Camping World Inc. posted a steep loss in the third quarter due to its decision to strategically shift away from locations where the company does not have the ability or where it is not feasible to sell and/or service RVs. The company said it will close 28 of the 37 remaining Gander Outdoors doors that have not been converted into RV dealerships, as well as two of the seven outdoor lifestyle locations operated by TheHouse.com
Camping World reported sales in the third quarter increased 6.0 percent to $1.39 billion. Adjusted EBITDA decreased 37.5 percent to $60.6 million, and was negatively impacted by discounting at retail locations earmarked for closure.
Gross profit decreased 9.3 percent to $338.5 million.
The loss from operations, net loss and diluted loss per share of Class A common stock were $32.3 million, $65.3 million, and $0.82, respectively, and included long-lived asset impairment and restructuring costs of $76.0 million related to the company’s previously disclosed 2019 strategic shift away from locations that do not sell and/or service recreational vehicles (“RVs”).
On September 3, the Board of Directors of CWH approved a plan to strategically shift its business away from locations where the company does not have the ability or where it is not feasible to sell and/or service RVs (the “2019 Strategic Shift”). As of September 3, 2019, the company operated 37 locations that do not sell and/or service RVs but sell an assortment of outdoor lifestyle products (the “Outdoor Lifestyle Locations”), and an additional five Outdoor Lifestyle Locations that were previously closed or had not opened as of that date. In addition, the company operated seven specialty retail locations operated by TheHouse.com, an indirect wholly-owned subsidiary of the company.
Of the Outdoor Lifestyle Locations operating at September 3, 2019, the company closed three locations during September 2019 and currently expects to either sell, divest, repurpose, relocate or close 28 of the remaining Outdoor Lifestyle Locations, at which sales and/or service of RVs cannot be performed, and two of the seven specialty retail locations operated by TheHouse.com. The company was able to, or is in the process of, acquiring and/or obtaining the developmental consents, approvals and permits necessary for the sale and/or service of RVs at six of the Outdoor Lifestyle Locations. As part of the 2019 Strategic Shift, the company has evaluated the impact on the company’s supporting infrastructure and operations, which included rationalizing inventory levels and composition, closing one of its distribution centers, and realigning other resources. The company expects the majority of the store closures and/or divestitures related to the 2019 Strategic Shift to be completed by January 31, 2020. The company will have a reduction of headcount and labor costs for those locations that are sold, divested or closed and the company expects to incur material charges associated with the activities contemplated under the 2019 Strategic Shift. In connection with the 2019 Strategic Shift, the company expects to incur costs relating to one-time employee termination benefits of $1.0 million, contract termination costs of between $10.0 million and $15.0 million, incremental inventory reserve charges of $27.3 million, and other associated costs of between $4.0 million and $6.0 million.
Third Quarter 2019 Results
Good Sam Services and Plans Segment
- Segment revenue increased 2.2 percent to $42.2 million;
- Segment gross profit increased 0.2 percent to $22.8 million and segment gross margin decreased 108 basis points to 54.1 percent; and
- Segment income decreased 2.4 percent to $18.2 million.
RV and Outdoor Retail Segment
- Segment revenue increased 6.1 percent to $1.35 billion;
- Same store revenue decreased 5.0 percent to $1.04 billion
- Segment gross profit decreased 9.9 percent to $315.6 million and segment gross margin decreased 416 basis points to 23.5 percent;
- Segment loss was $42.8 million compared to segment income of $68.9 million in the third quarter last year and included $77.7 million of impairment and restructuring costs;
- Vehicle units sold increased 1.3 percent to 28,653 units;
- New vehicle units sold decreased 4.7 percent to 18,592 units
- Used vehicle units sold increased 14.6 percent to 10,061 units
- Average selling price per vehicle unit sold increased 2.3 percent to $32,383;
- New vehicles increased 2.4 percent to $36,613 per unit
- Used vehicles increased 9.0 percent to $24,565 per unit
- Same store vehicle units sold decreased 8.0 percent to 24,285 units;
- New vehicle same store units sold decreased 14.7 percent to 15,553 units
- Used vehicle same store units sold increased 6.9 percent to 8,732 units
- Gross profit per vehicle sold including finance and insurance increased 2.5 percent to $8,679;
- Finance and insurance revenue as a percentage of total vehicle revenue increased 47 basis points to 12.3 percent;
- New vehicle inventory per dealership location decreased 20.9 percent to $5.7 million from December 31, 2018;
- Products, service and other revenue increased 13.5 percent to $290.8 million and gross profit decreased 44.1% to $57.6 million;
- Same store products, service and other revenue decreased 7.3 percent to $140.9 million
- Good Sam Club revenue increased 17.7 percent to $12.6 million and gross profit increased 20.8% to $9.4 million; and
- Good Sam Club memberships increased 7.7 percent to approximately 2.17 million
- At September 30, 2019, the company operated a total of 209 RV and Outdoor Retail locations, with 153 of these selling and/or servicing RVs.