Lazy Days Rv Center, Inc. Business Information, Profile, and History

Company Perspectives:

Don Wallace has worked hard in creating "Florida's Newest Tourist Attraction" and attributes the company's continued success to unsurpassed customer service and satisfaction.

History of Lazy Days Rv Center, Inc.

Based in Seffner, Florida, ten miles north of Tampa Bay, Lazy Days RV Center, Inc. has mixed aspects of Wal-Mart and Disney World to become the world's largest seller of recreational vehicles. The dealership's "SuperCenter" occupies 150 acres and has available for sale more than 1,200 RVs, covering 150 models from 18 manufacturers and ranging in price from less than $10,000 for basic units to more than $1 million for luxury coaches. Units are presented in a park-like setting, unlocked and open for customer inspection. Each year Lazy Days serves more than 300,000 complimentary breakfasts and lunches to customers and prospects. The SuperCenter also includes an RV park capable of accommodating 300 RVs, a 12,000-square-foot RallyCenter, banquet kitchen, screened-in swimming pool, tennis courts, a Camping World store, Flying J RV Travel Plaza, and a Cracker Barrel restaurant. The SuperCenter is so large that Lazy Days maintains a fleet of some 170 six-passenger golf carts to transport employees and customers around the lot. In addition, the site includes some 275 service bays, with 24 service bays making up the largest RV collision center in the country. The company also maintains three massive paint booths capable of handling three 45-foot RVs simultaneously. For customers who buy luxury motor homes costing more than $250,000, Lazy Days also provides Crown Club membership. In addition to first-class check-in for RV service, members have access to an exclusive clubhouse on the SuperCenter grounds, where they are served free meals and cocktails in an opulent setting. Because of all that Lazy Days has to offer, its SuperCenter has become a major RV tourist attraction in itself, each year attracting more than 1.25 million visitors from all over the world. Although the New York City private equity firm of Bruckmann, Rosser, Sherrill & Co. bought the company in 2004, it continues to be run by Don Wallace, whose family founded Lazy Days.

Patriarch of Wallace Family a Product of the Depression

Although Don Wallace is the man most responsible for the creation of Lazy Days, it was his father, Herman Kemper "H.K." Wallace, who became the public face of the business in the early years. The elder Wallace was born in the mountains of Virginia, close to the Tennessee border, one of 12 children. When Wallace was just six years old his father died after losing his grocery store, forcing the youngster to drop out of school after the second grade to help his mother scrape by during the difficult years of the Depression. He helped farmers, he shined shoes--anything to make some money. He also followed in his father's footsteps and became involved in the grocery business, eventually running a few stores in Tennessee, where he raised his family. He uprooted his two sons and daughter when they were teenagers and moved them to Florida. Wallace became an auto parts jobber, starting out by selling parts to repair shops and garages from the back of his truck. He remained in this line of work until his son Don enlisted him and another son, Ron, to join him in selling RVs.

Don Wallace graduated from high school in Tampa, Florida, married, then returned to northeastern Tennessee to farm tomatoes and corn. Although it was a challenge at first, after nine years of farming Wallace became bored. In the mid-1970s he decided to move back to Florida to start a landscaping business with his brother-in-law. After selling the farm he bought a tractor and 16-foot travel trailer to make the move and provide a place to live when he got to Florida. He soon decided to trade up and sold the trailer, making a $500 profit. He bought a bigger unit, but even before he moved in he sold it as well at a profit. His success in these transactions prompted him to buy two used trailers, one damaged by fire which he rebuilt with the help of his mother. After he sold these units, he abandoned the idea of getting involved in the landscaping business. Instead, he approached his father and brother, and they agreed to go into the RV business together.

Starting an RV dealership in Tampa, Florida, was a bit of luck that in hindsight could be mistaken for a stroke of genius. Not only was the local market virtually untapped, Tampa was also a popular winter home for many people who were potential RV customers. After the Wallaces found 1.75 acres of land along North Florida Avenue in Tampa available to lease, they studied trailer and RV manufacturers in order to acquire inventory. They decided they wanted to sell Prowler Trailers, only to learn that the manufacturer already had a Tampa dealer. They contacted Fleetwood and were told that it too had an area dealer, but the company also suggested that the Wallaces talk to the dealer, who might be interested in cashing out. The Fleetwood dealer sold them his stock of two trailers and Lazy Days was in business. Don Wallace then traveled to Pennsylvania to acquire another trailer, a mini motorhome, as well as a tent trailer on consignment. With this meager inventory and $500 in the till, Lazy Days was launched in 1976.

Turning Point in the 1980s

The initial sales goal for Lazy Days was two new and two used trailers each month. To drum up business the Wallaces visited area campgrounds and even went door-to-door. Their efforts paid off and by the end of the first year in business they were able to buy the lot they had been leasing. During the first five years Lazy Days limited itself to travel trailers and mini motorhomes, growing sales to $13 million in 1980. Then, in 1981, they expanded into Class A units by taking on the Fleetwood Pace Arrow line of motorhomes. It proved to be a turning point for the company, which then saw its sales grow exponentially. In 1983 sales reached the $50 million mark.

Much of Lazy Days' early growth was the result of television commercials that featured H.K Wallace, who became something of an area celebrity. His Tennessee drawl, quick-fire delivery, and down-home personality appealed to customers. "Come on in," he told them, before adding his signature tag line: "Tell them H.K sent you." By the mid-1980s he and his children had become millionaires selling RVs, so that when he was recognized in restaurants by satisfied customers, H.K was more than happy to pick up the check. By this time his daughter, Connie, also had joined Lazy Days. She would prove instrumental in aligning the service department with sales. Each service manager was assigned several salespeople and together they worked in teams.

