Marcus Lemonis: And it isn’t because the machine isn’t ready to rev, it’s because him and I kind of wake up every morning and we’re like, are we there yet? Should we just wait a little bit? Let’s test it in this market and Matt has been the absolute genius in setting up this auction idea, and we’re excited. We’ll be glad to post a link on maybe even our Investor site just to show people what this auction process is looking at. We’ve had both in-person and virtual auctions, and we were just in the early stages of testing it. We only ran 500 units plus or minus through the auction process. We had dealers, consumers around the country flying to places to see it. There is no market maker for the RV industry, and we believe for the growth of our new business because we need to be able to take in a creative blend of trades for the growth of our used business.
We have to firm ourselves up between our Good Sam RV valuator and our CW auctions, we now believe we will become the market maker on establishing used values. When you control 20%-plus of the new side and you control the largest portion of the youth side, and you can create a market through this open, independent process, you now start to establish yourself as the authority and that is really the investment that we spent. We spent about $7 million launching the auction process in the first quarter. We know that that $7 million is a very, very small price to pay to become the market maker in the industry.
Operator: Thank you. Our next question is from the line of Mike Swartz with Truist Securities. Please go ahead.
Michael Swartz: Hey, guys. Good morning, Marcus. Just wanted to follow up on the CW auction business, I guess just curious of what spurred that decision and maybe within that, how much of an investment are you making? I think you said $7 million in the first quarter, but if we think about that just on an annualized basis, how much are you planning to spend there? And then what are the — I guess, what do the economics look like within that business as it pertains to camping world?
Matthew Wagner: Mike, let me take a step back and the impetus behind auctions was to enable us to procure more used assets. In some respects, site unseen. When I say like virtual, we could take pictures, we could basically explore the asset, but we had no idea what it actually smelled like. If there were some finer tooth details that required someone actually to go out there and inspect the asset, we could never quite figure out a way whereby we could buy more assets night unseen but offloaded, in case we made a slight mistake. And really, that’s representative of an efficient marketplace in a free enterprise environment within the used side of the business, which has never existed. So we have largely been a bit timid from a centralized perspective to buy too much because we didn’t want to make too many mistakes.
The auction concept really sprung out of that, and that’s why we’ve been working diligently for the past couple of years to figure out, okay, how do we centralize more functioning of used procurement, while at the same time knowing that if we step into something and unfortunately make a mistake here or there, or if we want to just allow more assets to be run through the market, to procure more information and actually start to set more accurate market based supply pricing of all the used marketplace, we knew that the auctions needed to take form. Through this process, we’ve learned a tremendous amount, and in a lot of ways, we’ve had to build the market and prime the pump for this marketplace, which is why these are largely just upfront, one-time costs, we referenced with the $7 million.
This is not going to be an annualized expense. Rather, we view this as a business that we’re building and we realized how much bigger this business could be more than we even imagined at first, given that wholesalers, banks, different manufacturers, consumers alike have all started to raise their hand and participate. Yesterday, for example, we held our first ever virtual auction and what I mean by that is it was literally entirely online. We ran just 35 through the chute. We were able to sell 31 and these consumers and or wholesalers and our banks, whomever was bidding literally did not even see these assets. This is the first time they were bidding on them and for us to successfully sell through that many tells us that, wow, we could actually improve this velocity of sales to an even greater extent.
Furthermore, as Marcus referenced earlier, when we think about the opportunity on trade-ins that are coming in, we think that we can open up all these trades, whether we want to retail it, we could do that as we always do, and that’s just our normal course of business, or if we need to get a wholesaler bid, we think we can get more real time feedback quicker to turn around and make a quick buck. Where today we’re wholesaling about 8,000 units on an annualized basis, I believe we can pull down at least another couple $100 of front end gross profit. Never mind the fact too that we’re going to start to be able to run different bank reposition as well as different wholesalers that want to list their own assets. Off of that concept, we’ve taken a page out of the larger auction houses books where we’ll be able to charge sellers and buyers fees on both sides of the transactions and as this thing starts to expand, we’ll have an auction at least every other week beginning this month, somewhere in the country, be it a virtual auction, an in person auction, where we see a lot of consumers looking to participate.
I’m super excited for this, on the backside of this, of how this becomes a true revenue stream and profitable for our business.
Matthew Wagner: One thing to keep in mind, it is acting independent of our dealership operations, so that we truly believe that the values are not contaminated by any influence other than whatever the free market provides and when we run our own units, we adhere to that free market principle. And so when you look at the losses, some of those or us taking some of those losses through the auction, some of it was the cost to stand it up, but just to reiterate, it is not $7 million on an annualized multiplied times three more quarters of that. You should not expect that at all. We feel like we’ve gotten it down to a bit of a science, and we’ve taken kind of the big steps that we needed to, to launch it.
