AutoNation’s new vehicle sales tank 10.7% in Q1 due to the Coronavirus restrictions

AutoNation Inc. (NYSE: AN) released its quarterly performance results on Monday that topped analysts’ estimates for earnings and revenue. As states continue to ease Coronavirus restrictions, CEO Mike Jackson of AutoNation said, demand for cars and trucks is starting to recover in the United States.

Following the release of the financial results, AutoNation was reported around 5.7% up in premarket trading on Monday.

AutoNation’s Q1 financial results versus analysts’ estimates

According to Refinitiv, analysts had expected the company to print £3.71 billion in revenue in the first quarter. Their estimate for earnings per share (EPS) was capped at 55.5 pence per share. In its report on Monday, AutoNation beat both estimates posting a higher £3.81 billion in revenue in Q1 and 74 pence of adjusted earnings per share.

On a year over year basis, however, the leading U.S auto retailing chain saw a 6% decline in quarterly revenue. The company also reported an impairment charge (non-cash) of £2.83 per share in the first quarter.

At 56,739 vehicles, AutoNation’s new vehicle sales came in 10.7% down in Q1. The company also said that its used vehicle volumes dropped to 56,149 units in the first quarter that translates to an 8.2% decline.  

In terms of same-store sales, AutoNation reported a 50% decline in the first 10 days of May as compared to a 20% drop that it posted in the last 10 days of April. CEO Jackson, however, expressed optimism that demand and consequently sales will surge sharply as the government eases Coronavirus restrictions.

AutoNation’s online orders surge 45% in Q1

Amidst the virus outbreak that has so far infected more than 1.3 million people in the United States and caused over 81,000 deaths, the company saw a significant increase in online orders with sales in its e-commerce segment having risen 45% in the recent quarter.

In an attempt to shore up finances, the company placed roughly 7,000 of its workers on unpaid leaves, deferred £40.5 million worth of quarterly expenditures, reduces advertising expenses in the second quarter. Owing to the signs of recovery, however, it recently called around 1,000 of its employees back to work. With customers resorting to online orders, however, it remains unclear if the auto retailing company plans on recovering the rest of its workforce or not.

The £2.89 billion company is currently around 20% down year to date in the stock market and has a price to earnings ratio of 8.0.