Group 1 says Q1 earnings may fall below expectations

Article by Anita Panait, on February 24, 2014

Group 1 Automotive Inc. has warned that its earnings in the first quarter of 2014 may fail to meet expectations as snowy and icy weather during the period led to "significant" interruptions at 105 of its 118 stores in the United States. The dealership group said in a statement that the severe weather disrupted store business by one to three days per storm, which had caused dangerous driving conditions and road closures that either led to store closures or a significant drop in store traffic.

For the first quarter of 2014, Group 1 said that the storms' impact equates to 391 lost store selling days, which is around a 9-percent decline in available selling days through Feb. 16, 2014. In January, the group posted a 3-percent drop in US light-vehicle sales, no thanks to harsh winter weather.

"The severity and extremely widespread nature of the storms this year is far beyond our normal experience," Group 1 chief executive Earl Hesterberg said in a statement.

"We would ultimately expect new and used sales not to be lost, only deferred, but it is unlikely that all of the sales will be recovered in the first quarter."

Hesterberg noted that lost service days are difficult to recover since their service capacity is “somewhat finite." He added that many of the affected stores are spending "above normal amounts" on snow removal and lot cleaning.

Affected stores include those from Houston to New Orleans to Atlanta, which are typically safe from winter weather, Hesterberg noted. Group 1 also saw its dealerships in Boston, New Jersey, New York, New Hampshire, Oklahoma and Kansas affected by the weather.

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