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Dealership chain Holiday RV Superstores Inc. reports much lower net losses and sales revenue during its second fiscal quarter, but the company continues to say that its ability to survive remains uncertain.
The 10-location dealership group, which does business as Recreation USA, lost $973,000 during the three months ended April 30, compared with a $2.1 million loss incurred a year earlier, according to a report it filed with the Securities & Exchange Commission (SEC).
During the six months ended April 30, Recreation USA lost $5.4 million, compared with $7.1 million lost a year earlier.
The company’s second fiscal quarter sales revenue plunged 52% to $19.9 million and its sales during the six months ended April 30 fell 49% to $38.3 million.
The closure of four Recreation USA locations during the past year contributed to the sales revenue declines, although the company also reported that its “same-store” sales fell 30% during the February-through-April period.
Sales fell at the stores that were opened more than a year because Recreation USA’s ability to borrow is limited to the point where it cannot “maintain what we believe is a desirable mix between new and used products,” according to the company’s report to the SEC.
“These circumstances raise substantial doubt about the company’s ability to continue as a going concern,” Recreation USA wrote in the SEC report. “The company is currently in active negotiations with another major floorplan lender to provide all of the company’s floorplan capacity.
“While the company has retained the ability to floorplan its inventory, failure to come to terms with its alternative floorplan lenders or obtain sufficient floorplan financing could have a material adverse effect on the company and raises substantial doubt about the company’s ability to continue as a going concern and to achieve its intended business objectives.”