Lazy Days expanded beyond Tampa in the 1980s, opening dealerships elsewhere in Florida. By 1986 the company was operating seven stores on Florida's west coast. The Wallace family dreamed about operating hundreds of lots spread across the country, but Don Wallace began to have misgivings about this approach. Sales growth was slowing and he suspected that rather than adding business the new stores were actually taking it from each other. Moreover, he was exhausted from traveling store to store. According to a 2002 Florida Trend company profile, "On Christmas Eve 1986, during a miserable drive from Bradenton to Tampa, Wallace decided to try to convince his dad and brother that a single RV super center in the Tampa Bay area was the way to go. 'It was raining like hell outside,' he recalls, 'and I decided I didn't want to do this anymore.'"

The family would ultimately agree to the super center concept but another ten years passed before Don Wallace's idea became a reality. In the meantime, the family was struck by tragedy. Ron Wallace, who served as Lazy Days' general manager and secretary-treasurer, was killed in February 1989 when his car ran into the back of a bus in Tampa's Ybor City. H.K Wallace took the death of his son hard and began to ease out of the business. He soon retired and Don Wallace bought out his father in 1993. After a long illness H.K Wallace died in June 2002 at the age of 83.

Lazy Days also was threatened by scandal in the early 1990s. A former employee, William M. Jones, who had been fired by Don Wallace, went to the state attorney's office and accused Lazy Days of fraud, which led to a well publicized state investigation. The company was accused of engaging in a practice known as "bumping," in which Lazy Days allegedly sold vehicles on consignment, then pressured the customers into accepting a lower price while selling the RV for the full price and pocketing the difference. In addition, Lazy Days was accused of telling customers that their RVs needed expensive repairs before they could be sold on consignment, but the repairs were not actually done. Don Wallace vehemently denied these charges, maintaining that Jones was providing misinformation to the state attorney's office. After several months of reviewing files, investigators found Lazy Days had not conducted any criminal wrongdoing and the attorney general's office exonerated the company. Jones, on the other hand, was arrested and charged with extortion after sheriff's investigators caught him on tape telling Don Wallace that for $250,000 he would refuse to help investigators and urge other employees not to cooperate as well.

In 1992 Don Wallace promised Lazy Days employees that they would gain a stake in the tremendous growth the company had enjoyed over the past decade. In 1995 he launched a stock ownership plan in addition to the company's profit-sharing retirement plan. The Employee Stock Ownership Plan (ESOP) went into effect in 1996 and began to buy out Don Wallace's stake in the business. Not only did the employees gain ownership in the company, Wallace was able to cash out and take advantage of tax provisions allowing him to defer capital gains tax if he invested the proceeds in stock and bonds within a year. By 1997 employees owned about 10 percent of Lazy Days. Then in 1999 Wallace sold a majority interest in the business to the ESOP.

Opening Crown Club in the Early 21st Century

It was also in 1995 that Don Wallace announced that after several years of planning, Lazy Days was finally ready to begin construction on its SuperCenter located ten miles south in the

Lazy Days also expanded the rest of the SuperCenter, adding service bays and camp sites. Sales grew at a rapid clip, topping $500 million by 1999, prompting Wallace to set a goal of reaching the $1 billion level by 2003. But sales began to stall industrywide in 1999 and in 2000 Lazy Days only achieved 2 percent growth to $556 million. In 2001 Lazy Days posted sales of $584 million and Wallace pushed back his target date for reaching $1 billion to 2005. Nevertheless, the company was still trending upward. One of its greatest challenges was keeping up with the demand for service. Although Lazy Days remained committed to providing emergency service, wait times for routine service reached two months.

Lazy Days sold 8,842 RVs in 2003 and generated sales of $750 million and an estimated net profit of $36.4 million. Several months later, in June 2004, a majority interest in the company was sold for $206 million to the New York private investment firm of Bruckmann, Rosser, Sherrill & Co. LLC (BRS). Wallace retained a 10.6 percent stake in the business. The employees figured to be major beneficiaries of the deal, as each one was slated to receive a share of the ESOP buyout, depending on their length of service. Employees were also in line to earn more common stock as it was issued from the new owners. BRS was known to take a hands-off approach if a company was performing well, so that there was little reason to believe that Lazy Days would see any major changes in the years to come. It would soon face increased competition, however, in the form of La Mesa RV Center, one of the largest RV dealers in the country with 12 dealerships located in five Western states, generating about $700 million in annual sales. La Mesa announced in late 2004 that it planned to open a sales center in the Tampa market. But Lazy Days remained well positioned for continued growth. The demographics were on the company's side, as the nation's graying population entered its prime RV-buying years. Moreover, the average age of the RV buyer was dropping. Although Lazy Days had closed its other dealerships to focus on a single location, there was a good chance that in the years to come it might open super centers in other locations, such as Texas and Arizona.

Principal Competitors: Cruise America, Inc.; Earnhardt's Auto Centers; La Mesa RV Center, Inc.

Chronology

• Key Dates:
• 1976: The company is founded by the Wallace family.
• 1989: Ron Wallace is killed in an auto accident.
• 1993: Don Wallace buys out his father.
• 1996: RV SuperCenter opens in a Tampa suburb.
• 1999: The Employee Stock Owner Plan gains majority control.
• 2004: A New York investment firm buys a controlling interest.