CarMax Shares Dip on Q1 Earnings and Revenue Miss
CarMax Inc. saw its stock price drop by 1.9% after announcing first-quarter earnings and revenue that didn't meet Wall Street's expectations.
Earnings and Revenue Shortfall
The company reported earnings per share (EPS) of $0.97, which was slightly below the expected $0.98. CarMax also missed the revenue projections, bringing in $7.11 billion compared to the anticipated $7.2 billion.
Sales Figures
During the first quarter, CarMax experienced a 3.1% decrease in retail used unit sales and a 3.8% drop in comparable store used unit sales year-over-year. Wholesale units also declined by 8.3% from the same period last year. However, gross profit per retail used unit remained stable at $2,347, while gross profit per wholesale unit hit a record high of $1,064.
Financial Highlights
On a positive note, CarMax Auto Finance (CAF) income increased by 7.0%, reaching $147.0 million from the prior year's first quarter.
Bill Nash, president and CEO of CarMax, stated, "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." He also mentioned the company’s strong gross profit per unit in retail, wholesale, and Extended Protection Plans (EPP).
Strategic Moves and Future Growth
CarMax sourced a record 35,000 vehicles from dealers and repurchased over $100 million in shares of common stock. Despite the drop in unit sales, CarMax maintained strong profit margins and has initiated steps to support future growth.
The company is expanding its securitization program through a non-prime public asset-backed securitization deal, which is anticipated to boost finance income incrementally.
In summary, while CarMax faced some hurdles in the first quarter, the company’s strategic moves and robust financial measures indicate a commitment to future growth and stability.
