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Thor Industries (THO -15%) posts back-to-back EPS misses on its tenth consecutive quarter of yr/yr revenue compression in Q2 (Jan), enough to send investors packing today as shares sink to 52-week lows. THO's gloomy FY25 (Jul) outlook is adding kindling to today's fire sale, slashing its EPS target by $0.85 at the midpoint and revenue estimate by $150 mln. Management's tone flipped from its relatively optimistic view last quarter, noting today that despite the RV Industry Association's (RVIA) recent upward revision to its 2025 shipment forecast, it remains more cautious in its outlook for the remainder of CY25. Underpinning its glass-half-empty view is the recent drop in consumer confidence, which fell sharply in February, and considerable uncertainty surrounding tariff policies. Meanwhile, higher cost of ownership and elevated interest rates add further headwinds into the mix.

• Like last quarter, headline numbers reflected macroeconomic headwinds. THO registered EPS of $(0.01), below analyst estimates of a minor profit, on revs of $2.02 bln, an 8.6% decline yr/yr. While THO did flip back to delivering revenue upside in Q2, posting a modest improvement from the 14.3% drop in Q1 (Oct), it came on lower gross margins, contracting by 100 bps sequentially to 12.1%.
• THO has been aligning production with end demand to avoid piling up dealer inventories. The result has been dealer inventories across North America remaining materially below historical norms. During Q2, THO shipped 28,013 towable units, a 27.6% jump yr/yr but only 3,526 motorized RVs, a 20.5% decline. Similarly, European shipments tracked 27.8% below last year's levels.
• Camping World Holdings (CWH), a major RV dealer, commented last week that it is maintaining discipline in ensuring its inventories align with demand. However, potentially creating a future headwind for THO and other RV OEMs, such as Winnebago (WGO), is used inventory. CWH added that it continues to see healthy foot traffic and lead volumes, attributing the green shoots to its used inventory. Furthermore, CWH has noticed owners hanging onto their RVs for longer, dampening new RV demand. Also, CWH mentioned that if tariffs increase prices on new units, demand will grow for its used inventory.
• The added wrench of tariffs, combined with ailing consumer confidence, clipped THO's FY25 guidance. The company anticipates EPS of $3.30-4.00 and revs of $9.0-9.5 bln, translating to an 8% yr/yr decrease at the midpoint, 2 pts worse than its previous forecast. Discouragingly, last quarter THO was optimistic that the second half of FY25 would be much brighter than the first half. However, THO cautioned that this might not pass if consumer confidence does not begin to tick higher, which is exactly what unfolded.

THO and the RV industry are dealing with headwinds that are not only failing to subside but are also growing stronger. Tariffs are injecting plenty of uncertainty in the broader markets lately, having a similar effect on THO. Management maintained a bullish long-term view of the industry, as interest has remained elevated since the pandemic, with RV owners shifting toward a younger demographic. We also like THO for the long term for similar reasons. However, short-term uncertainty can lead the company to bounce along the bottom for an extended period.