Affinity Group Holding Inc., parent company of the Affinity Group Inc. (AGI), reported its financial results for the second quarter and six months ending June 30 in a 10-Q filing with the Securities and Exchange Commission.
According to the SEC filing, revenues of $129.9 million for the second quarter of 2009 decreased by $17.8 million, or 12.1%, from the comparable period in 2008.
Membership services revenues of approximately $39.2 million for the second quarter of 2009 decreased $3.4 million, or 7.9%, from the comparable period in 2008. This revenue decrease was largely attributable to a $2.3 million reduction in member publication advertising revenue and reduced membership file size for the Coast Club and Golf Card Club, an $800,000 reduction in revenue from member events, a $500,000 decrease in other ancillary product revenue and a $400,000 decrease in marketing fee income for vehicle insurance products. These decreases were partially offset by increased extended vehicle warranty program revenue of $600,000 resulting from continued policy growth and strong renewals.
Media revenues of $9.4 million for the second quarter of 2009 decreased $6.1 million, or 39.3%, from the comparable period in 2008. This decrease was primarily attributable to a $2.8 million reduction in revenue in the outdoor power sports magazines related to decreased advertising revenue, a $2.3 million reduction in RV related publications, primarily attributable to decreased advertising revenue, a $500,000 reduction in consumer show revenue due to reduced exhibitor attendance and a $500,000 reduction in advertising revenue related to the campground guides.
Retail revenues of $81.4 million decreased by $8.4 million, or 9.4 %, from the comparable period in 2008. Store merchandise sales decreased $4.6 million from the second quarter of 2008 due to a same store sales decrease of $4.0 million, or 6.5%, compared to a 15.0% decrease in same store sales for the second quarter of 2008, and discontinued store revenue of $2.2 million, was partially offset by a $1.6 million revenue increase from the opening of seven new stores over the past eighteen months. Same store sale calculations for a given period include only those stores that were open both at the end of that period and at the beginning of the preceding fiscal year. Further, mail order sales decreased $400,000, installation and service fees decreased $900,000 and supplies and other sales decreased $2.5 million.
Costs applicable to revenues totaled $81.4 million for the second quarter of 2009, a decrease of $8.9 million, or 9.8%, from the comparable period in 2008.
Membership services costs and expenses of approximately $24.6 million decreased $1.9 million, or 7.2%, from the comparable period in 2008. This decrease consisted of $600,000 of reduced member magazine costs, a $400,000 reduction in wage-related expenses, a $400,000 reduction in marketing costs related to vehicle insurance products, a $300,000 decrease in member events costs related to reduced revenue and a $200,000 decrease in other ancillary product expenses.
Media costs and expenses of $7.4 million for the second quarter of 2009 decreased $4.0 million, or 35.0%, from the comparable period in 2008 primarily related to a $1.7 million reduction in magazine expenses resulting from decreased circulation and production costs, a $1.5 million reduction wage-related costs, a $600,000 reduction in consumer show costs related to reduced revenue and a $200,000 reduction in costs related to campground guides.
Retail costs applicable to revenues decreased $3.0 million, or 5.7%, to $49.4 million primarily as a result of the decrease in retail revenue. The retail gross profit margin of 39.3% for the second quarter of 2009 decreased from 41.7% for the comparable period in 2008 primarily due to new, discounted “value pricing” adopted on over 1,000 products.
Selling, general and administrative expenses of approximately $33.1 million for the second quarter of 2009 decreased $7.2 million compared to the second quarter of 2008. This decrease was due to a $6.1 million decrease in retail general and administrative expenses consisting primarily of decreases in labor and selling expenses, a $700,000 reduction in wage related expenses, a $600,000 expense reduction in the consumer shows group relating to discontinued consulting agreements and management fees and $300,000 in other general and administrative expenses. These decreases were partially offset by an increase of $500,000 in professional fees.
Income from operations for the second quarter of 2009 totaling $8.2 million decreased $3.9 million compared to the second quarter of 2008. This decrease was primarily due to reduced gross profit for retail, media and membership services operations of $5.4 million, $2.1 million and $1.5 million, respectively, partially offset by reduced operating expenses of $5.1 million.
Six Months Results
For the second months ending June 30, revenues of $235.0 million decreased by $37.8 million, or 13.8%, from the comparable period in 2008.
Income from operations for the first six months of 2009 totaling $13.0 million decreased $5.3 million compared to the first six months of 2008. This decrease was primarily due to reduced gross profit for retail and media operations of $10.9 million, and $7.2 million, respectively, partially offset by reduced operating expenses of approximately $11.8 million and increased gross profit for the membership services operations of $1.0 million.
Loss from operations before income taxes for the first six months of 2009 was $2.3 million, or an increase of $2.4 million from the first six months of 2008. This increased loss was attributable to the $5.3 million decrease in income from operations and $2.9 million of reduced non-operating items mentioned above.
Net loss in the first six months of 2009 was $3.0 million compared to $500,000 for the same period in 2008.
AGI is the parent company of RVBusiness and RVBUSINESS.COM.