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CarMax Q1 Earnings Top Estimates; Retail Sales, Profits Climb Sharply
Used car giant CarMax tops EPS and revenue estimates as retail used unit sales jump 9%. Gross profit rises nearly 13% with record-high margins and strong customer demand.
CarMax Inc. (NYSE: KMX) on Friday reported fis cal first-quarter net income of $210.4 million, or $1.38 per share, beating Wall Street expectations. The average estimate from nine analysts surveyed by Zacks Investment Research was $1.18 per share.
The Richmond, Virginia-based used car retailer also topped revenue forecasts, posting $7.55 billion for the quarter . Analysts had expected $7.52 billion, according to Zacks.
Retail used unit sales increased 9.0%, while comparable store used unit sales rose 8.1%. Wholesale units also posted a 1.2% increase. The company sold a combined total of 379,727 retail and wholesale used vehicles, up 5.8% year-over-year.
Total gross profit surged 12.8% to $893.6 million, fueled by strong unit volumes and margins. CarMax recorded a record-high gross profit per retail used unit of $2,407, up $60 from last year. Wholesale unit profit remained strong at $1,047, though down $17 per unit.
“We delivered our fourth consecutive quarter of positive retail comps and double-digit year-over-year earnings per share growth,” said Bill Nash, president and CEO of CarMax. “These results highlight the strength of our earnings growth model, which is underpinned by our best-in-class omni-channel experience, the diversity of our business, and our sharp focus on execution.”
CarMax also bought 336,000 vehicles from consumers and dealers in the quarter, up 7.2% from the previous year. Of those, 288,000 vehicles were sourced directly from consumers (up 3.3%), and 48,000 from dealers (up 38.4%).
Selling, general, and administrative expenses (SG&A) rose 3.3% to $659.6 million. However, ongoing cost management supported SG&A leverage of 680 basis points as a percentage of gross profit.
The company also expanded its CarMax Auto Finance (CAF) non-prime funding program, which is expected to offer greater flexibility for growth in CAF’s full-spectrum lending while managing risk.
“Our associates, stores, technology and digital capabilities, all seamlessly tied together, enable us to provide the most customer-centric car buying and selling experience,” Nash added. “This is a key differentiator in a very large and fragmented market that positions us to continue to drive sales, gain market share, and deliver significant year-over-year earnings growth for years to come.”
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