Yesterday, Winnebago Industries (WGO) released its third-quarter results for fiscal 2019. After yielding solid returns of 75.7% in 2017, Winnebago stock tanked 56.5% in 2018. Last year, the company’s rising dealer inventories and inflating costs due to trade war tariffs hurt investors’ sentiments, which triggered a sell-off in its stock.
In contrast, the company’s stock turned positive in the first quarter this year on hopes that the US and China would reach an agreement to end the trade war. These expectations also drove the broader market up as the S&P 500 Index rose by 13.1% in the first quarter this year.
Meanwhile, the two largest US automakers, General Motors (GM) and Ford (F), also went up by 10.9% and 14.8%, respectively, in the first quarter. General Motors and Ford are among the large US companies that are facing trouble due to the ongoing US-China trade tensions. In the last year, both GM and Ford have warned investors about the negative impact of higher tariffs on their international business.
Winnebago warns about US-China trade war
During its third-quarter earnings conference call yesterday, Winnebago President and CEO Michael Happe said that the RV (recreational vehicle) industry is “dealing with the looming threat of increased tariffs.” While talking about a recent US-Mexico trade deal, he added: “While the threat of additional tariffs related to products imported from Mexico has passed, a trade war with China appears to be more lasting.”
Happe believes that tariffs are likely to have a “material dollar impact” on the company’s cost inputs.