Dealer LAB July Report: Another month in black

Publish Date: 
Oct 29, 2013
By Joe Delmont

PUNTA GORDA, Fla. - Even though total revenues declined year-on-year through July at our Dealer LAB dealership, Destination Powersports of Punta Gorda, Fla., posted another positive earnings month by cutting  total costs and total expenses enough to increase profitability by almost $4,000 over July 2012.

In July, the dealership earned $5,664 on total revenues of $414,436. That compares with earnings of $1,671 on total revenues of $449,469 in July 2012. Total expenses were reduced by $4,326, with savings in flooring and administration. Advertising costs climbed from $930 to $3,060 as the dealership spent heavily on eBay listings to sell a large inventory of Polaris parts that it had in stock for 18 months with no sales history.

“Polaris really pushes for the dealer to make large orders several times a year,” says owner Bill Shenk, “and they tie money to those orders. For dealers without daily or weekly inventory control, it probably works. However, we prefer to check our inventory continually and replace items as they sell. This ensures that our customers get the best possible service.

“What happens here is we have the inventory to support our marketplace continually. But if we don’t place these large orders [with a Polaris-determined amount], we have to charge our customers approximately 15 percent more for the same items [i.e. the missed discount].

“It’s a tough decision,” Shenk continues. “Do we make Polaris happy and allow inventories to run out on many items so we can make the larger orders? Or do we say ‘no’ to the larger orders and have sufficient inventory on-hand all 12 months for our customers and charge 15 percent more?”

Positive July earnings were also supported by the dealership’s wholesale business. It earned $1,745 compared to a loss of $1,890 in July 2012. “Wholesale is fixing mistakes or moving product, like a car or truck taken on trade,” says Shenk. “This was a truck we took on a motorcycle that we were able to sell to a local auto dealer at profit.”

Year to date the dealership earned $181,597 on total revenues of $3.58 million, topping the earnings for the same seven-month period in 2012 by more than $70,000. (continued)