What happened
Shares of Camping World Holdings (CWH 2.28%) were moving higher today after the company topped expectations and showed resilience against the coronavirus pandemic. The stock was up 24.6% as of 2:07 p.m. EDT on Friday.
Image source: Camping World.
So what
The RV seller actually reported a 3.5% decline in first-quarter revenue to $1.03 billion. The drop was due to the impact of COVID-19 and the company's strategic shift as it sold or closed more than 60 locations that did not sell or service RVs. That result was still better than expectations at $998 million.
Gross margin in the period increased from 28.1% in the quarter a year ago to 29.5%, seemingly driven by the exit of those locations, and adjusted EBITDA jumped 68.5% to $36 million, helped by improvements in its variable cost structure. Earnings per share adjusted for the store-closing costs and asset impairment were break-even, ahead of the analyst consensus for a loss of $0.06.
Especially encouraging to investors were comments on the earnings call that sales had surged more recently after a lull in March and the first weeks of April as Americans see RVs as a good vacation option. CEO Marcus Lemonis said that the first weekend in May was "the biggest weekend in the company's history -- period, end of story -- in all aspects, every part of our business, so we feel good about where those trends are going." Camping World seemed to be benefiting from the view that an RV is a desirable way of social distancing despite RVs normally being a cyclical business, while other options for vacationing like cruises and air travel are unavailable or riskier.
Now what
Camping World did not issue guidance, and was wary that the boom could be temporary. Management said it was still committed to cost savings to make up for the shortfall from the prior weeks. Still, with summer on the horizon and conventional vacations being disrupted, RV sales look set to experience a boom, at least for this season.
