AutoCanada Q2 net rose 5.4%, but the decline in same-store results

Posted on 8/8/2015 10:29:14 AM

AutoCanada Inc., a retailer of car traded, said net in the second quarter rose 5.4 percent to $ 13.5 million Canadian (US $ 10.9 million), and earnings of newly dealers acquired offset economic winds in wildfire in western Canada.

Revenues in Edmonton, Alberta, the company rose 76 percent to C $ 816.9 million, while gross profit rose 67 percent to C $ 129.7 million.

On a same-store basis, however, revenue slipped 2.8 percent to C $ 371.4 million and gross profit fell 11 percent to C $ 57.4 million.

"Although the second quarter and the western Canadian economy in particular provided major challenges, as evidenced by the decrease in our gross margin percentages," said CEO Tom Orysiuk in a statement, "we were pleased to see that our efforts "led to a greater store mismo- gross margins, both in the vehicle used and parts and service operations.


He added that the company is "working closely based on a dealer by dealer to make appropriate to maximize all opportunities to reduce volume, gross and expenditure adjustments sensitive market."

Total new vehicle sales rose 42 percent to 12,296 units, led by a 66 percent increase in retail sales, while retail sales of used vehicles head rotor 149701-0520 were up 97 percent to 5,443.

But on a same store basis, sales of new vehicles fell 7.3 percent to 6,071 and retail sales of used vehicles were down 0.4 percent for 2604.

Net income was also affected by a rise in the general rate of company tax Alberta to 12 percent from 10 percent, effective July 1.

The company said that while credit remains widely available and employment rates "have diminished, but remain at acceptable levels throughout Alberta," consumer confidence continues to be hit by lower prices of oil and gas in the region.

Higher inventories

In addition, inventories of new vehicles AutoCanada increased in the first quarter due to sales and orders placed by the end of 2014. That led to what he called "more competition" to clear inventories in the second quarter of sliding, and reduced gross margins on top of larger floor plan expenses.

AutoCanada had previously indicated it would buy two dealerships in June 2015 and another five fifty-six before May 2016, to add to its current 49 dealerships with 57 franchises. But he not closed in the two before June 2015 "because some due diligence and related matters", said CEO Patrick Priestner in a statement.

However, he added, "We are very confident that we will achieve our guide purchase six to eight stores in May 2016."

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