Update: America's Car-Mart 4Q Profit Drops 28 Percent

by Marty Cook  on Wednesday, May. 28, 2014 1:04 pm  

William H. "Hank" Henderson, America's Car-Mart's president and CEO.

America's Car-Mart Inc. of Bentonville on Tuesday reported fourth-quarter net income of $6.8 million, down 28 percent from $8.8 million it reported in the same quarter last year.

The company said diluted earnings per share were 68 cents, down from 92 cents last year.

Earnings came on quarterly revenue of $123 million, down more than 2 percent from $126 million in  the same quarter last year.

"Net charge-offs were higher in the fourth quarter than we have typically seen, and we have tried to take the necessary steps to improve in this most important area of the business," CEO William H. "Hank" Henderson said in a news release. "The bottom line is that too many of our customers did not successfully fulfill the requirements of their contracts."

Jeff Williams, the company’s CFO, said Car-Mart was concentrating on selling cars with affordable payment plans, "rational terms" and customer service that led to repeat business. Car-Mart officials have said in the past year, and repeated during a conference call Wednesday, that the easy-money climate has hurt their business as competitors offered terms Car-Mart didn’t want to risk offering.

"We have not seen a significant decrease in intense competitive pressure on the funding side," Williams said. "We’re not going to predict when conditions are going to improve. We are focusing on the things that we can control."

For the full year, net income was $21.1 million, down 34 percent from $32.1 million the year before. Diluted earnings per share were $2.25, down from $3.36.

"We just finished what could be considered the most challenging year in our history," Williams said. "We know we can do better."

Earnings for the year came on revenue of $489.2 million, up 5 percent from $464.7 million the previous year.

Henderson said Car-Mart opened 10 new locations this past year but will scale back plans for new opening this year. Henderson said the company usually aims at open new stores at a rate of 10 percent of existing stores but will probably only open eight this year to add to their existing 134.

"We plan on being even more selective than typical," Henderson said.



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