Stock market slump affects boating industry

ORLANDO, Fla. — Harry St. John had his eye on a sleek 18-foot fishing boat as he browsed for bargains at a recent boat show. But his mind was on Wall Street.

"It does worry you when you see what the stock market did last week," the 65-year-old Hernando Beach retiree said of the recent dip in the bull market. "Gas is getting high again. That's all going to be taken into play. I'm not buying unless the price is right."

With consumer confidence wavering, shoppers like St. John are balancing the desire to get out on the water with the $25,000 average price of a new boat. Boat sales are down and the projection for 2007 is flat or down slightly from 2006, said Thom Dammrich, president of the National Marine Manufacturers Association

"Nobody needs a boat," he said. "It's a discretionary purchase. It depends on people feeling good."

The slump has also hit the boat retail industry's only giant — MarineMax, based in Clearwater, Fla. — but the company seems to be shaking off the worst of it. The $1.2 billion corporation has more than 2,200 employees at 88 retail locations selling everything from $20,000 starter boats to multimillion-dollar yachts.

"They are dramatically outperforming the industry," said Brian Rayle, an analyst with KeyBanc Capital Markets. "Even though the market was down 15 percent, their same store sales were up 7 percent. They are continuing to take market share even in the trough."

The company has Wall Street's attention. Shares of marine manufacturing giant Brunswick Corp. slumped in January when MarineMax, the only publicly traded boat retailer, lowered its 2007 profit expectations. For the quarter that ended Dec. 31, MarineMax posted a loss of $3.8 million, or 21 cents per share, compared with earnings of $664,000, or 4 cents per share, during the year-ago period. Sales climbed 30 percent to $234.7 million from $181.2 million.

The company said employee and product incentives and increased spending on marketing hurt its operating margins. MarineMax chairman, president and CEO Bill McGill also said a slump in the housing market has hurt the worst.

"Store traffic is usually down when there is bad news out there," McGill said.

McGill started his professional life as an aerospace engineer. He even hoped to be an astronaut. But when the Apollo-era ended and aerospace cratered, McGill, an avid water-skier, decided to do something he loved. He got into the boat business.

He recognized right off that customers wanted to spend time on the water, not changing their engine oil or stressing about running aground in unfamiliar waters.