Car-Mart confronts challenges of uncertain time

Bentonville-based America's Car-Mart has created a task force to deal with the effects the coronavirus is having on its business and customers as its stock price slumped this week in response to the outbreak.

In an interview Friday, Chief Executive Officer Jeff Williams said the company's focus is to create a safe and healthy environment for its employees and those who visit a Car-Mart location while simultaneously being available to help its customers as they struggle with the current uncertainty.

"We're doing what we've done for 39 years -- work with our customers as individuals," Williams said.

The company put a statement about its actions dealing with the situation on its website and its Facebook page recently.

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The buy-here pay-here used car dealer serves consumers who often have little to no credit, a group that experts say is particularly vulnerable to the outbreak economically. The car dealer has more than 81,000 customers and more than 2,000 employees in 12 states.

According to the Pew Research Center, 24% of the civilian workforce in the U.S. does not have paid sick leave. Citing Bureau of Labor Statistics data, Pew Research noted the percentage of those with paid sick leave goes down based on how much a worker earns. Pew said 92% of top earners, or those who make $32.21 an hour or more, have paid sick leave, whereas just 31% of those in the lowest quarter, who earn $10.80 an hour or less, have paid sick days.

Car-Mart's stock was trading close to $130 a share in late February and has nosedived, as has most of the market, on coronavirus fears. Shares closed Friday at $40.43, down $3.43 or nearly 8%, in trading on the Nasdaq. Over the past year, shares have traded as low as $35.18 and as high as $129.70. Broader markets were also down for the day, with the S&P 500 down 4.3% and the Dow Jones Industrial Average down 4.55%.

Williams said the company has "ramped up" its cleaning and sanitizing efforts in its stores, corporate offices and vehicles. Those steps include frequently disinfecting high-touch surfaces such as door handles, keypads and vehicle door handles and steering wheels. Employees are using disposable gloves, disinfectant sprays and cleaning solutions.

Williams added that if customers are unable or too concerned to come to a company store to make a payment, other options are available, including online payments, paying at a Walmart store or paying by phone. He stressed that if customers are worried or have concerns about their ability to make a payment, they should contact the company to work out a solution.

"We're focusing on people first," he said.

The company has also told its employees to stay home if they have a cold or flu-like symptoms or if they're diagnosed with coronavirus.

In late February, Car-Mart reported earnings for its third quarter that beat analysts' profit estimates for the eighth quarter in a row. The coronavirus impact comes after at least two years of solid earnings and a recent acquisition.

Car-Mart reported earnings of $12.7 million, or $1.83 per share, for the quarter ending Jan. 31, compared with $10.9 million, or $1.55, for the same period a year ago. According to Yahoo Finance, an average earnings estimate of four analysts stood at $1.77 for the quarter.

Revenue for the third quarter was $187 million, up 16% from $161 million in the same period a year ago. The average of estimates by four analysts forecast revenue at $171.47 million.

Also in February, Car-Mart was added to the S&P Small Cap 600 Index, which tracks a broad variety of companies with a market cap of $450 million to $2.1 billion. It is the benchmark index for small-cap stocks published by Standard and Poor's.

In December, Car-Mart said it was buying an Illinois car dealer, giving the company its first lots in that state. Taylor Motor Co. and Auto Credit of Southern Illinois has dealerships in Marion, Benton and Mount Vernon in Illinois.

Car-Mart already operates 145 dealerships in Alabama, Arkansas, Georgia, Indiana, Iowa, Kentucky, Mississippi, Missouri, Oklahoma, Tennessee and Texas.

Williams said that in many ways Car-Mart acts as a small-town lender and its lots are deeply connected to the communities they serve.

"Folks count on us in times of stress," he said.

Business on 03/21/2020

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