Has Camping World become too big to fail? Keep reading to find out why I ask this question.
A July 21, 2023, press release announced:
Camping World’s Creditors Expand Credit Capabilities
In light of its rapid acquisition of dealerships, Camping World Holdings has entered into a first amendment to its existing floor plan credit agreement dated Sept. 30, 2021.
The RV Inventory Floor Plan Facility Amendment provides additional financial and operational flexibility for the company’s growth strategy by increasing the committed borrowing capacity by $150 million, to an aggregate amount of $1.85 billion and resetting the accordion feature to allow the company the option to increase the principal amount available in $50 million increments up to a maximum amount of $300 million.
“The RV Inventory Floor Plan Facility Amendment demonstrates our lenders’ confidence in Camping World and our strategic direction as we work toward our goal of increasing our store count by 50% over the next five years,” said Camping World Chairman and CEO Marcus Lemonis. “This amendment provides incremental inventory borrowing capacity to support the future growth of our manufacturer-exclusive concept, dedicated to the industry’s leading OEM brands, including Keystone, Jayco, Forest River, Grand Design, Winnebago, Coachmen, and Alliance, among others.”
– End of press release –
Floor plan financing
You may recall my recent article entitled “NOW is the time to buy a new RV,” where I wrote about floor plan financing, curtailments and its impact on RV dealers. What I didn’t cover in that article is that the financial institutions which supply RV dealer floor plan financing (i.e., a line of credit allowing dealers to purchase RVs from the manufacturers) typically have a “buy back” agreement with the RV manufacturers. As part of the buy back agreement, the RV manufacturer agrees to “buy back” (repurchase) RVs when a dealer defaults on the term of repayment.
In simple terms, if a dealer goes broke and fails to meet their obligations with the flooring company (i.e., bank or other financial institution), the manufacturer pays the flooring company the remaining balance due on the RV. The manufacturer is then tasked with finding another RV dealer to buy what is in essence a repossessed RV, often at a discount. After all, what RV dealer wants to pay full price for an RV that has sat on another dealer’s lot for months? It may have dents, scratches, parts missing, broken items, or may have leaked.
RV dealers went broke daily during the last recession
This scenario happened daily as RV dealers went broke in the last recession. Rumor has it that flooring companies, at the urging of RV manufacturers, suspended curtailments on Camping World’s aging stock of RVs. It was feared Camping World would financially collapse if forced to pay the large amount of curtailments that were owed. In turn, the manufacturers would have to buy back all of Camping Worlds’ aged inventory which would have likely, given the recession, placed them in financial peril as well.
With Camping World’s floor plan limit now raised to $1.85 billion (that’s billion, with a “b”), that begs the question, “Has Camping World grown too big to fail?” Failure would have a devasting impact on RV manufacturers, major floor plan lenders, OEM suppliers and all those employed by the RV industry. Where would it end?
Would the federal government step in with a bailout as it did for the “Big Three” American auto makers in the last big recession?
If Camping World has grown too big to fail, then there is nothing stopping Camping World’s CEO Marcus Lemonis from continuing his conquest of growing larger and larger, leading to total domination of the retail RV market. Maybe becoming too big to fail has been his plan all along.
What are your thoughts? Has Camping World grown too big to fail?
Please share your thoughts using the comment box below.
Dave will be speaking at the 2023 America’s Largest RV Show in Hershey, PA, September 13th – 17th. He would love to meet RVtravel.com readers that are attending. Feel free to introduce yourself after one of his seminars.
##RVT1114b
Ask Kodak (the great yellow god to professional photographers) how that idea worked out for them.
Camping Worlds dividend is 8 percent. Buy the stock.
You got that right. Have owned the stock since 2009. Great ROI
No one, no company, is “too big to fail.”
Just look at Sears and Kmart. Two giant retailers that failed. Kmart probably because of Walmart, but Sears really had no competition. Walmart is also closing stores. Part of the Walmarts problem may be online competition, but that’s only part of the problem. Prices rose during the pandemic, but that is not the main problem. The prices have never returned to pre-pandemic levels and keep going up.
As far as CW, Marcus has his fingers in more than RV sales. I think he enjoys putting small businesses out of business so he can further line his own pockets. My small family owned RV center has great service and is faithful to their customers.
I think with Sears and M. Ward that a large part of it was they a) are located in malls and b) just didn’t keep with the times. JC Penney (now “JCP”) have done a better job in the marketing department and are still holding on.
