Car-Mart Reports Declining Profits in Fiscal Q1
Car-Mart, one of America's leading automotive dealerships, has reported a decrease in profit for the fiscal first quarter. The company recorded a profit of $4.2 million, or 63 cents per share, for the three-month period ending July 31. This is a significant drop from the $13.7 million, or $2.07 per share, it earned in the same quarter last year. Wall Street analysts had predicted earnings of 91 cents per share, as per FactSet.
Despite the decline in profitability, Car-Mart saw an 8.6% increase in revenue, reaching $368 million. However, this figure fell short of analysts' expectations, who had anticipated revenue of $347 million.
While total retail unit sales showed a modest growth of 2.4% during the quarter, same-store sales, which account for store openings and closings, saw a more substantial increase of 8.2%.
Car-Mart's CEO, Jeff Williams, who will step down on October 1 and be replaced by President Doug Campbell, acknowledged that the positive performance in sales and margins was overshadowed by an increase in the provision for loan losses during the period.
Comparing the figures to the same quarter last year, the provision as a percentage of sales rose from under 26% to nearly 31%. Williams attributed this increase to higher vehicle sales prices and changes in consumer payment behavior. He explained, "We are experiencing the same credit results on the portfolio as we have historically, but the contract length has changed."
The news of declining profits led to a 15% decline in Car-Mart's shares during premarket trading, with prices falling to $97.
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