Car-Mart expects a loss and a decline in sales in the second quarter

Rogers-based America’s Car-Mart Inc. is expected to report a loss in the second quarter of fiscal 2025 as vehicle sales decline and prices become more stable. Analysts predicted that the loss would be significantly smaller than in the same period last year.

Before markets open on Thursday (Dec. 5), Car-Mart is expected to report a loss of 10 cents per share for the quarter ended Oct. 31, much better than a loss of $4.30 per share in the same A consensus from five analysts for the same period last year. Revenue is expected to decline 4.76% from $361.58 million to $344.37 million.

In an earnings preview, equity analysts John Hecht and Matthew Hurwit and equity partners Alexander Villalobos and Ibrahim Kargbo, all of Jefferies, expect second-quarter vehicle sales to fall 6% to about 14,300 vehicles compared to the same period last year. This is down from the 10% year-over-year decline reported in the first quarter of fiscal 2025.

Analysts expect the average vehicle sales price to fall about 1% in the second quarter compared to the same period last year, “as price changes have moderated in recent quarters and affordability issues become entrenched among (Car-Mart’s) core customer base.”

Loss ratios are expected to improve modestly “as coverage underwritten on the company’s legacy (lending system) continues to deplete,” analysts said. “The creditworthiness of loans made through the new lending system has been significantly improved.”

Gross margin is expected to improve to 36.4% in the second quarter from 34.3% in the year-ago period. Analysts attributed this to “stabilization in auto prices and sourcing improvements from the Cox Automotive partnership.” Our forecast gross margin is still well below the long-term historical average.”

Analysts at Jefferies maintained their “hold” rating on Car-Mart and a 12-month target of $45 per share.

Shares of Car-Mart (NASDAQ: CRMT) closed at $45.86 on Monday (December 2), down 30 cents. Over the past 52 weeks, the stock has fluctuated between $37.98 and $83.07.

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