CarMax Reports Rough Q1

By Staff Writer June 22, 2020

CarMax Inc. reported that net sales and operating revenues declined 39.8 percent to $3.23 billion for the first quarter ending May 31.

Total used vehicle unit sales declined 39.8 percent, including a 41.8 percent decrease in comparable store used unit sales compared with the prior year’s first quarter. The comparable store sales performance reflected the combined effects of Coronavirus-related store closures and restrictions on operations, as well as reduced customer traffic resulting from the economic impact of the pandemic and nationwide shelter-in-place orders.

Total wholesale vehicle unit sales declined 47.6 percent compared with the first quarter of fiscal 2020. Prior to the current quarter, almost all of CarMax’s auctions were conducted as in-person, physical auctions. During the quarter, it successfully transitioned its wholesale auctions to an online platform.

Sales have progressively improved since hitting a trough in early April; comparable store used unit sales for the two weeks ended June 14 were within 10 percent of last year’s sales, with many stores generating positive comparable stores sales.

The quarter showed strong margin management execution during a period of unprecedented depreciation; used and wholesale gross profit per unit for the first quarter were $1,937 and $978, respectively. The company grew its liquidity position during the quarter by selling through inventory and quickly aligning costs to lower sales volumes.

Omni-channel rollout is almost complete, and customers can now buy a car via curbside pickup at 200 stores nationwide.

Net earnings declined 98.1 percent to $5.0 million and net earnings per diluted share declined 98.1 percent to $0.03. The current quarter’s results included $122.0 million in the CarMax Auto Finance (CAF) provision for loan losses, which included an increase of $84.0 million, or $0.38 per diluted share, in its estimate of lifetime losses on existing loans resulting from the coronavirus-related turmoil and worsening economic factors. Net earnings per diluted share for the current quarter also included a one-time benefit of $0.18 in connection with our receipt of settlement proceeds in a previously disclosed class action lawsuit.

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Last modified on Monday, 22 June 2020 13:17