By Will Feuer
Shares of Fox Factory Holding tumbled after the company, which makes components for bicycles, ATVs and more reported a steep drop in sales due to a glut of bikes in the market and fallout from the auto workers strikes.
The stock fell more than 36% to $52.96. Shares were already down about 9% this year.
The Duluth, Ga., company, which makes components for mountain bikes, ATVs and other manufacturers, reported a 19% drop in sales, which were $331.1 million in the third quarter. Analysts surveyed by FactSet had expected sales of $399.5 million.
Sales were dragged down by a nearly 59% drop in revenue from the company’s specialty-sports unit, which serves bicycle manufacturers.
Chief Executive Mike Dennison said many bike manufacturers are dealing with a glut after a pandemic-driven burst of demand, which has since cooled off. He said the inventory issues will likely drag into the first half of next year.
Some bike makers, he said, are canceling production as they try to right-size inventory.
“Everybody is trying to get rid of all the old components and products in their inventories,” he said, adding that some manufacturers didn’t launch 2024 model bicycles so they could keep selling 2023 models.
Dennison also warned that the United Auto Workers’ strikes weighed on sales in the third quarter and will likely drag into the fourth quarter.
The company also cut its full-year sales guidance, saying it expects sales at the low end of $1.43 billion to $1.47 billion, down from its prior outlook for sales of $1.67 billion to $1.70 billion.
Fox Factory also struck a deal to buy baseball bat manufacturer Marucci Sports for $572 million. On a conference call, some analysts questioned how Marucci would fit into Fox Factory. Dennison said the company uses metals in most of its bats, so there could be synergies with Fox’s manufacturing operations.
Write to Will Feuer at Will.Feuer@wsj.com
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