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Investing.com - America’s Car-Mart (NASDAQ:CRMT) shares plunged 12.6% on Thursday after the used car retailer reported a wider-than-expected first-quarter loss and revenue that fell short of analyst expectations, despite improvements in its credit portfolio quality.
The company posted a loss of $0.69 per share for its fiscal first quarter, significantly worse than the $0.83 per share profit analysts had expected. Revenue declined 1.9% year-over-year to $341.3 million, missing the consensus estimate of $359.21 million.
The disappointing results came as sales volumes decreased 5.7% to 13,568 units, though the company saw a 7.5% increase in interest income and improved its gross margin 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 its 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 increased slightly to 6.6% from 6.4% a year earlier.
America’s Car-Mart noted that wholesale price increases during the quarter limited inventory capacity, constraining its ability to meet customer demand.
The company is focusing on attracting higher-quality customers, with applications from its top three customer credit rankings growing by 15% during the quarter compared to 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.
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