Winnebago sales, profits soar as pandemic drives demand for RVs

In a pandemic, SUVs and vans just weren't enough for many people.

Winnebago Industries said Wednesday its profit during the winter quarter was five times higher than a year ago, and sales were up 34% as more people decided to hit the road in recreational vehicles.

"Strong retail demand, low field inventory, and record committed dealer orders set the table for continued robust performance," Mike Happe, the company's chief executive, said. But he added, "We also believe there is secular and ongoing growth in outdoor lifestyle products as consumer priorities have changed due to the pandemic."

The fastest growth was not in giant RVs that haul families and retirees on weekslong trips, but in products that are used on shorter getaways.

Winnebago's towable product segment had a 55% jump in sales, while the motor home segment rose 17.5%.

Consumers showed the strongest interest in Winnebago brand Class B motor homes, such as the Solis, Revel and Travato models. These models are 21 feet long or shorter and sleep two to four people.

The company, which has its management office in Eden Prairie, said it earned $21.2 million, or $2.04 a share, for the three months ended Feb. 27. That's up from $4 million, or 51 cents a share, a year ago. Revenue was $840 million.

Consumer demand that rose faster than manufacturers were able to ramp up production after shutdowns last spring has driven up order backlogs at Winnebago and elsewhere. Throughout the industry consumers are seeing fewer discounts and allowances. The pricing advantages helped Winnebago increase its gross profit margin 590 basis points in the quarter.

Happe noticed an increase in interest in the RV lifestyle even before the pandemic.

"There was already momentum before it was disrupted last March," he said in an interview. "We do believe the challenging pandemic times really caused families and individuals to search for safe, healthy experiences and caused people to reevaluate their priorities."

After so many people were introduced or reintroduced to outdoor pursuits, Winnebago and other companies that specialize in outdoor activities are looking for ways to keep them.

"All of us collectively in the RV and marine industries need to work as hard as we can to satisfy the new customers that have come into our lifestyles. We believe a majority of them will maintain a presence in the lifestyle in some way," Happe said.

The company has been operating near its manufacturing capacity but has had periodic disruptions due to parts shortages. Suppliers have helped the company increase production, Happe told investors and analysts. But he added, "We also continue to be restrained from hitting full manufacturing potential given almost daily component availability challenges."

Happe said the company is committed to building a more diverse and equitable culture within the company and the outdoor communities. Last week, Winnebago took steps to diversify the racial and gender makeup of its board.

Kevin Bryant, an EVP and chief operating officer of Evergy Inc., brings financial, operational and business development qualifications from the energy industry. Jacqueline Woods, chief marketing and communications officer at NielsenIQ, adds marketing, branding, pricing and strategic development skills to the board. The 11-member board now has three female members.

Patrick Kennedy • 612-673-7926