CarParts.com Inc (PRTS) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
CarParts.com Inc (NASDAQ:PRTS) has scaled and optimized its vertically integrated supply chain, leading to an attractive product margin in the mid-50s percent.
The company has invested in a fitment-based proprietary catalog, which includes 83,000 private label SKUs and 1.5 million premium branded SKUs.
CarParts.com Inc (NASDAQ:PRTS) is the second largest importer of aftermarket collision parts in the US and the world's number one seller on eBay Motors.
The company has replatformed its website with a mobile-first, fit-specific user experience, generating 100 million annual visits and serving 10 million customers.
CarParts.com Inc (NASDAQ:PRTS) has launched a highly profitable wholesale business with same and next-day last mile delivery in key markets, achieving a contribution margin up to three times higher than e-commerce.
CarParts.com Inc (NASDAQ:PRTS) reported a revenue decline of 11% in the first quarter, primarily due to inclement weather and softer consumer demand.
The company experienced a gross profit margin decline to 32.1%, down from 32.4% in the prior year period, mainly due to increased outbound transportation costs.
CarParts.com Inc (NASDAQ:PRTS) reported a GAAP net loss of $15.3 million for the quarter, compared to a loss of $6.5 million in the prior year period.
The adjusted EBITDA loss for the first quarter was $6.2 million, down from an adjusted EBITDA of $1.1 million in the prior year period, due to soft consumer demand and increased competitive pressure in performance marketing.
The company faced significant pressure on profitability due to gross margin compression and increased advertising spend.
Warning! GuruFocus has detected 4 Warning Signs with PRTS.
Q: Can you provide more details on how tariffs are impacting your business and what measures you are taking to mitigate these effects? A: David Meniane, CEO, explained that less than one quarter of their private label products are imported from China, with two-thirds from Taiwan. They are taking steps such as prebuying inventory, negotiating cost concessions, adjusting pricing dynamically, and optimizing supply chain and operating expenses to mitigate tariff impacts.
Q: How did the first quarter performance compare to your expectations, and what are your plans to address the challenges faced? A: David Meniane noted that the first quarter results were disappointing, particularly in terms of profitability due to soft consumer demand and increased advertising costs. They are focusing on upgrading their customer base, diversifying acquisition mix, and enhancing their mobile app and wholesale opportunities to improve profitability.
Q: What progress have you made in your strategic initiatives, and how are they contributing to your business? A: David Meniane highlighted several initiatives, including optimizing their supply chain, expanding their proprietary catalog, and enhancing their e-commerce platform. These efforts have led to improved product margins, increased mobile app usage, and growth in their wholesale business.
Q: Can you elaborate on the financial results for the first quarter and the factors affecting them? A: Ryan Lockwood, CFO, reported revenues of $147.4 million, down 11% from the previous year, primarily due to inclement weather and softer demand. Gross profit was $47.3 million, with a slight decline in gross margin due to increased transportation costs. The net loss was $15.3 million, driven by lower margins and higher marketing costs.
Q: What are your priorities for 2025, and how do you plan to achieve long-term growth? A: David Meniane outlined priorities such as expanding product offerings, monetizing customer visits with high-margin fee income, scaling B2B offerings, growing the mobile app business, and maintaining a strong balance sheet. These efforts aim to capture opportunities in the $400 billion auto parts market and achieve sustainable growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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