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CarMax Reports Overall Strong Performance

CarMax Reports Overall Strong Performance Featured

CarMax Inc. reported results for the latest quarter and fiscal year ended Feb. 28.

Net sales and operating revenues increased 9.3 percent to $4.05 billion in the quarter. For the fiscal year, net sales and operating revenues increased 4.8 percent to $15.88 billion.

Used unit sales in comparable stores increased 8.7 percent in the quarter and 4.3 percent in the fiscal year.

Total used unit sales rose 13.4 percent in the quarter and 8.3 percent in the fiscal year.

Total wholesale unit sales declined 1.2 percent in the quarter and 0.7 percent in the fiscal year.

CarMax Auto Finance income declined 10.2 percent to $82.9 million in the quarter. For the fiscal year, CAF income declined 5.9 percent to $369 million.

In the fourth quarter, net earnings increased 8.2 percent to $152.6 million. Year-over-year comparisons were affected by a previously disclosed impairment-related charge of $5.2 million, net of tax, or $0.03 per diluted share, which reduced the prior year’s fourth quarter results.

For the fiscal year, net earnings increased 0.6 percent to $627 million.

 

Last modified on Thursday, 06 April 2017 20:45
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    Executives at CarMax Inc. attribute the company’s success to a pretty simple idea: selling what people want.

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    The vehicle mix improved compared to last year’s offerings. Their percentage of sales in large and medium SUV’s and trucks rose to 27 percent, which is about three points higher than the prior quarter.

    “So even last year, when we were little bit lower in large SUV’s and trucks, we were still putting what folks wanted to buy and what were also a good deal for them,” said CarMax CEO Bill Nash. “So I think the supply has increased on these vehicles and has driven price down somewhat but again we’re going to buy what the consumers want.”

    The company’s new online appraisal initiative helped CarMax stock the right vehicles. The online system allows customers to receive a value for their vehicle before coming into the store.

    CarMax executives view buying inventory directly from consumers as a better value proposition.

    “It is more profitable than buying it off-site so we’re always trying to drive as much as possible through the line but even given this quarter where we were allowed a little more off-site purchases because the volume, we’re still able to maintain gross profit per unit,” Nash said.

    Even though CarMax is stocking more SUV’s and minivans, the average selling price remains down a bit. Nash said that this could be attributed to the acquisition prices.

    “I think this speaks to the execution that the stores are doing and the great things that are buyers do, making sure that they’re getting the best price and really at the end of the day that’s really where it starts,” Nash said. “You have got to buy the vehicles at the right price so lower acquisition prices more than offsetting the increase that you would normally see from the mix shift.” 

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