Car-Mart to close 42 dealerships, lay off staff - Talk Business & Politics
Rogers-based America’s Car-Mart Inc. will close 42 dealerships over the next week as market challenges impact its establishment of a “non-recourse revolving warehouse credit facility,” according to a Tuesday (April 7) filing with the U.S. Securities and Exchange Commission.
The company did not identify which stores would close.
By April 14, the company is expected to have 94 dealerships across 12 states, down from 136. Car-Mart CEO Doug Campbell wrote a letter Tuesday to shareholders, employees and customers about the closures and challenges that the company is facing. Campbell highlighted the replacement of the company’s “inefficient lending facility” with a $300 million term loan, its ninth securities transaction, and that the new loan operating system is “producing materially better credit outcomes.”
However, the company’s “non-recourse revolving warehouse credit facility that would restore our origination capacity has taken longer than anticipated,” he said. “This is not a singular Car-Mart decision — it requires alignment among multiple counterparties.”
Since the company released its third-quarter earnings on March 12, “it has become increasingly clear that the path to resolution is less certain and may require an extended deadline, primarily driven by broader market conditions and factors largely outside our control,” Campbell said. “Management continues to work feverishly to put a warehouse facility in place, but considering the extended timeline and environment, we face a binary constraint on capital deployment that limits our ability to serve customer demand.”
In the company’s third quarter, which ended Jan. 31, the buy here, pay here used car dealer reported a loss of $76.71 million, or a loss of $9.25 per share compared to earnings of $3.15 million, or 37 cents per share, in the same period last year. Revenue declined by 12% to $286.79 million from $325.72 million.
In the third quarter, Car-Mart had completed the first two phases of a cost-control strategy, closing 18 dealerships. Its dealerships fell from 154 to 136 after those closures. The company had planned to start seeing savings from this in the fourth quarter of fiscal 2026, which started Feb. 1.
“To be clear, this is a near-term liquidity challenge,” Campbell said on Tuesday. “Our approximately $1.5 billion finance receivables portfolio represents an asset base that management believes substantially exceeds our total recourse obligations, and we are taking these actions to protect that value for stakeholders.”
Because of this, the company will close 42 dealerships and reduce “the requisite support staff,” he said. “These locations make up about 31% of our total store count, but they only serve 18% of our customers… We did not make this decision lightly and are taking these steps because they are the right thing to do for the long-term health of this business.”
The company expects a non-cash charge of about $14 million related to assets at the closing locations. The company also expects cash charges related to employee layoffs and lease exit costs, which the company was unable to estimate.
Campbell said the company will “continue to evaluate our entire store portfolio and will take additional action where needed.”
Affected customers’ accounts will be transferred to a nearby dealership or to the company’s central team. The company’s digital payment platform, which handles about 65% of its payments remotely, will allow customers to continue making payments through it.
“The buy-here-pay-here model is durable, and the credit quality improvements we have built over the past two years are real,” Campbell said. “The actions we are taking today are designed to protect what we have built and position Car-Mart for the future.”
Shares of Car-Mart (NASDAQ: CRMT) closed Tuesday at $12.46, up 15 cents or 1.22%. In the past 52 weeks, the stock has ranged between $11.04 and $62.72.
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