASDAQ:JOUT) specializes in innovative outdoor recreational products for adventurers worldwide.
Leisure Products
Leisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.
Sales Growth
Reviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Johnson Outdoors's annualized revenue growth rate of 1.9% over the last five years was weak for a consumer discretionary business. 
Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Johnson Outdoors's recent history shows a reversal from its already weak five-year trend as its revenue has shown annualized declines of 9.1% over the last two years.
This quarter, Johnson Outdoors's revenue fell 13% year on year to $175.9 million but beat Wall Street's estimates by 10.8%. Looking ahead, Wall Street expects sales to grow 4.8% over the next 12 months, an acceleration from this quarter.
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Operating Margin
Operating margin is an important measure of profitability. It’s the portion of revenue left after accounting for all core expenses–everything from the cost of goods sold to advertising and wages. Operating margin is also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Johnson Outdoors was profitable over the last two years but held back by its large expense base. Its average operating margin of 3.5% has been paltry for a consumer discretionary business.
This quarter, Johnson Outdoors generated an operating profit margin of negative 0.1%, down 5.8 percentage points year on year.
Over the next 12 months, Wall Street expects Johnson Outdoors to become profitable. Analysts are expecting the company’s LTM operating margin of negative 0.9% to rise to positive 4.6%.Key Takeaways from Johnson Outdoors's Q1 Results
Johnson Outdoors missed on operating profit by a meaningful amount. The company called out "challenging marketplace conditions" and added that it is "continuing to work hard to improve our cost structure and reduce inventory levels," Overall, this was a mediocre quarter for Johnson Outdoors. The stock is flat after reporting and currently trades at $42.61 per share.
So should you invest in Johnson Outdoors right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
