DealerLAB: Bad weather, new location cause a stumble

Publish Date: 
Mar 25, 2014
By Joe Delmont

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

A big part of the year-end decline was caused by the dealership’s move to a new, location several blocks away from the old store. The business was run from two locations simultaneously for a time, cutting into the dealership’s bottom line, according to Shenk.

The causes of December’s monthly slide continued through January when the dealership lost $6,609 on total revenues of $342,073. In January 2013 the operation earned $42,339 on total revenues of $571,815. Moving was part of the problem, but business also was hurt by bad weather.

January in Florida was colder, wetter and windier than normal, and this bad weather continued well into February, Shenk said.

Revenues across the board, except for parts, were off as well. Unit sales were down (30 compared to 53 last January), and F&I, accessories and service were off sharply. Parts improved, however, climbing to $34,646 from $30,163.

In January 2013 the dealership sold 20 used motorcycles, nearly double the 11 units sold in January of this year. New bike sales were better this January, however, climbing to 11 units from seven last year. Again, bad weather was cited as a major factor.

Logged guest traffic was down year-over-year, to 112 people from 132, a drop of about 15 percent. This was a related effect of the move to a new facility, Shenk said.

“A lot of people initially went to our old location,” he said. We didn’t make much of an effort to promote the change because we didn’t want to bring in lots of traffic to the new store before we were ready to handle it. That may have been a bit of a mistake in the short run, but I think it will work to our advantage in the long run because we’ve got a lot of happy customers in our new store.”

The good news for January, strictly from a numbers point of view, was that total expenses were down $26,013, or nearly 21 percent. Large gains were made in payroll: $38,029, down almost 45 percent from last January. But outside of the numbers, it’s bad news, Shenk said.

“Our team is paid on commission, so if payroll is down $20,000, gross profit generated is going to be down a whole lot more than that,” Shenk noted. “That’s not good for the team or the dealership; both need to make money. Lower sales mean lower profits and a lower payroll for our performance-based team. I would like to see payroll double.”