Improving its dealer network is a top priority for Arctic Cat going forward, and that means the company will likely part ways with retailers who are less active in powersports sales, said Christopher T. Metz, president and chief executive.
The company has already assessed its dealer base in order to make changes where needed, Metz said during the company’s conference call yesterday to announce earnings for the fiscal 2016 first quarter, which ended June 30.
“Most of our conversations are going to be around those dealers, where powersports in general aren’t a key focus of theirs,” he said. The company needs to “make sure that either they’re committed to powersports and Arctic Cat or we’re going to have to look at other partners that are more active in this space.”
Moving forward, Metz said he expects that Arctic Cat will separate with more dealers than it will add.
The dealers that end up staying in the company’s network will see higher consumer rebates and incentives, as the company focuses on reducing non-current dealer inventory, Metz said. “Over the past 90 days, we have reduced total dealer inventory in North America by approximately 4,000 units,” he said. Part of the reduction will open room for new products.
Previously, the company had set a full-year goal of reducing dealer inventory by 5,000 to 7,000 units. “It’s not going to be ‘turn the light switch on,’ but they [dealers] are excited about the direction we’re headed in for sure.”
Arctic Cat reported a net loss of $1.1 million or $0.08 per share. Snowmobile sales increased 4% year-over-year to $58.2 million, while sales of ATVs and side-by-sides decreased 17% to $52.9 million. Sheffield Financial is the preferred finance company for Arctic Cat. Sheffield provides financing for approximately 80% of the company’s products that require promotional financing, Jack Snow, chief executive of Sheffield Financial, told Powersports Finance.
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