America’s Car-Mart Inc. of Rogers (Nasdaq: CRMT) on Wednesday reported third-quarter income for fiscal 2023 of $1.5 million, a steep drop of more than 92% from $19.1 million in the same quarter of 2022.
The auto retailer reported revenue of $326.5 million, up 13.6% from $287.3 million. But same store revenue growth slowed to 12.3%, half the rate that the company saw a year ago.
Earnings per share came to 23 cents, down from $2.82.
The results did not meet Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 49 cents per share.
Shares of the company were down 10% late Wednesday morning.
It was the third consecutive quarter with a sharp decrease in profits for the company. For the first nine months of fiscal 2023, the company reported income of $18.3 million, down more than 73% from $68.6 million in the first three quarters of fiscal 2022.
In a news release, the company said it missed out on about $3.5 million in expected profits in the third quarter due to winter storms, which affected sales volume and collections, and higher than expected credit losses. Car-Mart’s provision for credit losses as a percentage of sales rose to 31% in the period, compared to 25% a year ago.
“Short-term operating conditions are difficult; however, we are making significant progress on the things we control and prudently investing for the long-term,” America’s Car-Mart CEO Jeff Williams said. “Over the next three to five years, we expect to generate returns on equity at historical levels by increasing volume productivity, improving gross margins as a function of procurement initiatives, by leveraging [operating expenses], and through acquisitions of well-operated dealerships.”
Car-Mart said it sold 14,508 vehicles during the third quarter, up from 14,126 vehicles in the same quarter a year ago. The average sales price was $18,091, up from $16,750 a year ago.
Prices have leveled off in recent months, which Car-Mart believes has helped bring some buyers off the sidelines. Its active customer base increased 6% from a year ago, driven by market share gains in the used vehicle market.
The company said it’s making progress on several “high-return” projects, including a loan origination system, enterprise resource planning software, the centralization of certain activities, and improvements to its wholesale and reconditioning processes.
It expects to spend about $28 million this year on capital expenditures, of which $20 million is for new locations, relocations and finalizing a rebranding project. About $6 million has been allocated for information technology investments.
During the quarter, Car-Mart closed on dealership acquisitions in Knoxville, Tennessee and in Taylor, Texas, bringing the company’s total locations to 157.
The Associated Press contributed information to this report.