EXCSLUSIVE-Winnebago CEO says retail RV buyers still scarce

By James B. Kelleher

FOREST CITY, IOWA, April 14 (BestGrowthStock) – The top executive
at U.S. motor home maker Winnebago Industries Inc (WGO.N: ) said
the encouraging sales rebound his company has seen over the
past four months was a function of dealer restocking, not real
end demand, and that he was still waiting for retail customers
to return to the market.

In an exclusive interview on Wednesday inside the company’s
2.5 million square foot factory complex, Bob Olson, Winnebago’s
chairman, president and chief executive, also provided a
glimpse into his company’s desperate effort to respond to the
sharp downturn in demand that began a little over two years
ago, saying the managers were repeatedly outrun by the
deteriorating market as they tried to respond.

“The difference about this recession over others ones we’ve
dealt with in the past was that it went so deep, with such
velocity, that you couldn’t keep up,” Olson told Reuters.

“You’d get your team together, you’d go through all the
different things that you’d look at to try and survive this
recession, you’d make those cuts, you’d take a step back, you’d
take a deep breath — and you’d have to do it all over again.
And we did that about four or five different times.”

He said Winnebago had rehired 350 of the nearly 2,200
workers it laid off over the past two years and was now running
all three assembly lines at Forest City to keep up with dealer
demand.

But he acknowledged the sales to dealers were
“anticipatory” and said “we need the retail customer now to
complete that cycle and pull the inventory of the dealers’
lots.

“We’ve gone through a series of events here recently that
have really helped Winnebago Industries,” Olson said.

“The dealers, they took their inventories down to
historical levels – and I mean not by just a little bit; they
took it down pretty significantly to record lows,” he said.

“Well they have now looked at it and said, ‘Spring is
coming. We’ve got empty shelves. We’ve got to start the
replenishment cycle.’ So they started that about four months
ago.”

The interview took place in the building where Winnebago’s
RVs undergo final inspection and testing before being leaving
the factory.

Only a handful of the two dozen or so vehicles Reuters saw
during an hour-long in the building had so-called “Code Red”
stickers on them, indicating they were headed to a consumer’s
driveway rather than a dealer’s showroom.

DEEP SLUMP

After seeing industry-wide sales peak at historic highs in
2004, motor home makers such as Winnebago have endured a
protracted, painful downturn that peaked last year, with sector
sales totally about 12,000 — well below the more than 70,000
sold in 2004.

But sales and other data suggest the industry may be
rebounding in a modest way – though the sustainability of that
rebound is in question.

In March, Winnebago, the leading U.S. maker of recreational
vehicles, posted its first quarterly profit in nearly two years
as sales of its largest and most expensive motor homes
rebounded modestly.

At the time, Winnebago, which makes motor homes under the
Winnebago and Itasca brand names, said it was seeing renewed
dealer demand for all its vehicles, but the resurgence was
particularly pronounced for so-called “Class A” motorhomes —
the biggest and most lucrative of its products.

Demand for those bus-like vehicles, which can cost more
than $300,000 and get less than 10 miles to the gallon, had
dropped off dramatically in recent years as fuel prices rose
and the U.S. real-estate downturn morphed into a full-blown
recession.

Sales of Winnebago’s more affordable — and more efficient
— Class B and C vehicles also rebounded, but less sharply.

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(Reporting by James Kelleher; Editing by Anshuman Daga)

EXCSLUSIVE-Winnebago CEO says retail RV buyers still scarce