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Here Lies the Winnebago


The RV may be latest casualty of the crunch.

Monday wasn't a pleasant day for Thor Industries (THO), the leading recreational-vehicle (or RV) maker: It announced that first-quarter income plunged 87%.

I would suggest that Thor's management rent RV, the classic Robin Williams comedy from 2006. Williams' lovable antics will remind execs of a time when RVs made people smile and laugh.

For those who didn't see it in theatres -- yes, there were a few -- Williams's character, Bob Munro, rents a RV and takes his dysfunctional family on vacation. As one can imagine, hilarity ensues when they set out on their trip. Much of the plot revolves around Bob's job being in jeopardy if he doesn't make it to an important meeting.

Then again, maybe Thor's executives shouldn't watch it.

The RV market is in shambles - of course, any company selling leisure is in serious trouble these days. The reasons are many and obvious - it costs a small fortune to fill up the gas tank, the economy stinks, the consumer isn't spending on big-ticket items, and its client base derives from the hardest-hit regions of the real-estate crash. Even the precipitous drop in gas prices can't stop this tidal wave.

And Thor is the best in the industry. Along with Drew (DW), their stock prices are the only ones that exceed $5. If one is expecting a wave of bankruptcies, the first place to look would be RV makers.

Winnebago Industries (WGO), whose name is synonymous with RVs, can sympathize. In October, when the company reported dismal earnings, Bob Olson, the chief executive, president and chairman, said in a conference call that recent months amounted to "one of the worst downturns the industry has ever seen," adding that it was unclear when conditions would start to improve.

And that was almost 2 months ago. I doubt Mr. Olson has seen those conditions improve since then. Although declining fuel prices offer a slight respite, the turmoil in the credit markets has made it more challenging for RV dealers to get financing, forcing them to rein in their inventories. Earlier this year, General Electric's (GE) financing arm said it would stop offering loans for the purchase of consumer boats and motor homes.

This must seem like a bad dream for RV makers. Only 3 years ago, the industry was flush with cash, and their stock prices were at record highs. No wonder the movie version arrived 1 year later. Following Hurricanes Katrina and Rita in 2005, the RV industry came through, providing temporary housing for a period of time.

FEMA was like the industry's rich uncle. Fleetwood Enterprises (FLE) was just one RV manufacturer that benefitted: It received orders from FEMA valued at $170 million after Katrina.

Fleetwood's stock trades for pennies now and its entire market cap -- $9 million -- is a fraction of that order. Even the rich uncle couldn't prevent this nightmare.
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