by Jason Epperson

YouTube videos and Facebook posts are beginning to spread a massive rumor about a favorite target. The message: “Camping World will declare bankruptcy within the next few weeks.” What’s more, they’re encouraging RV owners to cancel their Good Sam (a Camping World subsidiary) extended service plan (also known as an extended warranty) before SHTF. So before the world goes crazy, I thought maybe we ought to look at the facts.

Let’s just get to the bottom line right away:

NO. There is no empirical evidence that Camping World is on the verge of filing for bankruptcy.

If you like to stay above the drama and have no horse in the race, you can stop reading now. If you care to understand a bit more about what’s brought on this mess, stay with me.

There’s a podcast-slash-radio-slash-YouTube show called The RV Show USA, hosted by Alan Warren, who has had a bone to pick with Camping World for some time now. In fact, dozens of episodes set Warren’s sights on the US’ largest RV dealer, which is, admittedly, an easy target. Over the last year, the company has faced accusations of financial impropriety, plummeting stock prices, and lawsuits, along with reports of countless dissatisfied customers.

Warren has been sounding the trumpet for a while now about the alleged shaky financial situation of the company, and he’s not entirely wrong, but he’s turned exaggeration into an art. The show takes a page right out of your favorite AM radio conspiracy theorist’s playbook, amping up facts and half-truths to make a case for something that’s just not founded in reality.

Episode titles include “Camping World Exposed,” “Camping World sells 84-year-old Great Grandmother a Motorhome,” and a recent episode called “Camping World Ex-Salesman Dishes On Working There” in which the anonymous “Mr. X” attempts to expose all the shady sales techniques Camping World uses. Warren’s mind was “blown” by such tactics as upselling people to more expensive RVs and profiting off the financing. Things I think most people are aware of as modus operandi for vehicle dealerships of all kinds.

But this time, he’s gone a step further. Warren is encouraging people who have bought RVs to cancel their extended service plans (ESP) — or “extended warranties” as they’re known — that they may have purchased from Camping World subsidiary Good Sam in order to get a refund before things fall apart. Warren has even published a step-by-step guide for owners to do it themselves in an expedited manner. The popular YouTubers Hebard’s Travels latched onto this and put a video together of them going through the process of canceling their ESP.

Most of Warren’s insight into Camping World comes from a frequent guest named Kevin Frazer, the president of Cheyenne Camping Center in Walcott, Iowa whose logo hovers over Warren’s shoulder as the sponsor of his videos. Frazer’s longtime local competitor was bought out by Camping World, and he now faces them directly, and he’s been on the warpath since, often using Warren’s show as his venue to get out his message. That’s not much of a surprise to me. Camping World’s competitors are notorious for targeting their one common enemy. Go to any RV show and start talking to the non-Camping World dealers and they’re all going to tell you the reasons you should stay away, and why they do it better. But publishing a guide to canceling service from a competitor? That’s got lawsuit written all over it.

Now I’m no stranger to the stories people have about purchasing and getting their RV serviced at Camping World. There are many serious problems the company needs to deal with. But so do MANY other dealers. Just because the biggest guy might be causing problems doesn’t mean that the little guy is a saint. You should watch your back wherever you buy an RV, and if you find a great dealer, stick with them. And let’s not pretend the RV manufacturers are making it easy on any dealer with the massive drop in quality we’ve witnessed over the last decade.

But that’s all irrelevant to the question. Is Camping World going bankrupt? Let’s look at Warren and Frazer’s points one by one.

  1. Camping World stock has dropped 70%. Yep. Other major publicly traded RV companies like Thor Industries and Winnebago have seen similar drops. The RV industry had a major boom in the last few years and is undergoing a drastic correction. But the RV industry is very cyclical.
  2. Camping World’s terrible customer service is coming home to roost. Again, irrelevant. Whatever your stance is on the way Camping World treats its customers, it has nothing to do with their financial stability. People still buy there. Sales are not down. In fact, they are up.
  3. Good Sam Extended Service Plans are a terrible deal. Maybe. So are most of the other ESPs you get from a dealer. Or at least they’re often overpriced. We always recommend you buy them after the fact from a third party.
  4. On a May 8th investor conference call, Camping World CEO Marcus Lemonis revealed the company’s dire financial situation. Frazer states that Lemonis announced on this call he would freeze any future capital expenditures at his dealerships. Meaning, according to Frazer, that the company can’t afford to change lightbulbs and buy copy paper. But that’s not what capital expenditure is. Capital expenditure is an accounting term for acquiring fixed assets, such as land, buildings, and equipment. Things that are depreciable on a balance sheet.
  5. Camping World’s debt to equity ratio is astoundingly high, meaning they can’t get loans. Sure is. Doesn’t mean they’re going bankrupt. Their debt load is intentional. More on that below.
  6. Camping World execs are being sued for a “pump and dump” scheme in which the stock price may have been artificially inflated. Yep. They are. Is that a sign of bankruptcy? These lawsuits haven’t even been litigated yet.

Camping world has been undergoing a massive expansion. They purchased bankrupt chain Gander Mountain, and they’re in the middle of re-opening them as retail competitors to Bass Pro, Dick’s and Cabela’s, and they’re beginning to sell RVs at them. That roll-out hasn’t gone very well. But it’s going.

Camping World Holdings (NYSE: CWH) reported its fourth-quarter and full-year 2018 results on March 7, missing profit estimates and posting a loss of 83 cents per share for the final three months of the year. That’s certainly bad news. But revenue grew 10.6% in the fourth quarter, up to $982.4 million, topping expectations of $978.3 million, and for the full year, CWH recorded earnings of 28 cents per share on $4.7 billion in revenue, an increase of 12%. Not so bad news.

The major issue is that CWH issued $772.9 billion in new long-term debt over the past three years to finance its many outdoor retailer acquisitions like Gander. But on the whole, stock analysts consider CWH a hold or buy, and don’t seem too worried. I’ll take my cues from them before anyone who doesn’t know the ins and outs of publicly traded companies.

Buy your RV where you want to buy it, but I don’t recommend canceling your extended warranty just on a rumor started by a Camping World competitor. Especially since Good Sam ESPs are fully insured by A+ rated QBE Europe Insurance Ltd. Meaning even if Camping World goes under, you’re still covered.