A lack of income-tax refund money hindered America’s Car-Mart Inc.’s third-quarter sales growth, the company said Friday when it released earnings for the period that ended Jan. 31.
The Bentonville auto lender and buy here/pay here business said that because the Internal Revenue Service eliminated the confirmation of “lien-free” returns for tax-preparation businesses such as Jackson Hewitt, a two-week payment lag had been created.
It “pushed back the timing of when customers will have cash in hand,” Car-Mart President Hank Henderson said in a conference call Friday.
Car-Mart in the third quarter has typically benefited from the annual “zero down” tax-refund program, in which certain customers qualify to forgo the average 4.8 percent down payment. Instead, down payments are made weeks later, typically with an income-tax-refund check.
“The quarter looked like a fine quarter in spite of headwinds from income-tax-check refunds,” said John Hecht, an equityanalyst with JMP Securities in San Francisco. The investment bank performs financial services for Car-Mart.
Car-Mart posted a 10 percent increase in revenue at $92.57 million for the period that ended Jan. 31, compared with $83.81 million reported in the same period a year ago.
Net income fell 9 percent to $5.69 million, or 52 cents a share, for the quarter that ended Jan. 31, compared with $6.28 million, or 53 cents a share, for the same year-ago quarter. The company said the repayment of debt shaved 3 cents off earnings.
Car-Mart added that 205,884 shares of common stock also were purchased in the third quarter.
The business missed the average earnings estimate of59 cents per share from five analysts surveyed by Thomson Reuters.
Buy here/pay here customers tend to have poorcredit histories or none at all, and make weekly, biweekly or monthly payments at the lot from which the car was sold.
Henderson said a recent, voter-approved change to the state’s constitutional amendment that allows certain retailers to charge interest rates as high as 17 percent had been appealed to the Arkansas Supreme Court. Henderson said he felt confident the change would be upheld.
Car-Mart lobbied for a permanent change to the state’s usury law through an interest group called the Committee for Arkansas’ Future. Voters approved the constitutional amendment in the November election.
Car-Mart officials said they have not charged the maximum 17 percent allowable rate, instead opting for 12 percent.
During the third quarter, Car-Mart operated 102 lotsthroughout Alabama, Arkansas, Indiana, Kentucky, Missouri, Oklahoma, Tennessee and Texas.
Car-Mart sold 8,266 cars in the period that ended Jan. 31, a figure that represented a 5.6 percent increase compared with 7,824 cars sold in the third quarter of 2010.
The average retail price in the third quarter increased 2.1 percent to $9,463 a vehicle, while same-store revenue growth fell to 5.3 percent from 11 percent in the year-ago period. Same-store sales represent sales at lots in operation over both corresponding quarters, company officials have said.
Shares of America’s Car-Mart Inc. stock fell 7 cents, or 0.29 percent, to $24.24 per share Friday on the Nasdaq. Its shares have traded as high as $30.10 and as low as $20.40 per share over the past year.
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Business, Pages 23 on 02/19/2011