WATSONVILLE, CA (BRAIN)—Revenue was down 14.8 percent at Fox Racing Shox for the third quarter of the year as both OEM and aftermarket sales dropped in the weak economy.
For the quarter, Fox reported net sales of $36.9 million, compared with $43.3 million for the same period last year. Year-to-date sales are down from $101.1 million in 2008 to $86.8 million in 2009, according to financial figures released Monday by Compass Diversified Holdings, Fox's parent company.
OEM sales decreased $4.4 million during the third quarter and aftermarket and service revenue fell $2 million. OEM sales accounted for 80.7 percent of net sales during the three months ending Sept. 30, compared with 78.9 percent in 2008.
For the first nine months of the year, OEM sales are down $11.9 million, or 15.6 percent, and aftermarket sales have fallen $2.4 million.
International sales were $26 million for the third quarter, down from $31.1 million for the same quarter last year. For the year, international sales were $60.3 million, compared with $71.1 million in 2008.
Fox's income from operations fell $1.7 million in the third quarter—from $6.4 million in 2008 to $4.7 million this year—and $3.5 million for the year—from $9.4 million last year to $5.9 million this year.
Sales this year have been impacted by poor economic conditions, the credit squeeze and high inventory levels in the mountain bike channel, said Joe Massoud, Compass’ chief executive officer.
“We believe inventories have returned to normalized levels, but that in fact the last couple quarters there clearly has been an effect of exaggerated inventories so I think our OEMs had the potential to be overly bullish and I think that’s kind of what happened,” Massoud said during a conference call with analysts on Monday.
Still, Fox continues to gain traction in non-mountain biking segments including military and off-road. Also, Fox partnered with Ford to handle suspension on the F-150 Raptor, which was well-received in product launches and is now being delivered to showrooms, said Jim Bottiglieri, chief financial officer for Compass.
"Over the long term, we believe Fox's leading reputation for high performance suspension products offers significant and attractive growth opportunities and demand among market enthusiasts remains strong," Bottiglieri said.
Fox’s power sports business including watercraft, ATV, snowmobiles and side-by-sides, is up year over year, Massoud said.