Shares of Malibu Boats (NASDAQ: MBUU) were falling today after the recreational boat company missed estimates on the top line and offered disappointing guidance for the full year.
It was the latest sign of weakness for high-priced, consumer discretionary goods. As a result, the stock was down 18.1% as of 1:58 p.m. ET.
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Stormy seas for boat dealers
The disappointing results for Malibu Boats came on the heels of a weak report from MarineMax, the largest recreational boat dealer.
Malibu Boats said revenue tumbled 37.7% to $211.1 million, which missed estimates at $219.7 million. The company blamed weak retail demand and high interest rates for the poor performance in its seasonally slowest quarter of the year, and profits fell even further than revenue.
Gross profit was down 50.5% to $37.5 million, and adjusted earnings per share fell 69% to $0.57, though that was still better than the consensus of $0.47.
Despite the headwinds, CEO Jack Springer expressed optimism about a recovery, saying: "We are recalibrating wholesale production to match retail demand as seasonality, along with continued interest rate pressures has resulted in elevated inventory levels. While the current macroeconomic outlook creates uncertainty, we are starting to see some positive signs following our Year End Sales event for Malibu."
What's next for Malibu
Looking ahead, Malibu said it expected revenue to decline in the mid-to-high 30% range in the third quarter and for its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin to fall 8 percentage points to 9 percentage points. That forecast shows the challenges Malibu is facing won't end soon, but interest rates are expected to fall later in the year, which could give the stock a boost.
Management also promised to keep costs low, setting the company up for a recovery. While there's no sign of a recovery on the horizon, one should happen eventually.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
