CarMax shares dip on Q1 earnings and revenue miss

RICHMOND, Va. – CarMax Inc . (NYSE:) experienced a slight decline in its stock price, dropping 1.9%, after reporting first-quarter earnings and revenue that fell short of Wall Street expectations.

The company reported earnings per share (EPS) of $0.97, which was just below the analyst estimate of $0.98. Revenue also did not meet analyst projections, coming in at $7.11 billion against the consensus estimate of $7.2 billion.

The company’s first-quarter performance was marked by a 3.1% decrease in retail used unit sales and a 3.8% drop in comparable store used unit sales compared to the same quarter last year. Wholesale units also saw a decline of 8.3% from the prior year’s first quarter. Gross profit per retail used unit remained stable at $2,347, matching last year’s figures, while gross profit per wholesale unit rose to a record $1,064. CarMax Auto Finance (CAF) income showed a positive trend with a 7.0% increase from the previous year’s first quarter, reaching $147.0 million.

Bill Nash, president and chief executive officer, commented on the results, stating, “I am encouraged by the trends we saw in the first quarter including continued year-over-year price declines, improvements in vehicle value stability, and ongoing growth in upper funnel demand.” Nash highlighted the company’s strong gross profit per unit in retail, wholesale, and Extended Protection Plans (EPP), the sourcing of a record 35,000 vehicles from dealers, and the repurchase of over $100 million in shares of common stock.

Despite the decline in unit sales, CarMax managed to deliver robust margins and has taken steps to support future growth. The company’s expansion of its securitization program with a non-prime public asset-backed securitization deal is expected to enable incremental growth in finance income.

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