The Brunswick CEO expects the surge in boat gross sales from Covid to proceed via 2021
David Foulkes, CEO of Brunswick, told CNBC on Monday that early signs suggest the coronavirus pandemic-inspired surge in recreational boat sales will extend beyond 2020.
“We have incredible momentum in the industry now. We have attracted a new population,” Foulkes said on Closing Bell, explaining that Brunswick boat buyers have become more ethnically diverse, with the average age moving from the low 50s to the high has dropped 40s this year. Sales have also increased among women, he added. “I think that gives us a lot of momentum, not only in the next year, but also in the years to come.”
Foulkes, whose brands include Mercury, Mariner and Boston Whaler, said the boating industry benefited from the rise in remote working during the pandemic and “provided more opportunities for outdoor recreation.” Net sales in the third quarter increased by around 26% compared to the same period last year.
Another factor that could further boost boat sales next year is low inventory levels in 2020, according to Foulkes. In fact, the Mettawa, Illinois-based company was trying to ramp up production to keep up with orders in early fall . “A lot of people who would normally have swapped their boats this year haven’t had a chance. We expect the replacement trade to take place next year,” said Foulkes.
In Brunswick, retail boater demand rose well into May and June, Foulkes said in the company’s second-quarter earnings release. This followed the first wave of the coronavirus pandemic in March and April, which resulted in widespread home stay orders.
“New boaters who came into the market had a very short window of time to make the decision to go boating,” said Foulkes on Monday in the spring. “We believe this will be a much longer window for next year. People are now making decisions about buying boats even in winter.”
“I was looking at retail finance applications this morning. They are up about 90% year over year. This is a really strong leading indicator of good retail for the next year,” he added.
Boating wasn’t the only outdoor activity that grew in popularity during the pandemic. Bicycle sales began to surge in the spring, causing severe supply shortages, and recreational vehicles such as RVs also saw new buyers.
“We believe this is not a trend, but a connection with nature,” Stephen Smith, CEO of outdoor retailer LLBean, told CNBC last month. “There is an understanding of the physical and psychological benefits of being outside and we believe it will continue to do so through 2021.”
Foulkes also said he awaits a newfound desire to be outside to weather the pandemic. Boating is “a way to recreate yourself while maintaining social distancing, and I think people see and appreciate it and will continue to appreciate it for the next year and beyond,” he said.
Brunswick’s shares are up around 24% in 2020. The stock, which hit an all-time high of $ 78.92 on November 24, closed the session on Monday at $ 74.51 apiece.