America’s Car-Mart Inc. of Rogers (Nasdaq: CRMT) posted a second straight quarter in the red as the buy-here, pay-here auto dealer faced what CEO Doug Campbell called a “challenging macro environment.”
The company on Friday reported a net loss of $8.5 million for the fiscal quarter ending Jan. 31, compared to a $1.5 million profit in the same period a year ago. Per share, the loss came to $1.34.
Revenue in the period was $299.6 million, down 7.9% from $325.3 million a year ago. The company attributed the annual decline primarily to falling sales, as average units sold per store dropped from 31.2 to 25.2 in the quarter.
“While sales volumes fell short of our expectations during the quarter, they are not reflective of the efforts put forth by the team,” Campbell said in a statement. “I am encouraged by our continued progress during the quarter in gross profit, credit losses, and initial results generated by our loan origination system.”
Market challenges have pressured Car-Mart’s bottom line for the past two years. Before it posted back-to-back quarters in the red, it reported six consecutive quarters of falling profits.
Campbell said Car-Mart has implemented several strategies to boost sales in its fiscal fourth quarter. In addition to being “agile with our cost structure and investments,” the company has entered into a strategic partnership with auto services and technology provider Cox Automotive of Atlanta. Under the arrangement, Car-Mart aims to drive better outcomes in vehicle acquisition, reconditioning, transportation and remarketing.
Additionally, the company said its new loan origination system is helping to attract higher down-payments, shorter terms and a stronger consumer profile.
The company reported lower delinquencies in the third quarter, allowing it to reduce its provision for credit losses as a percentage of finance receivables. The adjustment amounted to $3.9 million. Falling inflation was also a key factor in the adjustment.
During the quarter, Car-Mart completed the purchase of Central Auto Sales of Hot Springs. Campbell said the transaction is consistent with Car-Mart’s strategy to grow its business through acquisitions. The deal is also expected to expand Car-Mart’s vehicle reconditioning and warranty servicing capabilities.
Car-Mart shares jumped nearly 14% Friday morning to $73.94 before retreating below $69.
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