VOXX International reported aftermarket sales of remote start and security fell during the recent quarter, but sales are expected to improve over the next two quarters.
Aftermarket automotive electronics net sales (including VOXX and Directed) totaled $22 million, for the quarter ending August 31, compared to $29.4 million for the period a year ago. This was due mainly to lower sales of aftermarket security, plus lower sales of rear seat entertainment and satellite radio products.
OEM automotive sales fell to $15.2 million, versus $16.4 million a year ago. This included lower sales of OEM rear seat entertainment.
VOXX believes the general automotive industry has been in “recessionary territory” for the last three years. It said consumers are ready to buy once the chip shortages resolve and auto makers can produce more cars.
On an earnings call today with analysts, VOXX President and CEO Pat Lavelle said consumer spending for the quarter was weaker than VOXX anticipated, not just for VOXX, but for the industry as a whole. This was due to inflation and retailers curtailing their inventory purchases. But the company expects much improved results over the next two quarters given the cold season for remote start and the holiday season for consumer goods. It believes consumers are still willing to spend.
“We do business with some of the biggest retailers in the world,” Lavelle told analysts. “Coming out of their first quarter, [retailers] missed their numbers and their reaction was to severely cut back on orders.” He continued, “Their mantra was to bring down the amount of inventory they are carrying. We do believe as Christmas starts to materialize…retailers will reorder to make those sales.”
He continued, “The retailers also know that, unlike in years previous with supply chain issues, that we have inventory and if they need it, they can order it. That’s a different dynamic than we’ve seen last year.”
Lavelle noted, “We expect that if the car manufacturers can start producing more vehicles, if they can get the chip situation resolved, sales of new cars will be quite robust.” This would improve VOXX’s OEM business.
For all of VOXX International, including its consumer and biometrics divisions, sales fell 12 percent to $125.7 million for the quarter, compared to $143.1 million the year prior. Operating loss was $10 million versus $2.7 million a year ago. Net loss was $10.2 million, versus a net income of $0.3 million a year ago.
The company said it is confident it can weather the current downturn if economic conditions remain stable and it believes it is in a position to grow, once the economy improves. VOXX’s main concern is how steeply the Fed will raise interest rates in the future.