Fleetwood CEO Acts to Pull It Out of Rut
At the helm of Fleetwood Enterprises Inc. for less than a month, Chief Executive Elden Smith has moved quickly to deal with the company’s troubled recreational vehicle and manufactured housing units.
The Riverside-based company said Tuesday that it would sell its manufactured-housing retail division and an affiliated finance business.
“We are taking this action in order to stem losses and concentrate our attention on our core businesses,” Smith said.
Riverside-based Fleetwood has been struggling to recover from a persistent slump in manufactured housing, which represents about a third of its $2.6 billion in annual revenue. Its RV business also has been flagging.
The sale of its 125 retail outlets would not change Fleetwood’s ranking as the No. 2 maker of factory-built homes, a $7-billion market. The retail operations booked about $243 million in sales in fiscal 2004.
Fleetwood said it expected to complete the sale within 12 months. Prospective buyers and a possible sale price weren’t disclosed.
“We will continue to build the homes, just not be a retailer,” said Kathy Munson, a spokeswoman for Fleetwood. Most of its manufactured homes are sold through independent dealers.
The entire manufactured-housing unit has been a drag on the company’s profitability. In its most recent quarter ended Jan. 23, the unit’s revenue rose 18% to $207 million but it posted an operating loss of $14 million. Since 2000, the company’s sales of manufactured homes plunged 66%, to 20,000 in fiscal 2004.
Fleetwood’s troubles stem partly from an industrywide slowdown in prefab home sales, hurt recently by low interest rates, which have made site-built homes more affordable.
Fleetwood’s retail business is concentrated in the Southeast and Texas -- soft housing markets where prices of site-built homes are commensurate with factory-built ones. What’s more, a wave of repossessions of prefab homes further depressed prices and prompted lenders to tighten standards for financing such housing.
Meanwhile, Fleetwood’s revenue from RV sales fell 16% to $343 million in its latest quarter.
Smith, 64, was called out of retirement last month to help turn around Fleetwood. Because he was a longtime leader of Fleetwood’s RV division, his appointment as CEO led some analysts to speculate that he would sell or spin off the entire housing unit.
Smith said the decision to sell the housing retail operations presented the “best opportunity” for Fleetwood to regain its position as the top maker and wholesale distributor of factory-built homes and RVs.
Fleetwood also announced that it would shutter manufactured-home factories in Georgia and Texas. The two closures will result in the loss of about 45 jobs, Munson said.
The announcements came after the close of Tuesday’s stock market session, during which shares of Fleetwood rose 6 cents to $8.75 on the New York Stock Exchange. The stock has fallen 40% in the last year.
