AutoNation Tops Estimates Overcoming Cold Start to YearTim Higgins
AutoNation Inc., the largest U.S. retailer of new cars and trucks, reported quarterly profit that topped estimates even as horrible winter weather kept many car buyers home for much of January and February.
First-quarter net income increased 15 percent to $95.1 million, or 78 cents a share, from $83 million, or 67 cents, a year earlier, the Fort Lauderdale, Florida-based company said today in a statement. Adjusted profit per share was 75 cents, exceeding the 73-cent average estimate of 10 analysts surveyed by Bloomberg. Revenue rose 6.5 percent to $4.36 billion.
“This was an epic winter and the first 10 weeks of the year were extremely difficult,” Chief Executive Officer Mike Jackson said today in a telephone interview. “I’ve never seen such a contrast between the first 10 weeks of a year and then the next two weeks. The last two weeks of March were absolutely spectacular and the consumer came out of hibernation and streamed back into the showroom.”
Blizzard conditions and frigid temperatures kept car buyers away in January and February, which caused industrywide auto sales to fall 1.4 percent, according to researcher Autodata Corp. But a stronger than expect March with deliveries rising 5.7 percent means that sales through the first three months of the year are now up 1.4 percent. AutoNation’s retail sales rose 5 percent while the industry advanced 4 percent, the company said. The industry rebounded sharply in the final 10 days of March.
That level of intensity has continued into April, Jackson said.
“It wasn’t just a short-term spurt, which gives me the confidence to say now it’s going to be a very good spring market,” he said. “We’re probably going to recapture a lot of the lost business from the first quarter.”
The company’s shares rose 2.2 percent to $54.99 at the close in New York. The stock has added 11 percent this year.
AutoNation also said it wants to reduce dealings with third-party companies such as TrueCar Inc. and Cars.com that sell leads of interested car and truck buyers. It’s part of an effort to control the shopping experience, the company said.
Separately, Jackson said today that Tesla Motors Inc. should be given the ability to bypass dealerships and sell its electric cars directly to consumers.
Tesla, restricted by laws in New Jersey, Texas and elsewhere that forbid auto manufacturers from retail sales, isn’t a threat to AutoNation, Jackson said in an interview on Bloomberg Television.