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US Auto Parts Reports Net Loss of $3.6 Million in 1st Quarter

The company continues to take a hit from its dispute with U.S. Customs and Border Protection.

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Internet retailer U.S. Auto Parts reported net sales of $74.7 million for the first quarter, down from $78.4 million in first-quarter 2018.

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The company reported a net loss of $3.6 million or minus 10 cents per share, down from net income of $600,000 or 1 cent per share in first-quarter 2018.

The company attributed much of the decline to its dispute with U.S. Customs and Border Protection, asserting that the situation caused a reduction in traffic and lower in-stock rates. Last year, the federal agency held some of the company’s shipping containers at the Port of Norfolk based on allegations that U.S. Auto Parts had imported some counterfeit grilles.

The dispute with Customs also cut into gross profit, which declined from $23.2 million in Q1 2018 to $20.1 million in Q1 2019, according to the company.

“During the first quarter, we began to lay the foundation to return U.S. Auto Parts to profitable revenue growth,” said Lev Peker, CEO of Carson, California-based U.S. Auto Parts. “I took over the leadership position in January, and we have already begun to rebuild and strengthen our team with a new chief marketing officer, chief legal officer and chief operating and financial officer, all of whom bring unique qualifications and skillsets to U.S. Auto Parts. We have also brought in critical personnel to execute our new growth strategy, including a new user-experience team, SEM and content teams and retention marketing teams.

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“We began to deploy various strategic initiatives during the quarter, including the consolidation of multiple websites and marketplace stores. As mentioned on our last quarterly update, we want to focus our resources on fewer properties to do a better job at both growing and optimizing these sites, while ensuring each property has a unique and differentiated value proposition for the customer.”

To reduce shipping times, the company recently signed a new lease for a 125,000-square-foot distribution center in Las Vegas. Expected to go live in September, the DC will enable U.S. Auto Parts to provide two-way delivery to 93% of the country, according to the company.

“Although we have begun to take the necessary steps to return U.S. Auto Parts to growth, there is still much work to be done, particularly with improving our in-stock rates as we continue to be impacted by prior management decisions pertaining to the customs issue,” Peker said. “Nevertheless, we remain committed to achieving revenue growth and positive adjusted EBITDA in 2019, and continue to expect the benefit of our various initiatives to materialize as we exit the year.”

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