Ups and downs in first quarter sales number

By AmSnow Staff

One of the bright spots in Arctic Cat's latest financial report was that its products, garments and accessories (PG&A) sales increased by 3% in the first quarter compared to the same period a year ago. The increase was due primarily to an upshot in pre-season snowmobile accessory purchases.

Arctic Cat says PG&A grew to $19.3 million from $18.7 million in the prior-year. This year's better selling products included the Drift line of snowmobile garments targeted towards more price-sensitive shoppers.

However, much of the report did not show sales figures on the rise. "Given the current recessionary environment, we are pleased with the company's improved results on lower sales," said Christopher Twomey, Arctic Cat's chairman and chief executive officer.

Snowmobile sales dipped to $17.9 million in the first quarter compared to $21.4 million in 2008's first quarter; a 16% decrease. However, Cat plans to see a strong increase in sales around October when the 2010 snowmobiles are shipped to dealerships, according to Twomey.

Arctic Cat cancelled its dealer show this year, but hopes to still create better communication channels with its dealers. While that may sound a little counterintuitive, instead of having one big show this year, Arctic Cat representatives will be meeting three times a year with the dealerships, personally. Twomey says he expects this to help improve communication with dealers and lower inventory.

In addition, Arctic Cat says they plan to offer 800cc engines in models all across their snowmobile market segments to increase sales.

Still, Cat sales declined by 26% in the first quarter compared to last year. Sales were $69.4 million this year compared to $93.9 in last year's first quarter. The company reported a net loss of $5.9 million for this quarter.

However, cash and short-term investments was $7.8 million which was up from the previous first year's $5.8 million at this time. "We are taking appropriate actions to preserve cash and maintain dealer health, as well as developing select innovative products that position Arctic Cat to emerge as a strong company once the economy recovers," Twomey said.

For the full year Arctic Cat expects overall sales to be $425 million to $460 million compared to $563.6 million in 2009. Part of the smaller sales forecast can be contributed to its all-terrain vehicle sales as those declined by 40% in the first quarter to $32.2 million from $53.8 million at the same time last year.

"With the current retail ATV sales slump driven by the recession, we are working harder than ever to offer consumers the innovative products they want, in the ATV segments that currently show some signs of improvement," Twomey said.