October 15, 2015 / 11:39 AM / 2 years ago

UPDATE 3-Winnebago profit falls as motorhome buyers spend less

* Q4 profit falls 9 pct

* Top-end motorhome sales fall 34 pct

* Operating expenses rise 7 pct

* Shares fall as much as 9 pct (Adds details, CFO and analyst comment, updates share price)

By Arunima Banerjee and Ankit Ajmera

Oct 15 (Reuters) - Winnebago Industries Inc reported a lower-than-expected quarterly profit as thrifty customers opted to buy cheaper models from the biggest motorhome maker in the United States.

The company's shares fell as much as 9 percent on Thursday.

Winnebago, which has been making motorhomes for more than half a century, is closely watched for the clues it provides to spending on big-ticket discretionary items. The company's profit fell 9 percent in the fourth quarter. (bit.ly/1Lm3PVx)

Sales of its top-of-the-range Class A motorhomes fell 34 percent, the steepest decline in four quarters, while sales of its cheaper Class B and Class C vehicles rose 13 percent and 45 percent respectively.

A labor shortage at the company's main plant in Forest City, Iowa has compounded the problem. Winnebago made a conscious effort to produce more Class B and C motorhomes in 2015, partly because production of Class A diesel vehicles is more labor-intensive and requires more factory space.

Chief Financial Officer Sarah Nielsen said she expected this trend - fewer Class A motorhomes sold, but strong demand for the cheaper models - to continue next year.

This would translate to "flat to modest" growth in overall 2016 deliveries, she said on a conference call with analysts.

Winnebago's most expensive model - the Class A diesel-pusher Grand Tour motorhome, which comes with an electric fireplace - can cost up to $430,000. The Class B Era retails at about $120,000 and the Class C Winnebago View slightly less.

Reflecting concerns about slowing global economic growth, U.S. consumer sentiment slipped more than expected in August, according to a University of Michigan survey.

"For a long time I've thought that the sales environment that Winnebago enjoyed in the early 2000s was not likely to repeat," Morningstar analyst David Whiston said.

"The industry may shift to smaller motor homes over time as Class A are so expensive."

Winnebago, which also sells trailers, said its fourth-quarter operating expenses jumped about 7 percent, citing costs associated with strategic initiatives announced at the beginning of the year and the retirement of its CEO in August.

These initiatives include the hiring of a consultant to review the company's sourcing of materials, as well as the implementation of ERP - enterprise resource planning - software to replace outdated systems.

Winnebago's shares were down 4.7 percent at $19.18 in late morning trading. To Wednesday's close, they had fallen 7.5 percent this year. (Reporting by Arunima Banerjee and Ankit Ajmera in Bengaluru; Editing by Robin Paxton and Anil D'Silva)

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