BENTONVILLE - America's Car-Mart (NASDAQ:CRMT), a prominent automotive retailer in the United States, experienced a significant drop in its stock value today, with shares falling by 17.13% to $66.98 near end of day trading. The decline came as a shock to investors following the company's announcement of an unexpected fiscal second-quarter loss.
The Bentonville-based company reported a loss of $27.5 million, a stark contrast to the profit of $3.14 million it posted in the same period last year. This translated into a loss of $4.30 per share after the company increased its credit loss allowance to 26.04%. The decision to raise the allowance resulted in a substantial charge that reduced earnings by $3.40 per share. CEO Doug Campbell attributed this downturn to the economic strain on subprime borrowers, which has been exacerbated by ongoing inflation.
This financial setback comes as a surprise especially when considering that analyst projections had anticipated a profit of 79 cents per share. Despite a slight increase in revenue by 2.8% to $361.6 million, America's Car-Mart fell short of estimates and saw a downturn in retail unit sales. However, the company did report an upsurge in interest income contributions.
The latest developments indicate that America's Car-Mart is facing headwinds amid broader economic pressures affecting consumers, particularly those with weaker credit profiles.
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