DealerLAB: 2013 earnings up 76 percent but ...

Publish Date: 
Feb 27, 2014
By Joe Delmont

... December move takes time away from sales

PUNTA GORDA, Fla. — Bill Shenk’s Destination Powersports dealership finished the year ended Dec. 31, 2013, on a flat note, but overall the store posted a strong performance for the year, with earnings up 76.5 percent over 2012.

Earnings for 2013 were $268,558, up $116,427 from the $152,131 earned in 2012. Earnings in December and 2013 were reduced by $30,426, the amount taken from profits for distribution to the dealership owner. The dealership lost $19,223, compared to earnings of $11,906 in December 2012.

Prior to this one-time expense, the dealership earned $11,204 from ongoing retail operations. By comparison, operations in December 2012 included a gain of $14,054 from wholesale operations. So retail operations in December 2013 were about $14,000 better than the year before.

Revenues for the month were $399,519, which generated a gross profit of $106,606, up from revenue of $374,815 and gross profit of $105,904 in December 2012.

December’s weak performance, says Bill Shenk, was due in large part to the time and energy spent moving into a new, larger facility in Punta Gorda. “We took our eye off the ball in December,” he said.

Read all about the move to the new facility in next month’s issue.

Despite the soft month, the dealership continued a nice three-year trend of growth, even though it dropped off in 2012, driven by a huge increase in flooring costs that year.

For the three full years of operation under the ownership of Shenk and his partner (they acquired the dealership in March 2010), the dealership has grown from revenues of $5.2 million in 2011 to $5.8 million this year, or 11.5 percent.

Gross profit has increased from $1.34 million to $1.52 million, a gain of 13.1 percent.

Most importantly, during the three-year period, net earnings climbed from $223,431 to $298,984 before the $30,426 owner’s profit withdrawal in December. The gain in earnings from 2011 to 2013, before the withdrawal, was 33.8 percent.

The improvement is even more dramatic if we include the year 2010, when the dealership was shut down in February during the ownership transfer. Net income for 2010 was only $19,263 on total revenues of $3.2 million.

Going back one more year we see that the gains were even greater. In 2009, the year Shenk began managing (but not owning) this dealership, it had total revenues of $2.67 million and gross profit of $699,076. So that reflects a gain of more than 225 percent between 2009 and 2013.

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