Lithia Motors Shares Drop After Cutting Profit Outlook

Shares of Lithia Motors dropped 4.8% in premarket trade Monday, after the auto retailer warned that third-quarter profit would fall short of forecasts, given a bigger-than-expected drop in vehicle margins. Lithia now expects adjusted per-share earnings of $1.30 to $1.32, below its previous outlook of $1.36 to $1.38, with vehicle margins about 1.3 percentage points below projections. Meanwhile, sales are seen rising 21% over year-earlier results to $1.3 billion, compared with the average analyst estimate compiled by FactSet of $1.29 billion. For the fourth-quarter, Lithia expects earnings of $1.17 to $1.19 a share, below its previous outlook of $1.23 to $1.26 a share. Through Friday, Lithia's shares have dropped 16% since closing at an all-time high of $80.86 on July 3, but were still up 16% year to date, compared with a 3.1% gain in the S&P 500.