Car-Mart sees Q3 loss of $76 million, revenue down 12%

Rogers-based America’s Car-Mart Inc. posted a $76.71 million loss and a double-digit revenue decline in the third quarter of fiscal 2026 in which it completed the closure of multiple dealerships as part of a cost-control strategy. The company’s share price fell to a 52-week low Thursday (March 12).

Before the markets opened Thursday, the buy here, pay here used car dealer reported a loss of $76.71 million, or a loss of $9.25 per share, in the quarter that ended Jan. 31 compared to earnings of $3.15 million, or 37 cents per share, in the same period last year. Revenue declined by 12% to $286.79 million from $325.72 million.

Car-Mart widely missed the estimated loss of 32 cents per share, based on a consensus of two analysts. It also missed revenue estimates of $329.26 million. This was Car-Mart’s third consecutive earnings miss. The company posted losses of $2.71 and 69 cents per share in the second and first quarters of 2026, respectively.

In an earnings report, equity analyst John Hecht and equity associates Alexander Villalobos-Morsink, Yuna Sohn, Jonathan Weitz, Aleksander Labosky and Nick Henderson, all of Jefferies, said the third-quarter miss on revenue and sales volumes and higher expenses, including a one-time $2.8 million charge due to dealership closures, contributed to the lower earnings per share.

“Capital structure transition and weather pressures continued to weigh on sales volumes and inventory levels,” the analysts said. “However, demand remained strong and credit is overall stable. (Car-Mart) improved operational flexibility by eliminating a line of credit and restrictive covenants, and completing (selling, general and administrative) reductions.”

Analysts said the company’s “results reflect continued affordability and weather-related headwinds; however, strong top-of-funnel demand and operational improvements point to underlying progress as (Car-Mart) navigates a tough environment. (Car-Mart) made meaningful progress in enhancing operational flexibility by eliminating a line of credit and restrictive income covenants, and by completing phases one and two of its (selling, general and administrative) initiatives and headcount reductions to streamline operations.” Car-Mart’s capital structure transformation, operational efficiency management, and affordability “will be key drivers in the coming quarters.”

In the earnings call, Doug Campbell, president and CEO of Car-Mart, said, “The story of this quarter was straightforward. Volume was constrained by our capital structure transition, not by demand. That matters because it tells us the path forward. We’re not rebuilding demand. We’re not re-underwriting the portfolio. We don’t have a broken business model. We’re closing the final gap on our financing platform so that the demand that we already have can be served by operational infrastructure that we’ve already built and can generate the volumes that we’re capable of.”

Campbell said low inventory, winter weather in late January, and 12% fewer dealerships affected sales. Vehicle sales fell by 22.1% to 10,275 in the third quarter from 13,198 in the same period last year. Its dealerships fell by 18 to 136 from 154 as it completed phases one and two of its dealership closures. The company plans to start to see savings from this in the fourth quarter of fiscal 2026.

“Just prior to the end of the second quarter, we closed a $300 million term loan, which eliminated our revolving line of credit and removed restrictive income statement covenants that had constrained our operational flexibility,” Campbell said in the earnings report. The company also completed a $161.3 million securities transition in December.

“These were important milestones in our capital structure transformation,” he said. “We are now focused on completing the final critical component by securing an additional financing source to sustain and supplement our operating cash flows, such as new asset-backed securitizations, warehouse facilities, and other potential sources of financing that would enable the company to execute on its current business plan. We are working diligently on this to restore our origination capacity which will allow us to fully capitalize on the positive demand we see in our markets.”

Campbell said the completion of phases one and two of its cost-control strategy will “streamline our operations and position our highest-performing locations to absorb additional volume as our capital structure work advances. We remain committed to serving our customers across our footprint with the same level of care and quality that defines our brand.

“While this is a challenging period, I am confident in our team’s ability to execute our plan.”

According to Car-Mart, customer accounts over 30 days past due rose to 4.4% in the third quarter from 3.7% in the same period last year primarily because winter weather affected customers’ ability to make timely payments. However, February delinquency metrics returned to normal as normal operations resumed and customers resumed regular payment patterns. Net charge-offs increased to 6.5% in the third quarter from 6.1% in the same period last year, and Car-Mart attributed this to decreased sales volumes and “portfolio seasoning from acquired lots.”

Through three quarters of fiscal 2026, Car-Mart has posted a loss of $104.94 million, or a loss of $12.67 per share, compared to earnings of $7.26 million, or 94 cents per share, in the same period last year. Revenue had declined by 4.1% to $978.67 million from $1.02 billion.

Following are third-quarter metrics compared to the same period last year.

• Average retail sales price increased by 7.1% to $20,634 from $19,275.
• Active loans declined by 2.6% to 100,998 from 103,663.
• Average loan term rose to 48.8 months from 48.3 months.
• Total gross profit increased to 35.8% from 35.7%.
• Net finance receivables decreased to $1.11 billion from $1.14 billion.

Shares of Car-Mart (NASDAQ: CRMT) were trading Thursday at $15.46, down $3.59 or 18.83%. In the past 52 weeks, the stock has ranged from $14.51 and $62.72. The low was hit on Thursday in heavy trading.