Johnson Outdoors beats estimates as fishing unit surges 36%
Gross margin expansion to 36.6% drives improved profitability in Q1
Johnson Outdoors shares surged in after-hours trading on Friday after the outdoor recreation equipment maker reported fiscal first-quarter results that handily exceeded analyst expectations, driven by robust growth across all product lines and a dramatic improvement in profitability.
The Racine, Wisconsin-based company posted net sales of $140.9 million for the quarter ended January 2, representing a 31% increase from $107.6 million in the prior-year period and comfortably beating the $123.9 million consensus estimate. The net loss of $3.3 million, or $0.33 per diluted share, narrowed significantly from a loss of $15.3 million, or $1.49 per share, a year earlier and outperformed Wall Street expectations of a $0.45 per-share loss.
The most striking improvement came on the profitability front, where the operating loss was slashed 86% to $2.9 million from $20.2 million in the prior-year quarter. This turnaround was powered by a substantial expansion in gross margin to 36.6% from 29.9%, attributed to improved overhead absorption and cost-saving initiatives.
All four of the company's business segments delivered double-digit growth, with the fishing division leading the charge with a 36% sales increase to $112.37 million. The diving segment grew 15% to $17.97 million, while camping and watercraft recreation equipment sales rose 12% to $10.60 million, according to the earnings announcement.
"We're pleased with the positive start to our fiscal year," said Helen Johnson-Leipold, Chairman and Chief Executive Officer. "We saw markets stabilize and we continue to get solid reception to our innovation. Our critical investments in new products and digital commerce, combined with our ongoing hard work on improving profitability, are essential to position us for success."
The company's inventory levels declined to $183.9 million from $201.6 million, demonstrating progress in working capital management even as sales accelerated. Johnson Outdoors ended the quarter with $130.7 million in cash and short-term investments, providing a solid balance sheet as it heads into its peak selling season.
Chief Financial Officer David W. Johnson highlighted the operational improvements driving the better-than-expected performance. "We continue to benefit from our ongoing efforts to improve operational efficiency, enabling us to improve our margins and continue to reduce our inventory levels," he said.
The outdoor recreation market, valued at $62.4 billion in 2025, is projected to reach $93.65 billion by 2031, representing a compound annual growth rate of 7.0%. Johnson Outdoors' strong first-quarter performance positions it well to capture this growth as it enters the seasonally stronger second and third fiscal quarters.
Despite the positive earnings surprise, the stock faces some headwinds from the analyst community. The consensus rating remains at "Reduce" with a target price of $52, according to market data. The company's operating margin remains negative at -2.73%, and net margin stands at -5.79%, though both metrics have shown improvement.
Johnson Outdoors maintained its dividend, with the board approving a quarterly cash dividend payable January 22 to shareholders of record as of January 8. The stock currently offers a dividend yield of 2.72%.
Looking ahead, management signaled it will "continue to strategically manage costs while protecting investments to strengthen the business." The first fiscal quarter typically serves as a ramp-up period for warm-weather outdoor recreation products, with the primary selling season occurring in the second and third quarters. Investors will be watching closely to see if the momentum from the fishing segment's strong new product reception can be sustained through the critical spring and summer selling seasons.