News Summary
CarMax shares rose after the used car retailer reported quarterly earnings that exceeded analysts’ expectations, driven by increased wholesale vehicle sales and reduced costs. The largest used car seller in the United States also resumed its stock buyback program in the last quarter. The company noted ongoing challenges in the availability of affordable vehicles in the retail used car market.
News Details
CarMax (KMX) shares rose after the largest used car seller in the United States beat earnings expectations by selling more vehicles in the wholesale market. The company also reinstated its stock buyback program.
CarMax reported third-quarter earnings for fiscal year 2024 of $0.52 per share, which is more than two-thirds of analysts’ expectations. Revenue fell 5.5% to $6.15 billion, which was below expectations.
Combined retail and wholesale unit sales increased by 1.3% to 302,666 units. Wholesale unit sales rose by 7.7% to 127,900 units, and revenue increased by 1.1% to $1.17 billion. The company added that the wholesale unit achieved a “strong” gross profit of $961 per unit, compared to the same period last year.
However, retail unit sales declined by 2.9% to 174,766 units, and revenue fell by 7.2% to $4.83 billion as the average retail unit sale price dropped by about $1,300. CarMax noted in its quarterly earnings statement the continued “challenges in the availability of affordable vehicles,” pointing to “ongoing headwinds from general inflationary pressures, high interest rates, tightening lending standards, and declining consumer confidence.”
The company noted that it had reduced selling, general, and administrative expenses by $560 million, a decrease of 5.4%.
CarMax CEO Bill Nash stated that the company is encouraged by the investments made in multi-channel strategies, which contributed to increased foot traffic in stores and online, enhancing vehicle availability.
The company announced that it had reinstated the stock buyback program it had paused in the third quarter of fiscal year 2023, purchasing 648,500 shares for $41.9 million. It noted that as of the end of November, it still had $2.41 billion available for repurchase under the current authorization.
CarMax shares rose by 5.1% to $78.51 just before noon after reaching $84.20 earlier in the session. The stock has increased by nearly 30% for the year.
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CarMax. “CarMax Reports Third Quarter Fiscal Year 2024 Results.”
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