Winnebago Industries Inc. says the outdoors will keep calling out to customers acquired during the COVID-19 pandemic, creating a pipeline for business long into the future.
More than 10 million households camped for the first time in 2020 and another 4.3 million will try it in 2021, according to Michael Happe, chief executive of Winnebago.
“We believe the pandemic not only accelerated some existing purchase intents within the recreational vehicle and marine markets these last 15 months, but we are equally convinced there has been, is and will be a meaningful expansion of interest and engagement in the outdoors that will benefit out business and industries for many years even through unavoidable cyclical periods that have been and will be a part of the outdoor economy for decades,” he said, according to a FactSet transcript.
Happe called out the new young consumers who came to Winnebago in the last year.
“Now some will look for signs of fallout of first-time buyers and challenging comparative periods in the sort-term to record retail demand a year ago, but others like us see a net positive new wave of engaged enthusiasts, especially millennials and younger generations who are actively now shifting their available time and income to invest in a lifestyle that is rewarding and accommodating to countless use cases personally and professionally when using our products,” he said.
The comments echo those of other companies that also saw interest accelerate during the pandemic.
“The most robust homeownership growth is in the millennial cohort, with the growth coming in suburban and rural areas. We believe the growth in this customer segment has staying power, and could be (a) structural game-changer for us,” said Hal Lawton, chief executive of Tractor Supply Co.
after the rural lifestyle retailer’s most recent earnings report.
Tractor Supply said it sold 11 million birds, including poultry, during the prior year-and-a-half period.
Petco Health & Wellness Co.
says pandemic pets adopted over the past 12-plus months will reap business rewards into the future. Petco added more than 3 million new customers in the most recent quarters, with more new pets to come.
“From a mid- to long-term standpoint, a recent survey indicated 65% of 18-to-34-year olds plan to acquire a pet in the next five years,” said Ron Coughlin, chief executive of Petco, according to a FactSet transcript.
“And once a cute puppy or kitten joins the family, they’re going to need to be fed, groomed and vaccinated for over a decade or more.”
KeyBanc Capital Markets analysts are upbeat about Winnebago’s prospects despite a share decline of 5.5% over the last three months.
“[W]e reiterate our view that the RV industry remains best positioned versus other end markets this summer to put up respectable numbers versus 2019,” wrote analysts led by Brett Andress.
KeyBanc rates Winnebago stock as overweight with an $80 price target.
Wedbush cut its price target after the stock pullback.
“Despite another substantial beat and an increase to our earnings outlook, we
are lowering our price target to $86 [from $94] as investors have made it clear that they are hesitant to pay up for what is perceived to be inflated demand, margins, and ultimately earnings power,” wrote analysts led by James Hardiman.
Calling the company’s commentary “conservative,” Wedbush says “Winnebago shares will work in the long run once we get past the short-term hand-wringing as we lap the very hardest of comparisons from the initial COVID reopening.”
Wedbush rates Winnebago stock as outperform.
Winnebago stock has gained 12.4% over the year to date while the S&P 500 index
has run up 13.6% for the period.