MarineMax Inc.HZO

Morningstar Rating

Stock Research and Analysis

by Philip Gorham, CFA

Although MarineMax attempts to differentiate itself from competitors by the service it delivers to customers both during their purchase process and beyond, we believe this can be replicated by rivals over the long run. Therefore, we do not allocate Read more

Bulls Say

Through investments in its customers such as the Getaways! events and with an estimated 45% of the firm's revenues coming from repeat purchasers, MarineMax could be well-positioned to exploit an upturn in consumer spending.

The company owns outright 33 of its 78 retail stores, many of which occupy prime real estate locations. If the company does run into liquidity issues, it has the option of remortgaging the properties it owns to raise cash quickly without damaging the long-term strength of its operations.

The economic downturn has taken its toll on MarineMax's smaller competitors, with some single-store retailers going out of business. Read more

Bears Say

A significant proportion of MarineMax's sales are made on credit, so the firm's business model relies heavily on functioning consumer-lending markets.

The current economic landscape is very difficult for retailers of high-ticket discretionary items such as boats. MarineMax's largest competitor, Olympic, has already filed for Chapter 11 bankruptcy.

In fiscal 2008, sales of new Brunswick boats accounted for around 49% of MarineMax's revenues. Brunswick is also in a precarious financial position, and if it were to experience financial distress, MarineMax's supply of new boats would be significantly reduced.

The company's strategy focuses on service differentiation, but the company is being sucked into a price war by the competitive forces in the industry and risks being unable to compete on price or differentiation.

Approximately one third of the company's retail stores are in Florida, and others are in Texas, two regions prone to hurricanes, which can significantly disrupt operations and marketing events, and damage inventory. Read more

Strategy

MarineMax targets the premium end of the boating market, and aims to differentiate itself by delivering a positive customer experience and focusing on the lifestyle aspects of owning a boat. It has also Read more

Management

In our opinion, there is room for improvement in the corporate governance of MarineMax. The board lacks independence, with only four of the seven directors qualifying as independent using the NYSE definitions. Furthermore, two of the independent directors Read more

Profile

MarineMax is the world's largest recreational boat retailer. It operates 81 retail locations in the United States, and sells premium-brand boats, including Sea Ray, Boston Read more

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