Car-Mart Q2 loss exceeds $22 million, revenue up 0.8%; plans to close 15 dealerships

Rogers-based America’s Car-Mart Inc. posted a loss but a revenue increase in the second quarter of fiscal 2026 and closed five dealerships in early November as part of a new plan that includes closing 10% or approximately 15 dealerships.

Before the markets opened Thursday (Dec. 4), the buy here, pay here used car dealer reported a loss of $22.48 million, or a loss of $2.71 per share, in the period that ended Oct. 31, compared to earnings of $5.08 million, or 61 cents per share, in the same period last year. Revenue rose by 0.8% to $350.19 million from $347.26 million.

The company missed the estimate of a loss of 57 cents per share, based on a consensus of two analysts. But the company beat the revenue estimate of $331.02 million, based on a consensus of three analysts.

In an earnings report, equity analyst John Hecht and equity associates Alexander Villalobos-Morsink, Yuna Sohn, Jonathan Weitz and Aleksander Labosky, all of Jefferies, attributed the miss to lower than expected vehicle sales and higher expenses and loss provision. However, revenue growth and lower delinquencies “suggest marginal trends are improving.” Tariffs continue to impact prices, affordability, inventory levels and sales.

Car-Mart’s “results reflect ongoing headwinds from affordability factors; however, strong demand patterns, growing collections, improving margins, lower (delinquency rates) and a focus on cost containment suggest that (Car-Mart) is managing this well and is in an improved position for a recovery,” the analysts said. “The headline (numbers) don’t reflect ongoing strong demand, improving credit on the margin and structural changes the company is making to improve its positioning for a recovery. The increase in (average selling price), expanding margin on interest income and improving cost structure are positive trends for (Car-Mart) to position for a cycle recovery. (Car-Mart’s) capital structure transformation and management of credit trends…will be key drivers in future (quarters).”

The analysts noted that the reported loss of $2.71 per share excluded adjustments of about $4.5 million related to a loss on the early payoff of a revolving line of credit, credit loss impact on allowance of about $11.8 million and $3.5 million impairment impact due to the five dealership closures. If included in the second-quarter results, the loss would be 79 cents per share.

The company had 154 dealerships at the end of the second quarter, flat from the same period last year. With the five dealership closures noted in the earnings report happening in the third quarter, the dealership count falls to 149.

Also in November, Car-Mart laid off about 10% of its workforce, including corporate employees. The company has more than 2,200 employees, according to its website, and 10% would equal more than 200 employees laid off.

Car-Mart implemented phase one of the multiphase plan in early November, with the layoffs and closing dealerships and consolidating them into nearby dealerships. The company’s website shows six dealerships have closed, with two being consolidated into one dealership. The Chattanooga, Tenn., dealership is serving customers of the Dalton, Ga., and Hixson, Tenn., dealerships. The Grove, Okla., dealership is serving customers of the Miami, Okla., dealership. The Broken Arrow, Okla., dealership is serving customers of the Tulsa (Okla.) North dealership. The Evansville, Ind., dealership is serving customers of the Henderson, Ky., dealership. The Athens, Ala., dealership is serving customers of the Decatur, Ala., dealership.

In the earnings call, CEO Doug Campbell discussed the company’s multiphase plan to “optimize our footprint, cost structure and strengthen capital efficiency.” The second phase will be completed in the company’s third quarter, which started Nov. 1. Combined, the first and second phases of the plan will contribute to $20 million in annual savings. The company plans to close about 10% or approximately 15 dealerships in the phases.

Jamie Fischer, chief operating officer, said the company has consolidated underperforming dealerships into better-performing dealerships that shared the same geographical footprint.

“Early results confirm that this approach was sound,” Fischer said. “Our existing and new customers continue to be served seamlessly from one location in the same geographical area with a larger staff, more inventory selection and the same great service they have become accustomed to at Car-Mart.”

Fischer said the company cut jobs after a “comprehensive review of both field and corporate” staff. “Where technology, automation and process improvements have eliminated manual tasks, we made targeted reduction. These changes were implemented smoothly, and operational continuity has been fully maintained.”

Jonathan Collins, chief financial officer, said the company had $3.5 million in expenses primarily related to “store impairment costs” from the dealership closures. The store consolidations are expected to contribute to about $2 million in annual savings. Collins said that after all phases of the multiphase plan are completed, the company is expected to see $31.4 million in annual savings.

Following are other highlights from the second-quarter earnings report compared to the same period last year:
• Vehicles sold declined by 1.1% to 13,637 from 13,784.
• Average vehicle sales price rose by 0.2% to $20,075 from $20,031.
• Gross profit fell to 37.5% from 39.4%.
• Net charge-offs rose to 7% from 6.6%.
• Accounts over 30 days past due fell to 3.3% from 3.5%.
• Active loans increased by 0.5% to 103,819 from 103,336.
• Net finance receivables rose by 3.5% to $1.17 billion from $1.13 billion.

“At the end of our second fiscal quarter, we successfully closed a new $300 million term loan and fully repaid the outstanding balance under our revolving line of credit,” Campbell said. “This was a significant step forward that provides us with greater flexibility and control over our balance sheet, while removing restrictive income statement covenants that previously limited our ability to make strategic decisions. With these constraints lifted, we are moving decisively to optimize our cost structure, improve profitability, and pursue additional actions to further strengthen our capital structure.

“Completing the term loan transaction also allowed us to access the substantial amount of residual equity that sits within our asset-backed securitization (ABS) platform differently than how those non-recourse notes were treated under our revolving credit line. Because the ABS bonds we issue are short-term, equity builds quickly in these transactions. Unlocking this equity enhances our flexibility to fund the business in a unique and efficient manner… Planned enhancements to our ABS platform will further improve efficiency and deliver greater benefits to the company.”

Shares of Car-Mart (NASDAQ: CRMT) were trading Thursday at $24.63, up $1.26 or 5.39%. In the past 52 weeks, the stock has ranged between $17.78 and $62.72.