Michael Swartz: Okay, that’s extremely helpful. I appreciate that. And one of the — I guess the second question is just on your expectation for new door additions. This is always kind of a difficult thing for, I think, most of us to model just in terms of timing and I think you’ve given us some framework for how many doors you expect to open this year. But it sounds like you may have put some of those on hold or delayed some of those, just given some of the macro considerations out there, but any way to think about, just from an updated standpoint, how many doors you expect to open this year?
Marcus Lemonis: Yeah, so we opened 14 already. We did mention that we sold one location. We actually sold that location, I think, for around $3 million. It was much more than we had in that transaction. So we netted to 13. We have two more stores that we expect to open internally by year end, potentially three and then, as always, we’re always looking for opportunistic acquisitions. As we look at the landscape of dealers who potentially are sitting with more inventory than they would like to, we’re always a great source. We did fall off a number of deals that we had contemplated, and we didn’t fall off because of anything internally on our side. We fell off because through the diligence process, they didn’t meet certain standards and they weren’t willing to do the things that we felt were necessary to receive our money quite frankly.
We are not in the business of just adding doors. We are in the business of being accretive in our acquisitions, which means I’m not going to pay much, and we expect to get a lot out of it, and anything absent of that, we’re not interested in. So I would expect that we’ll have no less than 17 stores, potentially one or two more than that, but we could turn around in the fourth quarter and see a deluge of opportunities and capitalize on four, five, six of them. We’re not going to do anything that’s going to flex our own business or put our own balance sheet at risk or put our own human capital at risk for anybody or anything.
Operator: Our next question is from the line of Bret Jordan with Jefferies. Please go ahead. Hey, good morning, guys.
Bret Jordan: Good morning, guys. On the Good Sam, continuing to explore alternatives comment, I guess it sounds like you’re also simultaneously expanding the business into things like Marine. Should we expect that that’s going to sort of push back the alternatives that you’re pursuing there as you develop more of the in-house strategy?
Marcus Lemonis: No, I think what happened was, when we talked about this internally before we disclosed it to the market, we have that unique relationship inside of our company between our Camping World management team and our Good Sam management team and Matt and I are always put in the middle of that, like two parents. And the Good Sam team wants to do certain things, and the dealership team wants to ensure that they’re not being compromised. And we kind of just put everybody in their own corner and said, look, you’re chartered and you’re incentivized financially to run your business and the response from the good sand team is, well, great, let me go run my business. I understand that you’re not in the boat dealership business, but that doesn’t mean that I can’t go explore the recreational landscape.
We have the policies. We have the process. We have the relationships with the vendors. So we have given, Matt and I have given permission to the Good Sam team to grow their business in ways that they believe are going to be financially accretive to the business and if they choose to get into the boat warranty space, which they’re getting into, or the power-sports space, which they’re getting into, it really is none of Camping World dealership’s business and I think historically, we tried to keep everybody happy, and we were probably holding that business back a little bit. Now, that’s a long maturation process, but while that’s happening, we’ll continue to explore ideas and as everybody knows, I was very matter of fact in the first quarter that I have a certain perspective on what I think the value of that business is.
It’s $100 million contribution in 2023 and I don’t believe that the market properly recognizes the value of that business. I put a marker out there, and shockingly enough, the inbound activity that Goldman received from that statement that we made was surprising and pleasing. At the same time that we explore those ideas, the board wants to understand how does that work with the database? What happens with a variety of questions and we will get the board all of those answers over the next several months, but it doesn’t mean that Good Sam management team has to wait to pursue their initiatives, to pursue their path at the same time. So we see those as parallel paths. We obviously are focused right now on growing our business and so Goldman is handling that process and if something interesting comes up, we’ll present it to the board, we’ll look at all the options, we’ll see if it makes sense for the shareholders, and we’ll make a decision, but at this point, we’re still exploring it.
Bret Jordan: Okay. And then you also commented about a new aftermarket supplier agreement. Is that changing your strategy around the aftermarket side of the business and I guess, who’s the agreement with, or is it at scale?
Marcus Lemonis: Yes, so we believe, as we looked at our retail business, and retail is a dirty word, but as we look at our parts and expenses, an aftermarket business, which is a foundation of our stores, the Camping World brand, we really thought to ourselves, we have to kind of reset. We have to reset how we’re approaching the market. We have to reset how we’re deploying money in inventory. We have to reset our partners. Years ago, we made the acquisition of a furniture business. They were manufacturing furniture, and we were selling it in the aftermarket space successfully, and we were selling it directly to OEMs. We have a very, very good relationship with Lippard [ph], which is a very dominant force outside of frames in the aftermarket, with Furion, with SOLARO, with CURT hitches and when we look at wanting to minimize our risk in that business and enhance product development, product rollout and all of those things, we ended up signing a definitive agreement to sell our furniture business to Lippard.
