Car-Mart Earnings Slip On Charge-offs, Competitive Pressures
by February 19, 2014 6:57 am 113 views
America’s Car Mart posted lower earnings as charge-offs and competition reduced net income in its most recent quarter.
The Bentonville-based “buy here, pay here” used car dealer reported third quarter net income of $1.47 million on revenue of $122.58 million. One year ago, Car-Mart topped $7.97 million in profits on revenue of $118.92 million.
Same-store sales were down 2.8% year-over-year.
In its most recent quarter ended Jan. 31, Car-Mart charged off $4.9 million resulting from an increase to its allowance for credit losses.
“Despite the pressure we are feeling in the current competitive environment, we are continuing to see some good growth. We remain committed to growing our business the right way with the realization that so long as the competition does not share our same focus on customer success, our results could continue to be affected somewhat,” CEO Hank Henderson said in an earnings statement.
As he has for several quarters, Henderson also said that Car-Mart was facing competitive pressures from other dealers in the subprime space offering deals that he has suggested were unsustainable in the long run.
“We will continue to do our very best to set our customers up to succeed so that we will be in a position to earn their repeat business in the future. Anything short of our customers successfully completing the terms of their individual contracts is not acceptable to us and not in line with how we believe this business should operate. Unfortunately, the current environment is contributing to higher levels of charge-offs and we will continue to work hard to reverse these trends,” Henderson said.
The company opened two new dealerships in the last quarter and has opened seven in the past nine months. Officials said they plan to open four more before the company’s fiscal year ends on April 30.
Shares of America’s Car-Mart (NASDAQ: CRMT) closed Tuesday at $37.55. For the past 52 weeks, shares of Car-Mart have ranged from a low $36.22 to a high $50.59.
Kim Souza with our content partner, The City Wire, has more in-depth analysis of Car-Mart’s latest earnings report at this link.