Update: We have now received and analyzed Johnson Outdoors/Scubapro’s financial results for the first 9 months of 2020, here.
Scubapro is one of the few dive gear manufacturers for which we can obtain official financial results. As such, it can give us an idea of the state of the industry.
Scubapro is own by Johnson Outdoors, a publicly-traded company (JOUT). We obtain Scubapro’s financial reports through their filings with the U.S. Securities and Exchange Commission (SEC) and in Johnson Outdoors annual reports to shareholders.
Addendum: The latest Johnson Outdoors (Scubapro) financial results include the first 9 months of 2020. Subscribe to Scubanomics to be kept in the loop.
Scubapro Worldwide Financial Results for The First 2 Quarters of 2020
The first 6 months (2 quarters) of 2020 have been devastating for Scubapro.
During the first 3 months of 2020, Johnson Outdoors experienced a 29% decline in sales in its scuba diving equipment division which means about US$5.8 million less in revenues. The following 3 months were atrocious for Scubapro with a reduction of US$9.5 million (47%) in sales compared to the same period in 2019.
These results are in line with what we have seen across the dive industry. During the first quarter of 2020, the pandemic showed its ugly face with some initial negative impact on sales. During the 2nd quarter though, everything was at a standstill around the world.
While sales of scuba diving gear were down 47% in the 2nd quarter of 2020, Johnson Outdoors reported a 17% growth in sales in their watercraft division. Not every other outdoor activity has been hit as hard as scuba diving.
As bad as these dive equipment sales numbers are, the scariest part of Johnson Outdoors' financial results is on profits and losses.
Scubapro went from producing operating profits of US$1.4M per quarter in the first half of 2019, to a loss of US$812K and US$2.6M. That’s US$3.4 million in net operating losses that were not expected in the company cash flow planning for 2020.
This is the issue all scuba diving businesses are facing. A reduction in revenues can rarely be fully matched by an equivalent reduction in costs, leading to deficits and eventually, bankruptcy or closures.
With scuba diving businesses strapped for cash, we expect to see more consolidation in the dive industry over the next few months. Cash-rich private equity firms will be able to purchase companies at a nice discounted price!
To be precise, the first 2 quarters of 2020 are actually the 2nd and 3rd quarter for Johnson Outdoors as their financial year concludes at the end of September.
How were dive gear sales during the Summer of 2020?
It will be extremely interesting to look at Scubapro’s sales results in the period from July to September 2020 (3rd quarter).
We have numerous indications that sales of dive gear were good in North America during the Summer months with a renewed interest in ‘local’ and inland diving. Scubapro’s public financial results could help us understand to what extent these observations are accurate.
What do we expect for the dive industry this coming Winter?
The big question for the dive industry is about this coming Winter.
Regardless of sales to ‘local divers’ during the Summer months, we expect a hard time ahead as scuba diving Winter sales are typically linked to travel — and travel continues to be at a standstill.
We expect to see numerous closures of local dive shops in the next few months with about 20% of North American local dive shops out of business by the end of the pandemic.
At the same time, we expect to see consolidation among dive training agencies and scuba gear manufacturers, as discussed above.
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