Breaking News

With travel season, pain at the pump could add to Winnebago's woes

Stock MarketsMay 25, 2018 01:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. With travel season, pain at the pump could add to Winnebago's woes

By Stephen Culp

(Reuters) - Jim and Jenise Harper, retirees from Evergreen, Colorado, have been living in their 43-foot Winnebago motor home for eight years, logging 5,000 to 6,000 miles annually and getting 7 to 9 miles per gallon.

Now, a surge in fuel prices has them tightening their budget while limiting their road plans as summer driving season arrives. "We're not traveling to the East Coast anymore," said Jenise, adding that the price of "fuel has definitely played a role in that."

Pain at the pump has also compounded the woes of recreational vehicle companies whose share prices have crumbled this year.

Winnebago Industries (N:WGO), the leading RV manufacturer and one barometer for U.S. consumer discretionary spending, has boasted sales above its 20-year average for four straight quarters. Still, its shares have lost more than a third of their value this year in the face of rising inventories, tariff concerns and an unusually long winter.

Shipments to dealers in the sector surged in late 2017, according to Recreational Vehicle Industry Association data. Seth Woolf, analyst for Northcoast Research in Cleveland, wrote that this could lead to a decrease in wholesale shipments in 2018 which in turn could squeeze margins industry-wide at a time when gasoline prices are at their highest in four years.

The American Automobile Association expects gasoline prices to average $3 a gallon this summer. [L2N1SM27U] The U.S. Energy Information Administration has projected a 13.7 percent increase at the pump since last summer. The EIA expects diesel, which powers many of the largest RVs, to be 12.7 percent costlier this summer.

This could discourage RV owners from roaming and also could scare off prospective buyers.

Winnebago's motor home retail prices range from just over $20,000 for compact towable models to more than half a million dollars for semi truck-sized class A mobile mansions like the Harper's, according to the company's website.

As of Wednesday's close, Winnebago stock was down about 35 percent since the beginning of the year, with fellow OEM Thor Industries (N:THO) off 37 percent and RV services/dealer Camping World (N:CWH) down 57 percent.

In contrast, the S&P 600 Consumer Discretionary index (SPSMCD) has advanced 3.6 percent.

A Winnebago representative declined to comment for this article. Neither Thor Industries nor Camping World responded to requests for comment.

AAA expects 42 million Americans to travel this Memorial Day weekend, the most in more than a dozen years. Conference Board consumer confidence data in April showed more consumers were planning a road vacation over the next six months than at the same time last year.

This data does not factor in those who already own and are living in their RVs full time, often on a fixed income. The number of these gypsy types is all but impossible to nail down.

"We've heard anecdotally that the number of full-timers – both retirees, and people able to work from the road – have been growing," said Kevin Broom, Director of Public Relations for the Recreational Vehicle Industry Association.

"There’s certainly a segment of people...working at Amazon (NASDAQ:AMZN) or even packaging vegetables," said Jim Harper.

Mr. Woolf said that while fuel prices may have played a role in WGO's share decline this year, heightened inventories, fears over potential steel and aluminum tariffs and unusually bad winter weather have exacerbated the slide.

In January Woolf downgraded WGO to neutral. "We ran the math and the inventory was insane. And once we got into February all the news about the tariffs caused concern," Woolf said in a phone interview.

Still, when keys are in hand and the road is open, the wallet can take a backseat to wanderlust. "This lifestyle is keeping us young," said Jenise Harper. "Will (fuel prices) stop us from RV-ing? No."

With travel season, pain at the pump could add to Winnebago's woes

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email