As part of that consideration, we entered in — we’re going to enter into a supplier agreement that gives us the proper pricing for giving them the proper amount of business. So we see margin expansion there for us and for them, and we have an opportunity to earn additional rebates based on our performance. I believe that an acute focus with a small number of suppliers, Lippert being one of them, Ericcel [ph] being one of them, LKQ being one of them, is going to put a hyper focus on the product assortment that we have in our stores. Ultimately, we need better terms in that business and we need better margins, and we believe that that’s going to happen. We will take on an entire reset of our retail business in 2024. We’re going to spend around $10 million resetting all the stores to one standard.
As most people know, we accumulated all 200 stores over 20 years, 30 years, 40 years. They have different iterations inside of them, based on where we were in our lifecycle. We’re going to press the reset button one time. We’ve now come up with the proper assortment to address aftermarket parts repair, replacement and enhancement. We’ve nailed down our suppliers to be largely Lippert secondarily, EricCel [ph], which we have a great relationship that’s a company [ph], and using suppliers and distributors like LKQ. That doesn’t mean we still won’t have import of our own products for margin improvement and there are a variety of other vendors that will be there, but we needed to do the same thing on the retail side, that has given us the dominance on the RV sales side and years ago, we used to sell everything, and today we hyper focus on the companies [ph], Forest River and Winnebago, and we’re taking that same approach to do business with less people and have it be more meaningful so that the performance would be more meaningful on the bottom line.
Operator: Our next question comes from the line of Brandon Rolle – D.A. Davidson. Please go ahead.
Brandon Rolle: Thank you for taking my question. Just piggybacking on the supplier environment right now, I think back in 3Q, you had talked about wanting a diversification of sourcing within the industry. Could you update us on kind of what you’ve seen over the past six months and in terms of maybe new suppliers entering the market and maybe, having a say within the model year ’25 bidding process?
Marcus Lemonis: Are you talking about on the aftermarket side or on the RV manufacturing side?
Brandon Rolle: On the rv manufacturing side.
Marcus Lemonis: You know, Brandon, we continue to work and develop products with THOR, Forest River and Winnebago and I think proof of our effectiveness in doing that is what has resulted in what’s happened with Coleman. Many, many years ago, Matt and I decided to, I think it was actually maybe ten years now. We decided to get into the Coleman licensing business, and we went down to Wichita, Kansas, and we did a deal with Coleman. And we connected, Coleman and Thor and us together. In the first quarter, it appears, at least through January and February, that Coleman will be the number one selling travel trailer in America, period and by the way, that product is only sold by us and so our ability to influence the way things are made or the design or the engineering is probably stronger than ever, not because we have a heavy hand, but because we have a lot of data and that data is very useful to manufacturers and whether they’re looking at repair records or whether they’re looking at turns or whether they’re looking at ASPs or whether we’re looking, looking at innovation, we do have a significant influence, but that influence over the market isn’t something that only we benefit from.
In order for our company to meet our goals, which is to be in excess of $10 billion, $12 billion of revenue, we need the TAM of the overall industry to grow and the only way the TAM of the overall industry grows is if the industry is healthy and the way that it becomes healthy is that we use our data to make it available to everybody. Here’s what we have. Here’s what we know. And I think this idea of everything having to be proprietary in some cases applies, but in other cases, if we want the industry to manufacture and ship and sell 750,000 units, we have to share some of our secret sauce so that the industry as a whole is more successful and whether that’s working with Lippert [ph] to develop better ways to do hitching, or working with Lippert to do other things, or working with Thor, between Ericcel [ph] and Keystone or Jayco to develop more innovative products, or working with Forest River, whatever it may be, we have a duty and an obligation to grow the overall industry because we’re primary benefactors of that.
Operator: Thank you. Our next question is from Tristan Thomas-Martin with BMO Capital Markets. Please go ahead.
Tristan Thomas-Martin: Hey, good morning. Last quarter, you said 25 new dealerships to 30 new dealerships by the end of the year. Now it’s 13 new dealerships. Is that just due to falling off some deals, or did something else change there?
Marcus Lemonis: No, we didn’t say 13 new dealerships. We’ve already opened 13 new dealerships as we sit here today. What’s that?
Tristan Thomas-Martin: I just said no less than 17 new dealerships.
Marcus Lemonis: Yeah, well, you said 13 new dealerships, so we’ve opened 14 new dealerships. Since January 01, we’ve sold one. So that’s a net of 13 new dealerships. We have two stores to three stores that will more than likely open hopefully by the end of the year and that’s before we even open the kimono to look at what acquisitions are out there in the back half. But I’m not going to — I’m not going to meet a number by just buying something. We know that deals are brought to us every day and every week. Right now, as we sit here today in May, June, and July, Matt and I are focused on one thing, and that’s crushing our same-store, new number and growing our market share. The deals that are out there are going to be out there in the fall, in the winter, and we believe they’re only going to get better.
