BRP Earnings: Languishing Demand Due to Macro Pressures Forces Massive Haircut to Near-Term Outlook

Wide-moat BRP’s dealer and consumer bases continue to be impacted by higher prices and interest rates, damping any hope for a return to sales growth in the near term. Fiscal second-quarter 2025 results and the firm’s updated outlook suffered. In the second quarter, total sales fell 34%, with nearly all segments ceding share (the exception was ATVs, which maintained its position). As a result of the massive decline in sales and the increased utilization of promotions, the cost structure has collapsed, as indicated by a gross margin decline of 470 basis points, to 20.4%. This softness is not specific to BRP, however, it has been widespread across the leisure products landscape in recent months.