America’s Car-Mart (NASDAQ:CRMT) shares fell 12.6% Thursday after the used car retailer reported a first-quarter loss wider than expected and revenue below analyst forecasts, despite improvements in its credit portfolio quality.
The company posted a loss of $0.69 per share for its fiscal first quarter, sharply below the $0.83 per share profit analysts had anticipated. Revenue dropped 1.9% year-over-year to $341.3 million, missing the consensus estimate of $359.21 million.
Sales volumes fell 5.7% to 13,568 units, though interest income rose 7.5%, and the company’s gross margin improved by 160 basis points to 36.6%.
“Our strategic investments are delivering measurable results,” said President and CEO Doug Campbell. “From a consumer demand standpoint, application volume was up over 10%. We deployed and implemented LOS V2 in the beginning of the quarter, which has a more advanced underwriting scorecard, and the enablement of risk-based pricing embedded within the tool.”
The company highlighted improvements in credit quality, with the allowance for credit losses improving to 23.35% compared to 25.00% in the same quarter last year. However, net charge-offs as a percentage of average finance receivables rose slightly to 6.6% from 6.4% a year earlier.
America’s Car-Mart noted that rising wholesale prices during the quarter limited inventory availability, constraining its ability to fully meet customer demand.
The company is focusing on attracting higher-quality customers, with applications from its top three customer credit rankings increasing 15% during the quarter compared with the previous fiscal year average.
Despite the quarterly loss, the company completed a $172 million asset-backed securitization in August with improved financing terms, which it used to pay down its revolving credit line.
America’s Car Mart stock price
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