Used-car seller America's Car-Mart Inc. posted profits below analysts' estimates, saying it faces continued pressure from its competition and saw soft sales during its third quarter.
During a conference call Friday, CEO and President Hank Henderson said revenue was up for the fiscal third quarter but unit sales were down. He said a few-week delay in income tax returns reaching the company's customers hurt sales.
Bentonville-based Car-Mart booked net income of $4.1 million, or 47 cents per share, for the quarter ended Jan. 31, compared with $7.5 million, or 82 cents a share, for the same period a year ago. The average estimate of five analysts predicted earnings of 50 cents per share for the quarter.
Revenue for the third quarter stood at $137.5 million compared with $131.5 million for the same quarter in fiscal 2015. Revenue for the third quarter beat the average of two analyst predictions of $132.4 million. Sales at stores open at least a year were flat.
Company shares closed down $1.25, or 4.9 percent, to $24.27 in trading Friday on the Nasdaq exchange. Shares have traded as low as $20.67 and as high as $57.55 over the past year. Car-Mart released its earnings results after markets closed Thursday and held the conference call Friday.
Henderson said the company opened two lots during the quarter but will not open any new stores in the near term. Instead, Car-Mart will focus on improving sales volume at some of its older lots. The buy-here, pay-here car company's key customers have little to no credit.
Henderson added that the company will look at cost-cutting measures to improve its bottom line.
He said an inspection by the Consumer Financial Protection Bureau, a federal agency, to assess the company's compliance was underway and he expected it to conclude next week. Henderson told analysts in November that the company was expecting the inspection.
Car-Mart also shifted 27-year company veteran Leon Walthall to the newly created post of field operations officer, where he will oversee regional vice presidents of operations. Jeff Williams, the company's chief financial officer, will take on additional duties as president effective March 1.
Williams said on the call that the fourth quarter should see increasing sales, adding that current inventory includes trucks and sport utility vehicles which are in high demand. He said the key moving forward will be finding the right balance between sales volume and risk.
Car-Mart sold 11,013 vehicles during the third quarter, down 4.2 percentfrom 11,495 for the third quarter last year.
Productivity was also down, with 25 vehicles sold per store per month for the quarter, compared with 28 for the year-earlier period.
Sale prices per vehicle increased $835 to $10,599, up 8.6 percent compared with the third quarter in 2015.
Car-Mart operates 147 locations in Alabama, Arkansas, Georgia, Indiana, Iowa, Kentucky, Mississippi, Missouri, Oklahoma, Tennessee and Texas.
Business on 02/20/2016