CarMax Q4 Results Miss Estimates

Used vehicle retailer CarMax Inc. (KMX) announced Thursday a profit for fourth quarter that decreased 27 percent from last year, hurt by lower gross margins amid the decrease in average selling price in retail and wholesale. Both earnings per share and quarterly revenues missed analysts’ estimates.

In pre-market activity on the NYSE, KarMax shares are plunging $5.82 or 7.34 percent to trade at 73.48.

“We reported growth in total used unit sales and comps, delivered strong retail and wholesale gross profit per unit, continued to actively manage SG&A and grew CAF income significantly year-over-year,” said Bill Nash, president and chief executive officer.

For the fourth quarter, the company reported net earnings of $50.27 million or $0.32 per share, lower than $69.01 million or $0.44 per share in the prior-year quarter.

On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.49 per share for the quarter. Analysts’ estimates typically exclude special items.

Net revenues for the quarter declined 1.7 percent to $5.63 billion from $5.72 billion in the same quarter last year. Analysts expected revenues of $5.79 billion for the quarter.

Total retail used vehicle revenues decreased 0.7 percent and total wholesale revenues declined 5.5 percent from last year.

Total retail used unit sales increased 1.3 percent to 172,057 and comparable store used unit sales increased 0.1 percent, while wholesale units declined 4.0 percent to 115,546 from last year.

Combined retail and wholesale used vehicle unit sales were 287,603, a decline of 0.9 percent from the prior-year quarter.

CarMax Auto Finance (CAF) income grew 18.9 percent to $147.3 million from last year, due to a lower provision for loan losses and an increase in average managed receivables, partially offset by lower net interest margins.

Selling General and Administrative expenses increased 1.4 percent to $580.9 million as continued cost management efforts were pressured by an increase in share-based compensation and the timing of marketing spend.

Looking ahead, the company said it expects to achieve the $33 billion annual revenue target sooner than units, given higher average selling prices.

The company is also maintaining its goal to sell more than 2 million combined retail and wholesale units annually. However, it is extending the timeframe to between fiscal year 2026 and fiscal year 2030 due to uncertainty in the timing of market recovery and as we continue to focus on profitable market share growth.

Further, the company expects capital expenditures between $500 million and $550 million in fiscal year 2025 largely reflecting spending to support its future long-term growth in offsite-reconditioning and auction facilities, as well as its new stores.

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