Good points made. I vaguely remember Thor bailing Camping World out during the Great Recession, which really upset many smaller RV dealers. I would not own any RV stock right now, no matter what the dividend. Implosions in the industry are far too likely.
Let it fail.
Amen
In my opinion, Camping World already fails in many ways. I won’t get specific, but I believe many who read RV Travel know exactly what I mean.
“Too big to fail” usually refers to manufacturers (autos a prime example) or financial institutions whose collapse would create major dislocations to the U.S. economy, justifying government intervention. While the RV industry likes to think it, too, is a major component of the national economy, its failure would cause little more than a perturbation—unless, of course, you live and work in Elkhart.
US Economists often look at Elkhart to see where the US economy is heading. If the RV industry fails, it will affect more than just those working in Elkhart. It will have a huge ripple affect for the USA. Wall Street Journal article from 2018
Sorry, Cookie, but I don’t draw the same conclusions from the WSJ piece that you do. The story all about full employment-plus in Elkhart, but has next to nothing to say about Elkhart being a significant component of the U.S. economy—which it isn’t. Saying any RV player is too big to fail is like saying Coca Cola is too big to fail. It isn’t, but it’s a whole lot bigger than Camping World or the RV industry in general.
Andy — seemed to me that Cookie was saying “Elkhart is an indicator”, not a “significant component”. Something akin (but more grounded in math) like how the presidential elections can follow/indicate Super Bowl wins or something.
You buy from CW you deserve what you get.
I used to love Camping World and Good Sam. Haven’t been in a Camping World in years and not a Good Sam member anymore. When Lemonis said he didn’t need Christians to do business he lost mine!
In fairness to Marcus Lemonis, he never said any such thing. — Chuck/publisher
It is very frustrating to consistently watch the failure of anti-trust enforcement.
I would not support one thin dime’s worth of taxpayer monies to bail out any RV company without Federal quality standards being established for the industry. And maybe not even then….. We enjoy camping in our 5th wheel, but remain annoyed at how the industry as a whole (manufacturers and campground owners) seems to be very self-serving.
Camping world built a NEW building in Green Bay Wi. And it is not stocked, dumpters are full and looks like they’ll ever move in. I understand they bought out a competitor basically across the street ( Van Boxtel camping) So a couple hundred thousand dollars just setting there. Two weeks ago they filled the lot of a new place in Oshkosh Wi 45 miles to the south. It will be interesting to see what happens. I’ve never needed service on an rv so I can’t comment on the service aspect but ive bought a lot of accessories over the years and never had a complaint.
There’s a shiny new CW store, I *think* it’s in LaCrosse, WI, that looks ready to open.
To big to fail….
I dont think so. $1.85 billion is a drip in the big picture. HOWEVER, because of the sheer number of vendors holding vast sums of ARs on balance sheets from CW, the trickle down into the manufacturing and supply end could cause some concern for privately owned vendors. Beware of your customer. Dine with the devil, use a long spoon.
Based on RV financing with $1.85 billion floorcap, versus the US having $12 Trillion in mortgages written.
IE: When SVB collapsed, it had $199 billion of deposits. Apples and oranges, sure it is but $1.85 billion is a drip. CW will collapse under it’s own weight. Good company for a GameStop short (meme) style play, IMO.
In my 15 years of RVing I have never used Camping World for anything but purchasing “ProtecAll”, and a few parts like sewer hoses, water regulators, vent covers, etc. I prefer to rely on mobil rv techs for repairs I can’t do.
Camping world is not too big to fail. If they do fold, it would be like pulling your finger out of a bucket of water, the rest of the industry would adjust and fill right in around Marcus. Many large retailers have gone under and rapid growth, being too big, is a formula for failure.
I wouldn’t buy a roll of toilet paper from CW, or any place affiliated with Marcu Lemonis.
Our government needs to step in and stop Camping world’s monopoly buying RV dealerships. Plus the poor service Camping World provides repairing RV’s and runaround some of their dealerships give their customers.
$31.73
Camping World (CWH) Stock Forecast, Price & News $31.73 -0.01 (-0.03%) (As of 11:09 AM ET)
Owning stock, still making money
In my opinion, Camping World is already a failure. I no longer purchase anything from Camping World, nor will I purchase any of the products offered by the Good Sam Club. The entire organization is focused only on profit to the shareholders without any regard to the customer experience or the quality of the products and services offered.
Finally, the marketplace is littered with companies that were at one time thought to be too big to fail, including Sears, Kmart, Woolworth, Pontiac, etc.