Americas Car-Mart Grows Gross Margin
America's Car-Mart(NASDAQ:CRMT) reported fiscal Q1 2026 results for the period ending July 31, 2025, with gross margin expanding by 160 basis points year over year to 36.6%, interest income rising 7.5% year over year, and unit volumes declining 5.7% year over year amid cost inflation and capital constraints. The quarter featured improvements in securitization funding, the rollout of a new loan origination system (LOS V2) now covering nearly 72% of receivables, and strong early adoption of digital collection tools. The following insights highlight strategic enhancements, risks from inventory financing limits, and portfolio credit mix shifts shaping the long-term thesis.
Total revenue (GAAP) declined 1.9% year over year to $341.3 million, primarily due to lower unit sales, while average selling price excluding ancillary products decreased by $144 year over year despite a $500 per-unit increase in procurement costs. Enhanced ancillary pricing and tighter underwriting contributed to the 160-basis-point improvement in gross margin, with additional support from lower loss frequency in higher-quality loans.
This margin expansion demonstrates the company's ability to maintain profitability despite inflationary pressures and declining unit volumes, underscoring operational flexibility in a challenging environment.
Source Fool.com
