CRMT Q3 Deep Dive: Cost Reductions, Underwriting Upgrades, and Capital Restructuring Shape Outlook

Used-car retailer America’s Car-Mart (NASDAQ:CRMT) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 1.2% year on year to $350.2 million. Its non-GAAP loss of $0.79 per share was significantly below analysts’ consensus estimates.

Is now the time to buy CRMT? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

America’s Car-Mart saw a notable market rebound after its third quarter results, despite reporting a larger-than-expected non-GAAP loss. Management attributed the positive market response to the early progress of a multi-phase cost reduction initiative, new underwriting technology, and improved operational efficiency. CEO Douglas Campbell emphasized the significance of recently completed store consolidations and headcount reductions, which are expected to generate meaningful ongoing savings. The company also highlighted resilience in consumer demand for used vehicles and the value of its upgraded digital payment platform. Campbell noted, “We are prioritizing value over volume to build a portfolio that delivers stronger returns.”

Looking ahead, America’s Car-Mart leadership is focused on executing the next phase of its cost optimization plan, rebuilding inventory to capture strong demand, and completing further capital structure enhancements. Management expects the rollout of its new Salesforce-based collection system and continued adoption of digital payment channels to improve collections and reduce costs. Campbell outlined that the company’s top priorities are achieving positive GAAP earnings, leveraging operational flexibility to serve a wider credit spectrum, and capitalizing on its strengthened capital base. He stated, “As these initiatives progress, we expect to return to positive GAAP earnings and demonstrate the earnings power of this improved model.”

Key Insights from Management’s Remarks

Management explained that the quarter’s performance was shaped by deliberate investments in technology and operational restructuring, with cost-saving actions offsetting macroeconomic challenges and industry-wide pressures.

• Cost optimization underway: The company began a multiphase plan to reduce SG&A (selling, general, and administrative expenses), including consolidating five underperforming stores and eliminating about 10% of total headcount. These steps are projected to save over $20 million annually once both phases are complete.
• Capital structure transformation: America’s Car-Mart secured a $300 million term loan, replacing legacy credit facilities and enabling greater flexibility in its operational decisions. CFO Jonathan Collins described this as a fundamental shift that removes previous constraints and supports growth initiatives.
• Underwriting technology upgrades: The launch of LOS V2, a new loan origination system, has shifted the customer mix toward higher-quality borrowers. Management reported a 12% improvement in high-quality bookings year over year, which they believe will enhance credit performance and lower loss frequency.
• Digital payments and collections: The updated Pay Your Way platform, supporting options like Apple Pay and PayPal, has driven increased adoption of auto-pay and reduced in-store payment volume. The rollout of a Salesforce-based collection CRM is expected to further boost efficiency and payment consistency.
• Resilient demand amid supply pressure: Despite inventory challenges, credit application volume grew nearly 15% from the prior year. Management attributed this to steady demand for affordable transportation and noted that operational changes have enabled sales volumes to remain nearly flat even as inventory declined.

Drivers of Future Performance

Management expects future performance to be driven by further execution on cost reductions, inventory rebuilding, and continued technology adoption—while monitoring macroeconomic and industry risks.

• Next phase of cost reductions: The company is finalizing the second wave of store consolidations and SG&A cuts, aiming to realize the full $31 million in targeted annualized savings. These actions are intended to restore profitability and support margin recovery.
• Inventory normalization and demand capture: With improved capital flexibility, management plans to rebuild inventory in the next quarter to meet strong consumer demand, especially ahead of the high-activity tax refund season. Achieving this is seen as critical for sales growth and operational leverage.
• Credit quality and macro headwinds: While leading indicators like delinquencies have improved, management remains alert to ongoing macro pressures and evolving consumer affordability. The credit allowance will be maintained at a historically prudent range until sustained stabilization is observed.

Catalysts in Upcoming Quarters

Going forward, our team will watch for (1) the pace and effectiveness of further SG&A and store consolidation actions, (2) measurable improvements from the new digital collections and payment infrastructure, and (3) successful rebuilding of vehicle inventory to support higher sales during tax refund season. Additionally, we will monitor credit quality trends and any changes in the competitive landscape, as these will determine if Car-Mart’s operational changes yield sustainable margin recovery and growth.

America's Car-Mart currently trades at $25.70, up from $23.32 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

Now Could Be The Perfect Time To Invest In These Stocks

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.