Boat manufacturer Brunswick is counting on raising some prices to help boost its margins, a tricky move with budget-conscious consumers spending more cautiously on discretionary items. Jennifer Williams writes for today's Morning Ledger:
Across a lineup of boats ranging from around $20,000 to more than $1 million, bumping up prices is a hard sell for shoppers unless they see a reason for it, said Chief Financial and Strategy Officer Ryan Gwillim. Buyers won't pay extra without upgrades.
"As an industry, we need to watch that we keep the product price reasonable for our consumers," Gwillim said. "So it's a delicate balance between adding price but also giving features to go along with it that folks want to pay for."
To justify price increases in the low-single-digit range this year, the company that owns brands including Sea Ray, Boston Whaler and Bayliner is adding upgrades such as lighter engines and modernized systems to its offerings, he said. AI-driven enhancements are also now part of the mix.
One example is an auto-captain system that functions like advanced marine cruise control. It determines the fastest and safest route from one point to another while accounting for factors including currents, wind, other boats and people swimming in the water, according to the CFO. Drivers can also dock, or park, their boats with the press of a button.
While the technology allows captains to go hands-free, it isn't intended for use without human oversight, Gwillim said. The feature is currently limited to larger vessels, but Brunswick is working to make it more affordable and available on all models 20 feet and longer.
Later this year, Brunswick will also roll out an onboard virtual assistant with the aim of making boating life easier, for example by checking the weather and recommending places to fuel up or eat lunch, the CFO said.
"People expect the same technology on their boat that they do in their road vehicles," he said. "We're going to deliver it to them."
Brunswick, which in addition to boats sells marine engines, parts and electronics, is targeting 10% to 13% operating margins by 2030, up from around 8%. Pricing is one part of the equation. Cutting costs is another. The company has closed or consolidated over 20 manufacturing facilities in the past several years while deploying robotic automation and AI to streamline operations on everything from product development to supply chains and manufacturing. Brunswick has cut more than $100 million in costs in recent years.
Brunswick hasn't seen its margins hit the midteens since emerging from the Covid-19 pandemic, when flush consumers were spending more freely and before tariffs weighed on corporate balance sheets, Gwillim said.
"We know we can get back to the midteens."
-Jennifer Williams
The Day Ahead
📆 Earnings
Broadcom
Brown-Forman
C3.Ai
Hewlett Packard Enterprise
PVH
Snowflake
📈 Economic Indicators
ADP releases its National Employment Report for August.
Share this email with a friend. Forward >
Forwarded this email by a friend? Sign Up Here >
What Else I'm Watching
Global bond market. The global economy has a new challenge to surmount: an unruly bond market that is sending borrowing costs to their highest levels in decades. The surge in bond yields comes despite efforts by finance ministers to calm the markets while assembled as guests of Treasury Secretary Scott Bessent at the G-20 meeting in Asheville, N.C.
G-20 Squabbling Overshadows Summit as Global Bond Markets Strain
The Bond Market Issues World Leaders a Failing Grade
Heard on the Street: Oil Prices Push Global Bond Market Closer to the Edge
Geopolitical risk still in focus. The U.S. said it was carrying out strikes on Iranian targets Tuesday amid an escalation in fighting over the Strait of Hormuz. Meanwhile, the U.S. is maintaining its blockade of Iranian ports to try and choke off trade to Iran.
A War That Won't End Is Complicating the Fed's Next Move
What Else Matters to CFOs
A large consortium of global banks is collaborating with each other to launch a new digital stablecoin by the first half of next year.
Bank of America, Citigroup and Goldman Sachs are among a group of nearly two dozen firms teaming up to jump into the world of stablecoins, which are digital tokens that can be used for cross-border transactions.
Banks have shifted to a more defensive strategy on stablecoins, with some executives worried the tokens could rise in popularity and encroach on their businesses, The Wall Street Journal reported last week.
Further context: Their coming stablecoin effort is intended to focus on commercial clients, the Journal reported, though use cases could vary by region and include retail markets. It will be dollar-denominated before expanding to other Group of Seven currencies.
Read on here for a further look at the 21 companies by geographic region.
📰 Other headlines
Volkswagen Fights Chinese Competition-and Its Own Board-in Battle to Survive
The Apple Empire That John Ternus Inherits-by the Numbers
The Airline CEO Filling a Spirit-Sized Hole in the Market
Partners Group Switches CEOs as Private-Market Jitters Hit Performance
Exclusive: Gap Pushes Into the Lucrative Accessory Business With New Handbags
David Ellison Is Promising at Least 30 Movies a Year. Hollywood Is Skeptical.
James Dyson Sold Us on a $400 Hair Dryer. Now He's Trying a $499 Toothbrush.
Can Evan Spiegel Sell the World on $2,195 Smart Glasses?
Bank of America Vice President Identified as Victim in Times Square Stabbings
📈 Earnings wrapup
Medtronic Lifts Outlook, Invests Over $700 Million in Heart Tech & Robotics
China's NIO Narrows Loss on EV Sales Growth, Expects Volume Pickup
For more earnings news, click here.
The Big Number
Number of U.S. job openings in July, up from 7.2 million in June, according to the Labor Department.
The WSJ CFO & COO Council
The WSJ CFO & COO Council convenes the world's top financial leaders so they can gain perspective on navigating market uncertainty, aligning priorities and making decisions that deliver measurable results. Join this trusted community where CFOs and COOs exchange approaches, access strategic insights and continuously sharpen their influence across the enterprise.
Request Information.
About Us
The WSJ Leadership Institute's CFO Journal offers corporate leaders and professionals CFO analysis, advice and commentary to make informed decisions. We cover topics including corporate tax, accounting, regulation, capital markets, management and strategy.
Follow us on X @WSJCFO. The WSJ CFO Journal Team comprises reporters Kristin Broughton, Jennifer Williams and Bureau Chief Walden Siew.
You can reach us by replying to any newsletter, or email Walden at walden.siew@wsj.com.