Higher floorplan interest costs were a major reason why retail dealership chain Holiday RV Superstores Inc., which does business as Recreation USA, reported a net loss of $3.2 million during its fiscal year 2000, which ended on Oct. 31.
The loss compares with a profit of $2.2 million that the company earned during its fiscal year 1999.
Recreation USA’s sales increased 87% during its fiscal year 2000 to $152.4 million as the company expanded with the acquisition of seven formerly independent dealerships. Recreation USA now has 14 locations in seven states.
Chairman Mike Riley said sales revenue at the locations Recreation USA owned for at least a year also increased, although the amount was not revealed. Riley added that the company out-performed its peers because RV retail sales were down 5.3% industrywide during the first 11 months of 2000.
However, Recreation USA’s interest expense climbed nearly 350% during its fiscal year 2000 due to higher interest rates and the fact it carried a bigger inventory as a result of the acquisitions.
In an effort to return to profitability, Recreation USA eliminated $2.5 million from its fiscal year 2001 budget. It hopes to achieve the cost reductions by better managing its inventory, including reducing the number of brands it carries, and securing better floorplan finance packages from lenders. The company also will cut out duplicate corporate positions, reduce overtime and contract labor at individual dealerships and tighten travel budgets.