Why Used Car Dealership Company America's Car-Mart Shares Are Diving Today

America's Car-Mart, Inc. CRMT shares are trading lower after the company reported Q2 financial results.

The company reported second-quarter FY24 sales growth of 2.8% year-on-year to $361.6 million, missing the analyst consensus of $363.76 million.

The increase in revenue resulted from a 23% increase in interest income and a 5.6% increase in average retail sales price. Approximately 40% of this increase was related to the vehicle selling price.

Same-store revenue growth was 2.7% versus 22.2% reported a year ago. Retail unit sales for the quarter were 15,162 units vs. 15,885 units, down 4.6% from the prior year quarter. 

The gross profit per unit was $6,835 compared to $6,132 for the prior year's second quarter. The improvement in gross profit over the prior year's quarter resulted from a continued focus on inventory efficiencies in procurement, remarketing, and repairs. Gross margin increased to 34.3% from 32.1%. 

The company increased the allowance for credit loss from 23.91% to 26.04% sequentially, resulting in a $28 million charge to the provision (basic earnings per share loss of $3.40 after tax). 

Quarterly EPS loss of $(4.30) missed the analyst consensus of $0.79. The customer count increased 6% to 104,596 in the quarter under review.

"The persistent inflationary environment impacted existing customers, which was evident in our credit losses. This required an increase in the allowance for credit losses which subsequently impacted the bottom line for the quarter. We believe these headwinds regarding credit loss are shorter-term in nature," said Doug Campbell, President and CEO, America's Cart-Mart.

Price Action: CRMT shares are trading lower by 17.89% at $66.37 on the last check Tuesday.

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