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Champion Enterprises: What Goes Around Comes Around!
This entry was posted on 2/22/2009 10:37 AM and is filed under Modular Home Buyer's Guide.
WHAT GOES AROUND COMES AROUND
It should come as no surprise that last Thursday, 2/18/2009 Champion Enterprises, makers of Redman, Genesis modular homes, among others, reported a substantial loss for the quarter and the year.
The stock closed Friday at $0.31 per share. This is down from a 52 week high of $11.42 and $0.03 higher than the previous low.
What do the investors know that the shoppers of modular homes should know? For one thing, they are not betting on Champion Enterprises. They know that unless Champion Enterprises comes up with a miracle, they will be delisted and start trading as a penny stock within the year. This seems only appropriate when one considers the quality of Champion Enterprises modular homes and the lack of customer service.
William Griffiths, chairman, president
and chief executive officer of Champion Enterprises, Inc. stated, "In this
challenging environment, we remain focused on reducing costs and
preserving liquidity. Since the beginning of 2008, we have idled or
closed four plants in the U.S., reduced companwide staffing by 42
percent and curtailed other spending. If Champion was previously having difficulty producing quality modular homes while providing meager customer service before, what should potential modular home buyers expect now, after all the cuts?
Champion has a history of buying its way out trouble rather than improving its product and customer service. Unfortunately, most everything they touch, once they apply their management standards, starts to decline.
Its funny how this works, good quality and customer service bring increased revenues while shoddy construction and lack of customer service bring just the opposite. Good marketing only goes so far when covering up flaws.
For example: As the U.S. residential sales market went into a tail spin and plummeted over the last two years, Champion Enterprises
looked to its overseas operations for revenue gains. But that strategy
didn’t pay off in the fourth quarter, as Champion’s UK-based operations
saw a decrease along with its domestic operations.
Champion
posted a 42-percent loss in revenue over the fourth quarter, ending the
year with a net loss more than three times the size of the loss for the
same quarter in 2007.
Revenues from the sale of modular homes in the U.S. totaled $37 million
for the quarter, down from $71 million in the fourth quarter of 2007. Champion did not report the number of modular homes sold, only the decrease in terms of a percentage from the previous year. Maybe if you don't put it in black and white, you can still pretend that modular home buyers won't notice the decrease in sales.
The
international segment net sales decreased 54.5 percent to $41.9 million
for the four quarter from $92.1 million in the same period of the prior
year primarily as a result of reduced prison sector revenues.
There are striking similarities between the auto industry and Champion Enterprises. Both built products that the public did not want and refused to change their methods of operation to meet the changing times. One difference however is that the auto industry woke up and realized change is mandatory, while Champion has kept its same old practices. One is retooling to build products the public wants, while the other continues to build modular homes no one in their right mind would buy.
It is true that if you build quality and back it with good customer service, buyers will find you and revenues will grow. It is also true the if you build something of lesser quality and provide little or no customer support, the revenues will shrink, hence;
WHAT GOES AROUND, COMES AROUND    
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