Q2 2024 Earnings Summary
- Robust new vehicle sales momentum: Executives highlighted double‐digit same-store sales improvements—reporting increases from 4% in May, to nearly 15% in June, and into the mid-20s in July—underscoring their strong market positioning and demand for new RVs in a challenging environment.
- Strategic focus on entry-level pricing drives market share: The company’s early pivot to lower-priced models, especially targeting vehicles under $15K, has helped build commanding market share, while strong manufacturer partnerships (e.g., with Colemans and others) position them to maintain a competitive edge as rivals adjust.
- Operational improvements through dealership optimization: Initiatives to convert underperforming locations into exclusive or consignment stores reduce floor plan costs and enhance margins, as evidenced by successful turnarounds like the RV Arizona asset, which now delivers solid bottom-line performance.
- Margin Compression Risk: The company’s cautious approach on used inventory—with a shift toward a lower-margin consignment model (margins of 16%-17% versus 20% for purchased units)—combined with excess used inventory (over 14,000 units from 2022 and 2023 still on dealer lots) could continue to pressure overall margins.
- High SG&A Relative to Gross Profit: Current SG&A levels are expected to finish in the low to mid-80% range—well above the long‑term goal of 72%–73%—driven by lower gross profits, aggressive cost absorption for acquisitions, and ongoing investment in people and technology, which may hinder profitability.
- Macro Environment and Rate Uncertainty: The company’s recovery outlook depends on favorable interest rate cuts and a stable post-election environment. If these macro conditions fail to materialize, subdued demand and continued margin pressures from conservative used inventory procurement could persist.
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2025 Outlook
Q: What changes for 2025?
A: Management anticipates robust new same‐store sales growth, with margin stabilization near 15% on new units and a return to active used acquisition as rate cuts materialize, setting the stage for a stronger 2025. -
Margin Outlook
Q: Will used margins improve?
A: They expect used margins to trend back toward historic levels, targeting around 19–20%, as improved economic conditions and rate cuts drive demand. -
SG&A Trends
Q: What will SG&A performance be?
A: SG&A is projected to remain high—currently in the low to mid-80s% of gross profit—but management expects a return to target levels of 72–73% once margins and volumes recover. -
Pricing Strategy
Q: Will new pricing trend upward?
A: Management is forecasting modest price increases for the 2025 model year, consistent with historical trends, while emphasizing affordability through strong entry-level offerings. -
Dealer Strategy
Q: How will dealer count adjust?
A: They plan to trim unprofitable locations and consolidate operations, aiming eventually to sustain an optimal network near 320 dealerships. -
Competitive Positioning
Q: How defend the low-price market?
A: By leveraging exclusive brands and aggressively pricing entry-level units—especially those under $15K—the company seeks to secure market share and preempt competitor moves.
Research analysts covering Camping World Holdings.