Outdoor Industry Association, in conjunction with Piper Jaffray Companies, recently surveyed industry executives with respect to their view of current economic prospects, recovery timeline, cost inflation, and the effect of tightened credit market on near-term business operations.

This was the third survey conducted by OIA and Piper Jaffray in the past nine months, and reflected a cautious and realistic picture of the economic situation facing the industry.

Nearly all respondents were independent businesses with revenues less than $50M annually, which provides an excellent gauge of the independent channel within the outdoor community. The majority of respondents identified themselves as either vendors or retailers.

Report highlights:

• Concern has continued to grow: When asked to indicate the level of concern surrounding current economic conditions affecting their business, 57 percent indicated they are "very concerned", up from 47 percent last spring and 37 percent last fall. The highest levels of concern have shifted to retailers with 88% of them signaling they are very concerned. Just 44 percent of vendors have the same level on concern, signaling mismatched expectations.
• Recovery expectations for 2009 continue to fall: In our first survey in November 2008, all respondents expected sales to either rise or remain the same in 2009. This past spring, expectations had declined with only 53 percent of respondents indicating revenues flat or up vs. last year. Our most recent survey shows only 45 percent of businesses expected revenues to increase in 2009.
• Businesses prepared for slow-down: Revenue expectations continue to decline. In the fall survey, more than three-quarters of respondents projected revenues in 2009 would be above 2008. This spring, about one-third expect 2009 revenue to top 2008 and nearly one-fourth expect revenues to decrease significantly. Comparing these results with our current survey, it appears that most respondents to date have been overly optimistic. Our current survey has only 28 percent of respondents indicating revenues will be higher than last year, and only 5% are indicating revenues will be up significantly.
• Retailers v. Vendors: The current decline in revenue trends appears to be more pronounced with retailers. 71 percent of respondents are expecting a decline in 2009 versus only 47 percent of respondents in the vendor community. We note these numbers are higher than our spring results. Overall, we believe 2009 has proved more challenging than originally expected, but tight inventory levels and traffic stabilization (albeit at lower levels) has buoyed profitability in the first half of the year. Broadly speaking, this has been a common theme among retailers in the publicly traded domain as well.
• Recovery expectations continue to push back: A whopping 91 percent of respondents believe the recovery will be no sooner than the first half of 2010. 22 percent of those businesses actually expect the recovery to come after 2010. Clearly the second half of 2009 was an optimistic business outlook in November of last year when 88 percent of respondents believed the recovery would come this fall.
• Employment indicators continue to decline: Over the last three months, 40 percent of respondents indicated employment has decreased versus 38 percent in the spring. Unfortunately, respondent’s outlook for the future also decreased with 25 percent expecting employment declines versus only 20 percent in the spring. Overall employment does not appear to be improving and believe revenues need to improve for employers to gain confidence.
• Inventory reductions continue: In response to these economic shifts, respondents report that they have taken appropriate steps in terms of inventory reductions. 58 percent of businesses plan to lower inventory levels over the next three months, consistent with our spring results. However, 18 percent of respondents plan to reduce inventory significantly, and acceleration from only 12 percent this spring. Overall, we believe the trend of ordering cautiously will continue until consumer demand begins to reaccelerate.