Brunswick Corporation (NYSE: BC) sells leisure products such as boats, foosball tables, air hockey tables, bowling and billiards equipment, and fitness equipment. BC also owns and operates bowling centers in several countries and billiards stores in the U.S. Its marine division, which markets and sells outboard engines and boats, is five times the size of its nearest competitor, and BC commands more than 35% market share in boats and more than 50% in engines. The company earned $2.8 billion in revenue but incurred a net loss of $586 million in 2009.
However, the U.S. boating industry has seen a major decline in sales, and Brunswick has felt the effects of this trend. BC offers a diverse set of boating products, from the low end of the market to the yachts in its Hatteras and Meridian brands, and the decline in consumer demand has negatively affected sales numbers across all its products in the past three years. Also contributing to Brunswick's struggles is a continued rise in used boat sales, which now make up over 60% of total sales in the marine industry.
The decline in the boating business certainly impacts Brunswick's balance sheet, as 80% of its revenues come from the marine segment, but the diversity of its portfolio may help it to withstand the current down-cycle. Health & Wellness is a rapidly growing industry where Brunswick owns three recognized brands, Life Fitness, Hammer Strength, and ParaBody. Bowling and billiards sales, meanwhile, remain flat and continue to account for less than 10% of the company's total revenues. These two sectors lend stability to the company in a period of high volatility in marine sales.
Brunswick has many competitors but no one company competes with it in all four sectors (boats, marine engines, fitness equipment, and bowling & billiards equipment). Brunswick is a market leader all four areas. It is the largest manufacturer of recreational boats by dollar sales and unit volume, and the largest manufacturer of marine engines. Brunswick's fitness brands - Life Fitness, Hammer Strength, and ParaBody - also make Brunswick the largest producer of commercial exercise equipment.
In the boating and marine engines industry it faces competition from Genmar Holdings, Yamaha Motor (YAMHF), Marine Products (MPX), Fountain Powerboat Industries (FPB), and others. The Industry is extremely fragmented with hundreds of different brands. Brunswick, however, controls 35% of the market share in boating, and over 50% of the market for the sale of outboard engines.
The bowling industry is highly fragmented with small business, but Brunswick must compete with market leader AMF Bowling which owns and operates 340 centers in the United States, compared to BC's 107 locations. Bowl America Inc A (BWL) is another competitor. The Bowling Industry is extremely fragmented with the biggest two companies owning 400+ centers and the next three largest companies owning a combined total of 50 centers. The total number of bowling centers is 5,498.
In the fitness equipment industry companies such as Nautilus Group (NLS) and Cybex International (CYBI) compete with Brunswick. Brunswick is the largest manufacturer of commercial fitness equipment and is a leader in the manufacture of consumer fitness equipment. Life Fitness is a leading brand and is found in many gyms nationwide.
One clear difference Brunswick has amongst its competitors is that it has many different products. Therefore, it is less vulnerable to downturns in one sector. For example, a decline in the bowling industry would impact Brunswick's competitors significantly, while Brunswick could absorb the losses because of its wide base.