BC's Freedom Boat Club Expands South Florida Operations

Brunswick Corporation's BC Freedom Boat Club, the world's largest boat club network, acquired the South Florida franchise operations and territory. The acquisition adds 13 corporate locations from Pompano Beach to Stuart, FL, accelerating the company's growth and expanding its corporate presence along the Southeast Florida coastline. Brunswick's shares moved up 4.4% during trading hours on Sept. 13, 2024.

Situated near Freedom Boat Club's existing corporate locations in Fort Lauderdale, Miami, and Islamorada, the acquisition enhances its operational efficiencies. This is one of the company's largest additions, covering Broward, Palm Beach, and Martin counties. It intends to build on the strong foundation laid by the former franchise owner while continuing to provide outstanding experiences for its members.

The addition of the South Florida franchise offers a key opportunity to accelerate growth in a year-round boating region while also leveraging synergies with Brunswick's family of brands.

FBC Expansion Drives BC's Growth

Brunswick Corporation leads the marine recreation industry with innovations that enhance water experiences. The company's Boat segment includes the Brunswick Boat Group, which manufactures and distributes recreational boats, and Business Acceleration. Brunswick significantly expanded FBC since acquiring it in 2019, growing from 170 to more than 415 locations across North America, Europe and Australia.

During second-quarter 2024, the Boat segment delivered steady results despite planned reductions in wholesale orders. Channel partners remain cautious with their orders, but the impact of modest model-year pricing and share gains offset some of the softness.

FBC contributed about 10% to the Boat segment's revenues and experienced steady membership growth despite macroeconomic uncertainty. The club also expanded with two new flagship locations in Denmark and the UK and recorded 200,000 member trips during the quarter. Discounting and promotional activities remain high, especially for prior model year products, to boost retail sales. Investments in digital platforms continue to benefit the company, with nearly 40% of FBC membership sales in the quarter being digitally assisted.

BC's Price Performance

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Shares of Brunswick have increased 5.9% in the past three months compared with the industry's 6.3% rise. The company is likely to benefit from new model introductions and marketing and promotional activities. Also, the emphasis on expansion bodes well.

Continued slower retail sales and higher discounting and carrying costs are a concern. Owing to these headwinds, the company expects full-year unit retail sales to decline by approximately 10% compared with the original forecast of flat sales.

Zacks Rank & Key Picks

Brunswick currently carries a Zacks Rank #5 (Strong Sell).

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