Johnson Outdoors: Navigating Market Challenges in Q1 2025

Johnson Outdoors Inc. (NASDAQ: JOUT), a leading global innovator of outdoor recreation equipment and technology, recently announced its fiscal first quarter results for the period ending December 27, 2024. The company faced ongoing market challenges, a cautious retail and trade channel environment, and competitive pressures, which resulted in lower first quarter sales and profitability. Despite these headwinds, Johnson Outdoors remains focused on its key strategic priorities and is confident in its ability to create long-term value and pay dividends to shareholders.



The company's first fiscal quarter typically generates the lowest sales and profits due to the lead up to the primary selling season. However, total company net sales in the first quarter declined 22 percent to $107.6 million compared to $138.6 million in the prior year first fiscal quarter. Fishing revenue decreased 25 percent, due to continued challenging market and competitive dynamics as well as a strong sell-in of new products in the prior year quarter. Camping & Watercraft Recreation sales were down 12 percent, primarily due to general declines in consumer demand. Diving sales decreased 10 percent, driven by softening market demand across all geographic regions.



Total Company operating loss was $(20.2) million for the first fiscal quarter versus operating profit of $0.05 million in the prior year first quarter. Gross margin was 29.9 percent, compared to 38.1 percent in the prior year quarter. The margin decline was due primarily to unfavorable overhead absorption and unfavorable product mix, as well as increased promotional pricing. Operating expenses of $52.4 million decreased $0.4 million from the prior year period, due primarily to lower sales volumes between quarters and decreased expense on the Company’s deferred compensation plan, nearly offset by increases in consulting expenses and warranty expenses.

Loss before income taxes was $(18.9) million in the current year quarter, compared to profit before income taxes of $5.9 million in the prior year first quarter. In addition to the decline in operating profit noted above, Other income also declined by approximately $4.4 million due primarily to a decline in earnings on the Company’s deferred compensation plan, as well as a gain in the prior year quarter of approximately $1.9 million related to the sale of a building. Net loss was $(15.3) million, or $(1.49) per diluted share, versus net income of $4.0 million, or $0.38 per diluted share in the previous year’s first quarter. The effective tax rate was 19.2 percent compared to 33.0 percent in the prior year first quarter.



Despite the disappointing operating results in what is historically the company's slowest quarter of the year, Johnson Outdoors was able to mitigate some of the profit losses through its cost savings initiatives, which it plans to expand this fiscal year. The company also continued to make progress on managing its inventory levels. David W. Johnson, Vice President and Chief Financial Officer, stated, "Our debt-free balance sheet provides a competitive advantage in today’s marketplace and we remain confident in our ability to create long-term value and pay dividends to shareholders."

Johnson Outdoors will host a conference call and audio web cast at 11:00 a.m. Eastern Time on Monday, February 3, 2025. A live listen-only web cast of the conference call may be accessed at Johnson Outdoors’ home page or here. A replay of the call will be available for 30 days on the Internet.

In conclusion, while Johnson Outdoors faced challenging market conditions and competitive pressures in the first fiscal quarter of 2025, the company remains focused on its strategic priorities and is confident in its ability to create long-term value and pay dividends to shareholders. The company's debt-free balance sheet provides a competitive advantage in today's marketplace, and its cost savings initiatives and inventory management progress indicate a commitment to improving its financial performance. Investors should closely monitor Johnson Outdoors' progress and consider the company's long-term potential as it navigates the current market challenges.