(Reuters) - Lithia Motors Inc (LAD.N) plans to return to a robust pace of growth following its four-year hiatus, Chief Executive Scott Smith said on Monday, reporting quarterly profit slightly below analysts’ estimates.
FILE PHOTO: A woman stops to talk with a car salesman at a Lithia Motors dealership in Seattle, Washington, U.S., May 4, 2017. REUTERS/Chris Helgren/File Photo
Lithia, which has lost momentum over the past year, reported a higher-than-expected 4.4 percent rise in quarterly revenue and helped its shares rise 3.5 percent in morning trading.
Unlike its big-box rivals like General Motors Co (GM.N) and Ford Motor Co (F.N), Lithia focuses on localized customer shopping, which helps bring customers to stores rather than to the mall.
The retailer also develops a long-term strategy rather than relying on hit items like SUV and pickup trucks that become more popular from one year to the next.
“Our strategy is more of a 20-20 strategy – that is 20 percent growth in total sales, 20 percent growth in revenue per store and 20 percent growth in net income,” Smith said.
The company said in November it would return to more robust sales growth, forecasting 2019 revenue of $9.7 billion to $9.9 billion, a jump of 9.5 percent to 12.2 percent from 2018.
Same-store vehicle sales, which account for about one-third of revenue, rose 3.3 percent in the quarter ended Jan. 31, a faster pace than the 2.4 percent growth in the third quarter.
Net income rose 7.2 percent to $38.9 million in the fourth quarter, helped by strong demand for pickup trucks, off-road vehicles and luxury cars.
However, the company’s shares declined 5.4 percent on January 19 after the company, during a conference call, said it was unlikely that its two largest contracts in the truck and commercial truck markets would be renewed before 2021.
Shares have since risen about 6 percent to trade at $103.55 on Monday.
New orders for trucks and off-road vehicles fell 5.3 percent.
Sales of sport utility vehicles, which account for about one-third of total sales, rose 1.3 percent.
Net new vehicle unit sales fell 2.8 percent to 13,236.
Total revenue rose to $3.32 billion from $3.09 billion a year earlier.
Analysts on average had expected revenue of $3.30 billion, according to IBES data from Refinitiv.